Jeffrey Buchbinder, CFA, Chief Equity Strategist, LPL Financial
Quincy Krosby, PhD, Chief Global Strategist, LPL Financial
Jeffrey Roach, PhD, Chief Economist, LPL Financial
Adam Turnquist, CMT, Chief Technical Strategist
The latest episode of the debate between stock market bulls and bears has gotten more interesting. For every valid point from one side, there’s an equally compelling argument on the other side. Perhaps the best reason for the debate is the uniqueness of this environment. The pandemic and its aftermath don’t come with a historical playbook. We haven’t been here before. So we’ll just recognize that the outlook is uncertain, weigh the pros and cons, glean what we can from the past, and give it our best shot. Call us cautious bulls.
TOPIC 1: ECONOMY
Bull case: Consumer is resilient, the labor market is strong, wages are rising, and inflation is coming down steadily.
Bear case: Inflation is still high, leading indicators are signaling recession, manufacturing activity and housing market have slowed significantly.
Background: The global economy will likely slow from the upper-2% range in 2022 down to slightly above zero in 2023 (Figure 1). Much depends on China's growth path now that it has largely abandoned its overzealous Zero-COVID-19 policy.