Saxo’s – Sandcastle economics, Q3 2024

The Q3 2024 outlook from Saxo highlights a surprisingly resilient US economy due to excessive fiscal policy and strong investments in various sectors. In Europe, the economy is recovering from shocks related to the war in Ukraine, while China is implementing measures to boost growth. Inflation remains a concern but is easing to a more manageable level. The economy is described as a "two-lane economy" with some sectors booming while others struggle. The potential risks to the economy include unsustainable fiscal spending in the US, geopolitical shocks, and other trends like healthcare budget explosions and demographic challenges. Despite the positive short-term outlook, caution is advised for the long-term as various factors could threaten the stability of the economy. The authors recommend a tactical asset allocation overweight in risky assets for the short term.