The last few years haven’t done wonders for the reputation of the pharmaceutical industry. In 2015, Turing Pharmaceuticals faced public outrage after hiking the price of Daraprim, a drug used to treat the parasitic disease toxoplasmosis in vulnerable populations such as pregnant women and AIDS patients, by more than 5,000 percent. This year, Mylan is embroiled in an ongoing controversy after the price of its emergency allergy treatment EpiPen increased sixfold in under a decade. Meanwhile, both major U.S. presidential candidates have promised voters that they will work to lower consumer drug prices. The combination of bad publicity and potential government interference has weighed on healthcare stocks. After the Turing news broke and Democratic candidate Hillary Clinton pledged to tackle pharmaceutical “price gouging”, the iShares Nasdaq Biotechnology ETF plummeted 20 percent in just seven trading days. In August, Clinton’s criticism of EpiPen pricing spurred another decline in the index.
 
So what’s a nervous healthcare investor to do? Buy the dips in healthcare stocks. Lorenzo Biasio, a healthcare analyst on Credit Suisse’s Investment Solutions and Products team, says fears that the U.S. government will force widespread drug price cuts are exaggerated.

When it comes to professional advancement, women can be their own worst enemy, right? That’s pretty much an accepted fact at this point. But is it true? For years, feminists and workplace diversity proponents have grappled with the suggestion that high-ranking women actively limit the advancement of their female subordinates, a phenomenon known as Queen Bee syndrome. Female executives, the thinking goes, believe that there is limited room for women at the top, so preventing others from reaching the upper echelons of management is an act of self-preservation. But a new study by the Credit Suisse Research Institute suggests that there aren’t as many Queen Bees as conventional wisdom might suggest. Female executives, it seems, are actually more likely to promote women who work under them than their male counterparts are.
 
The Queen Bee theory dates back to at least the 1970s, when researchers from the University of Michigan coined the term after analyzing 20,000 responses to a survey of Psychology Today readers and concluding that women were at times likely to oppose the rise of their female coworkers. Over the years, other research supported the findings, including a 2011 study of women managers in The Netherlands, which concluded that women vulnerable to Queen Bee behavior had experienced significant gender discrimination on their own climb up the corporate ladder.

In the years before the 2008 financial crisis, investors flocked to equities in fast-growing emerging economies. But when the crisis put the brakes on global growth, that attraction to emerging markets proved a fickle one, and investors sought safe haven in less risky investments. In late 2016, however, the pendulum is swinging back again, with investors citing several reasons for renewed confidence in emerging market equities. Among the most surprising? Their politics are relatively more stable than in the developed world.
 
Start with Latin America: In Brazil, embattled president Dilma Rousseff was ousted in August and her successor, Michael Temer, is advocating pro-business measures such as the auctions of infrastructure and energy contracts to private companies that won’t, unlike in previous years, require partnerships with state agencies. In Argentina, the 2015 election of President Mauricio Macri ended a decade of populist rule, and Macri has carried out a series of economic reforms, including removing export taxes and allowing Argentina’s peso to float freely. The settlement of old debts, in particular, allowed the country to return to the international credit market for the first time in 15 years.
 
In Asia, the bright spots are Indonesia and India.

Will the recent upheaval in Brazil’s political leadership lead to a stronger economy? Investors certainly think so. Fueled by anticipation of embattled president Dilma Rousseff’s impeachment and economic reforms by her replacement, Michael Temer, the Bovespa has jumped more than 50 percent since late January. In the week after Rousseff’s official ouster on August 31, the index rose a full 4 percent, and Brazilian consumer confidence reached its highest level since January 2015 that same month. But Brazil’s rising economic tide won’t lift all boats equally. Equity strategists on Credit Suisse’s Global Markets team have highlighted those sectors best poised for a strong recovery themselves.
 
