“Since COVID, idiosyncratic risk in the market has dropped, and average pair-wise stock correlations surged in 2022. The biggest rate shock in history, the most aggressive hiking cycle, the biggest inflationary pressure in 40+ years, rising recession fears (Bloomberg probability of US recession within 12 months at 100%), wartime and ongoing geopolitical risks, urgency building around carbon emission reduction suggest macro will loom large in 2023.” - BofA
Macro Chart In Focus
Analyst Team Note:
It’ll be interesting to see when equity leadership will flip from the United States to Emerging Markets. Is the decade of American equity dominance over?
Futures pricing indicates a downshift to a smaller, 50 basis-point, increase when policy makers gather on Dec. 13-14, in contrast to 75 basis-point hikes that had become norm, with the cycle ending next year with the key rate near 5%.
Cleveland Fed President Loretta Mester noted that she doesn’t think market expectations are “really off”.
Chart That Caught Our Eye
Analyst Team Note:
At current trends, the share of goods and services in personal consumption may not return to pre-pandemic trends for another 12-18 months. This assumes the pandemic did not induce any permanent shift in consumer spending patterns.
We want to take a moment to thank Interactive Brokers for being one of our Channel’s trusted Partners and to inform my audience of the special features they have given that our online friends here closely follow Chinese Internet stocks (BABA/Tencent).
Much of Larry’s audience is concerned about the US ADR issue of Chinese Stocks being delisted.
