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

    victorlei

    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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