UBS, the world’s largest wealth management company, recently surveyed some 360 global family offices with an average family wealth of $1.2B about their expectations for the global economic future. 55% of those 360 survey participants see a recession coming by 2020. 45% of those surveyed are shifting their assets to bonds and real estate and 42% are increasing their cash reserves.

One survey respondent said, “We are very cautious, even now with the market we don’t feel very comfortable.”

Intensified recession concerns are directly related to the escalated and escalating trade war between the US and China and to the extended yield curve inversion that came into effect in June 2019. (An inversion in the yield curve, when short-term rates produce more capital than long-term rates, is often considered to be a harbinger of bad economic news.)

According to one CEO of a European family office, “Who knows what will happen around Brexit (whether or not and/or how Great Britain will leave the European Union), what will happen in the EU (the European Union), and what will happen between the US and China. There are so many open questions and this could have a dramatic impact on the (financial) market. In general, we think we have reached our peak.”

This recently released UBS survey indicated that 20% of global family offices representing ultra wealthy families worldwide are reducing their respective leverage exposure within their investments as a result of their recession expectations for 2020.

Immediately on top of this UBS survey, the most recent quarterly Business Roundtable survey indicated that the CEO outlook for GDP expectations have now dropped to 2.3% from 2.6% last quarter.

According to Jamie Dimon, chairman of the Business Roundtable, “This quarter’s survey shows that American businesses now have their foot poised above the brake and are even tapping the brake periodically. Uncertainty is preventing the full potential of the economy from being unleashed.”

Thanks to Yun Li from HousingWire for source data.

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