Investors are divided regarding if the Federal Reserve can still steer the US to a gentle landing while hiking interest rates to battle inflation, which has caused turmoil on Wall Street due to the status of the economy.
In an effort to control prices during the last year, central bankers aggressively increased interest rates by 450 basis points. This action drove rates to their top levels since 2007 and had a significant negative impact on stocks and bonds.
Higher rates, say experts, might overstretch the economy and trigger a recession. Investors and commentators are split into three groups: Those hoping for a slight slowdown and steadily declining inflation, those getting ready for a more severe recession, and those who predict “no landing,” an upbeat set of circumstances where the economy keeps rumbling without decelerating at all.
Wall Street Expert: Jamie Dimon, CEO of JPMorgan
Although a gentle landing is conceivable, the JPMorgan CEO warned that the markets were in for some “bad things” in the near future. Dimon has cautioned that encouraging economic indicators, such as a solid labor market and strong customer spending, may only provide a partial picture of the state of the economy.
Kevin O’Leary, from “Shark Tank”
Investor Kevin O’Leary from “Shark Tank” maintained his optimism for the market in 2023 and argued for a soft landing. Despite continued high inflation, the US added a startling 517,000 jobs in January, exceeding experts’ projections by almost double. O’Leary also noted that consumer spending is still high.
Wall Street Expert: Wharton Professor Jeremy Siegel
Professor Jeremy Siegel, a leading economist, advised investors to temper their “tantrums” about rising inflation and said that, as long as the economy continues to be robust, the Fed may be able to prevent a recession and a slowdown.
Rosenberg Research Chief Economist David Rosenberg
Economist David Rosenberg dismissed investors’ expectations for a “no landing” scenario in a recent interview with CNBC, calling the notion that the US can maintain growth and avoid a recession or downturn a “fairy tale.”
CEO of DoubleLine, Jeff Gundlach
In spite of how severe it may be, investors should be ready for a recession, according to “Bond King” Jeffrey Gundlach.
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