Opinion: 11 predictions for money, tech, stocks and crypto for 2023

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Here are some predictions for 2023 for the financial markets, economy and stocks.

I’ve spent the past year and a half being cautious following the bull market bubble that finally ended in early 2022. After this turbulent year, perhaps now is a good time for us to see the economy turn into something healthy for while.

That would be unexpected in a world where so many CEOs and analysts are predicting tough times.

Keep in mind that the markets and the economy are not the same. And now onto some predictions and comments.

1. ChatGPT and its AI ilk will take another leap forward for worker productivity.

In 2023, we will see the initial blossoming of improved capacity and efficiency as people from many walks of life embrace artificial intelligence. This will lead to a productivity boost over the next three to five years that will rival what spreadsheets, word processors and the Internet have done in the last 30 years.

Businesses will be more efficient and effective in managing their customers, programming, legal fees, etc. Economists will talk about it as a recurring theme by the end of next year.

Improving productivity will mean an upward shock to corporate earnings in 2024, and since the stock market is still pricing in, AI will help lead a tech rebound in 2023.

2. The US economy will be one of the strongest in the world.

Aren’t we already in a recession? A few months ago, there was a debate about whether or not two consecutive numbers of negative GDP growth were a recession. Certainly, the technology industry and the real estate industries are in their own recessions.

I expect a decent US economy with stable corporate earnings in 2023. What’s a surprise?

3. The employment depression in technology/software engineering jobs will bottom out by mid-2023.

In 2024, the demand for such talent will pick up again.

4. Operating margins will increase.

Margins for Meta Platforms Inc. META, +0.07%, Amazon.com Inc. AMZN, -0.21% and others in the tech space that have cut jobs and luxuries will expand. This will lead to a pretty good year for the FAANG equity group (Facebook holding Meta, Apple Inc. AAPL, +0.25%, Amazon, Netflix Inc. NFLX, +1.29% and Google holding Alphabet Inc. GOOGL, -0.25% GOOG, -0.25% ) and mega caps in general, with most up 10% to 15%.

5. The Federal Reserve will not cut interest rates, the fed funds rate will be in the 5% to 6% range for most of 2023.

The Fed won’t have to cut rates as the US economy stabilizes and begins to surprise on the upside by the end of the year. It is healthy for people to be rewarded for saving money in a bank or lending to a government.

As someone who has lived through Fed-induced bubbles and crashes in my nearly 30-year professional career, I would love to see a normally growing economy with near-natural interest rate levels. for some years.

6. Inflation will rebound month by month.

CPI data will be the most volatile we have seen in decades. This is another reason why the Fed will not be forced to cut interest rates.

7. We will end 2023 with two-year Treasury bills yielding 3% to 4% and 10-year Treasury bills yielding 4% to 5%.

That would be normal and healthy.

8. The stock market will be flat for the year.

The Dow Jones Industrial Average DJIA, -0.22% will fall another 3% to 5%, the S&P 500 SPX, -0.25% will be flat and the Nasdaq Composite Index COMP, +5.91% will rise 5% to 10%.

Small caps will be crazy to watch, as there are hundreds of them that will run out of money. Again, some will be ready to roar. I expect the iShares Russell 2000 ETF IWM, -0.31% to underperform the Dow Jones.

9. Oil will drop to $50 or $60 a barrel and stay there for most of the year.

OPEC+ member states will start to over-pump while the US increases its supply. This will be a boon for the rest of the US economy, as it will also mean that many energy companies’ earnings estimates will have to fall, putting pressure on their stock prices.

10. Bitcoin will bottom out at $9,000.

After bottoming, bitcoin BTCUSD, -0.12% will bounce between $11,000 and $15,000 for most of 2023. Ethereum ETHUSD, +0.29% will bounce between $300 and $600.

There are still billions of dollars in valuation for a few hundred cryptocurrencies that will be wiped out in 2023, and the Securities and Exchange Commission and the Department of Justice will come to the rescue by finally bringing charges against some of those involved. in their sale. .

11. The space revolution is progressing, but not quite taking off.

I would love to buy back space stocks, but we have to wait for the next batch of good private space companies to go public in the next two to five years. I’m keeping Rocket Lab USA Inc. RKLB, +2.17%, because I can’t believe companies like Boeing Co. BA, +0.84% ​​or countries like the UK wouldn’t want their own capacity orbital launch. Rocket Lab can be purchased at a huge premium, it is currently valued at less than $2 billion.

Thanks to each of you for reading Revolution Investing on MarketWatch. Good year!

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