2023- The Yead Ahead
Hello everyone and welcome to the February 2023 edition of the boodle blog! If you are new here, welcome! If you are a client, we appreciate your business. In our February blogs, we at boodle like to take a look ahead as best we can and try to determine what the markets will do in the coming year, so let's forecast what we believe may be ahead in 2023 for our clients, and the economy.
The Risk of Recession
Accelerating inflation - The year over year inflation number is 6.5%, which sounds troubling, however looking a little deeper we discover that while everyone focuses on the 6.5% number, we discovered that the 6-month annual rate of inflation has receded to just 1.8% - that is good news from our perspective, even better is the 3-month rate that has fallen to 1.6%.
We expect CPI Inflation to be in the neighborhood of 3%- 3.5% by the end of 2023.
Payroll Growth - Unemployment continues to be a bright spot in the economy, and this fact is borne out by the January jobs numbers that just came out as we went to press - that number is 517,000 new jobs and a slight reduction in the unemployment rate. The payroll growth number is welcomed, but it is still not where the Federal Reserve Chairman would like to see it. The direction of the jobs number is moving in the right direction, at least.
Inverted Yield Curve - without getting too technical, the inverted yield curve is a tool used by economist to forecast if the nation is heading into a recession. The Fed hiked interest rates in an effort to create a "soft landing" for the economy. The results of their actions are unknown at this time, but it is boodle's opinion that should the Fed fail to stop a recession from occurring, we believe it will be short and mild in duration. We believe the economy is in the early stages of recovery.
Boodle outlook - 2023
Our forecast for our clients and investors for 2023 is bullish. Long time boodle members will remember that we turned cautiously bullish back in October of 2022. Therefore, clients should follow our guidelines by being fully invested in their portfolios and adhere to the asset allocation that they chose for themselves.
Boodle is comfortable stating that based on our research and financial news sources, we are of the opinion that the market, as measured by the S&P 500 index should exceed 18% this year, and we are leaving open the possibility of even more gains.
Any pullback, or retreat that occurs should be treated as an opportunity to add more funds to your equity holdings.
Continue to read this blog for any updates and keep your boodle consulting meetings if you are a client. If you are not a member and you enjoy what you're reading here and would like some help with your investments, then contact us at 815-793-6059 and get started today. We look forward to seeing you back here next month, and we thank you for choosing Boodle.