January 26, 2023

So Far, So Good

By Peter Bower

Fourth-quarter and year-end earnings are now being reported by many public companies. So far, over 70% of those reporting are beating estimates. Analysts and investors bracing themselves for an earnings recession are not getting the evidence of one yet. Those looking for an economic recession will have to wait longer as well.

All last year, the markets were bracing for a recession. There was an inventory correction during the first and second quarter, but that did not result in a full-blown downturn. This year could see some softness, but the current momentum points more to a muddle-through economy. Some sectors are clearly lagging, but others are steaming ahead. Take construction as an example. Home builders are off, but those projects benefiting from the new infrastructure spending are in the ascent.

Expect more of the same throughout this new year; some good and some not so good – muddling through. The Bull and his partners are working hard to identify strength and emphasize that in portfolios. As a result, we recently made some changes, incorporated some new names, and rebalanced portfolios. Stay steady my friends.

The Lonely Bull