It’s A Confusing Economic Picture What To Do Next?

Weekly Market Outlook
By Keith Schneider and Donn Goodman

Confusion, or even chaos, has been an accurate way to describe the stock and bond market moves, the economic outlook, and the sentiment of investors over the last few months.

As a result, risk and hopefully opportunity, have also likely been on your mind if you are an investor.

At MarketGauge, anticipating and adapting to “Chaos” in 2023 has been a theme of our messaging to clients all year and prominently reported on in our annual report, “How to Grow Your Wealth in 2023; Top Trends, Themes, and Trades to Watch.” 

A few recent examples of what we mean by chaos include:

1. The 2^ndand 3^rd largest bank collapses in U.S. history.
2. The Fed injects over $300 billion in a bank lending facility thus creating Quantitative Easing while at a time its policy objective to fight inflation is stated to be Quantitative Tightening.
3. Major banks put up $30 billion to shore up deposits at First Republic Bank
4. Chinese spy balloon shot down over the U.S.
5. The housing market is falling at the fastest pace since 2011.
6. Over 300,000 layoffs have been announced this year

And more – for more details see the complete article here

Despite such chaos, 94% of the S&P 500 stocks are rated either a “buy” or “hold” by financial analysts as you can see from the chart below (green and yellow areas). Even with the banking crisis creating confusion and chaos, the financial sector only has 8% of its stocks rated as a “sell”.

Additionally, many of the Nasdaq 100 stocks have rallied as the current banking chaos has unfolded and we head into an interested rate decision by the Fed on Wednesday.

Markets are often counter intuitive, and the best opportunities are not always in stocks. Gold for example, is one area that we’ve focused investors on successfully.

At the heart of the issue of both confusion and chaos is what investors expect to happen next with respect to interest rates, inflation, corporate earnings, and economic growth.

Click here for our weekly outlook in these areas and suggestions for what investors should do next.