January 11, 2023

The Appetizer

“Hi Scott. My name is Scott Stallings as well and I’m from GA. My wife’s name is Jennifer too! I received a FedEx today from the Masters inviting me to play in the Masters Tournament April 6-9, 2023. I’m (100 percent) sure this is NOT for me”

• The other Scott Stallings, an Atlanta-area realtor who shares the same name as a professional golfer and received the prestigious invite by mistake.

Now, on to the numbers. Drum roll, please …

• 19.44%: The S&P 500’s price decline last year, the worst since 2008.
• 65.4%: The energy sector’s 2022 return, the best performing sector in the S&P 500.
• 1.9%: The estimated U.S. GDP growth in 2022.
• 8.0%: The estimated U.S. inflation rate for 2022 compared to 2021.
• 1: The ranking for the search term “Wordle,” the most popular search term globally on Google in 2022.

Dig In
2023 Outlook

Happy New Year! We’ve finally closed the book on 2022, so what’s in store for 2023?

It’s likely to be more of the same as we start 2023, but there are potentially better times on the horizon. We expect things to improve as the year progresses and we find balance with inflation, monetary policy, and the economy. We anticipate the full–year return for the S&P 500 will be positive, about 6%.

On the inflation front, we see inflation falling, but not quite to the Federal Reserve (Fed)’s projection. We expect inflation to be somewhere around 3.5%-3.75% by year end. This will allow the Fed to soon pause its rate hikes.

Whether or not we enter a recession is anyone’s guess. A soft landing is still possible (0.0%-0.5% GDP growth), but we see a roughly equal chance of a mild recession (-0.1% to -0.5%). The consumer and the desire to keep spending will be a deciding factor.

In Washington, narrow majorities in both the House and Senate likely mean only a few “must-do” bills grudgingly pass, such as raising the debt ceiling.

Check out our Outlook 2023: Finding Balance report or video to learn more. Game on!

Weekly Specials

New House Speaker Kevin McCarthy showed he could roll with the punches: For the first time since 1923, a vote for House Speaker went longer than one round. McCarthy finally prevailed after 15 rounds and numerous concessions. A preview of the legislative gridlock to come? Most likely. Stifel’s Potomac Perspective offers a preview of what may be in store.

Heat wave! Europe is off to a positive start to 2023 as multiple countries shattered January temperature records. While not great for tourism – the heat caused snow to melt and resorts to close during peak ski season – it has allowed people to shut off their heaters and eased fears of high prices and energy shortages.

Everyone loves an underdog story, and one played out when an English bulldog took the top spot at the American Kennel Club National Championship. The win is the first for the breed and comes at a time when bulldog breeding has become controversial due to the health issues associated with the dogs.

Corporate Lunch

The earnings show kicks off this week with big banks being the first to report quarterly results. S&P 500 earnings are expected to be negative – consensus forecasts -4.1% for fourth quarter 2022. But S&P 500 earnings are expected to grow 4.8% in 2023.

Your car can now match anything in your wardrobe. BMW showed off a prototype car that can change color in seconds.

GM reclaimed the title from Toyota as the top-selling automaker in the U.S. Overall sales increased 2.5% compared with 2021.

Twitter is being sued for allegedly failing to pay rent for their office spaces.

Microsoft hopes OpenAI’s ChatGPT will make Bing smarter. Bing is still around?

Bed Bath & Beyond’s management “has concluded that there is substantial doubt about the company’s ability to continue as a going concern.” In non-finance talk, they may going out of business.

Southwest Airlines’ CEO said, “I know that no amount of apologies can undo your experience.” The airline is giving customers travel points after they canceled thousands of flights during the holiday season.

Uber Eats plans to launch a robot delivery service in the Miami area. The robots are provided by Cartken, an Oakland-based robotics company.