AI models point to recession, but quants won’t trade on them

Predicting the odds of a recession, and how markets will respond, is still a step too far for machines

AI recession

The world’s economists put the likelihood of a US recession at 44% earlier this month, a number not seen outside of actual recessions. AI machines, too, are detecting signals of a slump.

Allianz Global Investors’ statistical systems for detecting recessions, built using artificial intelligence and machine learning, are currently pointing to “a very high level of recession risk,” says Michael Heldmann, the firm’s chief investment officer for systematic equity.

“If you take out the Ukraine war

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