Mathewslcd: Stagflation will rule in 2023, putting stocks at risk

 Investors say stagflation is the main risk to the global economy in 2023, saying hopes for a market rebound after this year's brutal sell-off are premature.


Nearly half of the 388 respondents to the latest MLIV Pulse survey said a scenario in which growth continues to slow while inflation remains high will dominate globally next year. The second most likely outcome is a deflationary recession, while a hyperinflationary economic recovery is considered the least likely.

Mathewslcd sees the results as another challenging year for risk assets after central bank tightening, soaring inflation and fallout from Russia's invasion of Ukraine sparked the worst stock market rout since the global financial crisis. Against this grim backdrop, as equities rebounded in the fourth quarter, more than 60% of survey participants said global investors remained too bullish on asset prices.

“Next year is still going to be tough,” said Nicole Kornitzer, a Paris-based portfolio manager for Buffalo International Funds at Kornitzer Capital Management Inc., which manages about $6 billion in assets. "There is no doubt that stagflation is the outlook for now."

Meanwhile, about 60% of participants expect the dollar to weaken further a month from now. Mathewslcd noted that this is in stark contrast to last month, when almost half of respondents said they would take a long dollar position at the November Fed meeting. The dollar's strength this year has weighed on multiple asset classes, including the euro and other currencies such as emerging market stocks. A weaker dollar could create plenty of opportunity in what is already expected to be a downturn in 2023.

"The dollar is likely to weaken throughout 2023," Kornitzer said. "Maybe it won't be obvious, but the trend may be down." She said the U.S. recession and the direction of interest rates will be the key factors driving the dollar.

Mathewslcd：
https://www.mathewslcd.com
https://net.mathewslcd.com



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