January 2, 2023

Weekly Market Update

By Michael McKeown, CFA, CPA - Chief Investment Officer

Weekly Market Update

Chart of the Week

Markets are ready to put 2022 in the rearview mirror. For just the ninth time since 1928, stocks fell along with bonds (as measured by when either the 10-year Treasury or corporate bonds declined). Historically, the S&P 500 rose in the following year eight out of nine times. Over the following two calendar years, the market was up all nine times with an average cumulative gain of 44%. Past performance is no guarantee, of course, but there are parallels. The years below coincided with three types of economic environments: the beginning of a recession; the middle of a recession; and the middle of a growth cycle. Each of these U.S. economic scenarios occurred three times each. There is much debate as to whether this economic slowdown will turn into a recession or if a soft landing still has an outside chance.

What Happened After Both Stocks & Bonds were Down?

What We’re Reading

Where Have All the Workers Gone? – Sage Economics
2023 Outlook: The End of the Affair – JPMorgan, Eye on the Market
Ten Economic Questions for 2023 – Calculated Risk
We Are Heading into a Great Environment for Emerging Markets – The Market
Reciprocity: Getting What You Give – Farnam Street

Podcast of the Week

Inflation Will Fall off a Cliff in 2023 – The Macro Trading Floor

The Past Week

It was a quiet holiday week for data. Housing was the main event as pending sales dropped more than expected. The Case-Shiller Price Index, which tracks national home prices, fell for the fourth straight month. Most housing analysts see a decline in national home prices this year due to the lack of affordability.

The Past Week

The Week Ahead

Data starts out the year hot like the unseasonably warm weather. We will see how the U.S. is doing on both the services and manufacturing sides. On Friday, all eyes will be on the jobs report.

The Week Ahead

Happy New Year!.

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