Greg Branch on Cyclical Recovery and Global Economic Stimulus

Entering a Cyclical Recovery

• 💡 The market is entering a cyclical recovery phase, moving beyond speculation where beta matters to a stage where operating leverage and high EPS variance are key.
• 🚀 This phase is driven by both monetary and fiscal stimulus, favoring high-quality cyclical sectors like materials, transports, and financials.

Global Economic Stimulus

• 🌍 Approximately 90% of the world's GDP is in a stimulating phase, with only Japan and Brazil currently in a posture of cutting rates.
• 📈 This indicates a global cyclical recovery, not just in the US, supported by both monetary and fiscal policies that are expected to sustain a tailwind for at least the next 12 months.

Addressing Growth Concerns

• ⚠️ While concerns about growth are valid, factors like government shutdowns and trade tensions are viewed as short-term speed bumps rather than derailers of long-term GDP growth.
• 📊 A 35-day government shutdown, for instance, represents a minimal loss (four basis points) on a $30 trillion GDP, and major economies are showing willingness to de-escalate trade tensions.
• 💰 The anticipation of continued fiscal stimulus around the world is a significant factor supporting anticipated GDP growth.