The troublesome combination of high inflation and reduced growth raises worries of a protracted period of stagflation, which seems more likely in 2023 if inflation is not brought under control. Speaking with Kitco News Michael Gayed Portfolio Manager at Toroso Investments, pointed out which issues inflation is causing and what other outcomes can markets expect if it’s not brought under control. Gayed argued that a sovereign debt crisis due to a rise in treasury yields could occur as other countries fail to pay back their dollar-denominated loans.
A bad situation
Furthermore, Gayed pointed out that there is apathy in economies around the world as the US dollar rallies.
Deflationary event
Gayed suggested that a deflationary event could occur if an emerging market country refuses or is unable to pay off its dollar-denominated debt, this would then lead to a sovereign default crisis. Overall, caution should be stressed to market participants as the way in which inflation will develop is still unclear; the aggressive Federal Reserve (Fed) is pushing down the prices of risky assets, but in the end, strong cash flow companies should have the advantage regardless of the environment. Buy stocks now with Interactive Brokers – the most advanced investment platform Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
