Broker Check
2023 Predictions - Mid-Year Check In

2023 Predictions - Mid-Year Check In

July 18, 2023

Hard to believe but 2023 is over halfway complete.  Time to review where we were wrong, where we were right, and add some nuance to what is happening during the year:

  • The US economy will experience a recession this year. We believe it will be a mild recession, but we are concerned about tenacious inflation.    
    • As of July, there is still no recession. However, looking at a deeply inverted yield curve (as of today the 1-year is at 5.334%, the 5-year is at 4.029%, the 10-year is at 3.822% and the 30-year is at 3.938%!), employment numbers (stagnant except for services, healthcare, leisure and hospitality, and government jobs), and earnings slowdowns (not to mention historically high price to earnings ratios in stocks) – it looks as if the writing is on the wall. 
    • Right or Wrong – too early to tell


  • The S&P 500 will finish down 2% (3,760) on December 31, 2023.
    • The S&P is up nearly 19% year to date. It would take a full bear market (decline of 20% or more) to reach our forecast.  Although we do not think it is out of the question, it seems too big a pullback at this time.
    • Right or Wrong – we’ll mark as a miss at this point.


  • The 10-year Treasury yield will be at 4.00% on December 31, 2022. At the end of 2022 the 10-year sat at 3.88%.  We think there will be a flight to treasuries as the recession takes grip.  However, we also believe inflation will be stickier than markets are predicting.
    • The 10-year has already hit over 4% several times this year.  We believe the Fed will continue to raise rates one or two more times this year, before pausing and then cutting rates (if our prediction of a recession is correct). 
    • Right or Wrong – we feel this is correct.


  • The Fed will raise the overnight rates to 5% in 2023 and hold. It appears the Fed is looking at a 0.25% rate increase at the first meeting.  We believe inflation is persistent and will require the Fed to continue to raise rates, perhaps with a pause to evaluate the economy. 
    • We’re already at 5.25% (up from 1.75% one year ago!). We now think rates are likely to hit 5.75% before the Fed pauses.
    • Right or Wrong – Not far off, but we’ll take a wrong on this one.


  • Inflation will be transitory, if your definition of transitory is a long time. Inflation is here to stay through 2023.
    • We are not sure why the Fed is not getting roasted for their “transitory” inflation language last year. It was foolish then, and even more so in hindsight.   We have already seen the failure of several banks this year (Silicon Valley Bank, Signature Bank, and First Republic Bank).  These failures were caused in large part by the banks listening to the Fed language of no long-term inflation and buying long-dated treasuries.  When the Fed began to aggressively raise interest rates contrary to their “transitory” language, these banks (and there has to be others out there) could not pay higher rates to their customers because the bank was locked in on long treasuries that were paying less than short-term treasuries.  This began a bank run as customers moved their cash away to banks that could pay higher rates (to banks that did not go heavily into long-treasuries).
    • Right or Wrong – 100% correct.


  • The Russia/Ukraine issue will NOT slowly go away. This has evolved into a fight for the survival of two dying countries.  Ukraine simply does not have the population to hold Russia off.  However, the rest of the world has seen it fit to arm the Ukraine to the point to hopefully halt a Russian advance.  This will continue to be a war of attrition, bleeding off the youth of a once mighty empire.
    • This has become a WW1 trench-warfare slog. This favors Russia in the long-term just because of numbers.  The US and Europe are getting what they wanted, Putin is clearly destabilized as exampled by the Wagner putsch, but at what cost of lives?  Not to mention that Russia is the largest nuclear armed country in the world.  Will we push Putin to use the nuclear option?  If we manage to have Putin overthrown, will his successor be an even bigger threat?
    • Right or Wrong – 100% correct.


  • Home prices in the US will experience a 5-10% decline in prices. There is not a repeat of the housing crash of 2006-11; inventory is still low, pricing is close to replacement value of the home, and homeowners are reluctant to sell while locked into low rates.
    • Due to the above-mentioned conditions, the housing market has slowed (down about 1.5% from it’s high last year).
    • Right or Wrong – With rates continuing to rise, we feel that we will be correct on this forecast.


  • Electric vehicles will experience a pullback in demand.  It may not reflect in the numbers of units sold, but there is too much noise in the system regarding:  The pollution created in manufacturing the vehicles.  The de facto slavery that permeates the cobalt mining industry.  The lack of electrical infrastructure to support a large fleet of electric vehicles.
    • Units sold have gone up, but that is mainly due to more manufactures offering electric vehicles. The percentage increase of electric sales year over year is decreasing and inventory is growing (indicating weaker demand). 
    • Right or Wrong – this is difficult to call for this year, but the trend seems to indicate lower consumer demand and the public becomes better informed about the true environmental and social impact these “green” vehicles have. We are going to check the “right” box for now.


  • China will experience social unrest. Another dying empire.  There has already been capitulation over COVID lockdowns.  As food becomes less available due to the Russia/Ukraine war, look for increased vocalization/unhappiness from the masses.
    • China’s economy is slowing and unemployment is growing. This winter will see less food available due to the Ukraine war.  Look for a more conciliatory China to reach out to the US and Europe in an attempt to grow exports.  However, as the US continues to pull back from protecting the seas for all global shipping, manufacturing will move out of China.
    • Right or Wrong – Right.


  • Bitcoin will continue to drop in price. Too much competition (including governmental), too much volatility, too much taxation, too much pollution (energy costs).  It feels like a race to a value of zero.
    • Started the year at $16,605, currently at $30,270 (up 82%!).
    • Right or Wrong – Although we feel that our reasoning is correct, we were too early on this one. Barring a huge recession, we’re taking a wrong on this one.
  • Mid-Year Scoresheet
    • Right – 6/10
    • Wrong – 3/10
    • Too Early to Tell – 1/10