US Will Dodge Recession and Markets Will Rally, Ariel’s Rogers Says

(Bloomberg) — The US will avoid a recession this 12 months because the Federal Reserve controls inflation, giving the stock market a lift, in accordance with John Rogers, chairman and co-chief executive officer of Ariel Investments.

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The Dow Jones Industrial Average will likely rally 10% or more in 2023 and the S&P 500 Index greater than that, Rogers told business leaders on the Executives’ Club of Chicago’s annual outlook event. Last 12 months he accurately forecast a pointy increase in inflation and that Bitcoin was a bubble that may burst.

“We’re rather more optimistic today than a 12 months ago,” Rogers said. “The Fed is doing the precise things on the subject of money supply.”

Rogers, a veteran of the fund industry, said the worst is now behind us and the bad news is baked in already. He expects the Fed will get inflation back to the 4.5% level.

His views contrast with the opinion of three top Chicago economists, who earlier this week forecast a gentle recession by the top of the 12 months. Professor Randall Kroszner, a former Fed governor, forecast rates of interest will peak at 5.5% and the bank will keep them higher for longer, he said at a University of Chicago Booth School of Business event on Tuesday.

Diane Swonk, chief economist at KPMG, also said on the Executives’ Club event that she expected a gentle recession.

Rogers said cyclical stocks would do well, and added he was “all in” on US equities. He added that auto-related firms were “well-positioned” and that anything to do with housing and real estate would do “very well.” Rogers can also be favoring promoting stocks and the leisure sector.

“Equities in America is the place to be,” he said, adding the nation all the time finds a strategy to bounce back from its problems.

He cautioned against Chinese markets on account of an actual estate bubble there and said Bitcoin prices could fall further.

“I don’t see any real value there,” he said of the cryptocurrency.

Chicago-based Ariel was founded in 1983. The firm sells mutual funds and other investment vehicles, with a deal with value investing.

(Updates with Rogers views on inflation and stock sectors)

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