To my valued clients,
“Instead of giving a politician the keys to the city, it might be better to change the locks.”—Doug Larson, English middle distance runner who won gold medals at the 1924 Olympic Games.
As we close the chapter on 2021 and move into 2022, I would like to thank you for your patience and trust. I know everyone enjoys meeting me in person to see my smiling face and you’ll soon be able to do that if needed. Our return to office plans are being implemented as we speak. Our goal is to physically be in the office 3 days a week starting in January. This will be a step in the right direction and hopefully, fingers crossed, we’ll be going into the office full time in the first half of 2022.
In 2022, we should see continued earnings and GDP growth. Earnings growth in 2021 is expected to finish up 44% and continue with 9% earnings growth in 2022. It would be very difficult to grow much higher after such a large move in 2021 from the lows in 2020. (Factset Earnings Insight)
CONTINUITY AT THE FED - President Joe Biden nominated Jerome Powell on Monday 11/22/21 for a 2nd term as chair of the Federal Reserve. Powell, on the job since 2/05/18, has overseen the nation’s central bank during the pandemic, coordinating a series of stimulus programs that kept money flowing throughout our economy. During his nearly 4-years as Fed chair, the S&P 500 has gone from 2649 to 4595, an annualized return of +16.4% (total return). The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index with each stock's weight in the index proportionate to its market value (source: BTN Research).
FOR HIRE - Job openings in the USA have increased from 6.611 million as of 9/30/20 to 10.438 million as of 9/30/21, an increase of 3.827 million or 10,485 new job openings per day (source: Bureau of Labor Statistics)
“Inflation is clearly a problem. The CPI is up 5.4% from a year ago. This is the largest increase in inflation since the early 1990s. Some of this is transitory, but not all of it, not by a long shot. Housing rents were held down artificially until September, due to limits on evictions. Once nationwide eviction limits ended, rents escalated and we expect more of the same for the foreseeable future. That’s important because rents make up more than 30% of the CPI. In other words, the current economic environment doesn’t just warrant tapering, but rate hikes. Unfortunately, rate hikes aren’t happening anytime soon. We wouldn’t be surprised by just one rate hike at the very end of 2022, but the start of a hiking cycle could also be postponed until 2023.” (Brian Wesbury, First Trust)
The FED (Federal Reserve) expects GDP to grow by 5.9% for 2021, 3.8% in 2022 and 3% in 2023. World growth for 2022 is forecast to grow at 3.9% and 2.3% in 2023. (Federal Reserve Data as of 9/30/21). This forecast and inflation should keep the equity markets moving forward over the next few years.
Recent record highs in the market have been incredible, especially in the US indices, but I think international could be in the process of turning a corner and reopening their economies. The world’s loose monetary policy has benefited stock prices globally and as long as they don’t slam on the breaks, we don’t expect to see a larger pullback in stocks.
I believe we are still in a Secular Bull Market with many years left in its path. If that changes, we will adjust. As I’ve emphasized in our prior conversations, stocks are in a long term upward trend, and that upward trend is incorporated into your financial plan, but stocks don’t rise in a straight line. Be prepared for setbacks and use those as opportunities to add to equities.
As always, I’m honored and humbled that you have given me the opportunity to serve as your financial advisor. I’m here to assist you and to answer any questions you might have in regards to financial planning, the markets or walk through any issue that concerns you. As always, thank you for the relationship and trust.
Harry S. Williamson, WMS
First Vice President, Investments
Financial Advisor
Any opinions are those of Harry Williamson and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or
Forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Past performance does not guarantee future results. Future investment performance cannot be guaranteed, investment yields will fluctuate with market conditions.
The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S .stock market.
Prior to making an investment decision, please consult with your financial advisor about your individual situation.
