On New Year’s Eve, let’s raise a glass and bid “good riddance” to 2022. The S&P 500 is on track to post its worst year since 2008.

However, the new year ahead appears more promising. Data indicate that inflation has peaked, and pandemic-induced supply chain havoc is abating.

The Federal Reserve is determined to maintain its credibility by boosting interest rates, until inflation gets closer to the central bank’s 2% target. That’s a daunting goal. Even if inflation considerably cools, chances are the Fed will keep tightening.

But the slowing U.S. economy could come in for a soft landing in 2023, instead of an outright recession. If at the same time inflation reverses course, the Fed will be less inclined toward draconian tightening and the stock market could rebound. We’ll know better when the latest economic and inflation data are released in January 2023.

Read This Story: Is The Inflation War Over?

As the end of this year rapidly approaches, you should re-position your portfolio now to the sectors with the most promise in 2023. It begs the question: Where are analysts most optimistic and pessimistic in their ratings on stocks in the S&P 500?

The bear market remains in force, but analysts are surprisingly bullish about 2023. Overall, there are 10,835 ratings on stocks in the S&P 500. Among these ratings, 55.3% are Buy ratings, 38.8% are Hold ratings, and 5.9% are Sell ratings, according to research firm FactSet.

Analysts are most optimistic about the energy (63%), communication services (61%), and information technology (61%) sectors. As the chart shows, these three sectors have the highest percentages of Buy ratings:

Analysts are most pessimistic about the consumer staples (43%) sector, which has the lowest percentage of Buy ratings. This sector also has the highest percentage of Hold ratings (46%) and Sell ratings (11%).

Joining consumer staples in low analyst esteem are the financials and materials sectors, both with Buy ratings of 49%.

We didn’t get a Santa Claus rally this year, but stocks are still attempting a modest year-end bounce. The main U.S. stock market indices closed sharply higher on Thursday, as follows:

• DJIA: +1.05%
• S&P 500: +1.75%
• NASDAQ: +2.59%
• Russell 2000: +2.57%

The Labor Department reported Thursday that U.S. initial jobless claims edged higher last week, which investors interpreted as a welcome disinflationary trend that eases rate hike fears.

But time is running out for 2022. We’re coming to the end of a lousy month and a lousy year.

Twilight of the gods…

Throughout the market’s ups and downs, the financial press has continued to play its customary role of contrarian indicator. Our celebrity-obsessed culture worships billionaires, without giving them much real scrutiny.

One industry you won’t see on many “Buy” lists for 2023 is cryptocurrency. Crypto skeptics such as myself have been vindicated.

Bitcoin (BTC), the progenitor of crypto, is down about 65% year to date, which belies its much-hyped virtue as an inflation hedge.

Sam Bankman-Fried, erstwhile chief of collapsed crypto exchange FTX, had been touted all year on CNBC as the J.P. Morgan of crypto. But the last time I saw the wunderkind on television, he was wearing handcuffs.

Another media darling who fell from grace this year is Elon Musk, CEO of electric vehicle (EV) maker Tesla (NSDQ: TSLA).

Tesla shares had been elevated, beyond the company’s genuine growth prospects, due to the cult of personality surrounding Musk. However, the billionaire’s maladroit management of Twitter has wreaked significant damage to the social media platform, Musk’s reputation, and Tesla shares.

TSLA is down about 70% year to date, as global competition in the EV industry heats up and analysts increasingly question Musk’s competence, if not his sanity.

Both Musk and Bankman-Fried have frequently appeared on the covers of major business magazines as the subject of fawning profiles. In an October 2021 cover story on Bankman-Fried, Forbes magazine gushed:

“Worth $22.5 billion, Sam Bankman-Fried is the richest self-made newcomer in Forbes 400 history. And at 29, he’s one of the youngest…He just wants his wealth to survive long enough to give it all away.”

Fast forward to December 2022, and FTX is bankrupt. Bankman-Fried was arrested two weeks ago in the Bahamas and extradited to the U.S. to face charges that he defrauded investors and looted customer deposits. The 30-year-old is currently out on bail with an eight-count federal indictment hanging over his tousled head. He could serve up to 115 years in prison.

Those whom the gods would destroy, they first put on the cover of Forbes.

Editor’s Note: As I’ve just explained, it’s been a rocky year. For guidance in these uncertain times, our analysts have compiled a special report of seven macro predictions for 2023.

The product of painstaking research, our report steers you toward quality, under-the-radar picks in a range of sectors. To download your free copy, click here.

John Persinos is the editorial director of Investing Daily.

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