The last few weeks have been a busy time assembling scenarios and revised forecasts for clients and partners. Everyone is naturally keen to understand how intermediate and final demand, input costs, and the macroeconomic environment generally may evolve and impact the premium brands that we cover.
Our scenarios for a short-term supply side oil shock do not lead to big downward adjustments to our forecasts for a small, though positive, industry rebound this year as we released in January. However, scenarios for a big shift regime point to a possible return to an industry recession this year.
The markets are certainly pricing in the worst. Our FSW Markets All Luxury Index is down around 20 percent on the year as compared to a roughly 4-6 percent decline for the S&P 500 and Eurostoxx 50 and a 10 percent decline for S&P 500 consumer cyclicals.
