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Don’t expect a bull market anytime soon: David Roche

By:
on Jan 3, 2023
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  • Independent Strategy's Roche doesn't expect a swift recovery in 2023.
  • He quoted several headwinds that could weigh on S&P 500 this year.
  • The benchmark index closed the recent year (2022) down roughly 20%.

S&P 500 ended last year down about 20% but a swift recovery is likely “not” on the cards for 2023 either, says David Roche – the President of Independent Strategy.

Oil prices could move back up

Roche sees several headwinds that could make it difficult for the market to rally this year.

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To begin with, he does not expect the global central banks to revert to cutting rates anytime soon in the face of oil prices that he warns could climb back to $120 a barrel in 2023.  

I think energy due to Putin will move substantially higher to $120 during the year. And central banks won’t cut rates in the face of that performance by energy and quite potentially agricultural products.

An economic downturn that could weigh on consumer spending also fed into his dovish outlook.

Geopolitical tensions remain a challenge

More alarmingly, Roche is not convinced that the Ukraine war is moving towards an end. Continued geopolitical tensions, he noted on CNBC’s “Squawk Box Europe”, will remain a downward pressure on the equities market.

We’re not arming Ukraine to win; we’re arming it not to lose. That means this time next year, war of attrition would be ongoing. Worst scenario being Russia starts to win the war of attrition. So, no, we’re not near a bull market.

Roche sees China as another potential headwind for 2023 – be it as a support to Russia or its strategic issues directly with the United States.

A better move, in this environment, is to bet on Euro against the U.S. dollar, he concluded.