You can normally rely on your intrepid author to have strong, even if wrong opinions on markets, but I must confess to not feeling as strongly about things as I usually do.
My biggest concern is how Chat GPT - the new chatbot that can generate intelligent text about, it seems, almost anything - is going to change the world. In fact, my greater concern relates to the extraordinary influence its designers are going to wield.
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So it is a humble Dominic Frisby you find today, one lacking in clear vision, nervously looking up at the egg that is no doubt going to be on my face in a year’s time.
Nevertheless here are twelve things I think we will see in the year ahead.
12 predictions for the year ahead
- Commodities have a good year. Oil is currently in a downtrend, so it may have a bit more to fall. Metals took their hit in mid-2022 and appear to have made their lows. For the last couple of months, they have been gently rising, but both fossil fuels and metals have suffered from many years of underinvestment, which has hurt supply. China opening up should see increased demand. I see a good market for metals and energy in the first half of 2023 at least. Possibly the second half as well.
- Yield becomes a thing again. With choppy, uncertain markets, but sticky inflation, investing for yield rather than capital growth becomes a much bigger theme in 2023 than it has been for a decade or more.
- This is a classic recessionary bear market. This bear market proves to be more of the recessionary variety, rather than an all-out collapse. It’s a tricky, grinding market, but the S&P 500 gets back towards its old highs at 4,800. Briefly.
- Emerging Markets outperform. That’s something we haven’t seen in a while, but their time has come again.
- Biotech becomes a thing again too. Remember how back in the day biotech was all the rage? Somehow it was overlooked in the last tech bull market. Not anymore.
- Bitcoin also has a good year.
It’s hard to think of a time when sentiment in bitcoin has been as low as it’s been these past few months and yet it’s still $16,000. It has a market cap north of $300bn. The mining hashrate hit all-time highs this autumn, meaning the network is more robust than it has ever been. The tech is stronger than ever.Usage is growing in East Asia, Africa, especially in Nigeria, and anywhere there is a currency crisis (which is a lot of places - Turkey, Lebanon, Argentina, and Venezuela). Bitcoin solves the many issues facing the member nations of the Shanghai Cooperation Organisation - China, India, Russia et al - which are desperately seeking a non-dollar alternative money to trade with that doesn’t rely on trusted third parties. Bitcoin’s Lighting Network solves the problems facing Elon Musk who is looking to incorporate a payments system into Twitter.There are so many reasons to be bullish about bitcoin, yet sentiment could not be worse. It will not always be this way. My prediction for 2023: bitcoin will have a good year.
- Silver fails to deliver yet again. I’m getting so complacent with my predictions about silver that I’m bound to be proved wrong. If you can count on anything in this cruel world, it’s that silver will let you down. Silver can’t get above $30.
- The US dollar - up and down. It’s perhaps the world’s most important price and it has periods of strength and of weakness, but it ends the year higher than when it started.
- CBDCs - they’re coming. Currently, there are two countries in the world with functioning CBDCs - the Bahamas and Jamaica. Several other Caribbean countries are at the pilot stage, including St Lucia, St Kitts, Dominica and Grenada. As demonstrated by the reaction to Covid-19, risk-averse governments tend not to trailblaze, but to follow the lead of their neighbours. In this regard, it is likely that a couple or more Caribbean nations could have functioning CBDCs before the end of 2023. Such a roll-out is easier in nations with small populations.My forecast is that in 2023, probably in the latter part of the year, a nation with a population greater than 15 million rolls out its first CBDC, likely one of Canada, China, India, France, Saudi Arabia, Ghana or Nigeria.
- Ukraine. I know Dominic Frisby is the first person you turn to when you want insights into Ukraine, so here they are: The Ukraine War will not end before October. There will not be a nuclear war and Vladimir Putin will still be Russia’s president by year's end.
- Gold. Everyone always wants to know what I think about gold. "Well, this is a bull market, you know!" It goes up. Miners have a good time of it too. Gold retests its old highs around $2,080. But then it finds a way of being frustrating. It always does. It’s gold.
- Your Bruce-y Bonus sports prediction. Manchester City wins the League. Southampton. Wolves and Bournemouth go down.
So there we are folks. Everything you need to know about 2023 in one handy list.
Have a great year folks - and stick to those resolutions. It’s around now you start letting them go.
Dominic Frisby (“mercurially witty” – the Spectator) is the world’s only financial writer and comedian. He is MoneyWeek’s main commentator on gold, commodities, currencies and cryptocurrencies. He is the author of the books Bitcoin: the Future of Money? and Life After The State. He also co-wrote the documentary Four Horsemen, and presents the chat show, Stuff That Interests Me.
His show 2016 Let’s Talk About Tax was a huge hit at the Edinburgh Festival and Penguin Random House have since commissioned him to write a book on the subject – Daylight Robbery – the past, present and future of tax will be published later this year. His 2018 Edinburgh Festival show, Dominic Frisby's Financial Gameshow, won rave reviews. Dominic was educated at St Paul's School, Manchester University and the Webber-Douglas Academy Of Dramatic Art.
You can follow him on Twitter @dominicfrisby
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