Keep Calm About U.S. Crisis And Invest in Stocks, Barclays Says

(Bloomberg) -- There's no need to hide your money under the mattress for fear that the next selloff is around the corner, according to Will Hobbs, head of investment strategy at Barclays Plc in London.

“The further into the future you are happy to look, the less you need worry about calling the next recession, and the more you need to just put your cash to work and forget about it,” Hobbs told Bloomberg News in an interview. “It could be a long and painful wait for those out of the market, based on the indicators that we look at.”

Equities globally resumed a slide last week amid concerns that the U.S. Federal Reserve may be accelerating monetary tightening and that President Donald Trump's proposed steel and aluminum tariffs could lead to a trade war. Divisions between equity market bulls and bears are becoming more apparent as Barclays and Credit Suisse Group AG recommend focusing on strong earnings and global growth, while skeptics say the economic outlook is less promising as Trump shifts focus from fiscal stimulus to domestic protectionism.

Barclays warns against waiting until after the next U.S. recession to invest in stocks, saying that although the country is just a year away from seeing its longest sustained period of economic expansion, there's no statistical relationship between the length of an economic cycle and the recession that ends it. The majority of recession triggers, such as oil's collapse or a financial or geopolitical crisis, are often “random” and hard-to-predict factors that are independent from the length of the economic cycle, according to Barclays.

Among developed-market stocks, Barclays favors European equities, and especially banks.

“While history isn't always a reliable indicator of what will happen in future, it does seem to tell us very clearly that unless you think you can predict a recession within the next three months, on average you've lost out by not being invested,” Hobbs said.

To contact the reporter on this story: Ksenia Galouchko in Moscow at kgalouchko1@bloomberg.net.

To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net, Paul Jarvis, Angela Cullen

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