Miller adds that while the equity market sell-off gathered a lot of headlines, “the fall was actually only around 8 per cent, which isn’t a big deal in the context of history. And really the effect of this has been to make me a bit more bullish on equities as the conditions for economic growth are still there; the US economy is slowing but only to an extent that most people expected.
"I still think we will get two or three rate cuts in the US and that should lead to a broadening of the number of sectors and stocks that do well. When the sell-off was happening, some were starting to call for more aggressive rate cuts, but I don’t think that will happen, as inflation has not been vanquished just yet. Investors have had a bit of a wake up call, but I think the key thing is not to panic.”
Jones says “I don’t think a body of evidence exists for the US going into an abrupt recession. Yes some of the data has weakened, but people need to remember that is very much by design, and if the data weakens by more than expected, the central bank have plenty of ammunition to use to stimulate the economy.
"They can cut rates by more than currently expected if they need to. We estimate the neutral rate of interest in the US right now to be around 3 per cent, and the base rate is over 5 per cent, so there is plenty that can be done if needed.
"I would also say that the US stock market is very attractive and rate cuts should lead to a broadening out so that equity sectors linked to housing begin to perform better."
Carrell is more sceptical on the outlook for the US market, describing it as the most expensive in the world, particularly as he feels many investors became too optimistic around the extent of rate cuts in the US and the capacity for those to drive further equity market gains.
Kirsten Hooper, chief global market strategist at Invesco, says: “Market corrections are not uncommon. The question is whether something larger is happening – that is, a recession. In my view, markets are overly worried about a US recession. I still believe the US job market is in relatively good shape.”
Hooper says one of the triggers for market angst around the health of the US economy is as a result of an economic theory called the Sahm rule.
