A probability model run by Ned Davis Research found that there’s currently a 98.1% chance of a global recession in 2023. Legendary investor Stanley Druckenmiller echoed this sentiment, saying he’d be “stunned if we don’t have [a] recession in ’23.” Fox Business says that he thinks the Fed’s plan to fight inflation will cause a recession and that the financial markets could be stuck for a decade as a result.
CNN Business/Matt Egan
There’s a 98% chance of a global recession, research firm warns
Warning lights are flashing in the global economy as high inflation, drastic rate hikes and the war in Ukraine take their toll.
There is currently a 98.1% chance of a global recession, according to a probability model run by Ned Davis Research.
The only other times that recession model was this high has been during severe economic downturns, most recently in 2020 and during the global financial crisis of 2008 and 2009.
“This indicates that the risk of a severe global recession is rising for some time in 2023,” economists at Ned Davis Research wrote in a report last Friday.
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Fox Business/Megan Henney
Stanley Druckenmiller sees high chance of recession in 2023: ‘We are in deep trouble’
Legendary investor Stanley Druckenmiller sees the Federal Reserve triggering a recession with its inflation fighting policy and warns that financial markets could stagnate for a decade as a result.
“I will be stunned if we don’t have recession in ’23,” Druckenmiller said Wednesday at CNBC’s Delivering Alpha Investor Summit in New York. “I don’t know the timing but certainly by the end of ’23. I don’t rule out something really bad.”
Druckenmiller, who runs Duquense Family Office, a wealth manager with more than $1.3 billion of assets under management, pointed to the extraordinary quantitative easing and zero interest rates over the past decade as the driving forces behind the looming recession
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CoinDesk via Yahoo Finance/Helene Braun
The Fed May Not Be Able to Pivot Even If It so Desires
With the global economy teetering and markets in turmoil – the recent crash of the British pound and bond market being the latest examples – central banks are facing an acute dilemma they haven’t dealt with for a long time: choosing between price stability – tightening monetary policy to keep inflation from spiraling out of control – and financial stability – keeping financial markets from seizing up.
The U.S. Federal Reserve has pledged to keep hiking interest rates until inflation returns closer to the bank’s target of 2%. But that might mean the nearly unthinkable prospect of pushing the financial system into the kind of serious, panic-level trouble reminiscent of the global financial crisis and the COVID-19 pandemic.
American markets are undeniably in stress right now. Bitcoin (BTC) and ether (ETH) are down more than 50% for the year, the Nasdaq 100 has lost 30% of its value and the S&P 500 has shed 22%. Supposedly a place to hide during asset crashes, the bond market – as represented by the “risk-free” 20-year U.S. Treasury bond – has underperformed the S&P, losing 30% in 2022.
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