Ingram’s January 2023

Chart Title Dow Jones Industrial Average 2022

- 5,000.00 10,000.00 15,000.00 20,000.00 25,000.00 30,000.00 35,000.00 40,000.00

But projections of astronomic oil prices—$150 a barrel? $200? More?—were well off the mark, and in the first weeks of 2023, they stand about where they were a year ago. That’s taken some of the bite out of inflation, but higher wages, considerable cash on hand for the nation’s wealthiest quartile, continuing strong demand, and linger ing supply-chain issues will continue to pressure prices. The result? “In 2023, the Federal Reserve will continue to battle inflation and hike rates, reaching its terminal rate in the first half of the year, while inflation slowly dissipates,” said KC Mathews, chief economist for UMB Bank. “This will cause economic activity to slow, perhaps to a recession-like pace, causing financial markets to be choppy, yet producing positive returns.” In short, he says, “We think the economic landing will be bumpy, experiencing a short-lived, mild recession … prepare for landing.” Chris Kuehl, chief economist for Armada Corporate Intelligence, also points to rising wages and low unemploy ment as factors complicating the Fed’s task. Still another: the lingering pandemic. “The potential wrinkle is China,” Kuehl says. “If they return to normal levels of production, there will be renewed congestion issues and higher transportation costs. On the other hand, the COVID outbreak could force anoth er retreat, and the supply chain break will still be a factor.” For investors, Greiner says, “services—companies that provide services, not goods, are well poisoned in general” for growth this year. “Consumers’ desire to spend on ser vices seems to be pretty robust. … Companies reliant on export activity should do fairly well because the value of the dollar will be lower than right now, and that will make their goods and services more competitive than they are today.” The flip side of that is anything touching housing— construction, remodeling, furnishings, and the like. But interest rates will have to stabilize, Greiner said, before the housing sector will see some traction. At Commerce, said Colbert, “we remain somewhat defensive on the stock market in general, favoring U.S. assets over international, and overlaying most of our stock picking strategies with a focus on those stocks that have shown to have lower historic price volatiles, are somewhat defensive in nature and are generally of higher credit qual ity. We will likely remain somewhat defensive as we expect a U.S. recession will materialize in the back half of the year. Investors might find hope in his assessment that, if a

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Chart Title Oil Prices 2022

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Chart Title 10-Year Treasury BIll Rates 2022

0 0.5 1 1.5 2 2.5 3 3.5 4 4.5

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recession takes hold, “this could provide better opportuni ties to buy stocks in general.” And on the bond front, he believes investment-grade bonds will outpace lower-credit ed securities in 2023. While Stepp & Rothwell doesn’t make sector bets or predictions, Eaton said, “we do think that higher-quality companies that have stable cash flows and are not depen dent upon leverage through debt are more likely to do well until short-term interest rates moderate.” Markets are forward-looking indicators, he noted, “so, as the probability that the Fed will start to ease increases, the stock prices of growth-oriented companies will likely benefit. As always, given that no one can predict the future, we believe that diversification is the key to long-term success, and we encourage our clients to continue to follow their long-term strategy regardless of the current economic circumstances.”

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I n g r a m ’ s

Kansas City’s Business Media

January 2023