Despite global equities remaining relatively unchanged last week and hovering at the upper end of their trading range over the past 10 months or so, only the most ‘bullish of bulls’ would suggest that the economic outlook is clear and calm.

The main question remains that of whether the US and / or the UK and Europe – not to mention the other leading economies are headed towards recession. This remains a matter of great speculation and heated intellectual debate. One thing remains certain and that is its sheer uncertainty.

Bank lending has tightened considerably on the back of rate rises and regional bank issues. While the latter looks unlikely to pose a long-term threat it certainly doesn’t help wider market sentiment. With US employment figures and first quarter GDP statistics looking reasonably positive, it may be that any recession that is encountered will be less serious than many have predicted.

First quarter. S&P 500 earnings are now projected to be down only 1% on the year and many sectors have proven especially resilient including large-tech, which has been at the forefront of market recovery. The bigger question is whether the Fed will ease up on interest rate rises. In Europe the ECB continued its upward rate curve and specifically ruled out an end to this policy at least in the shorter term. Another 0.5% could easily be on the way in the next few months. The Bank of England itself meets this week and indications are that another 0.25% is likely to be on the cards with perhaps a further 0.25% over the summer.

Equity valuations are back up to their long-term average in the case of global equities and significantly above in the case of the US. However, corporate earnings in general will be undermined by any  recession and interest rates will only be cut if recession becomes reality. Somewhat of a dichotomy then to keep everyone on their toes and an eye to those all-important indicators.