The word of the year is POLYCRISIS.
"A global polycrisis occurs when crises in multiple global systems become causally entangled in ways that significantly degrade humanity’s prospects. These interacting crises produce harms greater than the sum of those the crises would produce in isolation, were their host systems not so deeply interconnected."
See Polycrises - multiple crises are a reality.
In 2023 we will see multiple crises come together to create a bigger market dilemma for the global economy. The Ukraine-Russia War will spill over to the energy and commodity markets again. The slowdown in Europe will continue as it searches for a more effective energy future. The COVID pandemic in China will be a headwind against growth in many EM countries. All this means that global macro will be a dominant strategy for 2023.
The second word of the year is SHRINKFLATION - the process of adjusting to inflation through maintaining prices but offering less quantity for what may seem to be the same package. See Higher labor costs and "shrinkflation" - Inflation beyond the headlines.
Firms are negatively affected by inflation because costs cannot always be passed through to buyers. Earnings will shrink for many firms, and this will have a further impact on valuations. Shrinkflation is a first response but cannot last forever. 2023 will be the year that firms must adjust to the price shocks of 2022. Inflation may fall but the impact on firms is just beginning.
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