Without a doubt, what is happening in Ukraine is a tragedy and a reminder of the fragile balance of the World. Due to the continued conflict, sanctions, and inflation, we are revising down our 2022 market outlook from Moderately Bullish to Moderately Bearish. G Squared now feels we will have a recession in the next 18-24 months. This does not mean an automatic repeat of 2008. We may have a milder recession; however, we feel it’s important to downshift into more defensive portfolio positions.
2022 is the year of the Tiger according to Chinese astrology. The Tiger is a symbol of strength, exorcising evils and braveness. After the past two years, exorcising evils seems like a fitting theme for 2022. As we limp into the final days of 2021, it has been filled with a Ying-and-Yang dichotomy of good and bad making it a taxing year for many.
Moore’s Law states that the number of transistors on a microchip double about every two years, though the cost of computers is halved. Gordon E. Moore was the co-founder of Intel and made this observation in 1965. The basic tenant being that the growth of microprocessors is exponential.
As we look forward to the second half of 2021, the world seems torn between optimism about reopening and economic growth, and despair over inflation and the Fed’s potential courses of action. Like most things, the truth most likely lies in the middle between hope and pessimism.
Life begins again, for most Americans, at vaccination dose two. It is entertaining to think about what we will do with newly granted freedom of movement; seeing family is often top of the list, followed close behind by travel. As we all look forward to turning the page on COVID, we should realize this restart is not necessarily pushing us back to normal but forging forward into the new normal. So, what might 2021 have in store for us? We outline 5 main themes for the rest of the year: Improving Economy, Pent up Demand, Inflation Fears, COVID Trends to Stick Around, and Market Bubble Questions.
As we turn the page on 2020 and look forward to a new and better year, it is hard not to feel anxiety about our future. The “what-if” virus has bitten us hard this year, as for the first time in a long time, the worst-case scenarios that run through our heads were realized, if not over-delivered.
There is a light at the end of the tunnel. The end of 2020 is finally within sight as we head into the 4th Quarter home stretch. At least we are finally unified in something — our collective loathing for the plague this year has become. But, before we can start to close the books on 2020, we have at least one more major chapter: the elections.
Einstein was right about the feeling of time being relative. 2020 feels like it has been at least a decade, but in reality, we are only approaching the halfway point. This year has surprised us and terrified us; shown us hardship and sacrifice not felt since the World Wars and made us evaluate our priorities and lives.
We are not underestimating the severity of the CoronaVirus and the rapid and evolving changes to our daily lives. For the first time in decades, the fight is not in some distant third world country, but in our cities, our stores and our streets. Information is flying fast and loose. Routines and safety feel as if they are slipping away.
We may feel at times we are at an intersection in the world economy; one path full of optimism and growth, the other marred in fear. At times that fear is overwhelming, gnawing at us that at some point the market cycle will end as all good things must end. As we plan for 2020 it feels we must pick a path — prosperity or ruin?
