) shares have lost about 65%. Meanwhile, energy stocks have bucked the trend by posting eye-popping gains.Inflation, and the Fed's degree of aggressiveness in trying to contain it, will likely remain a critical factor driving equity performance as 2023 gets under way. But investors will also be watching for fallout from higher interest rates, including how tighter monetary policy ripples through the economy and whether it makes other assets more competitive with stocks.
If a recession starts next year, stocks could be set for another slide: A bear market has never bottomed before the beginning of a recession, historic data showed. Consensus analyst estimates project S&P 500 earnings to rise 4.4% in 2023, according to Refinitiv IBES. Yet earnings fall by an average annual rate of 24% during recessions, according to Ned Davis Research.The Fed’s rate hikes have pushed up bond yields and created competition for equities, flying in the face of the low-yield environment that predominated for more than a decade and gave rise to the acronym “TINA,” or “there is no alternative” to stocks.
Still, some investors have noted that stocks fared well in past periods when yields were even higher.In the past year, value stocks - commonly defined as those trading at a discount on metrics such as book value or price-to-earnings - held up better than tech and other growth shares, reversing trends that had been in place for much of the past decade.
2023 is going to be filled with more downside as the FED will ensure this, and then miraculously, just as election season begins, they will artificially pump the market and the liberals will claim the best stock market recovery ever! Mark this post!
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Let's recap and have an honest look at what's ahead:
Too fat to survive this Bear.
FED can be the single most factor driving them.