- Jeffrey Gundlach, Byron Wynn and other top investors believe stocks are about to hit a rough patch.
- January saw some volatility already as investors prepare for the Federal Reserve to raise interest rates.
- Blackstone’s Wien forecast a roughly 20% drop in stocks and a flat year for the S&P 500.
January has already seen its fair share of market volatility – but some of the world’s top investors say more is on the way.
Tech stocks in particular fell at the start of 2022, as investors bet the Federal Reserve will raise interest rates aggressively over the next year, ending the era of easy money that lifted risky assets.
Investment legend Jeffrey Gundlach and Byron Wayne are among those who believe markets are on a wild ride as the Federal Reserve tries to control inflation, which is at a 39-year high. This is what they have to say.
Jeffrey Gundlach predicts an upcoming recession
“Bond King” and DoubleLine founder Jeffrey Gundlach told Yahoo Finance last week that he sees a strong opportunity for the United States to enter a recession over the next two years, as the Federal Reserve raises interest rates. He said the markets have a lot to take care of in the coming months as well.
Federal Reserve Bank [no longer] Doing quantitative easing starting in March…that’s what should worry investors, said Brian Suzy of Yahoo. Stock valuation is also worrying.
“The bond market is already showing enough of a recession indicator that by 2023 it seems very likely,” he said.
Depending on how aggressive the Fed is, a recession could occur in the later part of this year, according to Gundlach.
The investor noted that when the central bank started tightening in 2018, “we had an immediate bear market.”
Byron Wayne expects shares to fall nearly 20%
Byron Wynn of Blackstone, former head of US investment strategy at Morgan Stanley, said last week that stocks are poised for a dip in 2022.
In his closely watched Ten Prediction Note, his first point was: “Extreme volatility continues, and there is a correction approaching, but not exceeding, 20%.”
Wayne said stocks should recover, but he still expects the S&P 500 to be flat this year. It is expected that the Fed will have to raise interest rates four times.
Read more: RBC says buying these 30 high-confidence global stocks that are set to dominate the market in 2022 – including 9 that are expected to generate returns above 40% and one group of more than 200%
Jim Poulsen says correction is ‘too late’
Long-term bull Jim Poulsen and chief strategist for the Leuthold Group told CNBC in late November that he thinks stocks will fall 10% to 15% in the 2022 stock.
“We’re too late to make a correction, and we’re going to get one,” he said. “I will try to diversify away from the S&P 500, which I think may bear the brunt of it.”
He recommended that investors consider rebalancing their portfolios and move away from stocks in fast-growing technologies. Instead, they should consider joining companies that tend to do better when the economy is stronger.
Chris Harvey of Wells Fargo sees stocks fall 10% by summer
Chase Harvey, head of equity strategy at Wells Fargo Securities, predicted US stocks could fall as much as 10% before the summer, and said it would be a tough year.
“Puts are likely to be more frequent in the volatile stock market,” he said in a note published last week.
However, he said Republicans should take Congress into the midterms, setting the stage for a late rally in the S&P 500, which is usually better when the Republican Party controls the Senate.