As I sit here and watch CNBC I hear reporters state is Inflation is priced in & we should see a recovery in the stock market. Will the Fed gives us Fed Rate cuts next year? Oh, wait that was 2 weeks ago. Now it’s how many Fed Rate Hikes will we get this year and next year? Today it was the job reports show the Unemployment rate has gone up that’s a good thing showing the Federal Reserve’s moves of increased interest rates doing its job to slow down the economy and over time that should bring down inflation. It got me thinking what’s the state of the economy because at the end of the day Wall Street is not Main Street. What will our Stock Portfolios look like in the next 12 months?
Political Events Outside United States
The remaining months of 2022 I believe tell us what 2023 and 2024 are going to give us. There are a lot of regular folks including myself seeing living costs increasing not decreasing so check that on the uh-oh list for me. Interest rates going up check 2 on the list. Moving to Increasing Geo Political headwinds in Russia with the Nord Stream Gas Pipeline shutdown indefinite just today. Also today China locks down again major cities due to Covid-19. Chinese real estate downturn Oh yea and Ukraine is still at war I almost forgot about that. There are too many to list on the Political front so we move on.
Politics at Home
Back to here at home. The 2022 United States elections will be held on Tuesday, November 8, 2022. So I see deadlock on anything meaningful for legislation until after the elections I know obviously. I want to throw in the weird Joe Biden Democracy Speech did you catch it? Yea that did not help Democrats for sure. Note to the White House. Fire whoever’s idea was for the Speech idea and throw the person in prison for the horrific staging of the speech. Red with Black surrounding it have you heard of panning out on the camera? Video is below for you to watch.
Events to watch for Q3 & Q4 of 2022
What many are not discussing too much yet and I believe will be the major events that steer us economically into 2023 and 2024. 1st the upcoming Federal Budget which The last Federal Spending bill avoided government shutdowns through the end of the fiscal year for Sept. 30, 2022. 2nd Event The Federal Reserve’s quantitative easing ending its asset-purchase program. The “Fed plan “ to reduce its balance sheet of nearly $9 trillion in asset holdings it accumulated in recent years, mostly from Treasury and mortgage-backed securities. According to Fed Chairman Jerome Powell.
So taking all this into account here is what I believe could happen in 2023 into 2024.
Most Geo-Political headwinds will still be there at the end of the day.
As of today, it looks like the Republicans will gain both the Senate and the House.
I believe from here until 2023 we will see a major chop in the overall stock indies. I see tech stocks continuing down to maybe as low as in 2020 prices. We have had a lot of tech companies revise their overall outlook for the coming year. That will continue into Q2 of 2023. They have started to lay off some employees mostly in the corporate offices not so much yet in their retail employees but I believe it will start to show more in mid-2023 to 2024.
QE will start back up in 2023 if the recession is uglier than right now. The Federal Reserve will have no choice but to go back to buying securities to avoid a bigger 2008 recession.
Consumer spending will slow down since we will be spending only on everyday essentials.
Inflation will come down but that won’t be felt by consumers until at least Q3 of 2023. Inflation is more than just what you pay for at the gas pump.
At the end of the day, It will come back to the de facto campaign slogan of Bill Clinton It’s the economy, stupid. Let me know what you think?