12 January 2022
This week we’re reviewing all the various market forecasts we’ve seen for 2022 with the help of LCP Consultant & macro expert Anais Caldwell-Jones. We discuss China, the Fed, inflation, politics, and much more. We try and draw out some of the contrarian surprises that are being talked about as well as establish what the consensus is. Plus we try and evaluate the success or otherwise of 2021 predictions (remember those?) and of course, we discuss the relevance of forecasting itself and what value it has in today’s world.
Looking back, what were some of the common predictions for 2021, how did these fare?
- Good global GDP growth, including the US and China and positive equity markets were common themes a year ago which proved to be right
- Tech backlash. A common prediction but we can’t say this came to pass in the US, but maybe in China
What were some of the unpredicted surprises in 2021?
- Inflation. But the market reaction to inflation showed that even if you were armed with the critical macro piece of data you still might not be able to trade markets with it profitably
What are some of the common themes we’re seeing in 2022 forecasts?
- Inflation, China, Fed hikes, geo-political risks, employment labour dynamics: “the year of the worker”
What are some of the non-consensus surprises that could be lurking?
- Politics, geopolitics, new digital ecosystems (including crypto, web3, digital currencies - which maybe are starting to deserve a place in standard forecasts)
Forecasting vs nowcasting. In today’s fast-moving world it’s hard enough getting a handle on where things stand, let alone for the future!
- Reflecting on the role and usefulness of forecasting: it’s a tool and has its uses, but any single forecast is quite likely to end up wrong
One thing to take away
Beware of the risks around forecasts – no one has a crystal ball.
The most underappreciated thing about investing
Investing is not abstract numbers and charts on a page. It does relate to the real world and we are seeing this come out more and more.
- The Guardian’s Today in Focus podcast
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