2023: Another Year of Living Dangerously

After getting somethings right and somethings wrong last year, I am going to try my hand at making a forecast for the coming year. As Mike Evans used to say "often wrong, never in doubt." First, to review the rights and wrongs of last year (Shulmaven: Some Non-Consensus Thoughts about 2022 ).

What I got right:

* The Biden Administration would face a year of foreign policy crises.

* Omicron peaks in January and the economy returns to a semblance of normal.

* Inflation will still be running hot with inflation running above 4% and housing CPI above 6% by yearend.

* A leveraged player in Bitcoin will collapse triggering a mini-financial crisis. (NASDAQ in the Spring)

What I got wrong:

* The economy will grow at 4% on a Q4-Q4 basis.

* The S&P 500 will trade in a broad 5200-4400 range.

* The remnants of Biden's Build Back Better Plan will likely fail. (Clean energy bill passed)

Now here goes for 2023:

* The Fed remains on the warpath as wage gains rightfully stay solid. Don't fight the Fed.

* The economy enters a consumer/housing recession early in the year.

* Despite the recession 10-year Treasury yields go over 4% as the bond market recognizes that the Fed's 2% inflation target is a chimera.

* Stocks will trade in a broad range of 4200-3300 ending up at 4000 plus or minus with S&P earnings declining 5-10%.

* The market will realize that ongoing labor shortages, deglobalization, onshoring of production, energy transition and investments in resilience are inherently inflationary.

* The Ukraine War will enter its second year and feature Ukranian missile strikes and acts of sabotage deep into Russia. That along along with tensions with Iran, China and North Korea will amp up U.S. defense spending.

* Deep winter will descend on crypto currency with Bitcoin falling below $10,000.

*Trump will be a spent force by yearend making for a wide open Republican primary in 2024.

* By yearend the markets will come to recognize that we are well into a new economic cycle. ( Shulmaven: The U.S. Economy is Entering a New Thirteen Year Cycle)