US recession or economic growth? What awaits the stock market in 2023?

Posted by:Alex Belov Posted on:Oct 20,2022

Great Britain faces a political crisis; the Republicans can take the majority of seats in the US Congress and the Democrats have to do something like that in the remaining two weeks;

Bloomberg predicts a recession for the US economy.

What about the markets? They simply don’t see the risks.

Tuesday ended with the growth of indices:

▪️S&P 500 (^GSPC) by 1.55%,

▪️Dow Jones Industrial Average (^DJI) by 1.12%,

▪️NASDAQ Composite (^IXIC) by 0.90%,

▪️Russell 2000 (^RUT) by 1.16%.

▪️DXY dropped to 112.

▪️Yield on US 10-year bonds decreased by 0.42%.

Oil painting. What do we have ahead of us? Incredible economic growth?

The reason for optimism is the quarterly results of companies that exceeded analysts’ expectations: United Airlines Holdings, Inc. (UAL), Intuitive Surgical, Inc. (ISRG), Interactive Brokers Group, Inc. (IBKR), Netflix, Inc. (NFLX), Lockheed Martin Corporation (LMT), The Goldman Sachs Group, Inc. (GS) and others.

Why did the quotes for “black gold” fall? The main reason for the decline could be the plans of the White House to release from 10 to 15 million barrels of oil from the strategic reserve. Here’s to you and the approach of the midterm elections. What won’t you do to win?

What’s next? According to Deutsche Bank analysts, financial markets underestimate the risks of stagflation. Analyst Henry Allen said that in the fight against inflation, the Fed could raise rates up to 10%. The co-founder of the managing director of Mobius Capital Partners said that rates in the US could jump up to 9%. Finally, Neil Kashkari (the head of the Minneapolis Fed) added “optimism” to everyone: “If we don’t see progress in core inflation, I don’t see why I would argue for an end to raising rates at 4.5-4.75.”

It is unlikely that these forecasts will come true, but the reduction in the forecast for US GDP growth from Fitch Ratings makes us think about the long-term rally. The rating agency expects the country’s economy to enter recession by mid-2023. No longer technical, but full-fledged. With all the consequences.

Share analytics

Alex Belov

Developers by Analyst, investor

You must be logged in to post a comment