Summary

Chris Watling discussed how the global economy is entering the early stages of a classic cyclical recovery, with growing parallels to the upswing of the early 2000s. He argued that aggressive rate cuts across much of the world are laying the groundwork for a private sector credit cycle, especially in Europe and China, where banking systems are well capitalised, household balance sheets are healthy, and stimulus is gaining traction. In contrast, the US is lagging due to tight monetary and fiscal policy, though he expects the Fed to respond in the coming months. He noted signs of softening in the US economy and suggested that once rate cuts materialise, the cyclical recovery should broaden. Tactically, he sees evidence of a market uptrend, with a full washout of risk, improving breadth, and sentiment supporting further gains, although he flagged near-term risks linked to exuberance and global trade tensions. Strategically, Longview is overweight risky assets, particularly industrial commodities, and underweight gold, viewing reflationary assets as well positioned as global growth accelerates and the recovery broadens beyond US tech.

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