If Tuesday was any indication of how the market will behave this year, then buckle up, it looks like it’s going to be wild. The Dow Jones Industrial Average
DJIA,
had a trading range of 537 points, even though the blue chip index lost only 11 points at the close.
It’s still early enough in the year to look at the 2023 forecast, so this time we’re going to stick with one analyst who correctly called the market late in 2021. “The S&P 500 will have its worst year yet. since 2008,” said Michael Batnick, director of research at Ritholtz Wealth Management. “I predict this year that it will fall by more than 15%. The combination of high multiples, high inflation, supply chain issues and the Fed’s interest rate hike will prove too much for investors to handle. The S&P 500
spx,
fell 19% last year.
Sure, not all of his predictions came true — for example, he said the Fed would eventually cut rates by the end of the year — but it’s still a better record than many. So what is he waiting for in 2023?
Jeff Bezos, in the style of Bob Iger at Walt Disney, will return to run Amazon.com
amzn,
after the stock fell 50% last year, he said. “Jeff Bezos spent 27 years at Amazon and has been gone for less than two years. In 2023 he pulls a Bob Iger and comes back to steady the ship,” says Batnick.
It’s not crazy talk, given Amazon’s stock price struggles, although of course Andy Jassy had the misfortune to start as CEO just five months before the first vaccines arrived, releasing home consumers. “Is Amazon in a lousy business or does it do a lousy job of running it,” Needham analyst Laura Martin asked in a note in late December forecasting just 2% operating margins for the year.
Likewise, Microsoft
msft,
was downgraded by UBS, in part because its Azure cloud business, competing with Amazon’s AWS, is slowing due to maturation and not just macroeconomic headwinds.
Batnick more broadly expects the tech sector to continue its layoffs — which he wrote ahead of Salesforce.com
RCMP,
announcing a 10% job cut — and the value to continue to improve growth.
Some of his other predictions: bonds will hold up as a diversifying asset; bitcoins
BTCUSD,
will double; gold
gc00,
will set a new historic record; and the shares will gain by double digits. “With hopefully peak inflation behind us, a still healthy consumer and an all-around negative investor class, it wouldn’t take much of a surprise on the upside for stocks to take off,” he said. . .
Watch out emptor, though. “These are my best guesses as to what will happen next year, and I look forward to reading them again in twelve months, in disbelief that I could be wrong about so much,” Batnick writes.
The market
US Stock Futures
es00,
advanced in front of a torrent of data. The dollar
DXY,
slipped, and the yield on the 10-year Treasury
TMUBMUSD10Y,
was 3.67%.
For more market updates and actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.
The buzz
You’re here
You’re here,
will be in the spotlight after falling 12% on Tuesday to its lowest level since August 1. 13, 2020. Cathie Wood’s ARK Invest bought $20 million worth of Tesla stock on Tuesday, according to the company’s Daily Disclosures. Automakers are expected to report vehicle sales for December more broadly throughout the session.
It’s a big day on the economic front. The Institute for Supply Management’s Manufacturing Index is due out at 10 a.m. Eastern Time, the same time the latest job openings report is released.
Minutes from the last Federal Open Market Committee meeting are due out at 2 p.m. – keep in mind Chairman Jerome Powell was very hawkish after the meeting, so the summary may not match his tone . There is mounting evidence that inflation has peaked, Minneapolis Fed Chairman Neel Kaskhkari said in an essay released Wednesday morning. “In my view, however, it will be appropriate to continue raising rates at least in future meetings until we are confident that inflation has peaked,” he said.
In France, Inflation in December fell to its lowest level in three monthsas energy prices fall in Europe due to a warmer than expected winter.
The show of who will become Speaker of the House could continue after Kevin McCarthy has had his candidacy rejected three times by dissident Republicans.
Microsoft aims to make a version of its Bing search engine powered by ChatGPT software, according to informationin what would be a challenge for Google of Alphabet
Google,
The best of the web
The Unusual Whales website has released its 2022 Congressional Stock Market Report, which reveals that Democrats and Republicans enjoyed above-market returns last year.
The head of The Saudi wealth fund has been subpoenaed in a lawsuit over an Elon Musk tweet.
Moody’s warns of a recession but a ‘slowcession.’
Best Tickers
Here are the most active stock tickers as of 6 a.m. Eastern Time.
|
Teleprinter |
Security Name |
|
You’re here, |
You’re here |
|
EMG, |
GameStop |
|
amc, |
AMC Entertainment |
|
MULN, |
Mullen Automotive |
|
apl, |
Apple |
|
Nope, |
nio |
|
BBBY, |
Bed bath and beyond |
|
amzn, |
Amazon.co.uk |
|
baba, |
Ali Baba |
|
NVDA, |
Nvidia |
Table
Ahead of the Fed minutes, this chart from Fidelity Investments strategist Jurrien Timmer lays out the difference between market and central bank expectations on the direction of rates. “The risk here is that the Fed is right, that markets are wrong in projecting the path of policy in 2023, and that financial conditions remain tighter for longer,” he says. He says the recent rally from the mid-October low may not be warranted if rates stay higher for longer than investors anticipate.
Random plays
An unfortunate jolt in the new year: Goldman Sachs
gs,
is now charging his banks for coffee.
The man considered the tallest in the world stands 9 feet 6 inches tall.
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