Top 5 Charts to Watch in 2022
Top 5 Charts to Watch in 2022…
I hope everyone had a great holiday! Happy New Year! I would like to welcome all my new subscribers this week. Nothing that I say below is investment advice and the views below are subject to change at any time. These views are my views and not of any firm that I am associated with. Please read the disclosure at the end of this article for more information. Subscribe below!
Today’s letter is going to be looking at the top 5 charts going into 2022. I could probably put 100 charts or more on here, but I tried to narrow it down to the most important ones that I think will determine how markets will play out in 2022.
Let’s start with this incredible chart. Equity fund flows in 2021 is one for the record books. Global inflows into equities were over $1 trillion in 2021. 2021 had more equity inflows than the last 19 years combined! WHAT?! Two things stand out to me when analyzing this chart. Thank you, Jerome Powell and the U.S. Government. The Fed chair has kept interest rates at zero and investors are being forced further out on the risk curve to generate return. Also, the U.S. government’s stimulus packages have provided a boost to stocks. Deutsche Bank did a “survey of more than 400 investors, retail investors aged between 25 and 34 could be putting 50% of their stimulus check payments in to the stock market, Bloomberg report. The bank forecasts that the total amount of money that could be going to the stock market is $150 billion”. [1] Roaring 20’s anyone?
Source: Goldman Sachs, @schuldensuehner
This is another chart that didn’t surprise me, but it shows just how important mega cap technology is to the overall market. Will that trend continue in 2022 or will we see a resurgence in value stocks in 2022?
Source: Goldman Sachs
As a macro guy this chart is alarming… Annual percent change in the U.S. population is at the lowest level on record. Solution? Immigration!
Source: US Census Bureau, @lizzannsonders
This chart is probably the most important chart when looking forward. 6.8% YOY (Year over year) inflation rate for the U.S. If we move significantly higher from here, I expect stocks to suffer and the Fed to raise rates quicker than the market is expecting. The only issue, as I mentioned in my previous letter, is this time is different. Global supply chains are a disaster and raising rates doesn’t solve shortages in nearly every aspect of the economy. Also, note the shaded areas on the chart. A lot of recessions are right around spikes in inflation…
Source: St Louis Fed
Lastly, this year has been a record year for IPO activity in terms of deal value. But, despite this sounding like we’re ringing the bell at the top, this is a major positive development in my mind. Over the last 20 years or so, exchange listed public companies in the United States have declined by over 20+%.
Source: BofA Global Research
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Cheers,
Korey Bauer
The publication of this newsletter falls outside of the scope of Korey Bauer’s (“Bauer”) employment with AXS Investments, LLC (“AXS”), and Bauer does not represent AXS in its publication. The views expressed in the newsletter solely represent the opinion of Bauer and do not reflect the views or opinions of AXS. Bauer’s opinions are subject to change and are not intended as a forecast or guarantee of future results, or investment advice. Stated information is derived from proprietary and non-proprietary sources which have not been independently verified for accuracy or completeness. While Bauer believes the information to be accurate and reliable, he does not claim or have responsibility for its completeness, accuracy, or reliability. The newsletter is made available for informational and educational purposes only and is not intended to be a substitute for professional investment advice tailored to your specific circumstances. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and Bauer’s view as of the time of these statements. Accordingly, such statements are inherently speculative as they are based on assumptions which may involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those expressed or implied in such statements. These are Bauer’s views, and no company is responsible.
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[1] https://www.forbes.com/sites/naeemaslam/2021/03/12/190-billion-of-stimulus-money-could-go-straight-to-the-stock-market/?sh=1e0bf1e23936