Consider the real estate sector, specifically shopping malls. Things haven’t been so good of late: Mall operators charge rents based on tenants’ sales, and same-store sales growth rates for mall retailers have been declining since the fourth quarter of 2014. In the second quarter of 2016, mall same-store sales actually shrank by 0.5 percent, but the Bank’s strategists believe that outright decline marked a trough. They predict consumers will spend more at mall stores as Brazil’s economy—and its employment situation, in particular—improves. By the second quarter of 2017, the Bank expects same store sales growth of 4.8 percent.

Latin American airline profits came in for a hard landing last year as the region’s economic woes grounded would-be passengers. Brazil-based Gol Linhas Aéreas posted a record-breaking loss of more than R$4.4 billion for the year, while Chile’s LATAM airlines reported a loss of US$219 million of its own. But this year promises loftier profits for the industry. And the prognosis is as simple as they come: As macroeconomic conditions improve across the region, Credit Suisse says airlines’ profit margins and stock performance will follow.
 
Brazil’s battered economy, the largest in the region, looks set to finally start growing again next year, while Argentina’s economy is expected to grow 3.2 percent, rebounding from this year’s decline. The first part of the airline investment argument really is that simple: The healthier a nation’s economy, the more its people will take to the air.
 
But the argument has a kicker: Currencies. The Brazilian real has surged more than 20 percent this year, driven by improving commodity prices as well as growing optimism that Brazil’s troubled government is on the mend. (Embattled president Dilma Rousseff was finally impeached on Aug 31; her replacement, Michael Temer replaced the cabinet, installed a new economic team and has promised fiscal reforms.

Does the recent stabilization in oil prices portend better times ahead for energy companies? Investors in oilfield services companies (OFS), which provide equipment and support to exploration and production companies, certainly think so, as evidenced by the fact that the stocks of several such companies up by double-digit percentages this year. Can the rally continue? Equity strategists from Credit Suisse’s Global Markets team think so.
 
Why? The answer lies in a single number: the oil rig count. When oil prices began their slide in the summer of 2014, U.S. drillers stayed optimistic, and continued sending new oil rigs out into the oil patch. That October, the number of active rigs dotting American oil fields reached a record 1,609, according to energy services firm Baker Hughes. But the deep and prolonged decline in energy prices ultimately made it uneconomic to keep many of the rigs in operation, and the number of active rigs eventually shrank to a low of 404 in May 2016—less than a quarter of its one-time high.
 
OFS firms, which provide the technology and data critical to identifying promising drilling sites and the equipment used on the rigs themselves, saw their business evaporate along with the rig counts. The VanEck Vectors Oil Services ETF, which tracks the value of 25 of the largest U.S.-listed OFS firms, lost nearly 24 percent in 2014 and another 26 percent in 2015.

Global equities have had quite the comeback since the Brexit referendum. After plummeting more than 5 percent in the two trading days following the surprise “Leave” result of the June 23 referendum, the S&P 500 took just ten days to reach a new all-time high. The Euro Stoxx 50 and MSCI All-Country World Index have likewise climbed, with both up more than 10 percent from their post-Brexit troughs. Can the rally continue? Equity strategists on Credit Suisse’s Global Markets team believe that it will, and that the upward march in global stocks will continue into 2017.
 
That optimism is rooted in good news on the manufacturing front. New orders in the U.S. boosted the Markit purchasing managers index (PMI) to an eight-month high in July, while new orders increased in 12 of 18 industries surveyed by the Institute for Supply Management. Rising new orders, combined with more than a year of inventory declines, have set the stage for a strong inventory rebuild that would drive a pickup in industrial production. Globally, new orders are at a five-month high, pointing toward a mild increase in global GDP in the coming months.
 
A combination of both committed and hoped-for fiscal stimulus measures could also spur more demand for stocks. Both Canada and Japan announced new spending plans in recent weeks, and both U.S.

It’s not shaping up to be a banner year for mergers and acquisitions in Europe. Deal value totaled about $400 billion as of July 26 and is on track to reach $800 billion by year-end, which will put it some $200 billion short of last year. And parts of the horizon beyond that aren’t exactly compelling, either: A Credit Suisse survey of European executives shortly after the U.K.’s June vote to leave the European Union found that the Brexit shock had already made business leaders more reluctant to spend. What will turn things around? In a word, China. Credit Suisse likes the prospects of a European M&A revival fueled by a country increasingly searching for investment opportunities outside its borders.
 
