As the Fed begins to win their battle against inflation, the stock market will rally and the U.S. will dodge a recession, says John Rogers, chairman and CEO of Ariel Investments, according to an article in Bloomberg. Rogers, who made the remarks at the Executives’ Club of Chicago’s yearly outlook event, predicts that the Dow Jones Industrial Average will surge 10% or more this year and the S&P 500 will rise even more than that. Saying that he is “much more optimistic today than a year ago,” Rogers added, “The Fed is doing the right things when it comes to money supply.” With the economy’s worst days now behind us, all the negative factors are already being priced in, Rogers maintains. He believes the central bank will be able to cool inflation down to 4.5%.
But Rogers’ optimism is contradicted by other well-known Chicago economists, including Professor Randall Kroszner who predicts that interest rates will peak at 5.5% and stay there for a while, propelling the economy into a shallow recession by year’s end. Meanwhile, chief economist at KPMG Diane Swonk, speaking at the same Executives’ Club event as Rogers, also forecast a mild recession this year, Bloomberg reports.
Rogers pointed to cyclical stocks and called equities “the place to be” in the U.S. He highlighted auto-related businesses as a good bet, as well as anything in the housing and real estate sectors. He dismissed crypto as having no “real value” and warned that Chinese markets could see a collapse in a real estate bubble. But America, he said, always manages to bounce back after a troublesome time.