At the end of the year, we can look back and pick over the coals of the old and look ahead to the new. But of course, it’s an artificial delineation, and the forces mustering at the end of the old year such as recession risk, rising interest rates in response to inflation, Ukraine and COIVD all are still in play.
Remember U.S. stocks just polished off their worst year since 2008 with a loss on Friday, bringing the year-to-date decline for the S&P 500 to 19.4%, its largest calendar-year drop since 2008. The only years where stocks fared worse were 2002, 1974 and 2008. The same holds true for the Dow Jones Industrial Average, which shed 8.8% this year, and the NASDAQ Composite, which lost 33.1%.
As previously high-flying megacap technology stocks and other interest-rate sensitive assets crumbled, value stocks outperformed this year, sending the Dow to its biggest calendar-year out-performance vs. the NASDAQ since 2000. The blue-chip gauge also recorded its biggest out-performance vs. the S&P 500 since the index’s creation. Energy stocks were a lone bright spot, as the S&P 500 energy sector recorded its best year on record with a 59% gain.
CONTENTS
0:00 Start 0:16 Introduction 0:30 Annual Performance 1:53 US$ 2:50 Bonds And Stocks Fall 6:15 Oil 6:40 Gold 7:00 Bitcoin and Gold Compared 8:50 Europe and UK 11:09 China And COVID 11:35 Australia 13:22 Recession Scenarios 19:42 Factors To Consider 24:15 Regulating Crypto 26:04 Conclusion and Close
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Property prices are political not economic. So, while analysts are talking about property price corrections in 2023, and higher levels of defaults; and the IMF talks of a dysfunctional market; the truth is most politicians prefer to sit on the fence and mouth platitudes, to avoid upsetting voters.
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More weakness in markets as we close the year. The realisation of higher rates and recession risk hitting earnings is hitting home as big-tech takes another hit.
So we look at the market action and consider the signals ahead.
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I caught up with Adam Stokes, for a review of 2022 and into 2023. The Crypto community took a number of body blows in the year, most notably the failure of FTX, against the backcloth of Central Bank Digital Currency pilots and calls for increased regulation.
And how does all this play into the need to control inflation, and for sound money? Where might 2023 take us?
This is an edited version of our latest Live show, with Leith van Onselen Chief Economist At Nucleus Wealth, and Founder Contributor to MacroBusiness. Go to the Walk The World Universe at https://walktheworld.com.au/
Digital Finance Analytics (DFA) Blog
DFA Live Q&A: HD Replay Leith van Onselen: The 2023 Property Recession? [Podcast]
This is a recording of a recent interview I gave on ABC New Radio, where I discussed the latest IMF report which highlights the risks to the Australian Property market. Australia has one of the most “misaligned” housing and rental markets in the developed world, leading to high priced land and houses.
Property prices in Australia may be as much as 50 per cent above what an average household can afford as interest rates rise, a global analysis has revealed while warning the market is at risk of a major crash as interest rates are pushed up to bring inflation under control.
We hold the prize for unaffordable housing, and rents, and the IMF believe we are due a correction. Is this likely? Will the Government save us?
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Digital Finance Analytics (DFA) Blog
Talking About An Australian Property Price Crash On The Radio! [Podcast]
This is an edited version of our latest Property Rant, and live Boxing Day show in replay, discussing the latest from the property market and looking ahead to 2023.
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Digital Finance Analytics (DFA) Blog
Its Edwin's Live Property Rant Of The Year (HD Replay) [Podcast]
Investors have dumped equities at a record pace in the days since major central banks signaled, they won’t be deterred in their fight against inflation—a fitting end to the worst year for world stocks since the global financial crisis. Equity funds were hit by outflows of almost $42 billion, the highest ever, in a week when the Federal Reserve, the European Central Bank and the Bank of Japan all sounded staunchly hawkish notes in their policy outlook for next year, squashing bets of an imminent return to the era of cheap money.
The markets drifted into a weary close ahead of the Christmas break and closed slightly higher on Friday and Treasury yields advanced as investors digested a deluge of economic data ahead of the holiday long weekend. But this capped a week fraught with worries over the Fed’s restrictive monetary policy and related recession fears, and volumes were way down, with thin trading volumes creating more exaggerated moves Thursday and Friday. On U.S. exchanges 7.75 billion shares changed hands on Friday compared with the 11.41 billion averages for the last 20 sessions.
On the political front, The U.S. House of Representatives passed the $1.7 trillion bill to fund government operations on Friday by a vote of 255-201, paving the way for President Joe Biden to sign it into law.
Investors have been jittery since last week as the Fed indicated that it remains stubbornly committed to achieving the 2 per cent inflation goal and projected rate hikes to above 5 per cent in 2023, a level not seen since 2007. The markets are on edge over what the path for Fed policy is going to be for next year as that’s going to drive the economy and corporate earnings.
CONTENT
0:00 Start 00:17 Introduction 2:00 US Macro 4:08 Latest PCE 6:35 US Markets 8:40 Gold, Oil 10:50 Europe 12:45 Japan Surprise 14:40 China and COVID 16:20 Australian Markets 19:45 Australian Macro 22:30 Crypto 23:40 Close
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Digital Finance Analytics (DFA) Blog
Muddling Through: Market Update For Week To 24th Dec 2022 [Podcast]
This is an edited version of my recent live discussion with Investment Manager Tony Locantro from Alto Capital in Perth as we reflect on the year that was, and what is coming in 2023. Plenty more Locantro Bingo…
We fixed up the audio glitch which was on the live version https://youtu.be/9E4XqabXhzM
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Digital Finance Analytics (DFA) Blog
DFA Live Q&A HD Replay: Tony Locantro - Year In Review And Ahead [Podcast]
We are now in the end game of a massive experiment, which is clearly failing. That experiment, cooked up by central banks, and with support from Government meant that interest rates and mortgage rates dropped, lending criteria loosened, and home prices shot up dramatically. The final phase of the up was through COVID when quantitative easing again drove debt higher, whilst luring households into a false sense of security – remember not rate rises til 2024?
But now, it’s all coming unglued as rates are rising, and the debt burden is becoming overbearing. Take Canada for example – based on a recent EBC report. They say that sky-rocketing home prices earlier in the pandemic raised the bar by several notches for Canadian buyers. But the spike in interest rates since March served a crushing blow in parts of the country.
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Today’s post is brought to you by Ribbon Property Consultants.
Digital Finance Analytics (DFA) Blog
Only Property Price Corrections Can Help Affordability! [Podcast]
