Jan 9, 2023
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Barry Knapp of Ironsides Macroeconomics rejoins the podcast to discuss his surprisingly sanguine view of the economy in 2023: Why cyclical stocks should outperform the technology and defensive sectors, and why he's expecting inflation to drop to 3.5% by the second half of the year.
Content Highlights
- Inflationary recessions are different from deflationary ones. The last four were the latter. If there is a recession this year, it will be the former (02:18);
- Earnings downside is limited in this scenario, by 5% based on what happened in similar situations in the past, and earnings should actually go up (5:56);
- Tech margins should continue to be under pressure but economically-sensitive cyclical stocks should see margin expansion (10:50);
- The US labor market has actually started to weaken considerably -- and not due to Fed policy (12:18);
- There have been some big adjustments in the labor market post-pandemic (16:47);
- The 'wealth destruction effect' from tech stocks selling off is negligible (27:35);
- One point of concern: the deficit. This is where the implosion in wealth could affect things (32:59);
- The coming budget battle in Congress is worth paying attention to (34:41);
- The 'higher for longer' Fed interest rate hike thesis has gained traction. What this means for stocks (43:27);
- Inflation: Expect 3.5% CPI by mid-year (47:37).
More Information on the Guest
- Substack: Ironsides Macroeconomics;
- Twitter: @BarryKnapp.
Not intended as investment advice.