Market Outlook

Q4, 2022: Whac-A-Mole

Growth, Inflation & Policy

As of November 1, 2022


  • Historically low inflation has led to strong asset returns and structurally higher equity multiples, but there may be a return to a more volatile macroeconomic regime.
  • Even though inflation (as measured on a year-over-year basis) is expected to roll over, this does not necessarily mean that prices have to substantially come down (they can remain flat at higher prices). We believe that policy will stop and start, and while policymakers do not want to drive the U.S. into a recession, the Fed doesn’t seem to have much choice.
  • Given the shape of the yield curve, a recession should be investors’ base case.


  • The September reading of CPI showed inflation up 8.2% year-over-year and only slightly down from a high of 9.0% in June, while core CPI climbed to a new cycle high and is now up 6.6%.
  • Cleveland Fed Nowcast estimates show that CPI for October is expected to remain unchanged on a year-over-year basis, although marginal declines in the subsequent months are more likely.
  • Even with monthly inflation cooling, it will likely still be 5 months before inflation is below 5%.


  • The market continues to be surprised by CPI as the Treasury yield curve shifted higher after CPI announcements in both September and October.
  • While we are sympathetic to the view that inflation will roll over as the economy slows, potentially quite aggressively, we want to acknowledge that we don’t think anyone, let alone economists that told us inflation would be transitory last year, has a good handle on inflation. We are being very humble with our forecasts.

For additional market insights, download our complete market outlook report.

This material is provided to advisors by Mount Yale Investment Advisors, LLC and contains market commentary from third-party sources it believes to be reliable. However, Mount Yale has not independently verified or otherwise investigated such information and makes no guarantee as to its accuracy or completeness.  In the event any of the assumptions used herein prove not to be true, results may vary substantially. All investments entail risks. Past performance is no guarantee of future results and the opinions presented cannot be viewed as an indicator of future performance.  Indexes are unmanaged, do not incur management fees, costs and expenses and cannot be invested indirectly.  The information contained herein constitutes general information and is not directed to, designed for, or individually tailored to, any particular investor or potential investor.  It is not intended to be a client-specific suitability or best interest analysis or recommendation, an offer to participate in any investment, or a recommendation to buy, hold or sell securities.

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