This month, Jason Weaver discusses bonds, earnings recession and jobs.
BONDS ARE BACK
2023 Starting yields are the highest in years
The bulk of the Fed tightening cycle is over
Prices typically fall when interest rates rise
Inflation is continuing to decline
Bond market yields are attractive relative to many other income investments
EARNINGS RECESSION
Corporate earnings estimates remain relatively high
Expected earnings recession from
- Higher costs
- Lower margins
- Higher interest rates
- Lower consumer spending
Earnings downgrades outnumbered upgrades in 2022
3rd step in HOPE Framework
JOBS
Unemployment is likely to rise in 2023
The Fed forecasts unemployment could rise next year to 4.6% from its current 3.5%.
Earnings reports will also be watched for further evidence of layoffs
Most pronounced in Tech
Amazon, Salesforce, Alphabet, Microsoft, Meta, Netflix have all begun to layoff
Last Step in HOPE