Chinese water torture is how I've sometimes described the bifurcated mess of a market in 2022; which in my view was year 2 of a 'Bear Market'; not year 1 as some pundits or analysts contend.

That's rather important to consider as many expect year 3; which is extremely unusual except for Depression, World War, or other calamity. I believe we've had calamities, interrupted by the expected interim 'Bull Market' off the Covid lows from March of 2020; and that ran out-of-steam, masked by distribution in 2021, which was actually the pinnacle of the buybacks and insider selling that really is never adequately explained (as many CEO's promoted their stock for the purpose of additional compensation and then so they could sell chunks?).

Of course we can't say that the two years of decline ('troops' then Generals all eventually piling into the trenches and getting pounded into near-oblivion) will be all we get; as in some stocks it's still ongoing; might see some sales (may be for gains not just losses) pushed into early 2023; and then reprieve. But of course that's the debate as ongoing. I suspect 'Bear' is long-in-the-tooth; but it is conceivable things will struggle awhile more as Fed excessively perseveres in tight monetary policies; essentially opposite their too-low-for-too long 2021 policies that we railed against ponce the Nation stabilizes later in pandemic.

My inclination tends to be better 'pause' sooner than later; but it requires not just milder tone (or 'pass' at next FOMC on hikes), or Chinese economic signs of progress that they actually increasingly talk of; not thwarted by big Covid. It is Vice Premier Wang who said it's a 'new era' of Covid policy and economics.

Realize many variables are out there; and more predictions for 2023 than the number of pundits we even knew existed. Here, we'll try to assess the flow; as we did in calling the 'actual' bubble bursting in 2021; the tough 2022; including calling for rallies off the June and October lows (a debatable 'erratic' complex bottom for S&P); and the prospect that S&P .. even now.. hovers nearly at the same ~3800 level we'd sort of traded around for months. Tension on the tape.

In sum: You know the variables; and I won't dwell on them this weekend as a New Year's celebration approaches. For me there is also gratitude; this year was year two in a row of challenging health issues; Covid severe in 2021 and triple heart procedures; and then this Thursday's fortunately minimal personal impact from being rear-ended while fully stopped in front of a nearby mall. I'm ok after a couple CT scans in the ER. (And I already had enough in 2022.)

(It was such a hard impact that it pushed my car into the one ahead; 3 ladies as well as a baby. The driver that hit us had no license (figures in Florida). So I deal with it; but once again thankful to be fairly resilient in the ordeal(s). (I'm not indestructible; it fortunately just seems that way haha.)

2023 is going to be a better year if we can avoid a direct conflict with Russia; sidestep China's latest massive Covid outbreak again; tame the Fed zealotry; and realize that 'high PE's are seen twice:' at the highs ... and at the lows too.

Bottom line: How bad must things have to get to motivate the Fed pivoting a bit ? May not be as severe as a majority of analysts persist thinking; although I understand their frustration as the 2022 year ends with Wall St. performance bonuses pummeled almost as much as the markets.

Mega-caps (which they mostly own, hence their despair) were rotten to their core; but it's actually the 2nd not first year of serious downside 'trending'. So that's underlying my suspicion of something different for 2023; providing we're able to extricate Russia from Ukraine; prevent waves of new Covid variant of course (from ravaging the West, as well as China, which has no handle on it); and if the Fed finds a path to recognize they are hurting those they proclaim a lot about helping. Inflation will decline, but some of it has been baked-in.

Lastly, as I mentioned, gratitude for having endured a difficult year for health; in the markets (even though warning of many of these problems advising lighter holdings, gee ... almost for two years now); and now with a moderate accident, I also was to express gratitude to you, our members, for sticking aboard during these challenging financial and personal times. The X-ray technician the other evening briefly chatted about investments and asked me why I don't retire; as it seems sort of time. My response was; well, the brain scan was fine (nothing showed, thus still an air-head haha)... and I think my market work keeps me a bit on top of things, compels me to focus not just on myself; and I think we've helped a bit, especially since just at the onset of Covid and since.

Hopefully so, and will do so again in 2023; and I am clearly not so negative in regards to how the year will go, especially as opponents to stabilization in the world ought to also know what happens if they persist on destructive paths.

Enjoy the celebration; as I give thanks that I'm simply able to welcome 2023, and expect myself and the market to be even more resilient in the new year.

Cheers!

More By This Author:

Market Briefing For Thursday, Dec. 29
Market Briefing For Wednesday, Dec. 28
Market Briefing For Thursday, Dec. 22