The Year Ahead
2023 will be about a lack of EPS growth, while '22 was about valuations
2022 turned out to be an ‘Annus Horribilis’. What a strange year, a year of geo-political turmoil and macro shocks. The Ukraine-Russia War, The Queen's passing, 10 Downing Street housing three different Prime Ministers, Elon Musk bought Twitter, the Assassination of Shinzo Abe, FTX blowing up, FinTwitters getting charged by the SEC, and Americans even enjoying the World Cup. Bull market “geniuses” were exposed as markets experienced the fastest fed-hiking cycle in 40 years that created a vicious bear market in US stocks, the worst returns in bonds and credit in 50 years, and for the joke-asset crypto… BTC -60% year-to-date. After the gilt blow-up… I wonder what bond vigilantes are eyeing up next.
I have mentioned seeing through the cycle many times on Twitter but I still don't believe we are there. With central banks inducing recessions by over-tightening to crush inflation, it doesn’t take a genius to know that a recession is inevitable. This widely foretold recession will be something that I discuss in this post and why I believe it isn’t fully priced in valuations, nor reflected in corporate earnings expectations.
I expect 2023 to be a unique year for markets, one won’t be able to use a textbook to navigate it and traditional strategies won’t cut it. In my opinion, this bear market isn’t over, and there are many ways to trade it. On that note let’s dive into The Year Ahead and discuss how to navigate it.
PS… I have turned off lifetime subscriptions for the time being as we have had some problems with it. If anyone is interested please feel free to message me on Twitter.
PPS… paid subscribers the Q1 competition cut-off is 12/31