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This analyst who predicted a double-digit drop in stocks for 2022 now says Jeff Bezos could return to run Amazon

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If Tuesday was any indication of how the market is going to fare this year, then buckle up, it looks like it’s going to be wild. Dow Jones Industrial Average DJIA,
-0.03%
it had a trading range of 537 points, although the blue chip index lost just 11 points at close.

It’s still early enough to look at 2023 predictions, so this time we’re going with one from an analyst who correctly called the market a late 2021. “The S&P 500 will have its worst year since 2008,” said Michael Batnick, research director. from Ritholtz Wealth Management. “I predict this year it will drop more than 15%. The combination of high multiples, high inflation, supply chain issues and raising interest rates by the Fed will be too much for investors to handle.” The S&P 500 SPX,
+0.08%
dropped 19% last year.

Of course, not all of his predictions came true – for example, he said the Fed would eventually cut rates by the end of the year – but it’s still a better record than many. So what does he expect for 2023?

Walt Disney Bob Iger-style Jeff Bezos will return to run Amazon.com AMZN,
-2.37%
after the 50% drop in shares last year, he assesses. “Jeff Bezos spent 27 years at Amazon and has been gone for less than two. In 2023 he pulls a Bob Iger and comes back to stabilize the ship,” says Batnick.

That’s not crazy talk, given Amazon’s stock price struggles, although of course Andy Jassy had the unfortunate timing of starting out as CEO just five months before the first vaccines arrived, freeing consumers from their homes. “Amazon is in a bad business or they do a bad job of running it,” asked Laura Martin, an analyst at Needham, in a late-December note forecasting operating margins of just 2% for the fiscal year.

Similarly, Microsoft MSFT,
-5.17%
just got demoted by UBS, in part over concerns that its Azure cloud business, which competes with Amazon’s AWS, is slowing due to maturing and not just macroeconomic headwinds.

Batnick more widely expects the tech industry to continue with its layoffs — which he wrote ahead of Salesforce.com CRM,
+2.81%
announcing a 10% reduction in jobs – and value to continue to outpace growth.

Some of his other predictions: Bonds will remain a diversifying asset; bitcoin BTCUSD,
+0.83%
will fold; gold GC00,
+0.99%
will set a new all-time record; and stocks will gain double digits. “With the peak of inflation hopefully past, a consumer that is still in good shape, and an investor class that is negative across all sectors, it wouldn’t be a big surprise for stocks to take off,” he says. .

Caveat emptor, however. “These are my best guesses for what will happen next year, and I look forward to rereading them in twelve months, not believing I could be so wrong about so many things,” writes Batnick.

The market

US stock futures ES00,
+0.55%

NQ00,
+0.35%
surged ahead of a torrent of data. The DXY dollar,
-0.51%
fell, and the 10-year Treasury yield TMUMBUSD10Y,
3.695%
was 3.67%.

For more market updates, plus actionable trading ideas for stocks, options and cryptocurrencies, subscribe to Investor’s Business Daily’s MarketDiem.

the buzz

Tesla TSLA,
+0.20%
will be in the spotlight after its 12% drop on Tuesday to its lowest since Aug. 13, 2020. Cathie Wood’s ARK Invest bought $20 million worth of Tesla shares on Tuesday from according to the company’s daily disclosures. Automakers more broadly are expected to release vehicle sales for December throughout the session.

It’s a big day on the economic front. The Institute of Supply Management Manufacturing Index is due to be released at 10 am ET at the same time as the latest job openings report.

Minutes from the latest Federal Open Market Committee meeting are due out at 2pm – keep in mind that Chairman Jerome Powell was very aggressive after the meeting, so there’s a possibility that the summary won’t match his tone. There is growing evidence that inflation has peaked, Minneapolis Fed President Neel Kaskhkari said in an essay published on Wednesday morning. “In my opinion, however, it will be appropriate to continue raising rates for at least the next few meetings until we are confident that inflation has peaked,” he said.

In France, inflation in December fell to a three-month low as energy prices fell in Europe on the back of a warmer-than-expected winter.

The spectacle of who becomes Speaker of the House may continue after Kevin McCarthy saw his candidacy rejected three times by Republican dissenters.

Microsoft intends to version its Bing search engine with ChatGPT software, according to The Information, in what would be a challenge to Alphabet’s Google GOOGL,
-1.21%.

best of the web

The Unusual Whales website published its 2022 congressional stock trading report, which reveals that Democrats and Republicans alike outperformed the market last year.

The head of Saudi Arabia’s wealth fund has been subpoenaed in a lawsuit over an Elon Musk tweet.

Moody’s warns not of a recession, but of a ‘downturn’.

top quotes

Here were the most active stock market tickers as of 6 am.

ticker

security name

TSLA,
+0.20%

tesla

GME,
-1.57%

GameStop

AMC,
-0.76%

AMC Entertainment

MULN,
-5.32%

Mullen Automotive

AAPL,
+0.42%

Litter

NO,
+3.32%

no

BBBY,
+0.22%

bed bath and beyond

AMZN,
-2.37%

amazon.com

BABYSITTER,
+6.01%

alibaba

NVDA,
+0.76%

nvidia

the graph

Ahead of the Fed minutes, this chart by Fidelity Investments strategist Jurrien Timmer shows the difference between market and central bank expectations about the direction of rates. “The risk here is that the Fed is right and the markets wrong in projecting the policy path into 2023, and that financial conditions remain tighter for longer,” he says. He says the recent rise from the mid-October low may not be justified if rates remain higher for longer than investors anticipate.

random readings

An Unfortunate Shake into the New Year: Goldman Sachs GS,
-0.03%
now it’s charging its bankers for coffee.

The man who is believed to be the tallest man in the world is 9 feet 6 inches tall.

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