Cobra's Market View

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Historical data shows there is a high chance that the U.S. stock market may record a return of 20% or more this year after the three major indexes closed 2022 with their worst annual losses since 2008, according to Fundstrat Global Advisors.

Fundstrat’s head of research Tom Lee said stock-market investors are more likely to see a year of positive returns than a flat year after stocks performed badly in the previous year.

In the 19 instances of a negative S&P 500 index SPX, 0.87% return year since 1950, over half of those years were followed by the large-cap index gaining more than 20%, according to Fundstrat’s data. Only two of those years were followed by a flat year with a return ranging from 5% to negative 5% .

Global ‘disinflation’ underway

Lee and his team think the U.S. inflation will undershoot the Federal Reserve and markets’ consensus by a wide margin in 2023.

Wage gains are set to slow

“Despite what look like ‘strong’ jobs markets, leading indicators already suggest wage gains are set to slow,” Lee said.

The employment report on Friday showed wage growth was less than expected in December in a sign that inflation pressure could be easing. Average hourly earnings rose 0.3% for the month and increased 4.6% from a year ago, slightly less than expected and down from 0.4% a month earlier.

However, payroll growth, though it decelerated in December, was still better than expected, a sign that the labor market remains strong even as the economy faces rising headwinds from the Federal Reserve. The unemployment rate, meanwhile, slipped to 3.5% from 3.6%.

Equity (VIX) and bond volatility (MOVE) to fall sharply

Equity and bond market volatility is likely to fall sharply in 2023, in response to a fall in inflation and a consequently less hawkish Fed, said Lee and his team. “Our analysis shows this drop in VIX is a huge influential factor in equity gains, which would further support over 20% gains in stocks.”

The CBOE Volatility Index VIX, 1.89% was off 6.4%, at 21.03 on Friday, while the ICE Bank of America Merrill Lynch MOVE Index, a gauge of implied bond-market volatility, was last at 119.53.

JFR wrote:https://www.marketwatch.com/story/histo ... =home-page

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Some excerpts from the article ...

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BullBear52x wrote:

JFR wrote:https://www.marketwatch.com/story/histo ... =home-page

2023-01-09_07-26-45.png

Some excerpts from the article ...

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When was the last time Tom Lee ever go bearish in his career?

JFR wrote:

BullBear52x wrote:

JFR wrote:https://www.marketwatch.com/story/histo ... =home-page

2023-01-09_07-26-45.png

Some excerpts from the article ...

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When was the last time Tom Lee ever go bearish in his career?

Not so many bears, compared to bulls, it seems, amongst the "oracles of Wall Street."

BullBear52x wrote:

JFR wrote:

BullBear52x wrote:

JFR wrote:https://www.marketwatch.com/story/histo ... =home-page

2023-01-09_07-26-45.png

Some excerpts from the article ...

.

When was the last time Tom Lee ever go bearish in his career?

Not so many bears, compared to bulls, it seems, amongst the "oracles of Wall Street."

None, He is buy side. nothing wrong with that as long as we recognize that the author is permabull.

JFR wrote:

BullBear52x wrote:

JFR wrote:

Those writers have to be bullish, methinks. Gotta be optimists.

This trader does not really care which way the market goes, but I prefer it to be smooth and orderly. Down market brings value plays, and shorts. Up market is no doubt easier to play.

I think you pretended to be a permabear for a while there. Ha ha.