S&P 500 +17% to 4500

Headwinds:

• The Fed-induced earnings recession, analysts lowering forecasts late in 2023

• Labor, energy (Russia), and computer chip shortages (China) prolonging the 2023

recession into 2024 with inflation running at 5%

• Money supply decline (Quantitative Tightening) by the US Treasury with a moderate

housing correction in 2024

• Crypto, the SEC’s reluctance to regulate, more criminal activity ahead

Tailwinds:

• NATO’s containment of Putin – Oil price decline, green energy fashionable

• China’s not quite Zero Tolerance easing chip supply, and Chinese consumer spending

• Corporate profits benefiting from: pricing flexibility, moderating U.S. consumer demand,

and productivity gains through AI, work-at-home, and on-shoring

• Professional market forecasts almost universally bearish “Stagnant earnings”

• Slowing interest rate hikes and the 10-year Treasury Bond Yield pivot.

Strategy:

• Defensive equities in the 1st quarter, add mid-Cap growth in the second half

• Lengthen bond maturities from 3 months to 3 years to intermediate.

• Buy the dips in mid 2023.