Happy Saturday, readers. I’m senior reporter Phil Rosen.
Today’s newsletter features my conversation with Invesco’s global market strategist, Brian Levitt.
He broke down his predictions for the new year and where to put your cash as the Fed’s policy approach begins to shift.
After that, I’ve rounded up some of the very best stories from a busy week in markets, just for you.
Brian Levitt is the global market strategist Invesco. This conversation has been lightly edited for length and clarity.
Phil Rosen: What’s your current economic and market outlook?
Brian Levitt: The economy is likely to go through what we think is a more mild recession, but we would expect markets to recover coincidentally with that but we expect it to be a more positive year for risk assets.
I believe the market has bottomed for this cycle. But in the near term, the market may retrace some of that downside. What likely starts to happen as the Fed pauses with inflation coming down, the market starts to price in a new cycle.
How should investors position themselves this year?
BL: We’re in the period where you may have some near-term downside risk, but the challenge for investors, if you’re trying to time a 5-10% move down, you run the risk of missing the recovery.
We should try to be positioned for the next couple years for a sustained recovery.
The part of the market that trends to do best [in this environment] is higher yield corporate credit or bonds.
And in a recovery you want to be exposed to the cyclical parts of the market, including sectors like financials, materials, and industrials.
What’s your year-end prediction for 2023?
BL: Inflation will come down rapidly, and while there may be some near-term volatility, markets will finish the year positive. The S&P 500 will finish the year above 4,000.
And here’s are the top stories from markets this week:
1. Drivers could see gas prices surge to nearly $7 a gallon in some US states. Refinery issues may cut further into supply and demand from China looks poised to come roaring back, according to GasBuddy: “2023 is not going to be a cakewalk for motorists.”
2. Elon Musk’s lawyers subpoenaed the head of Saudi Arabia’s $620 billion wealth fund. The reason? The case involving Tesla’s “funding secured” tweets.
3. At Amazon, there’s chatter and jokes about Jeff Bezos coming back as CEO. The online retail giant is in the midst of massive layoffs and a plummeting stock price. Here’s what people are saying inside the company.
4. Tesla stock has taken a beating in the new year. The EV maker logged just over 405,000 deliveries in the fourth quarter, falling short of analysts’ estimates of 430,000. In 2022, Tesla’s share price plummeted 69% — erasing just under $700 billion in market cap.
5. Crypto hackers swindled $3.7 billion in digital assets last year. TRM Labs’ head of legal Ari Redbord tells me 2022 was the “year of the hack.” In his estimate, North Korean criminal groups accounted for more than $1 billion of the stolen funds.
Edited by Max Adams (@maxradams) in New York.