Sébastien Page

speaker

82 appearances 1 recordings 1 series first heard Jan 2023 last heard Jan 2023

Sébastien Page’s voice in public audio — every appearance, attributed to the second.

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WSJ Your Money Briefing · Stock Market in 2023: What to Expect · 9 Jan 2023 podcast

Commodities are hard to predict, but services, when you look at the housing component, are definitely coming down.

Now, this is a bit technical, but we're going to have a problem because we're forecasting housing prices to be down 7% this year.

But we're also forecasting that shelter inflation is actually going to be up 5%.

And that's because shelter inflation is based on rents, which renew only once a year.

And there are other lags in the data.

So that's a bit complicated.

But for all your listeners watching inflation numbers, this is going to actually keep inflation a bit sticky, but it's kind of artificial.

If I look at how we're positioned tactically in our portfolios, we're still defensive.

JR, I'm a reluctant bear.

I don't like being bearish when markets are already down by so much and we've already priced in a big rate shock.

The problem is what we were just talking about, the recession risks rising.

Stocks are more expensive now than they were at the beginning of 2022 if you adjust for the level of rates.

And earnings expectations are positive for this year.

So if we're going to get a recession, you would get a drop historically in earnings of 10%, 15%.

The forecast is for earnings to be up 4%.

So all that considered, we're actually underweight stocks.

And we're actually back to neutral on bonds, because if we're going from inflation risk, which is bad for bonds, to growth risk, then bonds and treasuries can reassert themselves as a diversifier of risk in the portfolio.

Yeah, that's a really good question, right?

Because, look, the rate shock is mostly behind us, and the rest is priced in up to about 5% Fed funds rate.

So markets should now be less sensitive to the Fed.

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