LPL Financial publishes Outlook 2023 report

LPL Financial released the firm’s Outlook 2023 report, in which LPL Research discusses the importance of "Finding Balance" in 2023. The report includes insights and analysis of the economy and markets and is available to all LPL Financial advisors, RIAs and institutions as well as publicly in an interactive digital version and downloadable PDF. "Equity markets lacked balance in 2022 as the challenging macro environment overwhelmed business fundamentals," said LPL’s Chief Equity Strategist Jeffrey Buchbinder. "Stubbornly high inflation and sharply higher interest rates were the dominant market drivers, pressuring valuations and inciting fears of recession and falling corporate profits. In 2023, we expect equity markets to find balance between key macroeconomic factors-inflation, interest rates, and Fed policy-and business fundamentals." Among the key forecasts and topics discussed in the Outlook 2023 report: Economy: Global economic growth will likely slow from above 3% to somewhere in the mid-2% range in 2023. The longer inflation is uncontained, the riskier the growth prospects. If the U.S. falls into a recession, chances are that it would occur during the first half of 2023 and would likely not be as deep as the 2008 recession, which was initiated by a fundamentally flawed financial market. Stocks: If the stock market is going to appreciate in 2023, a prompt end to the Fed’s rate hiking campaign will likely be a key component. We believe the Fed will pause during the first quarter of 2023 amid an improving inflation outlook and loosening job market. Should that occur, stocks would likely move higher, consistent with history. Bonds: There are a range of scenarios that could play out over the next year. However, given our view that the U.S. economy could eke out slightly positive economic growth next year, 10-year Treasury yields could end the year around 3.5%.