Part 1 of our Market Outlook Review and Forecast for 2023

-

 

Economic Outlook Analysis

As traders we are always looking into the future for opportunities we might be able to find. Join us this week as we dive into some analysis on the market and what we may see in 2023.

Inflation and Interest Rates

Inflation and interest rates have been the talk of the town for all of 2022 and will likely remain relevant in 2023. Massive government stimulus seen around the world throughout the pandemic. For the first time in 40 years we saw some extreme inflation accompanied by some serious interest rate increases. The rising cost of living, exacerbated with steep inflation has combined with the challenges of paying off loans at higher rates and we are now starting to see some cracks appear. Host Andrew Baxter notes that most people hear about inflation and assume it is merely economic jargon however it is noticeable at these levels and everything becomes that little bit more expensive with such high inflation. 

Inflation Expectations

The Australian market typically follows the US market however recent actions from the central banks have varied slightly as well as some major data. Host Andrew Baxter has been a fan of Jerome Powell and the Federal Reserve’s communication with investors as to what they are looking to do and clearly signposting interest rate increases. The RBA in Australia has not been so organised and have not communicated their intentions with investors well at all. In both cases, Andrew predicts we should see interest rates continue to rise – at least through the early stages of the year and potentially on the smaller side compared to what we have seen over the last few months.

The Housing Market

Host Andrew Baxter has some predictions about the housing market and what we can expect in 2023. Interestingly in the US, a large portion of home owners are on long-term fixed rate mortgages and have not felt the full force of the interest rate increases on their mortgage repayments. Conversely, many Australians are facing more expensive mortgage repayments due to their variable rate status on their mortgages. This provides a bit of a buffer for the US economy whereas Australians paying far more on their mortgages are more likely to need to sell their homes. The US property market has seen a higher standard of lending as well following the calamity in 2008. Overall, you may see housing activity slowdown a bit in 2023 and some potential decreases in price as well. That said, it should not be quite as bad as the consequences of the global financial crisis.

The Jobs Market

Andrew believes a slowdown in the jobs market is likely. Many people think pay rises are the solution for those that are struggling but the reality is that if employers need to pay staff more they then need to charge higher prices and simply pass on the cost to the consumer. There is always an expectation that businesses will show strong profits and overall growth but it is not always possible for businesses to flourish when the government is imposing higher costs across the board. The tech sector has already shown some signs of layoffs in the US and this is set to reverberate into the Aussie market at some point, perhaps not to the same point.

The Currency Market

The US dollar has been a big story of 2022 and it has strengthened significantly throughout a period of increasing interest rates. Host Andrew Baxter notes that the strength in the US dollar stems from higher interest rates. With the interest rate increases set to slow down in the US, we may begin to see the US dollar return after reaching about 20% higher against other major currencies. The Aussie dollar should also be a beneficiary as the US dollar weakens a bit over the next 12 months.

Comments

Post a Comment

Popular posts from this blog

Navigating the Debt Ceiling: Andrew Baxter’s Call for Principled Leadership

-
Image
  In the midst of complex economic discussions and political wrangling, one voice emerges with clarity and conviction: Andrew Baxter. In his recent insights into the intricacies of the debt ceiling debate, Baxter sheds light on the delicate dance that policymakers must perform to ensure economic stability. Raising the debt ceiling is not merely a matter of bureaucratic procedure; it is a fundamental aspect of fiscal responsibility and governance. As lawmakers grapple with this pivotal issue, Baxter emphasizes the need for principled leadership, bipartisan cooperation, and a steadfast commitment to responsible governance. At the heart of Baxter’s message is the call to rise above partisan divides. In a time when political polarization threatens to undermine progress, Baxter advocates for a unified approach to addressing economic challenges. By transcending political differences and embracing fiscal prudence, policymakers can navigate the complexities of the d...
Read more

Income Investing and Dividend Strategies – Andrew Baxter

-
In the world of investing, income investing and dividend strategies have gained significant attention and popularity among investors seeking to generate consistent returns and build wealth over the long term. These approaches focus on capitalizing on the power of cash flow generated by investments, particularly through dividends, to create a steady stream of income. In this article, we will delve into the concept of income investing, explore dividend strategies, and discuss their benefits and considerations. Income investing revolves around the idea of generating a regular income from investments, such as stocks, bonds, real estate investment trusts (REITs), and dividend-paying funds. The primary objective is to seek out assets that offer reliable and attractive cash flow, allowing investors to supplement their income or accumulate wealth over time. One of the key components of income investing is dividends. Dividends are a distribution of a company’s profits to it...
Read more

Five Things You Probably Didn’t Know About The Stock Market

-
The stock market is a massive puzzle that is changing every day. Nobody knows everything about the stock market, however we have a few things for you that you may not know. Join us this week as we dive into 5 things you may not know about the stock market: Money is Never Lost in the Market For many who have seen their accounts become smaller and smaller over time, this one may be tough to believe. The truth is however, money never simply disappears on the stock market, it merely changes hands. Host Andrew Baxter points out that where there are buyers, there are sellers meaning there is always someone else on the opposite side of any trade you take. What is happening is merely a transfer of ownership between people who have different opinions on where the price is going to go where someone is wrong and someone is right. The majority tend to find themselves on the losing side with a small percentage of people occupying the winning side. When frustrated with the stock marke...
Read more