Wall Street Experts Ridiculed for Inaccurate 2023 Predictions

As 2022 came to an end, gloom was the mood among most asset managers and American investment banks. The nearly unanimous conviction was that a deep recession would hit the United States in 2023. This, due to the aggressive monetary tightening decreed by the Fed to curb rampant inflation. The most listened-to experts on Wall Street, predicted difficult times for the financial markets. But their predictions proved to be disastrously wrong.

Predominantly Pessimistic Predictions in an Anxiety-Inducing Context

At Morgan Stanley, Mike Wilson, known for his bearish stances, confidently announced the imminent vertiginous plunge of the benchmark S&P 500 index, which he saw falling by more than 25%.

A few streets away, at Bank of America, Meghan Swiber and her colleagues assured their clients that the yields on U.S. Treasury bonds were going to collapse, as the bond market was seen as the ideal safe haven during a recession. Meanwhile, Goldman Sachs, through the voice of its expert Kamakshya Trivedi, recommended betting on a rebound of Chinese assets. Believing that the Middle Kingdom would finally emerge from its languor after years weighed down by Covid-related lockdowns.

On all fronts, Wall Street’s projection was the same: U.S. stocks would fall. Bonds would be the king of investments and China was expected to be the big winner after a troubled period.

A Reality That Turns Into a Fiasco

Except that the reality of 2023 would turn out to be the opposite of these doomsayers’ apocalyptic predictions. Against all odds, and despite the Fed’s continual rate hikes, U.S. stocks experienced a prosperous year. The S&P 500 eventually taking off by nearly 20% over the year.

With the return of inflation and the Fed’s policy reversal, interest rates rebounded sharply. Consequently triggering a drop in bond prices. Treasury bonds were far from playing their expected role as a safe haven.

Finally, in China, reality once again ridiculed the anticipations of Wall Street. The endless lockdowns decreed by the authorities as part of the zero-Covid policy plunged the Chinese stock markets, contrary to the rebound fantasized by American experts.

Across the board, whether it’s stocks, bonds, or emerging markets, America’s top financial experts completely failed in their predictions, victims of their visceral pessimism. In the end, 2023 will remain a dark year for the credibility of Wall Street’s most eminent strategists, incapable of anticipating the powerful rebound of U.S. stocks.