By Scott Hallermann
The final, holiday shortened week of 2022 should be light on news with trading focused on tax loss positioning and other non-fundamental factors. My summary of the past year is a 1st half in which high equity valuations negatively worked through prices along with the unexpected start to the Fed rate hike cycle. By July bank stocks and the broader market were off -20% from the start of the year.
In the 2nd half of 2022 stocks have chopped without making any movement point to point. Alternating between hopes of a “Powell-pivot” and the reality of tight money, the expected major theme for 2023 will be what type of economic landing will occur. Will the Fed thread the needle to find the dreamy soft-landing to its hiking cycle or will the contracting be severe so much that even a foamed and prepped runway provides little triage to the carnage? Of course, the other question is what less discussed theme will play its way to the forefront? My pick for the pool is something related to China.