Milken Asia Committee sees recession in the US as inevitable

“If you don’t have it and it kind of continues,” Sipahimalani said, inflation could drop a little bit to come back up again in 2024, which is reminiscent of what happened in the 1970s.

“So the best possible outcome is that the Fed keeps its course and really crushes inflation. And if that leads to a recession, and we think it’s going to happen, so be it,” he said, adding, “You’re basically going to take the pain.”

With the big drop in earnings likely to accompany the recession, Gardner said, “it’s not hard to imagine another 20% to 25% drop for global stock markets.”

Mr Sipahimalani said a case could be made for a milder recession, with strong consumer balance sheets, and a general lack of excessive leverage for well-capitalized companies and banks likely to limit further declines in the stock market from current levels to 10% or 15% .

He said the big-picture themes that have guided Temasek’s investments over the past five years — digitization, longer life, sustainable living and the changing nature of consumption — remain “relevant for the long term.”

It will continue to invest in it, Temasek said, “with some nuances.”

One is that everything must now be seen through a geopolitical lens, Mr. Sipahimalani said. For example, he noted that in previous years, Temasek could invest in a biotech company in China on the basis of a huge opportunity in the local market, complemented by relationships with multinational companies for sale in the United States as well. Today, he said, amid tensions between the United States and China, this external component cannot be relied upon.

That, he said, made Temasek focus more on “large local markets or stand-alone companies in a particular sphere of influence.”

Returning to the issue of inflation, Mr. Sipahimalani said that the fact that public markets as well as private markets have not yet begun to deal with the possibility of a profit cut “makes us more cautious but once that starts pricing, I think we will do our best to continue investing” along with these trends. .

from San Jose News Bulletin https://sjnewsbulletin.com/milken-asia-committee-sees-recession-in-the-us-as-inevitable/