Rebecca Patterson says soft landing is still 50%50%, retail may play a role in cary trade
- Speaking on Bloomberg survallance, Patterson said it makes sense to listen to the investment banks such as JPMorgan, which said the cary trade is mostly done. A few other banks have said similar.
- Says we don’t know who was in the cary trade, but we should pay more attention to retail investors. Retail investors are as large a part of the market as in 2007.
- Looking at the economy, Patterson still thinks its 50/50 if we get a soft landing and the data has not confirmed either scenario.
- Noted that earnings are ok but earnings showing caution are still focused on the lower end consumer. If the wealthier consumer gets more cautions, that could cause a “negative fly wheel” leading to a harder landing.
- Patterson are already starting to see companies feel pressure from not being able to raise prices. Says that if that continues it could feed into profit margins.
- Discussed that there are 2 stories to the soft consumer – the US consumer and the Chinese consumer. See risk in softening Chinese consumer.
- Patterson is skeptical on investing in Japan because their economy is dependent on the US. Noted that geography is not enough to diversify. because international equity markets are correlated in a downturn.
