cash should be “the real winner” in 2023 while bonds are preferable to stocks according to barclays “in the us in particular investors will soon be able to make 45 a year or more sitting on cash as they wait for asset markets to bottom” barclays analysts said in a research note wednesday stocks are “likely to bottom out” in the first half of next year they said in their view global equity markets may “drop significantly further” despite this year’s drawdown us stocks tend to bottom 30 to 35 below their peak in the middle of a recession which suggests a “fair value” of 3200 for the sp 500 index at some point in the first six months of 2023 the analysts said the federal reserve has been aggressively tightening monetary policy to cool demand in the economy and bring down high inflation leaving investors worried that its rapid pace of interest rate hikes risks triggering a us recession “this us recession has not yet started which is why a trough is most probable in the first half of next year” the analysts said they recommended fixed income over stocks after bonds “massively underperformed” equities this year there’s now “limited downside in longer us fixed income” according to their note read more trouble is brewing in the 24 trillion treasury market this time it’s about central clearing “if forced to choose between stocks and bonds we would be overweight core fixed income over equities” the analysts said but cash is a “lowrisk alternative” that should win in 2023 as us “frontend yields” are likely to go to at least 45 and “stay there for several quarters” according to the report “the ability to earn over 4 while taking virtually no risk is a factor that should drag on both stock and bond markets next year” the barclays analysts said so far this year the sp 500 index spx is down almost 17 while the bluechip index dow jones industrial average djia is off nearly 8 and the technologyladen nasdaq composite has suffered a steeper slide of about 28 according to factset data based on wednesday afternoon trading last week us stocks rallied after a consumerpriceindex report indicated that inflation in october rose less than anticipated with the data pointing to signs that the soaring cost of living in the us may be easing “despite the recent euphoria over the last cpi report monetary policy risks have not receded” the barclays analysts cautioned “prior weak inflation prints in march and july were followed by upside surprises in subsequent months” as for company earnings in 2023 the analysts see “the biggest downside risks” in the industrials discretionary and materials sectors defensive sectors such as healthcare consumer staples and utilities should “hold up better” they said “the world is set for one of its weakest years of growth in decades” the analysts wrote “and unlike in past recessions monetary policy will remain restrictive even in the throes of the coming downturn” us stocks were trading lower wednesday afternoon as investors digested a report from the commerce department that showed the rise in retail sales last month was slightly above expectations the sp 500 spx was down 07 at around 3963 while the nasdaq comp fell 13 and the dow djia slipped 01 factset data show at last check “retail sales boomed in october rising 13 increasing by the most in eight months” economists at first trust advisors said in a note wednesday “ultimately what the data show is that the federal reserve needs to stay the course and continue to tighten monetary policy” read traditional 6040 strategy may start to work again for investors but ‘tightening cycles can be scary’ goldman exec says