More excellent Micheal Hartnett at BofA for 2023.
2022 in Words: “inflation shock” and ”rates shock” caused historic bear market on Wall St but no “recession shock” on Main St; exogenous shocks of Russia/Ukraine, China COVID, UK pension funds, FTX/crypto all negative on Wall St, but were offset on Main St by historically low unemployment rates in US/G7 and ongoing government bailouts; higher rates crushed valuations on Wall St and US yield curve inverted most since 1982, but there was no rates shock on Main St; big outflows from credit funds, big inflows H2 into short-dated Treasuries, but no outflows in equities. 2022 in Numbers: world population exceeded 8 billion, US CPI hit 40-year high (9.1%), German PPI hit 100-year high (45.8%), 280 global rate hikes (>1 every trading day), 2-year UST yield hit 4.8% (was 0.2% in 2020), global government bond down 22% (worst since 1949 – Chart 4), 60/40 portfolios down 30% (worst since 1931 – Chart 3), $33tn global equity market collapse, China stocks crashed to lowest level since 2005, best year for US dollar since 2014, crypto $3tn market cap crashed to <$1tn.
2022 Winners & Losers: energy stocks 32%, US dollar 12% vs. HY bonds -15%, IG bonds -18%, government bonds -29%, China stocks -29%, Nasdaq -29%, US Treasury 30-year -33%, crypto -69%.
