As the calendar turns to 2023 keep in mind that the issues we dealt with in 2022 don’t just magically go away, they still persist. We are looking to see how January shapes out to be. The January effect is something we will be keeping an eye on ( The January Effect ).

What we expect in 2023

January will have earnings results from companies, and we will be listening in to see what the CEOs have to say about how they are navigating the current environment. We will also be paying attention to outlook for the Q1 2023 and the rest of the year. If earnings estimates come down, though that may not sound like a good thing we will take it as a positive that the rate hikes by the Fed are working to tame inflation.

We will also be looking to see how unemployment holds, if we get closer to 5% and ultimately 6% we are likely to be in a recession.

We expect in the second half (or around that time) in 2023 for the Fed to ease on rate hikes. Those will be seen as a positive and that could help lifts stocks higher as the stock market typically likes lower interest rates.

Bonds, and especially short term bonds, we think are worth a look in a diversified portfolio because they have attractive yields currently. Shorter terms bonds are yielding more than longer term bonds, but as an added benefit they will mature faster so you can get back your principal sooner rather than later.

We expect to see market whipsaws, but ultimately we do not see a year end target that is significantly changed by end of 2023. We expect the S&P to be somewhere near unchanged at the end of 2023. Mainly because the current environment we find ourselves in will continue until we got a release of the gas pedal from the Fed. That should help lift markets a little more, so we think that the market will remain relatively unchanged a year from now.