As the case for a UK and global recession grows the nearer we approach 2023, the equities markets have yet to price an economic downturn in.
That is according to Chris Watling, chief executive and chief market strategist at respected financial market research house Longview Economics.
As such, Watling’s advice to investors is to start rethinking their positions.
“Having been tactically long in US equities since 21st June 2022, we recommend closing that overweight position and starting to build tactical underweight equity positions,” wrote Watling.
He added: “Despite the view of some in markets that the recession/earnings downgrade is already priced (and therefore the market will look through those downgrades when they happen), our view is that the past six months’ bear market has been primarily about a ‘Taper Tantrum’”.
Other key market risks cited by Longview’s analysts include US/China and Russia/Ukraine geopolitical volatility, high European gas prices, and an equity market bubble.