Chinese firms have spent $144 billion buying non-Chinese firms so far this year, surpassing the total for all of 2015 and already marking a new annual record for the Middle Kingdom before the year is much more than half over. Among European deals this year, 18.5 percent of acquirers have been Chinese, more than any other country. In February, the Swiss pesticide giant Syngenta agreed to a $43 billion takeover by the state-owned Chinese agrochemical company, ChemChina.

 
Why are Chinese companies engaging in a shopping spree when the rest of the world seems in belt-tightening mode? One way to understand it is to understand that it’s not just Chinese companies but China itself.

It’s been a good year for gold. Gold spot prices hit $1,360 per ounce in early August, up 28% percent since the beginning of the year, buoyed by low interest rates and more recently, demand from investors seeking a safe haven from Brexit-related economic uncertainty. But for equities-minded investors, it’s worth considering the miners behind the metal. Gains by gold mining stocks have outpaced those of gold prices, with the NYSE Arca Gold Miners Index up more than 125% percent year-to-date, and Credit Suisse’s Investment Solutions and Product (IS&P) team believes there’s good reason for the gold mining rally to keep rolling. In short, the industry has learned from its mistakes.
 
The last time we saw a surge in gold prices like this one was in the summer of 2011, when gold shot up from below $1,600 in June to a record $1,910 per ounce that August. It was the last leg of a years-long gold rally that started during the financial crisis in 2008. Mining companies, which hadn’t enjoyed such attention from investors since 1980, threw caution to the wind and began operating under the assumption that the high prices were going to last a while. In particular, they expanded production to low-grade mining projects that would only be profitable if gold prices stayed aloft. Then the bottom dropped out.

Around the world, central banks continue to cut interest rates and buy bonds to stimulate their sluggish economies. China is no exception to the monetary policy trend, with the People’s Bank of China cutting rates seven times since late 2014. But here’s the twist: Whereas for most corporates, borrowing costs have been falling in lockstep with central bank moves, a recent spike in defaults has left investors in Chinese corporate bonds on edge. At a time when the cost of money has been in free fall, the cost of borrowing for Chinese corporates is going the opposite direction.
 
Indeed, there are signs that a complete re-rating of Chinese corporate borrowers is upon us, as investors grapple with the creditworthiness of the country’s corporate borrowers as a whole. Bad news from one company is suddenly potentially bad news for all. In April, headline-making debt repayment problems by a government-owned railway supply company resulted in a widening in spreads even for highly rated borrowers. Lower-rated companies were hit even harder, with the spread between AA-rated and AAA-rated five-year notes climbing to a four-year high earlier this month.
 
Credit Suisse’s Global Markets team thinks this might just be the start of something bigger. The Bank believes that Chinese corporate borrowing costs have further to rise.

For Asia’s export-driven economies, last month’s Brexit vote could rub salt in a nagging wound. China’s slowdown has already hampered export sectors in countries that count the Middle Kingdom as their largest trading partner. While a Brexit-based recession that is limited to the United Kingdom would have a minimal direct impact on the region — average export exposure to the U.K. from non-Japan Asia is about 0.9 percent of GDP — a downturn that spreads to Europe would inflict two to three times more damage. Vietnam would be among the hardest hit, as exports to the European Union account for approximately 7 percent of its GDP.
 
Declining exports to Europe would compound another economic trouble spot—frustratingly stagnant private investment. Fiscal policy in the region has resulted in dramatic increases in government investment spending since 2015, but private investors haven’t followed suit. That’s at least in part because flagging exports have made businesses nervous about expanding capacity and investors nervous about funding it, according to analysts with Credit Suisse’s Global Markets team. “The common theme across the Asian economies is a high correlation between exports and private investment cycles,” say the analysts.
 
