via Bloomberg
Summary:
- Despite the stock market rebound in the 1st half of 2023, Jeremy Grantham still expects a recession as soon as later 2023 and running into 2024.
- Before market declines in 2022, Grantham had warned of a drawdown in the stock market of as much as 50%.
- Grantham was characteristically critical of the fed, saying of the feds decision to stop forecasting a recession, that based on the Fed’s record, the fed is “guaranteed to be wrong.”
Full Synopsis
Jeremy Grantham joined the chorus of Gurus calling for a market downturn, despite the stock market rally so far this year. The power of interest rates rising is a slow moving influence that will hurt real estate markets and ultimately the total economy, reasoned the famed investor. Grantham believes the US may enter a recession in 2023 that runs “deep into 2024” and would have a negative impact on the stock market.
Grantham was characteristically critical of the fed, “The fed’s record on this things is wonderful. it’s (the fed is) guaranteed to be wrong.” Grantham continued to explain that the fed takes credit when asset prices go up in in a bubble, creating inflation, but doesn’t take responsibility when the bubbles pop creating deflationary recessions. Grantham has previously criticized the fed for under estimating the damage done when bubbles burst.
Grantham went on to reiterate his view that the current market represents a dangerous mix of high valuations in stocks, bonds and housing at the same time as there is significant risks in commodity prices and fed hawkishness. Grantham warned earlier in the year that stock prices could collapse about 50% from their all-time-high. Adding to his bearish tone, Grantham commented that he “doesn’t know if this is going to get out of hand like in the 30s” referring to the Great Depression.
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