A “global recession depression” is unlikely to happen, but the world won’t think it can avoid one until it does, according to veteran strategist David Roche.
“The likelihood is that the world is going to worry most about recession because what you’re describing is a lot of things going wrong at the same time, and a lot of them can’t be reversed, like war,” Roche, president and global strategist at Independent Strategy, told CNBC’s “Squawk Box Asia” on Friday.
Markets worldwide tumbled in recent weeks as investors worried about a wide range of concerns, such as monetary policy tightening in the West, the impact of China’s zero-Covid policy and the ongoing war between Russia and Ukraine.
The S&P 500 on Wall Street recently posted its worst week since 2020, while the pan-European Stoxx 600 slid more than 4%, and MSCI’s broadest index of Asia-Pacific shares outside Japan declined more than 5% in the same period.
That comes after major brokers and banks were describing the market downturn earlier in the year as a “small correction,” said Roche, former global strategist and head of research at Morgan Stanley. Now, however, everyone appears to be “rivaling each other to get the headlines and say the most awful things about the world.”
“I’m not saying that’s a moment to buy, but I think it is the moment to realize that things do turn around and there are implicit mechanisms in this worldwide position at the moment which could lead us to avoid recession in places like the U.S.” Roche said.
U.S. Treasury Secretary Janet Yellen recently said during an ABC News interview that a U.S. recession is not “inevitable,” though inflation is “unacceptably high.”
“I doubt it can be avoided in Europe. But not a global recession depression, but the world is going to worry about that the most I think for the next couple of months at least,” Roche added.