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A $1.8 trillion investing behemoth explains why the next recession will be an entirely different beast — and outlines what traders can do to prepare

2018/6/8

Pacific Investment Management Company (Pimco) just published a secular outlook spanning the next three to five years.

The firm argues the next recession will be different than the last, and makes recommendations around what investors can do to prepare for the inevitable meltdown.

Enjoy the strong economy and its accompanying asset returns while you can, because a recession is coming. And when it does, it's going to be an entirely different animal.

That was the message delivered by Pacific Investment Management Company (Pimco) on Wednesday as the firm published a secular outlook spanning the next several years.

While Pimco doesn't see a recession posing an imminent threat, it expects to see one sometime in the next three to five years. This has become the consensus view held by many market experts, and Pimco takes it a step further by outlining what will vary from history this time around.

"While all of this is highly speculative, we lean toward forecasting a shallower and longer, call it wok- or saucer-shaped, recession rather than a deeper but shorter V-shaped recession," Joachim Fels, the firm's global economic advisor, and Andrew Balls, its chief investment officer of global fixed income, wrote in the report. "Markets do not seem to be pricing in this risk, judging by risk spreads and volatility."