Last week, I had the pleasure of attending Kestra’s annual conference and enjoyed hearing from several economists including Dr. Claus te Wildt from Fidelity, who I have long followed. It was intriguing to follow the thought patterns of these different economists and their construct of how they expect markets to perform in 2022 and beyond. While getting to their conclusions through different frameworks, the end result in their expectations was the same. 2022 will likely not be as good as 2020 and 2021 were to investors, but 2022 should turn out to be a year where investors make a moderate amount of money with prediction of total stock market increases of 5 to 9%. They opined not only on how rising interest rates are a headwind for the equity markets, but also how the markets would endure these increases. After all, driving these rate increases is the attempt to control inflation. Rapid inflation, while problematic, is the result of a hot economy. They detailed while corporations earnings growth can’t be sustained at 2021 COVID rebound levels, most publicly traded businesses are expected to continue to grow earnings at a nice rate. Highlighted was the unique status of our employment situation with 11 million jobs open and only about 4 million people seeking a job. If those figures were reversed it could spell real trouble, but currently this is a great representation of how strong our economy really is.
We can all hope these projections come to fruition, considering the hole the stock market is in right now, with most stock investors down somewhere between 6 and 12% since the beginning of the year.
The Weekly Market Review zeros in on the Congress and their in ability to agree on our nations discretionary spending, inflation and Russia’s threat to Ukraine.
As always, we hope you find the WMR both interesting and informative. Have a great week!
Trevor N. Coe, CFP®