If private investment won’t ride to the rescue of ailing Asian economies, what will? Credit Suisse believes that monetary policy easing will be key.

By one measure of economic success, Asia’s largest frontier markets rank below most of their global peers. Pakistan, beset by social welfare challenges such as illiteracy, has a per-capita GDP of $1,300. Vietnam, which didn’t begin to transition to a market economy until the late 1980s, does better at $2,100. By comparison, Africa’s largest frontier markets, Nigeria and Morocco, each have per-capita GDPs of $3,300, while those in Europe and the Middle East range between $7,800 (Bulgaria) and $43,200 (Kuwait.)
 
But when the low per-capita GDP of a frontier market is coupled with the transformation of productivity and institutions, it can lay the groundwork for significant economic growth. And a handful of Asian frontier markets, including Mongolia, Sri Lanka and Vietnam, offer a mix of compelling growth prospects for savvy investors, while improvements in Pakistan have even led one index provider to recently upgrade the country from frontier market to emerging market status. How, then, does one practice savvy investing out on the Asian frontier? Credit Suisse believes that investors need to pay attention to the following factors if they’re interested in participating in some of the most dynamic growth stories in Asia.
 
Government reforms. Pakistan’s reclassification as an emerging market by index provider MSCI is a comeback of sorts.

In the years following the global financial crisis, the world’s leading economies have found relief through aggressive monetary policy. But with interest rates slashed to historic lows and central bank balance sheets significantly larger as a percent of GDP than they were before the financial crisis, policymakers will need alternatives to interest rate cuts and conventional quantitative easing when the next recession comes along. U.S. central bankers have cut real interest rates between four and five percentage points during previous recessions, but that would be a difficult feat to pull off in today’s world, with a fed funds rate between 0.25 percent and 0.5 percent.
 
One novel idea is what Credit Suisse analysts are calling fiscal QE, a not-entirely-literal catchphrase to describe expansionary fiscal policy in which central banks play an important role. Credit Suisse has identified several potential flavors of such, ranging from the very likely (coordinated monetary and fiscal policy) to the very difficult, including “helicopter money” policies, in which central banks either buy government bonds with very long maturities to finance government spending or lend to commercial banks at negative rates with a mandate that the banks then lend to consumers and corporations interest-free.

In his 1970s boat guide, “The Proper Yacht,” physicist-turned-yachting expert Arthur Beiser declared that, “no object created by man is as satisfying to his body and soul as a proper sailing yacht.” Exactly what constitutes a proper sailing yacht is a matter of personal preference. Today’s elites are clearly smitten with gleaming superyachts with onboard theaters and helipads. But others feel the call of the sea is best answered by a boat of an earlier vintage. What they lack in modern glitz, classic wooden vessels more than make up for in elegance and style. The challenge is ensuring that such boats are still fit for traversing the waves. That’s where William Morong of Rockport, Maine comes in.
 
Morong’s Yachting Solutions sells new yachts, but he and his crew are most passionate about finding and restoring decades-old classic yachts—projects that can take months or sometimes years to complete. Though Morong sometimes performs museum-quality “Concours” restorations, his work typically includes the addition of more modern performance and safety features that don’t detract from a boat’s classic aesthetic. Morong recently sat down with The Financialist to talk about life in the old boat business.
 
TF: How did you get into the classic boat business?
 
WM: Growing up in Maine, I always had an affinity for classic yachts, and wooden boats in particular.

Is the U.S. housing recovery still on firm footing? Your view on that will depend on which indicators you choose to believe. For the optimists: New home sales spiked 16.6 percent to 619,000 in April, the highest level recorded since early 2008, while the latest data from the Case-Shiller 20-City Composite Home Price Index shows that prices are 5.4 percent higher in the country’s major cities than they were a year ago. And for the pessimists: April housing starts, though up 6.6 percent from the month before, were down 1.7 percent from the previous year to 1.17 million. The number of starts is only in line with the average of the past 12 months, suggesting that the market lacks momentum.
 
