Soft landing or hard landing for 2023?

[Lsbcal]

Will the stock market have a soft landing in 2023 or will it be a hard landing?

Here is what a soft landing looks like:

And here is a hard landing:

See my next response for statistics of previous bear markets.

 

[Lsbcal]

Here is the data on recessionary and non-recessionary stock market declines:

 

[Bigdawg]

Haha. First to vote. I said hard. Planning on -15% equity market. Personnaly sitting pretty good. DW and I at 51 and 57 still working. FI but working. Plenty of time off for travel. Feb=2 weeks in St Croix, Apr= frozen 4 in Tampa with my son. First week of June=Quick 5 days to Belfast to see our British friends. July=one week in Costa Rica all inclusive dive trip. October=Rock festival in Vegas with my son.

2 military retirements are COLA along with jobs. Work at least through 2023 for me. DW probably 4 more years.

Best of luck to all of you in 2023. Should be an interesting year. Between 401 and play account, I will drop 30-40 into the market. Will add 5-10k to cash reserve.

 

[Jerry1]

I’m hopeful that 2022 was the worst of it. So, I guess that’s a soft landing. However, I don’t expect and upside in the market for 2023. I think we’re heading into stagnation and hoping we don’t have stagflation.

 

[Spock]

none of the above. My bet is the fed is going to turn the money printer back on sooner than later... Powell has already broken the ice by mentioning raising the inflation target.
But then I believed it was impossible for the fed to just print money to fund the debt, yet here we are.

 

[Lsbcal]

none of the above. My bet is the fed is going to turn the money printer back on sooner than later... Powell has already broken the ice by mentioning raising the inflation target.
But then I believed it was impossible for the fed to just print money to fund the debt, yet here we are.

But the Fed is executing QT. So you think the Fed will blink this time?

 

[audreyh1]

Looks like the non-recessionary “bear markets” since 1987 declines were all less than 20%, which for most pundits don't actually count as bear markets.

I am not going to guess as it would be a coin toss.

I will be buying stock funds in Jan due to rebalancing and I’ll just grin and bear whichever “landing”.

 

[foxfirev5]

I'm hoping for a soft landing while believing this may portend a longer period of sluggish growth. My LMP portfolio still has about 4 more years of maturing bonds to fill out my long term TIPS ladder rungs. At this stage of the game I'm only hoping TIPS real yields stay above 1% or so. Not a big deal either way.

If it's a hard landing reinvested dividends will buy more shares. Still not a significant issue.

 

[Lsbcal]

What is not know are the unknowns for 2023. In 2022 we these very negative "unknowns":
(1) spiking high inflation
(2) Russian invasion of Ukraine

The late Marty Zwieg coined the saying "don't fight the Fed". Bears thinking about.

I'm going into 2023 feeling the opposite of how I felt going into 2022.

 

[audreyh1]

The late Marty Zwieg coined the saying "don't fight the Fed". Bears thinking about.

I'm going into 2023 feeling the opposite of how I felt going into 2022.

Well maybe that’s good!

 

[njhowie]

But the Fed is executing QT. So you think the Fed will blink this time?

When has the Fed not blinked? Cues will be taken from the stock market. If they hike and DJIA has 20% peeled off, there will be an immediate halt to the hikes and the next move will be lower. At this time, Powell has not seen anything significantly bad happen in the face of the hikes, and he's waiting for something. Unfortunately, when something bad does happen, it's going to be too late at that point - there is a 6 to 12 month lag for hikes to flow through the economy. When they stop, there is still more pressure to be felt by hikes that are still working their way through. Then he'll do just the opposite. However, the rate declines will happen much more quickly than the hikes.

We've seen this all before.

As for the poll - "I like bacon is missing".

 

[Lsbcal]

Well maybe that’s good!

Yes, I am aware that my statement is just a confirmation of the past. But the market really doesn't care what I think. Just how I move my money.

 

[Lsbcal]

When has the Fed not blinked? Cues will be taken from the stock market. If they hike and DJIA has 20% peeled off, there will be an immediate halt to the hikes and the next move will be lower. At this time, Powell has not seen anything significantly bad happen in the face of the hikes, and he's waiting for something. Unfortunately, when something bad does happen, it's going to be too late at that point - there is a 6 to 12 month lag for hikes to flow through the economy. When they stop, there is still more pressure to be felt by hikes that are still working their way through. Then he'll do just the opposite. However, the rate declines will happen much more quickly than the hikes.

