Here are 2023 predictions for financial markets, the economy and stocks.
I’ve spent the last year and a half cautiously following the Bubble-Blowing Bull Market that finally ended in early 2022. After the turmoil this year, the time may be right to see the economy turn into something. healthy for a while.
That would be unexpected in a world where so many CEOs and analysts are predicting tough times ahead.
Note that markets and economics are not the same. Now let’s move on to some predictions and comments.
1. ChatGPT and its AI model will lead to another leap forward for employee productivity.
Through 2023, we will see the first flowering of improved capabilities and efficiency as people embrace artificial intelligence in many areas of life. This will lead to productivity growth over the next three to five years that will rival what spreadsheets, word processors, and the Internet have seen in the last 30 years.
Companies are responsible for their clients, programming, legal fees, etc. they will be more efficient and effective in managing issues. Economists will discuss this topic as an ongoing topic until the end of next year.
Improved productivity will mean a boost to corporate earnings in 2024, and artificial intelligence will lead to a tech boom in 2023 as the stock market is always thinking ahead.
2. The US economy will be one of the strongest economies in the world.
Aren’t we in a recession already? A few months ago, there was a debate about whether two consecutive negative GDP growth numbers were a recession. Of course, the tech industry and the real estate industry are in their decline.
I expect a decent US economy with corporate earnings in 2023. How to make it a surprise?
3. The employment depression in tech/software engineering jobs to ease by mid-2023.
In 2024, the demand for such talents will increase again.
4. Operating margins will expand.
Meta Platforms Inc. Margins for META,
Amazon.com Inc. AMZN,
and others that have cut jobs and luxuries in the tech space will expand. That would make for a pretty good year for the FAANG group of stocks (Facebook holding company Meta, Apple Inc. AAPL,
Amazon, Netflix Inc. NFLX,
and Google holding company Alphabet Inc. GOOGLE,
) and mega-caps in general, at most 10% to 15%.
5. The Federal Reserve will not cut interest rates — the federal funds rate will be in the 5% to 6% range for most of 2023.
The Fed will not have to cut rates as the US economy stabilizes and starts to surprise for a hike by the end of the year. It is healthy for people to be rewarded for saving money in the bank or lending to the government.
As someone who has lived through Fed-driven bubbles and crashes during my nearly 30-year professional career, I would be more than happy to see a normal growing economy near natural interest rates for a few years.
6. Inflation will jump from month to month.
CPI data will be the most volatile we’ve seen in decades. This is another reason why the Fed will not be forced to cut interest rates.
7. We will end 2023 with two-year Treasury notes yielding 3% to 4% and 10-year notes yielding 4% to 5%.
That would be normal and healthy.
8. The stock market will be flat for the year.
Dow Jones Industrial Average DJIA,
will pull back another 3% to 5%, the S&P 500 SPX,
will be flat and the Nasdaq Composite Index COMP,
It will increase from 5% to 10%.
Small caps will be wild to watch because there are hundreds to run out of money. Then again, some will be ready to roar back. I am waiting for the iShares Russell 2000 ETF IWM,
Bringing down the Dow.
9. The price of oil will fall to 50-60 dollars/barrel and stay there for most of the year.
OPEC+ member nations will start pumping excessively while the US increases supply. That would be a boon for the rest of the U.S. economy, but it also means earnings estimates for many energy companies will fall, putting pressure on their stock prices.
10. Bitcoin will drop below $9,000.
Bitcoin BTCUSD after the bottom,
It will bounce between $11,000 and $15,000 for most of 2023. Ethereum ETHUSD,
It will jump between 300-600 dollars.
There are still billions of dollars in “valuation” for the few hundred cryptocurrencies that will be delisted in 2023, and the Securities and Exchange Commission and Department of Justice will eventually go to the “bailout” by indicting some people. is engaged in their sale.
11. The Space Revolution is progressing, if not quite taking off.
I’d like to buy some space stocks, but we’ll have to wait for the next batch of good private space companies to go public in the next two to five years. I am Rocket Lab USA Inc. I keep RKLB,
because I can’t believe that Boeing Co. Companies like BA,
or countries like the UK would not want their own orbital launch capability. Rocket Lab can be bought at a huge premium – it is currently valued at less than $2 billion.
Thanks to each and every one of you for reading Revolution Investing on MarketWatch. Happy New Year!