Skyrocketing fuel costs are one of the forces threatening to upend the stock market as policymakers try to navigate the US economy to a soft landing, according to Pimco’s Erin Browne.
Equity investors are failing to factor in the chances of a recession while hazards, such as higher oil prices, could drive the S&P 500 Index down roughly 15%, the portfolio manager for multi-asset strategies at Pacific Investment Management Co. said in an interview.
Browne joins a number of Wall Street prognosticators who have had to dial back expectations for a recession in 2023 amid better-than-expected economic growth. “The consumer proved to be more resilient than expected as did aggregate GDP growth, which pushed back and softened our expectation of a recession,” she said.
To Pimco, one of the reasons behind this divergence is that companies have not yet indicated that they’ve seen any real slowing in their sales. And with inflation coming down, as it’s expected to continue to do into 2024, that would help margins.
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