It’s time for my finest guesses for subsequent yr: 2022 is a yr to go large and daring, as a result of a increase is coming. Not a increase in every part, however definitely a number of issues. Some good, some not so good.
Let’s speak concerning the booms to come back.
Friendly reminder: Don’t be a hero and contemplate these predictions funding recommendation. They are not. They are meant for enjoyable and to make you suppose. You can razz me about them in the event that they are improper on the finish of the yr.
That stated, I mainly went 5 for 5 on my predictions this year. One might dither over the “Roaring 20s” prediction, given omicron, however there is no indication the economic system is slowing down so I’ll take that as a win. As of this writing, the Invesco DB Commodity Index Tracking ETF and medical gadget firm DexCom which I referenced in my predictions, are each up greater than 40% year-to-date. That’s greater than the Invesco QQQ ETF, which gained 28%, and the S&P 500, up 27% in 2021.
Traders work on the ground of the New York Stock Exchange (NYSE) on December 02, 2021 in New York City.
Spencer Platt | Getty Images
Now, on to 2022 and the booms to come back.
1. Price Boom
Prediction: CPI tops 4% on common all yr
Inflation will worsen earlier than it will get higher. Wages are on the rise (that is good!) however prices are more likely to rise much more (that is unhealthy). Home costs and rents are nonetheless too darn excessive. Car costs stay within the stratosphere. Energy prices will rise this winter. Want to eat? Not solely are meals prices up — or packages getting smaller — however record fertilizer prices now might ship meals costs even greater subsequent yr. Also, no, the transport and ports scenario is not significantly better, regardless of what it’s possible you’ll hear. Rather, the ships are simply shifting further offshore. And sorry Federal Reserve Chair Jay Powell, until you discover ways to farm or unload containers, just a few rate of interest hikes will not matter a lot within the close to time period. Assuming the federal government does not change the inflation metrics on us (hey, it is an election yr in any case), we must always finish 2022 with an annual consumer price index acquire of greater than 4%.
2. Baby Boom
Prediction: Record births within the U.S.
I really like this prediction. I so need it to be appropriate. The pandemic and lockdowns have taken a toll. On lives, households, and our collective psyches. But we’re popping out of it, as a result of individuals are going to do what individuals do: transfer ahead. No matter what occurs with Covid. Singles are mingling. Travel is booming. Love is within the air. Even hip millennials are shopping for large properties within the sleepy suburbs. Homes with additional bedrooms. Wink, wink. The “youngsters” are all testing. Not for Covid, however for kids. The pandemic has introduced household again in focus. That’s a great factor. Birth charges within the U.S. have been declining forever. That ought to change subsequent yr. Is there a kid-centric ETF? There needs to be. Think about going lengthy child stuff and something birth-related, like shares of already red-hot Progyny.
3. Japan Boom
Prediction: Nikkei 225 tops the S&P 500
Japan is a rustic on the rise. Sound odd, proper? Sure, Japan’s acquired a stagnant economic system. Has for years. Numerous recessions up to now few a long time. And hey, Japan wants a child increase so unhealthy that the federal government has provide you with insurance policies to incentivize family creation. But from an organization perspective, Japan has acquired it happening. Valuations of Nikkei corporations are effectively under that of the S&P 500, whilst earnings are rising. Oh, and Japan’s fiscal coverage is as straightforward as ours. The analysts at Jefferies see value in many Japanese companies like Sony, Toyota, Suzuki, Subaru, Denso and others. Bottom line: the iShares MSCI Japan ETF EWJ outperforms the S&P 500 in 2022.
4. EV Boom
Prediction: Electric automobile gross sales high 10% of the automotive market
Hope lastly meets hype. Electric autos (EVs) are nonetheless a tiny tot within the American automotive market. They account for about 4% of passenger automotive gross sales, according to BloombergNEF. They’re hampered by excessive costs and worries about battery life. That modifications in 2022. The variety of electrical fashions accessible will double to about 20. It’s nonetheless only a fraction of the 300 or so complete fashions accessible, however significant for two causes. First, you not must be a bitcoin billionaire to afford an EV. Next, we’re getting what Americans really need: vehicles and SUVs. Between the Ford F-150 Lightning and the Rivian R1T (Motor Trend truck of the yr for 2022), together with midsized so-called “cute utes” just like the Volkswagen ID.4, there are the choices American households need (particularly if we get the aforementioned child increase). Price factors are additionally coming down.
Maybe the most important hurdle to gross sales outdoors of the associated fee — the supply of charging stations — can also be being solved nationally. As I came upon on a 517-mile road trip in an all-electric Polestar in August, vary anxiousness is an actual factor. But as extra charging stations get constructed and drivers can see they will not have to fret about the place to cost when not residence, it is going to be a optimistic upward cycle that sends gross sales greater.
5. Heavy Metal Boom
Prediction: Copper and palladium seem like gold
Want to construct an EV? You want copper. Charging station? Copper. Giant battery to retailer renewable energy? You guessed it, copper. The common electrical automotive makes use of greater than 150 kilos of copper. Now multiply that by thousands and thousands of vehicles, batteries, energy strains and every part else we need to construct on the grid. That’s a number of metallic that must be dug out of the bottom. The worlds largest copper mining nation — Chile — simply elected a brand new president who sounds like he does not like mining copper. Freeport McMoRan have to be in mining heaven. Meantime, palladium has been a canine of a metallic this yr, however which will change. Palladium is generally considered being utilized in gas-guzzling vehicles, however it’s now being tested in new battery applied sciences. All feels like a recipe for elevated demand on not a lot elevated provide. Bullish.
Special bonus prediction: The 10-year Treasury yield ends 2022 underneath 1.75%. Time stamp that!
Happy new yr and this is to a wholesome, pleased and pandemic-ending 2022.