- Bob Parker, senior adviser at the International Capital Markets Association, said investor confusion seemed to be becoming a major theme in financial markets.
- Fears of a coming recession seem to be growing, as many economists have predicted a period of contraction in 2023.
- “I think there’s now a general pessimism about the direction the global economy is going,” Giles Keating, head of Bitcoin Switzerland, told CNBC’s “Squawk Box Europe” on Thursday.
Market participants face the risk of ever-higher inflation and a bleak economic outlook, which strategists say is fueling a heady mix of confusion and pessimism.
It comes as investors watch for a fresh batch of US economic data that will provide further clues as to whether inflation is slowing and whether the Federal Reserve is likely to announce another interest rate hike at its next meeting. may’s beginning.
Bob Parker, senior adviser at the International Capital Markets Association, said investor confusion seemed to be becoming a major theme in financial markets.
“If you look at surveys of investor positioning and thinking, there’s huge confusion right now,” Parker told CNBC’s “Squawk Box Europe” on Wednesday.
“Is inflation falling rapidly or not? To what extent is the US economy and for that matter the European economy slowing down? And what are the risks of recession? said Parker.
“And so given those uncertainties, I think investors are de-risking for the time being and are, frankly, making decent profits year-to-date.”
Parker said many investors were taking profits on the “good returns” seen year-to-date in the US and Europe because “obviously first quarter earnings are going to be very negative.”
Traders work on the floor of the New York Stock Exchange on April 21, 2023 in New York City.
Spencer Platt | Getty Images News | Getty Images
Looking ahead, Parker said the theme for May and June would likely be a rotation into underperforming stocks year-to-date, “which relate to value and defensive sectors and profit-taking on sectors.” cyclical and growth”.
Value stocks are those that are believed to be trading below their true value, while defensive stocks generally offer stable profits regardless of the state of the stock market.
Cyclical stocks, considered the opposite of defensive stocks, generally follow economic cycles. Growth stocks refer to companies that are expected to outperform the overall market.
Fears of a coming recession seem to be growing, as many economists have predicted a period of contraction in 2023.
Earlier this month, the International Monetary Fund released its weakest medium-term global growth expectations in more than 30 years.
The Washington, D.C.-based institution said global growth is expected to be around 3%, meaning the global economy is not on track to return to pre-Council rates in the medium term. beginning of the coronavirus pandemic.
Gita Gopinath, the IMF’s first deputy managing director, has since said the risks of a so-called “hard landing” remain, even as the US economy may avoid a recession.
When asked if a downward trend in oil prices could be interpreted as a grim economic barometer, Giles Keating, head of Bitcoin Switzerland, told CNBC’s “Squawk Box Europe” on Thursday: “I think there is now a general pessimism about the state of the global economy going forward.”
He added: “I don’t think things are that bad. There’s too much worry about a problem with a bank now – and that’s not the same as a problem in the sector. banking, so I think oil is exaggerating the pessimism here.”
His comments referred to another sharp decline in First Republic stocks. The troubled San Francisco-based lender was seen by investors as a risky bank after the collapse last month of Silicon Valley Bank, which had a similar financial profile.
– CNBC’s Alex Harring, Hakyung Kim and Jesse Pound contributed to this report.