Why are markets moving up to start 2023? – The Average Joe


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    Why are markets moving up to start 2023?


    January 18, 2023

    Kids, behold… the January Ron Swanson effect.

    Nearly every corner of risky assets are up to start the year:

    • The S&P 500 ($SPY) is up 3%.
    • The Nasdaq ($QQQ) is up 5%.
    • Bitcoin ($BTC) is up 25%.
    • Chinese stocks ($PGJ) are up 13%.

    There are several factors helping drive up the market:

    1/ China has shifted its zero-COVID policy stance to reopen at all costs — easing fears of a global recession.

    2/ The US Dollar Index ($DXY) has fallen over 10% from a high last September (compared to a basket of major currencies).

    3/ Inflation is trending lower, as shown by the December CPI and PPI reports.

    But a recession is still in play. Investors are hoping for a soft landing — interest rates rising without triggering a recession. Too early to say, but companies are preparing for the worst.

    • Tech giants continue making significant layoffs that are already running into the hundreds of thousands.
    • Analysts are expecting corporate earnings to fall this earnings season.
    • Early reports from major banks show preparation for a potential recession.

    Remember this equation: The stock market ≠ the economy.

    We’ve said it many times, and we’ll continue pounding this into your heads. Markets are forward-looking, and current prices reflect future expectations.

    While this could turn out to be a temporary bear market rally, a potential market bottom in 2023 seems like a real possibility. Locked and loaded.

    The Average Joe: Investors, under our tutelage in 2023, we shall turn you from gladiators into Swansons.

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