Barclays_Global_Portfolio_Manager_s_Digest_Stalling_Out

This document is intended for institutional investors and is not subject to all of theindependence and disclosure standards applicable to debt research reports prepared for retailinvestors under U.S. FINRA Rule 2242. Barclays trades the securities covered in this report for itsown account and on a discretionary basis on behalf of certain clients. Such trading interestsmay be contrary to the recommendations offered in this report.Barclays Capital Inc. and/or one of its affiliates does and seeks to do business with companiescovered in its research reports. As a result, investors should be aware that the firm may have aconflict of interest that could affect the objectivity of this report. Investors should consider thisreport as only a single factor in making their investment decision.* This individual is a member of the Product Management Group and is not a Research AnalystAll research referenced herein has been previously published. You can view the full reports,including analyst certifications and other important disclosures, by clicking the hyperlinks inthis publication or by going to our Research portal on Barclays Live.FOR ANALYST CERTIFICATION(S) PLEASE SEE PAGE 32.FOR IMPORTANT EQUITY RESEARCH DISCLOSURES, PLEASE SEE PAGE 32.FOR IMPORTANT FIXED INCOME RESEARCH DISCLOSURES, PLEASE SEE PAGE 33.Global Portfolio Manager's DigestStalling OutWe provide context and perspective on research acrossregions and asset classes, this week updating our "tippingpoints" model, detailing odds of a potential recession;examining investor positioning in light of a "Fed put"; andtaking an in-depth look at the China WFE market.• Recession Analysis: Our updated "tipping points" model suggests that US growth hasdecelerated to a pace that makes it vulnerable to a recession. Our results draw from a regime-switching model that assesses the probability that the US economy is in each of four states –rapid expansion, expansion, stall speed, and recession – and the probability of transitioningbetween them. The key feature is the "stall" state, which identifies when the economy issusceptible to entering a recession, but it is not a foregone conclusion. Various specificationssuggest that the US is likely in a stall state, perhaps for a year or more. With this heightenedsusceptibility, the model places odds of a recession within eight quarters at about 50%. Ourresults offer some support for expectations that the FOMC will pivot to rate cuts in September.• Fed Put & Positioning: In our latest look into investor positioning, buying of global/USequities picked up in August, led by hedge funds and systematic investors as vol hascollapsed. And as US rate cut expectations gathered steam, credit and short duration inflowshave picked up, with LO and CTA positioning showing a preference for bonds over equities.Any weakness in labor market indicators could accelerate this trend, which we see as the keyrisk to the equity bull market. New summer highs for equities have also come with wider