Historically, housing starts have been a leading indicator of the housing market and economic health in general. As the U.S. housing bubble began to deflate in early 2006, housing starts initially experienced a steeper decline than home prices, which suffered a much more dramatic decline a year later.
 
This time around, however, the recent sluggish pace of construction may have created some pent-up demand, particularly for less expensive homes.

The bigger they are, the harder they fall. Tech investors learned that the hard way after Alphabet, Apple, and Microsoft missed first-quarter earnings expectations. Share prices for all three companies dropped in late April and have yet to return to their pre-earnings highs. Are the results a harbinger of poor results for the rest of technology? Credit Suisse says no.
 
For starters, the average tech company already reporting has beaten earnings expectations by 4.3 percent on an equal-weighted basis, suggesting that the biggest names with disappointing results were outliers rather than standard-bearers. What felled the big guys? Wall Street’s unrealistic expectations. “It’s obvious that the three IT majors have become a victim of too-high investor expectations rather than a weak sector trend,” says Ulrich Kaiser, a senior information technology research analyst at Credit Suisse.
 
Indeed, Kaiser sees multiple investment opportunities, ranging from the success of companies using disruptive technology to upend traditional businesses, to the potential of M&A deals, the volume of which rose 8 percent in the first quarter of this year according to EY. Share buybacks and dividends, meanwhile, continue to bolster shareholder returns. In the last quarter of 2015, IT firms in the S&P 500 paid out $16.6 billion in quarterly dividends, second only to financials, and spent $33.

After a multi-year period of recovery from the 2008 financial crisis, Europe’s economy is finally on the road to expansion. In 2016, Eurozone GDP has returned to above its pre-crisis peak, domestic demand is strong, and employment is growing. The European Central Bank is trying to keep the momentum going with a March interest rate cut and increases in asset purchases.
 
And yet the continent’s equities are sputtering. As of early May, the MSCI European Economic and Monetary Union Index was down 3 percent for the year, compared to just a 0.03 percent drop for the MSCI World Index. European equity funds have experienced significant outflows of late after a period of consistent inflows since late 2014. Looking to the future, a recent Credit Suisse survey found that less than 40 percent of investors believe that continental Europe will be the best-performing region in the coming quarter – down from a high of nearly 70 percent late last year.
 
What’s changed? A key headwind hampering the performance of European equities has been the strength of the euro. On a trade-weighted basis, the currency is up 5% from its 2015 trough, and that rise has driven earnings — and earnings estimates — downward. Credit Suisse analysts expect the euro to continue rising, which will likely result in continued declines.

This year, all the world’s a stage…for mergers and acquisitions. So far in 2016, cross-border M&A has made up about 45 percent of total deal-making volume, well above the historical average of about 30 percent, Robin Rankin, Credit Suisse’s Co-head of Global Mergers and Acquisitions, noted at a recent M&A panel discussion hosted by the Milken Institute.
 
A recent survey of executives in 45 countries suggests that there are more cross-border deals to come. The survey, conducted by EY (formerly Ernst & Young) found that 74 percent of companies have eyes on making foreign acquisitions in the next 12 months. M&A is “the only way to achieve growth in many corners of the world,” said panelist Steve Krouskos, Deputy Global Vice Chair, Transaction Advisory Services at EY.
 
The panelists agreed that activist shareholders are an important part of the M&A landscape. “About 40 percent of companies that encounter activism end up doing some form of M&A transaction,” Rankin said. She added that activism is emerging more and more outside of the U.S., especially in Asian countries such as Korea and Japan as well as in Australia.
 
Sometimes simply the potential of an activist campaign may spur corporate boards to make investments.

At first glance, U.S. equities seem to be turning a corner: They’ve rebounded from their February lows, bolstered by signs that China’s economy is stabilizing, dovish signals from the Federal Reserve, and a recovery in oil prices. And the majority of U.S. companies have beat first-quarter earnings and sales expectations. But that’s all in the past. Looking forward, Credit Suisse believes that several challenges will lead to choppy market conditions for the remainder of the year.

