Markets Edition: A Jobless Recovery?
KEY TAKEAWAYS
- The U.S. economy shows a "jobless recovery," with a strong equity market outlook despite weak labor market trends, a disconnect currently attributed to high interest rates and lagged tariffs
- The strategic significance lies in the emerging impact of AI on employment, which could trigger future Federal Reserve policy easing, creating a flywheel effect that further boosts equity markets
- Analysts maintain a bullish, overweight U.S. equity market outlook for year-end, citing strong seasonal trends and the potential for markets to benefit from both productivity gains and renewed Fed dovishness
Dirk Willer, Global Head of Macro Strategy and Asset Allocation, sits down with Adam Pickett, Head of the Global Macro Strategy team, to discuss the "jobless boom" being experienced by the U.S. economy, with the Fed cutting rates, strength in equities, and weakness in the labor market. What's behind this apparent disconnect? Four hypotheses are worth examination.
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Dirk Willer, Global Head of Macro Strategy and Asset Allocation, Citi
Dirk Willer is a Managing Director and Global Head of Macro Strategy and Asset Allocation. In this role, Dirk develops broad macro themes, related asset allocation views as well as trade ideas across a wide range of asset classes and geographies. Dirk also directs the Quant Macro Team. Prior to that, Dirk was the Global Head of Emerging Market Fixed Income and FX Strategy. He joined the firm in 2005 as the head of LatAm Local Market Strategy. Previously, Dirk worked at Omega Advisors and RHG Capital as their global macro strategist and portfolio manager. Dirk and his team have been ranked as the first team in the Institutional Investor survey for LatAm local strategy and the first or second team for LatAm sovereign credit strategy since 2017, as well as first in CEEMEA and Asia local strategy in 2019. Dirk is the lead author of “Trading Fixed Income and FX in Emerging Markets”, published by Wiley in 2020. Dirk holds a PhD and MSc in Economics from the London School of Economics. He did his undergraduate work at the University of St. Gallen in Switzerland.
Adam Pickett, Head of Global Macro Strategy Team, Citi
Adam Pickett is a Head of Citi’s Global Macro Strategy team, based in London; he also works within the Asset Allocation group. Adam and team focus on broad macro themes, cross-asset class analysis, house FX forecasts, and global asset allocation. He offers trade ideas aimed at hedge funds, real money, and other macro-oriented investors. Specifically, he covers FX, fixed income, equity, credit, and commodity markets. Prior to joining the Global Macro Strategy team, Adam spearheaded Citi’s EMEA G10 FX Strategy effort, based in London, for four years, primarily focusing on generating alpha via leveraged trade ideas.
