| John Mayer, Chief Investment Officer of Global X |
The omicron virus is less deadly, but more contagious and leads to the isolation of millions of people; In the US it will still reflect high; and in the stock market investors are looking for companies that know how to deliver the goods.
Like its predecessor, 2022 opens with the corona at the top of the agenda. The most acute problem of the Omicron strain is not in its lethality, but in the fact that it is highly contagious.
On January 3, about one million verified people were diagnosed in the United States. Since verified people must stay in isolation, these high numbers have an impact on the economy.
However, even if the situation is not ideal, the omicron is not as severe as the Delta, and today there are more means to fight against the corona, including vaccines and dedicated drugs. Markets are also responding to the omicron wave moderately, and we are optimistic about the economy’s ability to survive and function relatively normally alongside the corona in 2022.
When the global economy stabilizes and flight traffic returns to normal, we believe this will lead to an improvement in the bottlenecks in the supply chain and consequently to a recession in inflation as well.
Last week ended with disappointments for December in the United States. However, in total during 2021, about 6.45 million jobs were added to the American economy – a figure that has not been the same since the 1940s.
This week, the US consumer price index for December will be published. We do not expect the index to reflect any change in inflation trends, which are expected to remain high at least throughout the first half of the year.
Following the Fed’s decision in December, in which it decided to accelerate the reduction rate from $ 15 billion to $ 30 billion, the market now estimates that the first will take place as early as March, which will help cool inflation.
Another important figure to be published this week is December, the holiday season in the US. In light of the fear of a shortage of sought-after products in the vicinity of the holiday, American consumers this year preceded their holiday shopping, which may be reflected in a slightly lower figure for December.
In light of the shift in Fed policy and the expectation of interest rate hikes and termination of quantitative easing, we anticipate that this year investors will focus more on the companies’ fundamental data and their business ability to realize their vision, not just promises of breakthrough technologies.
Stock market trends will also depend on the financial reporting season for the fourth quarter, which is expected to begin soon. If we see better-than-expected earnings and profitability, investors may be more inclined to the growing sectors.