Investors pulled nearly $10 billion from U.S. equity funds in March, marking the reversal of a trend that had been improving since the start of the year. (January and February outflows totaled just over $5 billion and just under $1 billion, respectively.) Large-cap equity funds actually started the year with inflows: Investors directed more than $1 billion in January and again in February to large-cap funds. But in March, it all changed: $8 billion was withdrawn from large-cap funds during the month.

And yet, U.S. stocks still aren’t cheap. Credit Suisse’s multi-factor S&P 500 valuation model indicates that stocks are trading 1.38 standard deviations above their 30-year average. Historically, valuations near that level have portended returns in the low single digits over the following 12 months.

How do you spot a nation with high potential for economic growth? Look for countries with very low per-capita GDP and where both institutions and the workforce are undergoing a transformation. Important emerging markets such as China and India met these criteria in the past, paving the way for high growth rates for more than a decade for each. But growth in emerging markets has slowed considerably as of late, and investors looking for high potential growth are increasingly turning to frontier markets to find it.
 
Smaller and less liquid than their emerging market counterparts, the 34 frontier markets in the S&P Dow Jones Indices Frontier Market Index have at least two of the following characteristics: a market capitalization greater than $2.5 billion, domestic trading that exceeds $1 billion a year, or a market capitalization to GDP ratio of at least 5 percent. Credit Suisse’s Demographics Research team recently analyzed twelve frontier economies looking at demographic, economic and social factors that investors need to pay attention to if they want to turn to those markets.
 
Population Growth. High population growth leads to a larger working-age population, which under the right circumstances can provide a powerful boost to GDP. Population growth rates have declined in all 12 markets since the early 1980s, but some are more robust than others.

Consumers in emerging economies can be forgiven for having a less than rosy outlook these days. Currency weakness, market volatility, and in some countries, political risk, drove declines in consumer sentiment throughout much of the developing world in 2015, according to the Credit Suisse Research Institute’s 2016 Emerging Consumer Survey. In the long-term, however, consumption in the emerging world is still a growth story – one driven by an emerging middle class and optimistic young consumers whose tastes will shape consumption patterns for years to come.
 
Over the last two years, 90 million households in the nine countries the CSRI surveyed in late 2015 have joined the ranks of the middle class, defined as having a monthly income equivalent between $1,000 and $2,000. With 414 million households in the survey region still earning less than $1,000 a month, the middle class has plenty of room to expand even further.
 
The massive migration into middle-income territory could eventually give emerging market consumers buying power that rivals that of consumers in developed countries. In 2010, annual consumption in emerging markets was $12 trillion — less than a third of the world’s total consumption. By 2025, however, emerging market consumption is expected to grow to $30 trillion, or nearly half the global total, according to projections by the McKinsey Global Institute.

It’s been decades since conglomerates were the toast of American commerce. Many that formed in the 1960s and 70s broke up in the decades that followed, as the trend of diversification gave way to specialization. But in China in 2016, enthusiasm for the conglomerate form is at an all-time high, particularly among Internet companies. Last year, web titans Baidu, Alibaba, and Tencent invested a total of $29 billion in 134 businesses.
 
Alibaba has been the most aggressive of the three, investing more in 2015 than Tencent and Baidu combined through acquisitions and minority stakes in companies ranging from a language translation site to a home rental service. But they’ve surely bumped into each other outside some conference rooms. Alibaba and Tencent invested $1.25 billion and $350 million, respectively, in minority stakes in the food delivery site ele.me and $2 billion each in Didi Kuadi, China’s largest car-hailing app.
 
Alibaba isn’t abandoning its core e-commerce business, but its e-commerce strategy is evolving. One of its biggest deals last year was a $4.6 billion investment in the brick-and-mortar electronics retailer Suning. Suning’s distribution network will help deliver Alibaba’s orders and stock some Alibaba products in its stores, while Alibaba will host Suning’s first online store on its Tmall shopping portal.

