By Scott Poore, AIF, AWMA, APMA
Chief Investment Officer, Eudaimonia Group
Equities were mixed last week, but sectors that under-performed were down only marginally. Equities and fixed income finished the year with a thud as recession fears gripped the market and we’re in the “good news is bad news” cycle. Holiday Sales for 2022 came in higher than most expected (+7.6% vs 4-6%). Some are discounting the number, but in a year with high inflation and high interest rates, 7.6% growth year-over-year is solid. In fact, December’s Redbook Sales showed a higher average than the previous 8 years, with the exception of 2021 (which proved to be an outlier). Housing continues to struggle, but the Case-Shiller Home Price Index showed some improvement on a year-over-year basis. The Chicago PMI and Richmond Manufacturing Index showed improvement, but that fell into the idea that the Fed has more room to raise rates.
We will get the Fed minutes from December this week, which could move markets if the minutes show a hawkish bias. The 2023 targets for the S&P 500 Index are mixed as J.P. Morgan and Wells Fargo as calling for a strong 2nd half finish next year. Bank of America, Goldman Sachs, & Citigroup are calling for mildly positive returns for 2023. UBS and Morgan Stanley are expecting a recession, with a slightly positive return by year-end. The average prognostication is around 5% return in 2023. We expect more of the same to start off the year, but the 2nd half of the year could be good if inflation continues to recede and interest rates come down. The final outcome for 2023 rests in the hands of the consumer.
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