There are three consensus views I see right now in the market:
US recession sometime 2H23
- US office real estate is a mess and will experience permanent loss/impairment
- The 4200 level on the SP500 is a HUGE technical level to watch here
Sean has forgotten more about market technicals than I know, but with 1Q23 earnings season pretty much in the books now and with the Fed in “pause” mode with regards to rate hikes, all eyes turn to the debt ceiling saga and the all-important 4200 level on the SP500. Everyone should expect the DC debt ceiling saga to go down to the last second of the last minute before a problem happens – and then our elected officials will cut a mediocre deal and/or kick the can down the road till August. Expect to be underwhelmed and likely exhausted by it all. It’s what they do. The 4200 is a HUGE technical level the market needs to overcome. A break-thru above 4200 would likely bring about new market buyers on the breakout, covering of negative positioning already in place due to weak investor sentiment/debt ceiling hedging, and a nice wave of momentum and breadth with regards to market technicals.
To put it simply, the market needs to get its leg over the 4200 level and clear the hurdle. We’ve been rangebound for close to a year now. This is not a small level to ignore.
All eyes on 4200…and beyond.
Source: Bloomberg data as of May 22, 2023
Richard Barrett
Chief Investment Officer
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