In order to find out if the stock market will crash in 2023, you need to look at some factors. These factors include inflation and affordability. Both of these factors will determine whether or not the economy will continue to grow in the near future.
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Goldman Sachs
Goldman Sachs is famous for its great vampire squid style of business. The investment banking giant has been relentless in its pursuit of anything that smells like money.
This year has been a tumultuous one for global markets. It has also seen several major indexes reach the technical bull market. Some experts believe that a slowdown in global growth may be the key to a robust recovery in 2023.
Although the US is not in a recession, many investors are concerned that the economy will soon enter into a downturn. In fact, Goldman Sachs has warned that the chances of a recession in the next 12 months are higher than normal.
There are a number of reasons for this. One of them is the ongoing aggressive interest rate hikes by the Federal Reserve. Many economists believe that this action will lead to higher unemployment. Other concerns include the slowing of wage growth and core inflation.
JPMorgan Chase
If you’ve been investing in JPMorgan Chase stock, you’ve been taking a big hit. Since January, shares of the bank have fallen 18%. They are now trading at 1.5 times book value. That means investors aren’t getting as much for their money as they could.
The good news is that the company’s stock is still cheap and has a solid long-term case. However, the short-term outlook isn’t so great. Some of the firm’s analysts predict that US stocks will crash in 2023.
It’s not surprising that JPMorgan Chase expects a recession in 2023. A severe recession would mean higher loan losses and lower profits. This may cut into the bank’s net interest income (NII), which is the profit the firm makes on loans.
Jamie Dimon, the CEO of JPMorgan Chase, is more optimistic about the economy than he was at the beginning of 2008. He believes the U.S. will recover, though it may not be as fast as some investors think.
Burry’s inflation projections
Burry’s inflation projections for 2023 were based on four factors. He noted that the global supply-demand imbalance is driving elevated inflation.
He pointed out that a lack of skilled workers and a chronic shortage of manual laborers are pushing up blue-collar salaries. There is also a shift towards domestic production. But he warns of the possibility of asset bubbles.
Michael Burry, a hedge fund manager, predicted high long-term inflation in the US, citing a variety of reasons. In addition to global supply-demand imbalance, Burry points to the onshoring boom and changes to the global supply chain.
The Fed is raising interest rates at a rapid pace, which is fueling higher prices. However, it’s likely that inflation will drop lower as the economy improves in the coming years.
Moody’s Analytics
Moody’s Analytics has recently revised its housing market forecast downward. The firm predicts that house prices will fall in at least half of the country by 2023. It also says that a small correction will be necessary to bring the market back into balance.
Despite its bear case, the firm is not expecting a rout like 2008. It still forecasts a drop of 10%, with some markets experiencing much bigger declines.
Some of the nation’s most vulnerable markets are listed on the list. These include Boise, Phoenix, and Salt Lake City.
High interest rates are a major factor, and they are squeezing housing affordability. As a result, buyers have been pulled back from the market. In addition, there are fewer homes available. This is creating a shortage.
Affordability issues keep 2023 from being a huge buyer’s market
The housing market is undergoing some major changes. As more young adults enter the workforce, home prices are rising, but affordability is still a hurdle. It will take a while for a new generation of homeowners to be flush with cash.
To make matters worse, some experts think the mortgage rate will rise. High rates hurt participants in many ways, including those with variable rates and high levels of debt.
Nevertheless, it’s not all doom and gloom. Housing inventory is growing and the rate of home sales in late 2022 is a good indicator of annual sales in 2023. While it’s unlikely to see a spike, there will be more homes on the market. This will help keep the housing market stable.
In addition, the flurry of activity that occurred in the last few years has ended. However, the housing industry isn’t immune to the effects of geopolitical change.
