What sectors will lead the market higher in 2023? Tech? Financials? Healthcare? Industrials? Tech was the right play for the past decade – with rates anchored at zero and the Fed printing money. That has now changed. Tech will unlikely act as strong as it did… which requires a shift in asset allocation by investors.
Patience
Traders (and investors) are wise to remain patient through this tightening Fed cycle. And whilst it is maturing… there’s still more to go. Here I take a look at recent recessions… and some lessons to draw from. Don’t be in any hurry here – we are likely to be headed lower
Excited About the Opportunity Ahead!
I bring good news and bad news. The good news? We have done a lot of the heavy lifting. The rate rise cycle is maturing. Inflation is falling. And China appears to be re-opening. Now the bad news… rates are not about to repeat what we saw the last decade. And the Fed is sucking out liquidity. What’s more – corporate earnings are about to contract. Put that together – stock prices will likely fall. And that will represent opportunity…
Is the Market Fighting the Fed?
The market and the Fed are at odds. In short, equities don’t believe what Powell is saying. The market is betting the Fed is wrong and will be cutting rates by the second half of 2023 – where the ‘dot plot’ of 5.0% is a dream. My take: choose to fight the Fed at your own peril. Typically it doesn’t work out well.
For a full list of posts from 2017…