The Next Ten Percent

Friday, September 15th, 2023   Categories: Correction, Correlation, Energy Prices, Japan, US Treasuries

What happens if US equities have a correction

We think that US equities may be vulnerable to a correction over the next two to three months. Our models suggest that the Technology sector may be about to underperform and that this could put pressure on other related sectors which have also performed strongly this year. We identify three separate trades which may be able to mitigate some of the impact: long-dated US Treasuries, large cap Japanese equities and Energy equities in the US and Europe. The rationale behind each idea is discussed in detail in the note, but the key point is that they are largely unrelated and therefore offer an interesting diversification strategy as well.