Here’s how to structure your portfolio as the odds of a recession rise ‘dramatically’ in the next two years, according to a portfolio manager at $631 billion Federated Hermes

• Steve Chiavarone of Federated Hermes isn’t outright bearish, but is cautious about the economy.
• The strategist and portfolio manager sees a recession coming in 2023 or 2024.
• Here’s how investors should position their portfolios and allocate money to stocks and bonds.

Last October, Steve Chiavarone was waving the green flag for stocks — with a caveat.

The equity strategist and head of multi-asset solutions at $631 billion Federated Hermes had a 2021 year-end price target of 4,800 for the S&P 500, and predicted that the index would rise another 10% to 5,300 by the end of 2022 — even though he told Insider that inflation was a serious threat.

The 500-component index ended 2021 within 1% of Chiavarone’s price target, even as prices rose dramatically. Investors largely dismissed the risk of inflation and continued to send stocks higher.