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A Bull and Bear Overview of the U.S. Market

December 14, 2022

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On the Bear Side

A brown bear. U.S. Market
Wall Street makes for bearish reading. Photo by Mark Basarab on Unsplash

More and more people on Wall Street are saying that 2023 will be a ‘bad’ time in the U.S. market. CEOs and strategists at banks foresee a recession. Morgan Stanley is letting people go, and Bank of America is cutting its hiring.

As goods exports hit a seven-month low, the U.S. trade deficit grew by 5.4% to $78.2 billion. But Veronica Clark, an economist at Citigroup in New York, said that this should be partially offset by strong domestic demand, especially in business investment, because real capital goods imports have gone up in the last few months.

The overall fall in imports of consumer goods parallels the decreasing demand for products caused by rising borrowing rates. Tough COVID- 19 lockdowns in China have delayed factory output, resulting in iPhone shortages just in time for Christmas.

On the Bull Side

In somewhat more optimistic news, data reveals that bond markets anticipate a comeback in 2023 as a result of inflation reaching its peak.

Statue of a bull. U.S. Market
There is still bullish activity too. Photo by Hans Eiskonen on Unsplash

Exports of crude oil also went up by $1.6 billion, and exports of services shot up by $1.8 billion to an all-time high of $80.6 billion, thanks to travel, transportation, and other business services. So it’s not all bad for the U.S. market.

Perhaps more importantly, at this time of year when so many finance professionals are trying their best to forecast what will happen in the economy over the next 12 months, we would do well to recall the words of Warren Buffet: “The only value of stock forecasters is to make fortune tellers look good.”

This sentiment is echoed by Howard Marks, co-founder, and co-chairman of Oaktree Capital Management, who argues that the best we can do is to pay close attention to what is happening today. When we equip ourselves with high-quality information, we can rely on data to get curious about what we see as the possible implications for the future.

We hope that this is what our newsletter helps you to do.

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