A U.S. or global recession in 2023 may not be most people's base case forecast, but the risks are sufficient enough for investors to be positioning accordingly as this year draws to a close.Wall Street is determined to bounce on any dip, and is up 15 per cent from the October low. The VIX index of implied volatility hit a three-month low of 21.45 on Tuesday and has now fallen five days in a row, the longest run of declines since May.
Equities have not priced in the damage higher interest rates will do. Admittedly, Asian stocks have cheapened much more in nominal and relative terms, perhaps in part due to the huge FX valuation mismatch against the dollar this year.MSCI Asia ex-Japan - valuations https://fingfx.thomsonreuters.com/gfx/mkt/klpygkqwgpg/MSCIVAL.jpg