A November to Remember While Recession Warnings Persist

Despite all the negative-to-flat market expectations from Wall Street specialists and other pundits that frequent CNBC for 2023, the recession they feared did not manifest itself, soft landing or otherwise. The economy continued to be strong enough to avoid negative GDP growth. S&P 500 Index ETFs, including SPLG, continue to outperform other broad-based benchmark ETFs while the Nasdaq-100 ETF, QQQ, is poised to put another impressive year into the books.  Despite predictions of a long-cycle value regime following the problems growth had in the first half of 2022, growth continued to beat value and large-cap continued to beat small-cap.  Let’s look at the numbers from January through November of 2023.

All 5,000 stocks, 16 sector groups, 140 industries, and 500 ETFs have been updated.
Two-week free trial: www.ValuEngine.com
ETF Index          1- Mo. Change           3-Mo. Change            YTD Change  VE 1-Yr. Forecast Div. Yield
SPLG S&P 500 8.6% 2.1% 21.4% 0.3% 1.5%
SCHM MidCap 11.0% -1.0% 10.1% -0.3% 1.8%
IWM Small Cap 11.8% -2.7% 8.3% -1.3% 1.7%
IWD Value 8.2% 0.3% 6.7% -2.0% 2.3%
IWF  Growth 9.7% 3.8% 37.1% 1.9% 0.8%
QQQ Nasdaq-100 9.2% 3.4% 47.2% 1.4% 0.7%
Current ValuEngine reports on these stocks or ETFS can be viewed HERE

So why were so many strategists and economists so wrong in predicting that 2023 would be a tough slog for both the markets and the economy? As it turns out, the big economic story of 2023 is not a recession, as many had predicted — it’s the disconnect between consumer sentiment and behavior.  Unprecedented levels of anger and distrust of the government and at each other are indeed what is fueling the total disconnect between perception and reality. The economy is doing well. Unbridled pessimism and distrust for the government has distorted perceptions.  There are good reasons for many involved in this cycle to sell fear to the masses. 

The “super-fuels” that both parties and their affiliated media keep pushing are anger and fear.  In the history of our two-party system, raising the spectre of fear at what could happen if the other party took power has never reached today’s crescendo of Armageddon warnings. Political donations have never constituted a higher percentage of disposable income. The motivations are clear.

Back to the economy, I predicted in articles in ValuEngine Inc., TalkMarkets and LinkedIn as well as to my Financial Markets Investment Club that both the economy and the stock market would be up this year, the latter from 6 – 10%. There were many reasons for my rebound call: 1) As more than full employment rates continued, I thought calls for 7% unemployment were absurd for many structural reasons. We still have supply chain issues and a selective few inventory gluts. One major thing: Social Security cost-of-living adjustments (COLAs) went up 8.9% but inflation was likely to get to 5% by midyear. There was also an increase in the IRS standard deduction. Both of these late 2022 acts of Congress meant that consumers would have more than enough spending power in the coming year despite higher nominal prices. 

Financial Advisory Services based on ValuEngine research available: 

I and other independent analysts saw this as self-evident. Yet somehow, no economists or strategists were talking about this as they had their own corporate and political agendas.  Doom and gloom predictions grab headlines and spur imaginations and conspiracy theories. The bottom line is that fear sells and foments into distrust and anger.  However, while the US consumers still have spending power, Armageddon is a loser’s bet.  


By Herbert Blank
Senior Quantitative Analyst, ValuEngine Inc
All of the approximately 5,000 stocks, 16 sector groups, 140 industries, and 600 ETFs have been updated on www.ValuEngine.com
Financial Advisory Services based on ValuEngine research available through ValuEngine Capital Management, LLC
Free Two Week Trial to all 5,000 plus equities covered by ValuEngine HERE

Subscribers log in HERE