Headline earnings deteriorated again last week, while GDP is less than meets the eye. The Fed is almost sure to hike, but more focus will be on the future path. The monthly jobs report will add to the mix of data as markets try to divine the odds of a recession in 2023.

The debt limit was reached last week. While a possible default will be discussed if there is no agreement to raise the debt ceiling as extraordinary measures are exhausted, a default is virtually certain not to happen. History would suggest being prepared for stock and bond volatility, though.

Headline earnings deteriorated last week and remained below estimates. Outside of earnings season, stocks were depressed by worse-than-expected December retail sales last week. Forward guidance from companies will remain crucial while the threat of a 2023 recession looms.

Inflation readings and corporate earnings provided a spark to stocks last week. This week a more diverse group reports earnings. Markets are likely to be particularly sensitive to forward guidance while the probability of recession in 2023 remains high.

Earnings season starts with a focus on bank earnings. S&P 500 earnings expectations have plunged to -4% year-over-year. Forward earnings guidance from companies will be a focus since the aggressive Federal Reserve rate hikes are leading to expectations of a recession in 2023.

Despite a poor showing in 2022 and an impending recession, there are reasons for optimism about stock returns in 2023. Every bear market ends, and stocks have historically moved higher even while economic data remains dismal in anticipation of the brighter days that have always followed eventually.