Insider Monkey

10 Best Stocks To Invest In 2023 For Beginners

Omer Farooq
10 min read

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In this article, we will take a look at the 10 best beginner stocks to buy in 2023. If you want to explore similar stocks, you can also take a look at 5 Best Stocks To Invest In 2023 For Beginners.

"One-and-Done Much More Likely, But Not Fully Baked In Just Yet"

On April 21 Roger Ferguson, former vice chairman of the Federal Reserve, appeared in an interview on CNBC where he talked about inflation, the Fed, and recession risks. Ferguson thinks that we are now in a "one-and-done" situation, which means that he expects the Fed to raise interest rates for the last time at the FOMC meeting in May. However, as inflation is still higher than the 2% target, Ferguson thinks that there may be a June hike as well. Here is what he said:

"I think a one-and-done is most likely, but the uniformity and the fact that inflation is still relatively high, it may leave the possibility for a June hike on the table. I would say, one-and-done much more likely but not fully baked in just yet."

The market is pricing in Fed cuts in the back half of 2023. Roger Ferguson spoke about a discrepancy between the market's expectations and the Fed's expectations regarding interest rates in the latter part of 2023 and said that "the market is more optimistic about Fed cuts than the Fed themselves". However, economic data will be the determining factor for this as we move into the back half of 2023, noted Ferguson. According to Roger Ferguson, the Fed may keep interest rates elevated for longer than the market is expecting.

Roger Ferguson noted that sectors that are sensitive to interest rates, such as housing, are already experiencing challenges and pressures from rising rates. Ferguson thinks the Fed will keep interest rates higher for longer than the market is expecting because, though the labor market is showing signs of weakening, "it is still not soft", and there are certain parts of the economy that are still strong which will in turn keep inflation higher than 2%. According to Ferguson, "the Fed wants to really make sure that the disinflationary process is well advanced before it even starts talking about cutting rates".

Finally, Roger Ferguson talked about the risk of recession. Ferguson does not expect a severe recession, rather, he expects a shallow recession and he sees "some credit tightening in various places" as opposed to a credit crunch. Here are some comments from Roger Ferguson:

"A recession is more likely than not. I still think it's more likely to be a softer recession, as opposed to a hard one. But, the credit tightening that's certainly going on and being talked about in the Fed's Beige Book, does suggest that conditions are a little more fraught, and maybe a slightly harder recession. I'm not yet in the camp that says that we have a real credit crunch, I think we see some credit tightening in various places. Count me still in a sort of soft and shallow recession camp right now, but with the risk to the downside given the changing credit dynamics in the country."

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