After a turbulent start to the week for the equity market, CNBC’s Closing Bell Overtime interviewed Peter Cecchini, the director of research at Axonic Capital, live on Thursday, December 7, to provide insights into why he believes market volatility will continue into 2024, hinting at the possibility of a looming recession.
“As approximately thirty-three out of the past thirty-five Decembers have been positive, [the recent rally and rebound] do not tell us much, given the window dressing it points to and seasonal factors of what’s going to happen next year,” says Cecchini.
Moreover, Cecchini highlights that despite the current rally in small caps, their resurgence hasn’t matched typical end-of-year strength, attributing this to persistent financing needs amidst a heightened rate environment. According to Cecchini, this, coupled with the performance of high-yield bonds, adds weight to the potential indications of an impending downturn.
“Small caps, CDX high yield, they are telling you that storm clouds are on the horizon. Our view for next year is, as would be normal after a series of hikes as aggressive as we’ve seen, that we are going to see a significant slowdown,” he explains.
If you have any questions about Axonic’s outlook for 2024 and what you can do to prepare your portfolio, please do not hesitate to contact us.