Inside Markets — Lower Recession Probability

Weekend de-escalation in the U.S./China trade war resulted in economists lowering their 12-month recession probabilities. The average recession probability is now ~35%, down from ~55% before the tariff reductions. The 90-day de-escalation will likely result in some pull forward of demand and allow more time for more U.S. trade framework agreements that should be accretive to GDP. Recall, the average peak-to-trough decline in a cyclical recession-driven bear market tends to be ~35%, while non-recessionary bear markets (technically clocked on intraday lows from 4/7) have all been major buying opportunities. Resilient macro data, strong earnings growth and a cooling trade war is a recipe for more equity upside.