BofA Securities’ U.S. quantitative equity strategist Savita Subramanian, somewhat tongue in cheek, lists the two biggest risks for 2023 as: No. 1. Not owning equites and No. 2. Owning the wrong equities,
“Our 2023 outlook is for a year of two halves: near-term downside risk amid a recession, earnings cuts and QT / persistent inflation driving the S&P 500 to as low as 3000, then a snap-back as uncertainty, rates volatility and earnings revisions improve .
BMO senior economist Sal Guatieri highlights a big change in inflation pressure – it is now focused on services instead of goods, “Look no further than the two ISM surveys to see what the Fed is up against. While goods inflation is now falling with help from lower resource prices and improved global supply chains, services prices continue to boil, largely due to rapid wage growth. In fact, the price gap in the ISM surveys is the widest on record . Without a material decline in services inflation, the Fed stands little chance of achieving price stability.