A top strategist explains how to invest in a pivotal year for markets, policy, and the economy

"Good morning sunshine (Or, if you're like me and spent the entire weekend binging Netflix in bed, good morning dark and gloomy world)."

I'm Phil Rosen, and I hope you didn't think that was too funny of a sentence, because I didn't write it.

A robot did.

ChatGPT, OpenAI's buzzy artificial intelligence tool that launched in November, was just banned in New York City schools, and Microsoft is weighing a potential $10 billion investment in it.

While this probably does nothing for my job security, I asked ChatGPT to write a stock market story — and it immediately spat out an even-handed, convincing article devoid of typos.

You can read it here.

The tool is increasingly proving itself on everyday tasks of varying complexity. My colleague Jordan Parker Erb even asked the AI to answer messages on a dating app for her.

But one thing a bot can't do (yet) is have a conversation with Wall Street's top strategists. So I caught up with iCapital's chief investment strategist for her 2023 strategy.

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1. This year is going to be a "story of two halves," according to Anastasia Amoroso. Last year saw valuations for asset classes across the board tumble in a big way, she explained, but that gives investors a cheap entry point for the new year.

The first half of the year will likely see markets trade flat or move lower as the Fed continues to tighten monetary policy.

"Any sort of rally will likely be capped by a Fed that's still trying to get to 5% and stay there," Amoroso told me, talking about the Fed's interest rate increases aimed at cooling down inflation.

But in her view, June will bring a key pivot point for the economy and markets.

At that point the terminal rate will be higher than core PCE inflation, which should give the central bank leeway to hold rates steady or cut them, which markets will cheer.

"The times you want to invest is when economic data is falling apart, not surging," Amoroso said.

That means investors should look to capitalize in the first half of the year to prepare for the coming rebound.

"Whether you look at equities, or the reset likely to occur in private market valuations and real estate, I would use the next 3-6 months to be deliberate and methodical about adding to those positions," Amoroso said.

Early outperformers in stocks so far include the semiconductor and consumer discretionary sectors, but she noted that alternative assets also offer opportunities.

"We like private credit because amid the pullback in public markets, the banks are not as eagerly lending to companies," Amoroso maintained. "So a lot of the attention turns to private credit managers, who can be a source of capital, and they're able to secure better terms for investors."

Read the full story on my conversation with iCapital's chief investment strategist - and see what she has to say on crypto.

How are you positioning your portfolio for 2023? Tweet me (@philrosenn) or email me ([email protected]) to let me know.

In other news:

2. US stock futures are up early Wednesday, as investors await Thursday's consumer inflation data. Meanwhile, both the Nasdaq and gold are rising for the fourth session in a row. Here are the latest market moves.

3. On the docket: ASOS plc, Bang & Olufsen, and Life Corp, all reporting.

4. These are the top 33 bargain stocks to buy right now. Morningstar strategists listed the names they like as 2023 kicks off and equities are presenting buying opportunities: "Stocks look downright cheap."

5. FTX bankruptcy documents show a list of investors that are set to be completely wiped out. The equity-holder list includes Wall Street elite hedge funds and growth investors — as well as top celebrities like Tom Brady and Robert Craft.

6. A former Fed president said the current Fed is embarrassed about its inflation mistake. Richard Fisher said the central bank blew it on inflation, and now it will raise rates too far. But JPMorgan's Jamie Dimon also cautioned that the Fed might have to hike rates up to 6% to get inflation under control.

7. Russia could face two new price caps for refined petroleum products. The next EU embargo is looming less than a month away, and Bloomberg reported that the new measures would be aimed at Russian exports that trade both above the price of crude and those that sell at a discount.

8. Homebuyers are getting more deal sweeteners in certain areas around the US. According to Redfin, buyers seem to be finally gaining the upper hand in the housing market as mortgage rates throttle competition. Here's a list of 16 cities where buyers get the most concessions.

9. Chart patterns suggest that these investments are about to skyrocket while the rest of the market struggles. This veteran chart master pointed out six key sets of data that could help investors skirt a market crash and buy into attractive investments. Here's his list.

10. Coinbase stock jumped to a one-month high on Tuesday. The crypto exchange was in recovery mode after it saw more than an 80% slump in 2022. The rally followed the company's announcement that it plans to slash 20% of its staff.

Curated by Phil Rosen in Los Angeles. Feedback or tips? Tweet @philrosenn or email [email protected]

Edited by Max Adams (@maxradams) in New York and Hallam Bullock (@hallam_bullock) in London.