Because Harvest focuses on large-cap, dominant companies that have been proven across economic cycles, current prospects of recession and slowing growth don’t factor much into the firm’s playbook. But based on indicators he’s watching, MacDonald sees a very pessimistic picture.
“The language in the media is very pessimistic,” he says. “Sentiment amongst individual investors, which we can measure, is among the lowest we’ve seen in the past 30 years. Cash allocations among institutional fund managers are approaching levels we haven’t seen prior to ’08.”
Read more: Investors dash to cash amid worst pessimism since global financial crisis
Still, it’s always darkest before the dawn. While the prospects of the Federal Reserve staying on its rate-hiking path this year are virtually certain, MacDonald says the language from central banks they’re watching across the world is becoming less aggressive.
Some of the balance sheets and language from companies this earnings season reveal bright spots, MacDonald says. Some leading economic indicators for the next six to nine months also suggest that supply-chain congestion and commodity price pressures are starting to ease.
