What are the key themes/items to watch in 2023? (1) #Inflation is probably the number one item. It’s a global phenomenon, and remains elevated. It’s an additional tax on consumers. (2) as a consequence, #interestrates and #monetarypolicy should be number two. Both official rates and 10 yr yields have risen aggressively due to hawkish monetary policy. (3) Conflicts: war in #ukraine is about to be one year old and will either escalate or will be resolved, since it’s causing a lot of pain to Russia, Ukraine and Europe. The Chinese reunification agenda may bring another leg of tension in #Taiwan. (4) #housingmarket: rapid yield rise usually has a negative effect on real estate. Since there’s a lag in the transmission mechanism, we may see additional declines in the sector this year. (5) Corporate #earnings will determine if we are really in a #recession. They will have an impact on (6) #unemployment which in turn will affect central banks monetary policy. (7) The credit market, where spreads have widen modestly comprares to prior crisis. It’s important to keep an eye on defaults. Finally, we have the unknowns, those items nobody is looking at, that suddenly become very important and key to make investment decisions.
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