Disruption is as old as commerce, but the pace is accelerating of late. The rise of the sharing economy threatens incumbents in retailing, banking, and car insurance, while new financial and environmental regulations are increasing costs for banks, utilities, and autos. Chinese businesses, their home country’s economic troubles notwithstanding, pose an increasing competitive threat in the global steel, aluminum, railway equipment, power generation, and bulk chemicals industries.
 
But some industries are less vulnerable to disruption than others.  For investors looking for companies with better-protected flanks, equities strategists in Credit Suisse’s Global Markets division are looking into telecommunications and tobacco, both of which are also in a position to benefit from industry-specific tailwinds. (To learn more about the disruptive threats facing global companies, as well as which industries are most vulnerable to those threats, see our companion story.)
 
Telecommunications
 
While the advent of the smartphone and the app economy that came with it has put pressure on a number of industries, it’s been great for telecoms, which benefit handsomely from rising data usage.

It’s been a tough couple of years for value investors. Over the long term, value stocks have outperformed momentum and quality in most regions, sectors, and size segments. Since 2014, however, the opposite has been true. Between the first quarter of 2014 and the first quarter of 2016, momentum investing has proved dominant. Cumulative excess returns for momentum stocks reached 12.9 percent during that time, while so-called “quality” stocks delivered 4.7 percent and value stocks just 0.8 percent. In Europe, the divide is even wider, with momentum delivering excess returns of 28 percent, quality at 14 percent, and value at 3 percent.
 
Why has value fallen out of favor? Like many stories of asset underperformance, it begins with one of outperformance. Between late 2011 and 2013, value investing was in vogue, in large part due to the impacts of quantitative easing. The effort by the Federal Reserve, says David Rones, head of Credit Suisse’s US HOLT® Investment Strategy team, marked “the start of the monetary-policy fueled valuation expansion.” Investors, believing that the Fed’s quantitative easing portended declining risk and accelerating growth, gravitated toward the cheapest stocks that would disproportionately benefit from both. Between September 2011 and December 2013, the median price-earnings ratio for the cheapest European stocks rose from about 9 to nearly 15.

The National Bureau for Economic Research defines a recession as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.” And the question of the hour: Has the United States entered a recession? If not, is it about to? To both questions, Credit Suisse answers no. The bank’s Global Market economists expect the U.S. economy to grow by 2 percent in 2016.
 
The employment picture provides the most compelling argument against a recession. The four-week moving average of weekly jobless claims fell by 8,000 to 273,000 in mid-February, the lowest level since November. The unemployment rate, meanwhile, dipped to 4.9 percent in January, after holding steady at around 5 percent for three months, while average hourly earnings rose 0.5 percent. The retail and leisure and hospitality industries, in particular, enjoyed strong job growth. “While we may not be there yet, this is the sort of [monthly employment] report we would expect once the economy reaches full employment,” says Jeremy Schwartz, of Credit Suisse’s Global Strategy and Economics team.
 
The U.S. economy has certainly shown signs of stress in the mining and energy sectors, which are struggling with declining oil and commodity prices. A handful of U.S.

The effects of China’s economic slowdown are truly global: At the same time that investors are pulling billions of dollars out of neighboring Asian countries, Latin American countries are seeing raw materials exports to the Middle Kingdom fall sharply, and China concerns have brought volatility back to stock markets around the world and doused investor risk appetite. Could Europe be the next to be affected by sinking Chinese demand?
 
Unlike Latin America, a China-related sharp fall in exports isn’t likely in Europe. That’s not to say there aren’t European industries that are vulnerable to China’s problems. China takes 8.1 percent of Europe’s raw metals exports, 8.5 percent of its wood and paper, and 10.4 percent of raw materials used to make textiles. In Germany, 10 percent of machinery and transport exports go to China, and those China-bound machinery and transport products make up 5 percent of the country’s total exports.
 
Overall, however, Chinese demand accounts for just 1 percent of Europe’s GDP, while demand in the rest of non-Japan Asia accounts for another 1 percent. The euro area’s exports to China fell nearly 5 percent last year and yet overall exports rose 9 percent, with exports to developed economies driving much of the growth.

