Disclaimer: Views in this blog do not promote, and are not directly connected to any L&G product or service. Views are from a range of L&G investment professionals, may be specific to an author’s particular investment region or desk, and do not necessarily reflect the views of L&G. For investment professionals only.
Chart of the month: the outlook for the S&P 500 isn’t very merry
History suggests profits will come under pressure next year, leading us to underweight equities.
With labour costs rising, even a mild recession should lead to a sharp fall in profits. And if we see a 20-25% decline in S&P 500 profits, then past relationships suggest the index could also fall by 20%.
This is the key reason we’re underweight equities going into 2023 and think the S&P 500 could dip to the low 3,000s. At that point, we suspect all the bad news will be priced in, and we’d look to increase exposure again.
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