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2023 outlook: Key economic data points and policy issues

January 25, 2023
clock 6 MIN READ

Jim Solloway, SEI Chief Market Strategist and Senior Portfolio Manager, and Kathy Oldfield, Director of Client Portfolio Management, discuss the economic outlook for the coming months.

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- Hi, I'm Kathy Oldfield, client portfolio Manager at SEI. Today I'm here with Chief Market Strategist and Senior Portfolio Manager Jim Solloway to provide a quick preview of one of the timely topics he covers in our most recent economic outlook. Jim, what are the key economic data points and policy issues investors should be watching in 2023?

- Thanks, Kathy. There are seven items at the top of our list. As you can see in the chart labor markets and investor sentiment are the two items with projections that are the most notably on the green side of the Outlook projections so I'll focus on those for a moment. A strong labor market is good news for job seekers but not quite so good for employers or investors. Strong job markets result in wage inflation that far exceeds productivity gains which could drive down corporate profits and stock prices. In terms of investor sentiment, we believe the extent of any additional deterioration in stock and bond prices from current levels should be tempered due to the price correction that has already occurred over the past year and the return of valuations to historical norms. Bonds, for example should provide the diversifying benefits expected from a balanced portfolio something that was notably missing in 2022.

- Bonds have clearly been in the news and will continue to attract attention as investors carefully watch central banks for insight into interest rates. Can you say a bit more about your outlook for equities?

- Sure. The low equity multiple already applied to the earnings of many markets outside the US should provide a buffer for equity prices. Even against the backdrop of the harsher economic conditions, we expect to prevail in places like Europe versus that of the US.

- Thanks, Jim. We always appreciate your insights as your OCIO, SEI is focused on the major issues that are of interest to our clients. We incorporate these discussions into our advisory process as the impact varies based on each client's goals. For more of SEI's insights, read our latest Economic Outlook available on our website.

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This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. Positioning and holdings are subject to change. All information as of the date indicated. There are risks involved with investing, including possible loss of principal. This information should not be relied upon by the reader as research or investment advice, (unless you have otherwise separately entered into a written agreement with SEI for the provision of investment advice) nor should it be construed as a recommendation to purchase or sell a security. The reader should consult with their financial professional for more information.

Statements that are not factual in nature, including opinions, projections and estimates, assume certain economic conditions and industry developments and constitute only current opinions that are subject to change without notice. Nothing herein is intended to be a forecast of future events, or a guarantee of future results.

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