It’s time for my annual prediction of the market and the economy.
After going 5 eat 5 in 2021Last year was much harder to predict. a fightChina’s energy crisis and Covid obsession will do it. I call my 2022 prediction two to two, with a long-term “we’ll see” prediction of the baby boom.
On a macro note, although we have covered and talked about the energy crisis in the UK and Europe since before the war, I’m not sure anyone has seen this level of escalation and pain. is coming to the people of Ukraine or not.
So let’s make it clear that the main prediction we should all hope for is a quick resolution to the war and a change at the very top in Moscow (aka goodbye, Putin!).
In addition, the fortunes of Europe and the world can change very quickly at any time. With that in mind, here are some thoughts on this year and please remember this is not investment advice, just my own thoughts about next year.
Hey, after 12 years of doing this, you should know it by now. We start, 2023… it’s in your hands now.
Prediction #1: S&P 500 up slightly
History says that stocks can rise even if the US falls into a recession, which is an almost certain outcome. But while every strategist on Wall Street is currently stumbling upon himself to deliver year-end S&P 500 price targets lower and lower (after falling spectacularly this year), I think The stock will be volatile and end in light green.
It won’t be a great year. I hope I’m wrong about that.
Where could I go wrong?
If I’m wrong – and if stocks fall this year – history says 2023 could actually be a worse year than 2022. When the market falls two years in a row, that usually means the second year of a terrible decline.
Prediction #2: Oil explodes, natural gas falls
Even with A recession is coming in America And perhaps something worse in Europe, it’s hard not to see oil prices not skyrocketing at some point this year.
Growth in capital spending by US oil companies remains lower than some hoped, Russia’s oil infrastructure will begin to rot if they have to operate longer without oil technology Western mining, investment, and know-how, and China’s demand could really increase if they continue change direction on Covid.
Oil would hit $100 at least for part of this year and potentially end the year above $90 if it weren’t for some major global meltdown.
Nature Air is likely to go the other way: either stay where it is or even fall deeper. No new export capacity has been built into the US this year. That will come online in mid-2024 or even 2025.
Assuming oil production goes up, natural gas production could also go up, there’s nowhere to go because we could have maxed out in Europe. That would lead to an oversupply of natural gas and drive prices down further.
Where could I go wrong?
A severe economic downturn in Europe combined with a return to record US oil production could keep the world well-supplied and prices down. As for natural gas, as the Freeport LNG facility that is still offline returns to production, it will probably attract enough new gas demand to keep prices steady even higher.
A complete collapse in Russian LNG exports (yes, Russia is still quietly exporting LNG) could also help stabilize US prices. By the way, this is good news for Europe.
Prediction #3: European stocks beat the US
This seems crazy given the energy crisis and economic crisis unfolding in Europe. That’s the point.
The market tends to do things that don’t always make sense and I think this is one of those times.
Don’t confuse the economy with the market. Despite the ongoing difficulties in Europe – of which the seeds have been planted before Putin’s frenzied war – their ongoing energy crisis could make countries and Central Banks Europe must stimulate through financial and monetary options.
When we raise the price, one wonders if public anger over soaring inflation will prompt central banks to turn offshore and they begin to stimulate again. See ETFs like Vanguard European Stock Index Fund on the S&P 500.
Where could I go wrong?
Europe’s apparent economic problems and a deepening energy crisis turned into a full-blown panic among investors, sending stocks much lower.
Prediction #4: Tik Tok disappears, Snap goes private
The backlash against so-called social media companies is growing. It’s one thing the divided Congress can actually agree on.
Tik Tok is being criticized by Washington, DC because it is seen (probably correctly) as an arm of the Chinese government that is essentially spying on users like our children.
take a shot broken. The stock has gone from a high of over $80 just over a year ago to less than $10 as I write this. unsustainable.
Look for a Musk-like acquisition here.
Where could I go wrong?
Congress can’t lobby money for Tik Tok and/or Snap just messing around with no investors able or willing to remove it from its painful run as a public company .
Prediction #5: Electric vehicle sales in the US start to slow down
Well, I’m overturning my prediction for hot EV growth from last year. But with a recession likely in the US, Inflation Reduction Act With the impact of tax credits on many car models and an increase in auto prices due to raw materials, it’s hard to see sales continue to heat up.
By the way, this also applies to traditional cars.
Prices are too high when interest rates rise. The growth rate of electric vehicle sales will actually decrease in 2023 compared to 2022. The growth rate will only be slower.
Where could I go wrong?
Demand for electric vehicles is strong enough for higher-income buyers, so borrowing costs and rising prices no longer matter to millions of consumers.
Additional thoughts that almost made the top 5: inflation remains above 4% when raising wages proved difficult; job growth continues as people return to the workforce as their Covid-related savings begin to dwindle; we will see at least one major commercial real estate bankruptcy due to vacant offices in places like San Francisco; Jacksonville Jaguars win the Super Bowl. Have a great year everyone!
