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Monthly Archives: February 2023
January Portfolio Update | 2023
Thoughts on the Market: January Edition
The world is convinced a recession is coming.
Flashback to September 30, 2022. The S&P 500 was down 25% year-to-date. European power prices had doubled in a year. U.S. inflation was running at 8.2%. The Federal Reserve and other major banks were in the middle of an interest rate hiking cycle to curb economic growth.
Four months later, the U.S. economy just added 500,000 jobs. Inflation is retreating from high levels and central banks are indicating that a pause in hikes is forthcoming. Yet a recent survey of economists by J.P. Morgan indicates that recession calls (defined as probability of a recession in the next 12 months) are at all-time highs (Figure 1). A secondary indicator, the AAII Bulls/Bears survey indicated 30% of investors are bullish, compared to an average level of 37%.
Figure 1. J.P. Morgan Survey of Professional Forecasters.