In talking with a number of market players the last few weeks, there seems to be a broad consensus that 2022 is going to be more challenging than 2021, which almost makes me wonder if stocks won’t be up another 20 per cent next year, defying bearish expectations yet again. But things are a little different than this time a year ago.
I have been through a few yield-curve flattening cycles and every one is accompanied by a raft of dumb analysis. The first is the mechanics behind the measurements. If the Fed stays on its current path — or accelerates — then it looks probable that the yield curve will invert sometime in early 2022, right around the time that the actual rate increases are forecast to start. Then the clock starts, as a recession can happen anytime over the next 18 months, going by the relationship between inversions in the yield curve and economic contractions.
Huge Republican gains in the 1994 and 2010 midterm elections resulted in six years of relative austerity under presidents Bill Clinton and Barack Obama. The result was a budget surplus at the end of Clinton’s second term. Fiscal spending was especially lean from 2010 to 2016, as the budget deficit shrank from around 10 per cent of GDP to about 2 per cent of GDP. Republicans are by no means fiscally conservative, but they are reliably so when they are in the opposition.
As an investor, is there any better place to invest? One has to invest progressively for long term … don’t just regurgitate but give options !!!