Continuing from Trends for 2022 – Part One, we believe the twin story regarding prices next year is that prices could also see deflation in discretionary items as waning demand forces suppliers to price cut. Waning demand could also cause some businesses to cut capacity, which we have seen in shipping and luxury autos to keep prices buoyant. But we believe that is an exception, assuming businesses attempt to cut costs greater than or equal to price drops to either maintain or even increase profits.

In this scenario, we believe companies offering fourth revolution cost-saving innovations and technologies will continue to experience a boom for their products and services in 2022. Companies eager to maintain profit margins will adopt cost-saving technologies at an accelerated rate in 2022.

In short, blockchain technology, cybersecurity, and automation stocks are likely to outperform next year. So we see cryptocurrencies with utility, technology stocks in the digitalization space, chipmakers, AI robotization all outperforming in 2022.

Trends For 2022 - Part 2
S&P 500 returns 2019

“blockchain technology, cybersecurity, and automation stocks are likely to outperform next year”

WEALTH TRAINING COMPANY

We believe declining work participation rates are a mega macro trend, which will continue in advanced economies in 2022

Cashierless checkouts contactless with digital payments will become more common going forward.

In this example, it is easy to see the cost savings with the retailers no longer needing to pay a cashier’s salary or a security company service to transport notes and coins to the bank.

Food retailers could be the first to adopt fully automated road freight shipping and automated vehicle delivery service to customers.

Again, removing humans from the chain will reduce costs and improve efficiencies.

Fourth revolution technology will enable businesses to avoid the burden of wages, holiday pay, sick pay workers’ contribution as the chain becomes more automated and digitalized.

So fourth revolution technologies can be deflationary. Take, for example, food retailing and price controls combined with rising soft commodity prices and it becomes clear that the grocery cartels will be the first to adopt fourth revolution technologies to maintain profits under a controlled price regime

Fourth revolution technology

Fourth revolution technology will enable businesses to avoid the burden of wages, holiday pay, sick pay workers’ contribution as the chain becomes more automated and digitalized

WEALTH TRAINING COMPANY

Another one of the trends for 2022 is declining birth rates and falling population in 2022

The internal combustion engine was a technological advancement of the second industrial revolution. So the combustion engine led to the mechanization of shipping, commuting, and farming.

But the second industrial revolution also displaced horses from the productive economy, and it also drastically reduced the horse population. The horse was no longer necessary for production, and consequently, its population declined. Today most advanced economies have approximately 110 people for every horse. In 1800s Europe, they had about 11 people for every horse.

So with fourth revolution technologies, which continue to displace humans from the productive economy at an alarming rate, are humans any different from horses?

The US National debt could exceed a record 30 trillion US dollars by the second quarter of 2022” – Wealth Training Company

An aging and growing economically unproductive population will need Universal Basic Income which will continue to be funded by the central banks’ endless money creation policy, MMT

We have dubbed this quantitative easing QE to infinity.

Despite what comes out of every central banker’s mouth, there is no way M2 money supply can decline when an aging unproductive population is increasing. The statisticians might be able to statistically eliminate people from the unemployment date by not counting people as unemployed after six months of not finding work. Nevertheless, the growing number of displaced people need to be fed, housed, and clothed.

So we envisaged public deficits of advanced economies continuing in 2022

The US National debt could exceed a record 30 trillion US dollars by the second quarter of 2022.

A currency crisis could also be the trend for 2022 to keep on the radar

We forecasted that the US dollar would remain strong in 2021, which happened to be a contrarian view turning out to be correct.

We do not see US dollar weakness in 2022 and think the dollar could strengthen despite the rising US deficit due to the US dollar haven status.

The US dollar strengthening story in 2022 could be more about weakness in emerging¡ market currencies. Moreover, we believe that the Euro weakness could also be a story in 2022 as the ECB shy away from rising rates and adds more liquidity via repos.

Similarly, we believe the BOJ will not raise rates and continue purchasing assets.

“with stagflation likely becoming a reality in 2022, that is likely to put pressure on emerging market economies in 2022” – Wealth Training Company

The Fed could raise rates to 1%, but it is unlikely sufficient to tackle real inflation, which some think is around 14%. Approximately $1.7 trillion in the Fed’s Reverse Repos is about to be added in liquidity to the market when bond rates rise in the US.

GBP weakness could be a story in 2022 as the reality of Brexit messy sets in.

A major move downward in GBP or EURO would only strengthen USD going forward. 

So with stagflation likely becoming a reality in 2022, that is likely to put pressure on emerging market economies in 2022.

Depreciating emerging market currencies against the US dollar could make inflation pressure worse in emerging market economies, bearing in mind soft commodities and energy are priced in US dollars.

Emerging market loan defaults could make the business headline in 2022.

An epic nonsense melt-up in stocks could continue in 2022

The shortest Fed tightening cycle is abandoned in early-mid 20202. PBOC will also add to liquidity to counteract a wave of real-estate bond defaults.

In short, the melt-up in global stocks is likely to continue as the major central banks remain accommodating. 

We also remain bullish in precious metals and cryptocurrencies as more investors become better educated in the utility of the latter asset. 

The riskiest assets to hold in 2022 will be currencies that are not safe havens and fixed income assets as inflation, particularly in essential, could continue to rise in 2022. 

The metaverse (link to metaverse piece) is another one of the trends to watch in 2022.

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