💡 Dan Niles, founder of Satori Fund, believes the stock market will continue to fall in early 2023 due to deteriorating corporate financial results, high interest rates and a slowing economy.
Niles believes the stock market will have a Christmas rally through the end of December, supported by the lifting of coronavirus restrictions in China. In doing so, investors will rush into the market for fear of missing out on a rise in stocks. However, after the holidays, the major indices will start to correct during the reporting season, in which companies are expected to show weak results.
💎”We still believe that after a bear market rally, indices will retest or even break 2022 lows,” said the strategist.
Looking at specific companies, Niles said cloud and enterprise software providers such as Amazon, Google, Zoom, Salesforce and Microsoft will face tough times in early 2023.
During the pandemic, customers needed remote working software, but after three years, the need for such solutions has declined. In addition, many companies are cutting capital expenditures on cloud technology because of high interest rates and fears of a recession.
Separately, Niles pointed to Amazon. The strategist expects revenue growth from Amazon Web Services to slow to 16-20% y/y in 2023. It’s worth noting that Q3 revenue from AWS grew 27.5% y/y, the slowest growth since 2014.