$9 Billion Manager: Recession Is Unavoidable, Here Is How You Should Invest

Bleakley Advisory Group Chief Investment Officer Peter Boockvar was on CNBC "Fast Money" briefly discussing why the U.S. cannot avoid a recession. He outlined the three stages of a bear market:

1. Revaluations of multiples.
2. The economic impact and earnings impact from slowdowns.
3. Everyone decides to throw in the towel.

Key Takeaways From Boockvar: Boockvar said the U.S. is now in the first phase of stage two because growth is slowing as investors see the impact on profit margins, with Boockvar adding there is still a ways to go.

Boockvar acknowledged the Fed wants to achieve a Fed Fund target rate of 3%, which would be achievable by conducting a 50-bps hike in September, although he recognized there is no right level that could get us to a “magic level” of decreasing inflation.

Booker noted the U.S. is headed into dangerous territory as interest rate hikes and inflation have caused housing sales, prices and construction to decline while quantitative tightening will directly impact financial conditions and markets, causing a decline in corporate earnings and profit margins.

When looking for opportunities in the market, Boockvar recommended values and commodities over growth, citing some growth stocks are still relatively expensive.

See Also: Bed Bath & Beyond Stock Is Soaring Today: What's Going On?

Difference Of Opinion: Wharton School of Business Professor of Finance Jeremy Siegel on CNBC "Squawk Box" said he thought the market had interest rates correct for now and June was the bottom. Siegel noted the second half of the year should be promising.

Housing represented 40% of the core index, Siegel said, adding that the government recorded lagging house prices and the costs for commodities such as wood, steel and aluminum have started to decline. The National Association of Home Builders (NAHB) index reported the biggest drop in six months for housing sales in its history, besides the March 2020 drop.

Siegel's studies revealed interest rates have declined around the world for 20 years, acknowledging that if interest rates move to 5%, yields will invert further and the U.S. will be headed for a recession.

Photo: rzoze19 via Shutterstock