We've seen this all before.

As for the poll - "I like bacon is missing".

They did not blink under the Paul Volcker Fed. But inflation of the 70's was much worse then and longer lasting too.

 

[38Chevy454]

My crystal ball sees the following:
1) I think the labor market is going to go bad, with much more layoffs in the beginning of the year.
2) The effects of inflation will finally have consumer spending reduce down, now that the holiday spending time is done.
3) Republican control of the house will start to reign in govt spending; plus makes for gridlock which keeps govt from doing much.
4) Housing is already in significant pullback thanks to higher interest rates.

All of these contribute to factors causing a hard landing, IMHO. Hoping that second half of the year will start the recovery. I am in the "already in recession" camp, so the question is how hard it will bottom before things improve. I am quite pessimistic about govt lately with any ability of govt to do anything for good of the American people.

 

[aja8888]

Hard or soft landing doesn't matter as long as you are positioned for the landing and have a plan.

 

[audreyh1]

My crystal ball sees the following:

2) The effects of inflation will finally have consumer spending reduce down, now that the holiday spending time is done.

The effects of inflation have already made consumer spending reduce, including the holiday spending FWIW. I expect that will continue.

 

[tulak]

I'm going into 2023 feeling the opposite of how I felt going into 2022.

That's why I voted for a soft landing.

I tend towards contrarian viewpoints and optimism. Both make me think that 2023 won't be so bad.

And if I'm wrong, there's always 2024!

 

[frayne]

How about a sideways landing of the usual up and down markets driven by the usual irrational fears and joys.

 

[troutnut1]

OK I'll bite.

No landing at all. Not soft or hard. Markets soar! People rush to buy "stuff"with their money before it loses all value. This incudes stocks. Of course it is just the natural consequence of our governments massive counterfeiting in order to monetize its ridiculous debt from giving away money to all manner of stupid causes. Costco hot dogs sell for $12 instead of $1.50 and gas $24 a liter (fuel companies finally learned this from Dreyers). Median house price in Orange County CA is 3.2M for a 60 year old 3 /2 with 1250 square ft. Landlords become an endangered species because it is no longer safe to rent out any real estate for more than 3 days. Airbnb is the only way to rent. But most places have outlawed it because of wild parties. California falls into the Pacific from the weight of its massive debt and socialist policies. Newsome moves to Montana next to his families ranch in Stevensille, akong with Kevin Costner, and the entire Yellowstone crew and cast. Electric vehicles are banned in Montana and Idaho. Bill Gates buys the Yellowstone cattle for a song after inventing a secret vaccine for brucellosis. Elon gets a low appraisal and sells Twitter for $400. But he'll have a loss carryforward for thousands of years.

 

[audreyh1]

GDP and employment still look strong, inflation is coming down a bit. Still it’s very hard to know as apparently consumer spending has reduced quite a bit.

 

[flyingaway]

I think it will depend on the Ukraine war. If a nuclear weapon is used and the war is escalated, the market is going to crash, down at least another 20%.

Frankly speaking, if Ukraine wants to retake Criema, I don't know how that can be avoided, unless Putin is overthrown.

 

[ut2sua]

Here is the data on recessionary and non-recessionary stock market declines:

I am from the optimistic camp. Looking at the tables, most recessions last less than 2 years. S&P500 is already down by ~20%, so valuation is not as high as before. The US looks strong both from an economic fundamentals and as a country (vs the rest of the world). Landing may be soft or hard, but I expect stock valuation to recover back to the peak toward the end of 2023. If I am wrong, I am no worse than some certified experts out there

 

[street]

I voted hard landing but am optimistic overall. There is so much positive in our economy, but I think eventually it comes crashing down. I'm doing nothing different from what I have done in the past.

 

[pb4uski]

Will the stock market have a soft landing in 2023 or will it be a hard landing? ...
See my next response for statistics of previous bear markets.

Well to begin with hard and soft landings are typically in reference to the economy, not the stock market. The stock market is not the economy and the economy is not the stock market.

That said, I'm hopeful for a soft landing or mild recession. OTOH, I think the stock market is likely to flounder around in 2023.

 

[MarieIG]

I have concerns.