By Sam Boughedda
In a note Wednesday morning, Sevens Report Research said the start of 2023 isn't the time to allocate to growth.
In this morning's research note, the firm stated that while they appreciate the argument that growth is the "cheapest it's been in years," it isn't a reason to buy something.
"There has to be a looming positive catalyst and the bottom line is the looming macroeconomic setup still isn't favorable for growth," they wrote.
The group outlined three factors it believes are needed for growth to flourish, including quickly falling or low interest rates, normal economic growth, and geopolitical calm. However, as Sevens points out, the current backdrop provides none of the factors mentioned.
"As we begin 2023, it's almost the exact opposite: 1) Rates are not falling quickly, are a long way from "low" and aren't getting there anytime soon, 2) Growth is "normal-ish" for now but the economy will likely enter a recession within the first six months of 2023 and 3) Geopolitics aren't calm and aren't moving that way anytime soon."
"The simple truth is that the macroeconomic conditions that resulted in growth underperformance in 2022 are still in place, and for us to confidently buy the dip in growth we need to see those conditions change and get more favorable for growth stocks."