A recession in the U.S. is inevitable and the sooner, the better, a panel of veteran money managers and asset owners said on the closing day of the Milken Institute's 2022 Asia Summit in Singapore Friday.
Even as U.S. markets this week met the definition of a bear market, falling back more than 20% from recent highs, participants on a global investment outlook panel insisted that investors haven't begun to discount the impact of a coming slowdown in corporate earnings.
They predicted a drop in earnings as the economy slows could shave a further 10% to 25% from U.S. benchmark stock indexes.
For now, the market still seems to be anticipating that the U.S. Federal Reserve will be able to "tighten a little bit" and bring inflation down to target without scuttling growth, said Jeff Gardner, senior portfolio strategist with Westport, Conn.-based hedge fund giant Bridgewater Associates LP.
Mr. Gardner, speaking on the panel, said a recession is inevitable "at some point" but the timing will depend on whether the Fed opts to live with higher inflation or drive the economy into recession to staunch price rises.
From that perspective, the sooner a recession comes, the better, Rohit Sipahimalani, chief investment officer of Temasek, the S$403 billion ($297.7 billion) Singapore government-owned investment company, told the panel audience.