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1983, 2011 -- Will history repeat again in 2023?

If you have been following most watched tournament in the World, you would have guessed what today's title mean. Yes - it's about Cricket World Cup. India made history by beating then World Champion - West Indies in 1983. Repeated history again by beating stalwarts like Australia and England in 2011. In 2023 World Cup,  India has not lost a single game (out of 8) and is sitting at top of the table. Indian batting and more importantly Indian bowling have dominated this world cup. One more league match remaining. But semifinals are already decided. India would be playing New Zealand in semi and South Africa and Australia will face each other in other semi. Final would be played on Nov 19.  I am hoping and praying that India continues her dominance and win semi first and then win final to claim 3rd World Cup tille and repeat the history again in 2023! 

And like SuperBowl indicator, let's look at Cricket World Cup Indicatior  Last two times India won Cricket World Cup, markets had positive returns - 17% in 1983 and 3% in 2011. What would happen in 2023? (By the way there is nothing like this indicator - it's completely made up by me). Now let's talk about markets...

What a difference couple of weeks can make in changing market sentiments. All it took was change of month (seasonal factors do matter), change of tone from Fed chairman after Fed meeting and not-so-bad earnings from most of the companies - especially tech companies. All these led to biggest weekly gain for S&P (nearly 5.9% gains in one week) in 2023. Tech heavy Nasdaq also had excellent gains thanks to Magnificent Seven and semi sector. Just last week all indexes reached correction territory (10% down from recent high). Everyone started talking about recession and S&P going below 4000 and potentially ending negative for the year.  Markets are in sweet spot - here are the factors due to which markets would keep marching upwards for some more weeks.

  • 10-year tresuries have come dowm from 5% to 4.5% - clear indication that Federal Reserve may be done hiking interest rates
  • Earnings season has been reasonably good with no major downside surprises
  • AI powered tech boost is real even after one year
  • Employment is reaching equilibirum of not too hot and not falling apart
  • Inflation is grinding down lower albeit more slowly that Fed policy-makers would like to see
  • Seasonal factors - Nov/Dec/Jan have been one of the best months for markets
  • Economy is not showing any signs of recessions with consumer spending relatively strong
  • After 10% correction, valuations are not frothy
  • Semi sector is resilient. This sector is leading indicator for overall tech spending
  • With Biden/XI meeting scheduled next week in San Francisco, markets are expecting better relations between two economic giants (US and China). That's why today semi sector are showing biggest gains.
Overall these catalysts should keep markets around 4300-4600 for double digit return for 2023.

Happy Diwali...and Veteran's Day!

During this Diwali Festival season, Billion Indians are praying for India to win Cricket World Cup. Given my made-up Cricket World Cup Indicator, that should be another catalyst for markets to repeat the history!

/Shyam 

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