Market Outlook Winter 2023

Howe & Rusling Macroeconomic Committee

Market Outlook Winter 2023


At the start of every calendar year, we see the major financial institutions providing their outlook for the markets. Usually, the outlooks are hedged by not being too divergent from consensus, but nonetheless, they all must predict something, knowing that if their thesis comes true, they can lay claim to have made the right call.

As we prepared for this Outlook, we did our due diligence and read these outlooks, trying to glean clues to the future. As expected, they all had hinge points on inflation and the subsequent Federal Reserve’s rising interest rate campaign to quell inflation. They mentioned China, and Russia, and how they could and would impact their thesis. They all mentioned recessions, but not all in the same thought process, with some saying it will not happen in the U.S., others saying a recession will come (but they weren’t so clear on when), while others said developed countries (outside of the U.S.) will surely have a recession.

As it pertained to the markets, divergence was more pronounced, but earnings were the theme of their predictions. Many thought the early part of 2023 would see an earnings retreat, an easy bet given the abominable 2022 markets, with the latter half of 2023 being better. At least one said the opposite, with early earnings still good early in 2023, and then a pullback in the second half.

The problem with all these Outlooks is they were very reminiscent of a year ago when most of these financial powerhouses made the ‘safe bet’ saying markets would ‘correct’ in the first half but recover in the latter part of the year. The conventional thinking was 2021 was a very good year, as well as most of 2020 for growth stocks, and a ‘correction’ was due. Inflation was up, but most thought it would drop as the year progressed, and none predicted the very aggressive actions by the Federal Reserve. They did not predict the continuing China COVID issues or the full impact of a Russian invasion (Russia was in the discussion, but the economic impact was underestimated). The point here is amid all the financial resources and intellectual capital available to these institutions, no one had the secret sauce.

The bottom line is we all can try our best to piece together the past, but accurately seeing the future is impossible. However, our focus remains steadfast on the long-term goals of our clients so we are constantly looking ahead. Being in business for over 93 years has provided us with historical content, aiding us as we adapt during the present, fully understanding the future is merely where the past and present merge.

As our clients know, we are thoughtful investors, balancing the past with the current. Short term results do not make a portfolio. Yes, one year can be a challenge, like 2022, but that could have been said for 2018, which was followed by several stellar market years. Radically adjusting portfolios on temporary events usually proves tragic, for as we have stated, the future is where the past and the current merge, with the past having significant weight in the merger.

Our Outlook, for this quarter and moving forward will systematically look at this merger point, taking the past as the foundation, inserting current data, and formulating a move-forward thesis. Enjoy.

Click to read a PDF of our Market Outlook.

Macroeconomic Committee

Our Macroeconomic Committee meets monthly to review economic indicators with the purpose of adjusting client portfolio allocations to reflect current and anticipated economic cycles.


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