When it comes to global financial markets, China is in the driver’s seat. After it was reported in early January that the world’s second-largest economy grew at its lowest rate in 25 years in 2015, Credit Suisse’s Global Risk Appetite index slipped into panic mode – a rare occurrence that has typically only followed major macro events such as the failure of Bear Stearns or the U.S. sovereign debt downgrade.
 
China is currently in the midst of what might be called a triple bubble — in credit, investment, and real estate. As a result, Credit Suisse Global Markets equity analysts are watching three indicators that they feel would significantly increase the likelihood of a hard landing: property prices dropping more than 15 percent, the financial system’s loan-to-deposit ratio rising above 100 percent, or an acceleration of capital flight. None of these are the bank’s base-case scenario, however. Instead, Credit Suisse analysts expect the government to try to keep those bubbles at least partly inflated by initiating additional stimulus measures, such as cuts in taxes, interest rates, and reserve requirements for banks,
 
So what’s a nervous investor to do? Here’s what they shouldn’t do: invest in the heavy industry that drove China’s growth in recent years.

The first few days of 2016 were not kind to European and American equities: They each fell 8 percent in the first nine trading days of the year, the worst-ever start to a new year. But the year’s inauspicious beginning isn’t necessarily a sign of things to come — at least, not for European stocks. From the potential for further easing by the European Central Bank to a resilient regional economy, a host of factors play into an increasingly promising forecast for European equities. Even though major European indices have recovered some of their 2016 losses, Credit Suisse believes these rebounds have legs.
 
News of monetary easing tends to bolster share prices, and on January 21, the ECB hinted of future easing and European stocks rose. Following its meeting, the ECB announced that it would keep its benchmark rate (0.05 percent) and overnight deposit rate (-0.3 percent) unchanged. (The announcement came a month after the central bank lowered its deposit rate from -0.2. percent to the current -0.3 percent.) Of equal importance to financial markets was the dovish message central bank president Mario Draghi delivered after the meeting. With Europe still far short of its inflation target, the bank will “review and possibly reconsider” its monetary policy at its March meeting.

There’s good reason that financial technology firms – those that provide the tools that allow consumers to save, manage their wealth, access credit, and pay for things – might pique an investor’s interest. The most important one: they have outperformed the S&P 500 for seven of the past nine years. Within the fintech universe, Credit Suisse says that payment firms are the most investable segment, due to the relatively large number of publicly traded companies of all sizes, and also offer investors a long-term growth opportunity.
 
The growth of electronic payments – i.e., non-cash payments – is a particularly promising growth story for the industry, though not by any means a new one, given the proliferation of credit and debit cards in the developed world. But an emerging leg of growth for electronic payments – and the payment firms that make them possible – lies outside of consumer card transactions. Credit and debit card-based consumer transactions account for just $4 trillion, or 5 percent, of the $78 trillion non-cash payment volume in the U.S. The other 95 percent consists of business-to-business, business-to-consumer, and wholesale payments.
 
Global banks, already a major customer for payment firms, are poised to send them even more business.

Earlier this year, when Tesla CEO Elon Musk tweeted about an upcoming product launch, the market paid attention. That tweet—which divulged only that the new product was not a car and would be unveiled April 30—sent Tesla’s shares soaring and boosted the electric carmaker’s market capitalization by nearly a billion dollars. (Tesla later revealed the new product to be a battery to power homes.) But not all dispatches from the Twitterverse carry the same weight as one from a bold-faced name such as Musk. While the use of social media to inform trading decisions has caught fire in recent years, the fact of the matter is that investors scouring new social platforms are still sifting through more useless information than anything even remotely resembling a market-moving message.
 
Sophisticated investors don’t want information from just “anyone and everyone,” said Social Alpha CEO Prem Melville, speaking at a recent Credit Suisse panel discussion on crowd-sourcing market intelligence. Melville, whose firm combs Twitter and news sources for content relevant to investors, says his clients “value information from reliable, high value sources. They’re turned off by the flood of messages by the clueless guy in his basement tweeting about his portfolio.