A top analyst thinks we’re heading for a new ‘age of austerity’

There’s about six weeks left in 2023, and a top analyst thinks we may need to brace ourselves for trouble ahead in the markets and economy going into next year.

Jim Masturzo is chief investment officer at Research Affiliates (RA), a firm that oversees strategies for over $130 billion in mutual funds and ETFs for the likes of Pimco and Charles Schwab. “For this writer, RA provides superb, academically-based insights into both where the economy is headed, and how investors should best position themselves to profit from the looming trends,” writes my finance colleague Shawn Tully.

“2024 economy and stock market predictions: Expect subpar returns in a new ‘age of austerity,’ says a top analyst at Research Affiliates,” is Tully’s new piece that delves into Masturzo’s predictions.

“Masturzo concedes that in the short term, ‘The economy could remain buoyant and investors resilient,’” Tully writes. “But he believes that the big federal spending and ‘free money’ Fed policy that funded the bash will soon leave a stiff hangover. ‘The macro game of musical chairs cannot go on forever,’ Masturzo writes. It was the regional banking crisis starting in March, he says, that exposed the first cracks.”

“But after a steep selloff, frenzied excitement over the future of AI sent Big Tech soaring once again. Now, Masturzo believes the economy and the markets stand near an historic inflection point.” He thinks the “exhaustion of the COVID money, the end of student loan forbearance, and the stubbornly rising prices bound to spook consumers will ‘pave the way for an eventual recession,’ and usher in years of austerity,” Tully writes.

Well, that does sound bleak. But not all hope is lost. Investing will require a new paradigm, according to Masturzo. “The best investment categories of the last decade may prove the worst performers going forward, meanwhile the beaten-down, unloved sectors of recent years are likely to thrive,” Tully explains.

You can read more about the new paradigm here.  

Sheryl Estrada
sheryl.estrada@fortune.com

Leaderboard

Anastasiya “Stasy” Pasterick, CFO at Nikola Corporation, an electric truck-maker, informed the company on Nov. 13 that she is resigning from her position to pursue other opportunities. Pasterick will continue to serve as CFO and assist with a transition through Dec. 1, according to a Nov. 17 SEC filing. She was promoted to the role in March this year. Nikola is conducting a search for her successor. In the interim, key financial leadership will report directly to Stephen J. Girsky, the company’s president and CEO.

Manavendra Sial was named CFO at Tenneco, an automotive components manufacturer, effective Jan. 1. Sial succeeds former CFO Jeff Stafeil who recently left Tenneco to explore other opportunities. Sial joins Tenneco after serving as CFO of Fluence. Before that, he held EVP and CFO positions at both VECTRA and SunPower Corporation. Sial spent the first decade of his career with General Electric. 

Big deal

If you’re trying to share information with Gen Z, many are consuming their news on TikTok. A new report by Pew Research Center found that about a third (32%) of Americans ages 18 to 29 are most likely to say they regularly get news on TikTok, primarily known for short-form video sharing. This compares with 15% of those ages 30 to 49, 7% of those 50 to 64 and just 3% of those 65 and older, according to the report. 

Going deeper

In the latest AI and tech industry news, Sam Altman, the cofounder of ChatGPT parent OpenAI, who was ousted as CEO on Friday, will be joining Microsoft, Satya Nadella, chairman and CEO at Microsoft, shared in a statement on LinkedIn this morning.

"We remain committed to our partnership with OpenAI and have confidence in our product roadmap, our ability to continue to innovate with everything we announced at Microsoft Ignite, and in continuing to support our customers and partners," Nadella wrote. "We look forward to getting to know Emmett Shear and OAI's new leadership team and working with them. And we’re extremely excited to share the news that Sam Altman and Greg Brockman, together with colleagues, will be joining Microsoft to lead a new advanced AI research team. We look forward to moving quickly to provide them with the resources needed for their success."

OpenAI announced on Friday that Altman was departing the company. OpenAI claimed he “was not consistently candid” with the board. OpenAI said that CTO Mira Murati would replace him as interim CEO effective immediately. However, new reports on Sunday indicate that Emmett Shear, cofounder of video streaming site Twitch, would now take over as interim CEO.

Overheard

"The OpenAI failed coup attempt by the four-person board did not want Sam Altman back as their CEO...so Microsoft hired this key asset and now he will oversee OpenAI from Redmond along with Satya Nadella, which is the music to the ears of investors."

—Wedbush Securities analyst Dan Ives wrote in a note to investors this morning.