Financial services firm Hennion & Walsh is warning that investors are (or should be) wary of two things that could have a significant impact on the economy next year: The Omicron variant and what Fed officials will/will not do. Three federal rate hikes are expected in 2022. They’ll come just as new COVID infections are setting records in key regions, which could be a drag on the economy. In other news, Credit Suisse analysts believe gold prices will average around $1,850 an ounce in the new year with prices falling to $1,600 an ounce in 2023.
Yahoo Finance/Thomas Hum
Investors warn Omicron, Fed are a risk in a ‘growing but slowing’ economy
Major indexes are poised to end the year boosted by the “Santa Claus Rally” effect, as the market shrugs off concerns associated with surging COVID-19 case numbers across the U.S. and the world.
But according to NJ-based financial services firm Hennion & Walsh, the Omicron variant remains among the top uncertainties in the market heading into the new year, regardless of whether investors are currently interpreting it as such.
“The two biggest uncertainties for investors right now clearly are Omicron and what may come next with respect to COVID-19,” CIO Kevin Mahn told Yahoo Finance Live, “and then, of course, what the Federal Reserve may or may not do in 2022.”
The Fed is expected to embark on a rate hike campaign next year, just as new coronavirus infections set records in key regions, which may yet prove a drag on the economy.
The Omicron variant now comprises over 70% of all new COVID-19 cases in the U.S. Just last week, a dramatic sell-off attributed to these surging case numbers was a pointed reminder that a still raging pandemic remains the biggest wild card for 2022’s outlook.
Read the full story, here.
CNN Business/Michelle Toh
The pandemic pushed nearly 100 million people in poverty. They’re struggling to escape
Dipali Roy couldn’t afford to eat.
She and her husband, Pradip Roy, were garment workers in Bangladesh when the Covid-19 pandemic hit last spring, leading to mass layoffs at their factory.
Like millions of people around the world, both lost their jobs in the capital city of Dhaka, where they had worked for years making pants, shirts and jackets. And like countless other migrants, they were forced to move home to the countryside to cut down on expenses.
The World Bank estimates that 97 million people across the globe fell into poverty due to the pandemic in 2020, living on less than $2 a day.
There has been little improvement since. “Globally, the increase in poverty that occurred in 2020 due to Covid still lingers, and the Covid-induced poor in 2021 continues to be 97 million people,” economists at the World Bank said in a blog post earlier this year. They noted, however, that overall poverty should go down this year.
“We barely had enough to return home,” Dipali Roy said in an interview in Bengali from the family’s home, a corrugated metal shack in a village in northern Bangladesh.
You can read the full story, here.
Kitco News/Neils Christensen
Credit Suisse sees gold price around $1,850 in 2022, but long term around $1,400
The gold market is starting the last trading week of 2021 above $1,800 an ounce, and according to an analyst from Credit Suisse, the precious metal could see further bullish momentum in the new year.
In a recent report, Fahad Tariq, precious metals analyst at the Swiss bank, said that he remains optimistic on gold prices even as the Federal Reserve prepares to raise interest rates in 2022.
However, the bank does not expect gold prices to hold above pre-pandemic levels in the long term.
According To Tariq, Credit Suisse looks for gold prices to average around $1,850 an ounce. Looking to 2023, the bank expects gold prices to fall to $1,600 an ounce and it sees long-term prices hovering around $1,400 an ounce.
Tariq said the most significant impact for gold remains rising inflation pressures and Federal Reserve interest rates hikes.
“On interest rates, the consensus view appears to be potentially multiple rate hikes by the Fed in 2022 (following the completion of its bond tapering program), but there is uncertainty in terms of how high rates could actually go given record levels of national debt,” he said.
Although the Federal Reserve has said it expects to raise interest rates at least three times next year, Tariq said that rising inflation pressures will keep real rates in negative territory through 2022. He added that real negative interest rates would remain supportive for gold prices.
“Risks to our view include a more hawkish Fed, return to normalized inflation, substitution effect with cryptocurrencies, and lingering weakness in retail demand for gold,” said Tariq.
Continue reading, here.