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This is the time to determine if stocks are increasing in 2022, and if so, at what pace. The problem is, that is a difficult question.
So, how would you answer that? For market analysts who honestly do not know what will happen next, “um, I do not know, it depends” is a negative response.
The second to final method is to use the actual methods. “60 percent chance of Greece dropping out of the euro” was the kind of financial expert on debt crisis in Europe. The equivalent now would be to realize a 60 per cent chance of a market crash. Sixty is your sweet spot here – enough to make you look deep and cry at all of your work if you’re right, but low enough to get out if it doesn’t happen.
If that seems unlikely, experts and investors alike can go back to the last resort: predicting instability. Markets will not be high or low, really, but immovable. Often, this is a dodge. It’s “I do not know”, but in the markets-speaking.
But in this case, “it will be unsettled” and a reasonable and honest approach to the expert or Investor who is paid to predict without knowing it better than anyone else, and who knows that the global elimination of monetary stimulation is possible. be a distraction.
This is why words like “nimble” and, “instability” appear in 2022. Advertisers and experts expect an explosion of so-called “drawdowns” and “pullbacks”.
Policy makers are aware of this. At its most recent mid-December meeting, the Swiss central bank said “signs of increasing market share and location in various countries”. It added: “At the same time, global and corporate debt is on the rise. These risks make the financial markets more vulnerable, especially rising interest rates. ”
This marks the new phase of the financial markets. First, in early 2020, came the crisis phase when the epidemic broke out. Then came the time to return to the stock market after central banks flooded the system with a call to prevent a market crash from falling into financial crisis. Rising inflation was not enough to lose central banks, although they had to send stating that inflation will be “temporary” in economic history.
Now we have a difficult time. Yes, the suspicions continue. Coronavirus apparently still has some bad habits in his hands. But one thing we do know is that inflation is far above our expectations. Among the most powerful central banks, the Bank of England has already responded with a expensive, not without controversy. In the US, the Federal Reserve has indicated it intends to do the same, several times, next year. European Central Bank he says plans to suspend one of his shopping items by March.
“This is going to be an exciting year” when all the incentives end, says David Riley, a financial analyst at BlueBay Asset Management. “It may be short, but we are living in a world where the economy seems to have a high price tag. The good news is at a price, but we are going all over the world. There is no price tag. “
Riley adds: “I am determined to grow, to say the least. China and Covid are dangerous tails. But I think it will be ‘meh’ when it comes to the markets. It will be a difficult year for markets to thrive, and it will be difficult to choose the right place. ”
Along the way, expect hiccups. By 2021, the targets have grown significantly. The S&P 500 index of US blue-chip stocks dropped by 2 percent a day five times a year, even though the Covid-19 game has exploded. The appearance of the Omicron brand did not become a sign after a few days.
“The recovery period is over,” said Norman Villamin, chief financial officer at Union Bancaire Privée. “We are getting into a small car now. Of course, that does not mean that it is worth the effort. I don’t worry too much about stagflation because costs are high, yields are high, recurring and running business finances, “he says. serious difficulties “.
It is a long time before the Fed goes backwards, waiting to see how the markets will react, and then it is possible to abandon tight plans immediately for fear of a volatile market that is beginning to feel real pain again.
Retail remains reasonable for anyone who is not under any compulsion, under any circumstances, to hold government bonds, which provide no or no provision unless lower inflation is considered. But stocks will test the nerves of investors.
“It’s going to be unstable next year and this requires a little humility,” said Kasper Elmgreen, chief financial officer at Amundi in Dublin. “It’s easy to say, but the consequences are many.”
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