- Gabriela Santos, JPMorgan strategist, stated that the risks of a recession were “extremely high”, warning that a downturn could occur in mid-2023.
- According to CNBC, the odds of a recession today are 50%, as compared with normal levels of 15%.
- Santos emphasized the need to price in risks before a market rally can be sustained.
Gabriela Santos, JPMorgan Asset Management strategist, says that markets must price in the very high risk of a recession before a sustained stock rally can form.
Although a soft landing may still be possible, she estimated that the chances of a recession are at 50% today, as opposed to 15% for normal levels.
Santos, in an interview on Tuesday with Reuters, stated that “we would still place the odds at over 12 months as extremely high versus what’s usual.” CNBC.
Despite the fact that there were some strong economic data pockets, she predicted that indicators will eventually fall, with a recession likely to begin in mid-2023.
Stocks have seen a surge in recent months as investors rekindle their hopes that the Fed will slow down its rate hikes. However, this may not be the case. Investors hope to reap the rewards for – particularly if markets aren’t pricing in those elevated recession risks, Santos said.
“I believe it will be a sustained market rebound, but we need to embed that possibility more into earnings estimates and credit spreads,” she stated, echoing Morgan Stanley. Mike WilsonHe pointed out that positive earnings would mask future market headwinds. “So it is too early for us here to meaningfully dial up the risk.”
Others Wall Street commentators are also available sounding recession alarmsA warning about the Fed could tighten the economy. Inflation reached an all-time high of 41 years and the central bank has increased its benchmark rate to 3%-3.255%.
Fed officials are expected Wednesday to announce another 75-basis point rate hike. Expectations are that the central bank will continue to hike to 4.6%.
Strong consumer spending and strong a still-hot labor marketThese indicators are bolstering the economy. US Treasury Secretary Janet Yellen noted last week that they weren’t seeing any. Recession signs.
