2021 gave us the fastest growth and highest inflation in decades as well as stellar returns for equity investors. We think 2022 will be slower, but still pretty fast. The massive fiscal stimulus and post-reopening demand surge are over and waves of COVID-19 continue to ripple across the world, but global consumers continue to power ahead. While 2021 was the year of the upside surprise, we see 2022 as a return to a more balanced mix of risks to the economy and financial markets.
The good news is that the pieces remain in place to keep growth running well above its pre-pandemic average. Private sector balance sheets are in remarkable shape. Savings rates remain high as incomes rise, and household net worth continues to hit new all-time highs. Corporate profit margins are wide, and hiring demand is unusually strong, indicating more job creation is on the way.
The challenges to investors in the New Year could come in the form of tighter money from global central banks, as well as rising costs for businesses that could eat into profits. And, of course, COVID-19 endures as a hindrance to the global economy's full normalization.
We think as growth slows moderately and inflation eventually subsides in 2022, investors should expect somewhat lower returns. But we believe there will be rewards for moving into more economically sensitive areas of the market. These cyclical sectors include financials, U.S. small-cap stocks and the eurozone. In fixed income, we prefer to keep duration short and maintain more credit risk than usual.
Our 2022 outlook, featuring our asset allocation views and our best ideas in each asset class, is now available on nuveen.com.
RISKS AND OTHER IMPORTANT CONSIDERATIONS
This material is not intended to be a recommendation or investment advice, does not constitute a solicitation to buy, sell or hold a security or an investment strategy, and is not provided in a fiduciary capacity. The information provided does not take into account the specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made based on an investor's objectives and circumstances and in consultation with his or her advisors.
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This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The information and opinions contained in this material are derived from proprietary and non-proprietary sources deemed by Nuveen to be reliable, and not necessarily all-inclusive and are not guaranteed as to accuracy. There is no guarantee that any forecasts made will come to pass. Company name is only for explanatory purposes and does not constitute as investment advice and is subject to change. Any investments named within this material may not necessarily be held in any funds/accounts managed by Nuveen. Reliance upon information in this material is at the sole discretion of the reader. Views of the author may not necessarily reflect the views of Nuveen as a whole or any part thereof.
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A word on risk
All investments carry a certain degree of risk and there is no assurance that an investment will provide positive performance over any period of time. Past performance does not guarantee future results.
Video was filmed on December 01, 2021
Featured Speaker: Brian Nick, Chief Investment Strategist
Nuveen, LLC provides investment advisory solutions through its investment specialists.