The first trading session of the year
- Equities in Europe increased on the first trading day of 2023. The IMF Chief has warned that the global economy will experience severe declines in 2023 compared to 2022.
- Due to central banks boosting rates worldwide last year, recession fears were rising. Those concerns seem to be over for the time being.
- Big tech had a terrible year in 2022, with a $4 trillion decline in market value overall.
- Energy, led by $OXY, was the largest winner in 2022.
Source: Photo by Pixabay: https://www.pexels.com/photo/stock-exchange-board-210607/
2022 Growth vs. Value stocks
- The S&P500 saw a yearly fall of about 20%, which was more than double that of the Dow Jones Industrial Average. As a result, it performed differently from the other major U.S. stock benchmark, the Dow Jones Industrial Average.
- The gap between growth and value stocks was three times greater in percentage than in 2000.
Expectations for 2023:
- Wall Street anticipates a turbulent year in 2023 in which the US and Europe will experience a slight recession. According to bank forecasts, the 10-year US rate may fall to 2.65%, while the S&P 500 will decline by 25%. The focus has shifted away from cryptocurrency, and consideration of Covid is limited to the reopening of China.
In contrast, the beginning of 2023 shows inflation on the down, with the pace of interest rate hikes decreasing and an end target in sight, as opposed to the beginning of 2022, which saw inflation on the rise while the Fed started one of the quickest rate hikes in history.
Furthermore, a recession occurred in the first half of 2022, but it was finished by the second half, as evidenced by Q3 GDP growth of 3.2% (a recession ends when the economy begins to recover again) and Q4 expectations of 3.7%.
- The 4-year Presidential Cycle, which reveals that year 3 (2023) is the finest year of all 4, is also working in our favor in 2023. In fact, since 1950, equities have always increased in the year following midterm elections, returning an average of 18.6% during the next 12 months.
- Gas Prices Fall: Due to mild weather that lowered demand, European gas prices dropped to their lowest point before the Ukraine invasion. Forecasts indicate temperatures will be above average for the next two weeks, which should avoid a reduction in winter stock.
- The Covid that plagued Foxconn's Zhengzhou iPhone manufacturing late last year has nearly completely subsided. Shipments are almost back to pre-Covid levels, and incentives have been provided to recruit and keep employees.
- In 2022, Tesla reported producing 439,701 cars and delivering 1.31 million. They delivered 405,278 autos in the fourth quarter. In contrast, Tesla recorded 308,600 vehicle deliveries in the fourth quarter of 2021 and 936,172 total vehicle deliveries for the year. The overall trend remains favorable.
Source: Yiazou Capital Research