In 2023, stagflation will rule

According to investors, stagflation will pose a key threat to the global economy in the coming year. They also believe that after this year's sell-off, it is too early to expect a rally in the markets.

Nearly 50% of the 388 surveyed expect to see continued high inflation, as well as a continuation of the trend with a slowdown in the GDP growth worldwide in 2023, according to a recent MLIV Pulse survey. A deflationary recession is the second most popular scenario. At the same time, economic recovery in a high-inflation environment is considered as the least likely.

According to Nicole Kornitzer, the Paris-based portfolio manager of the Buffalo International Fund at Kornitzer Capital Management Inc., which controls almost $6 billion, the coming year will also be challenging. Moreover, she added, stagflation is certainly the forecast for today.

At the same time, the expectations of about 60% of respondents are associated with the upcoming weakening of the US currency in a month. The current situation can be contrasted with the previous month, in which about 50% of survey participants reported that they would approach the November Fed meeting with a long position on the dollar.

Over 50% of those surveyed anticipate that the S&P 500 will end the coming year within 10% lower or higher relative to the current level, which coincides with the forecasts of Wall Street analysts. Among those who share the view that the S&P 500 will remain near the same level a year later are strategists at Goldman Sachs Group Inc., Morgan Stanley and Bank of America Corp.