top of page

Market Comment - December

Beginning 2023 the outlook for the economy was bleak, as investors expected that the rise in interest rates will put pressure on the economy and recession calls dominated the financial media During the second half of the year, the substantial increase in fiscal spending, together with an escalating interest in “Artificial Intelligence” investing, helped especially the US stock market to extend its gains, notably during the last two months of the year Fiscal spending kept the global economy from falling into a recession and in the end, the Bank of Japan continued its yield curve control, supporting global liquidity At the end of 2022 the average price target for the S&P 500 provided by 18 investment banks for 2023 was around 4100 while the market managed to close at 4770 Bill Miller once said 100 of the information you have about any business reflects the past, and 100 of the value of that business depends on the future" Witnessing a resilient global economy and falling inflation, economists are now able to paint a much rosier picture Most investment bankers now have a year end price target for the S&P 500 of around 5100 matching bottom up estimates by equity analysts for the index of USD 242 44 implying a 13 gain year over year It looks like 100 of the information we have now is positive, leading to a positive outlook Obviously, the current framework is vulnerable to disappointment The cyclical bear market, that has started in 2022 needs a classic ending, which would mean, that we will see a panic sell off during the current year With high expectations, the odds for such an event are pretty good Nevertheless, a negative surprise would build the base for a cyclical bull market that could last until the first quarter of 2026 Longer term, our assessment remains the same In the US, the post 2009 secular bull market is in the early stage of reversing The secular trend determines the character of the primary trend, which is obviously important for investors Currently, there are cyclical forces that help equities to avoid entering a secular bear market The US Central bank wants to avoid a recession, some say, for political reasons The fear of a renewed presidency by Donald Trump is on the rise Some FED members clearly stated that they do not wish Donald Trump to be the next president The ruling party never won a presidential election when a recession occurred during an election year Both the government through fiscal spending, and the Federal Reserve by promising lower rates seem to join forces to avert Donald Trump, whatever it takes Any negative development in the economy, will lead to extensive stimulative efforts by Central Banks, which in the end will turn out to be inflationary once again.

Commentaires


Les commentaires ont été désactivés.
bottom of page