What will 2022 be like for the markets? After a 2021 in which global equities recorded record after record, while bonds reversed, next year could show a very similar trend, with positive stocks and loss bonds. BlackRock foresees it in its market outlook 2022 presented today. As the chief investment strategist explains, Bruno Rovelli, if the expectations are confirmed, it will be the first time since 1977, the first year in which the US giant presented its statistical survey, that for two consecutive years shares report a positive result and bonds a loss.
As for strategies, the largest investment company in the world prefers stocks to fixed income and remains overweight inflation-linked bonds. Geographically, developed market equities will be preferred over emerging market equities.
Speaking of the pandemic, BlackRock argues that Covid has now become an endemic crisis but that the economic impact is now lower than at the beginning of 2020. "Even then we had a total blockage of activities which was then followed by a restart rather than a recovery" said Rovelli, explaining that normally in a crisis normal to a downturn a gradual recovery follows while in this case there was an immediate return to the pre-covid pace of activity with the problem of an accumulation of demand which caused imbalances with supply, imbalances that will gradually decrease.
INFLATION
At the center of attention of investors, also next year, there will continue to be inflation, which increase” will be persistent over the course of 2022, even if in the Eurozone it will return to levels consistent with the ECB target, while it will remain above the Fed target in the USA”, predicts BlackRock.
"Overall, the world will have to deal with a higher level of inflation than we had after the great financial crisis and for a longer time horizon than expected", explained Rovelli, according to which prices in the Eurozone will return to consistent levels with the ECB's target when a balance is found between supply and demand and therefore there will be fewer "bottlenecks in supply chains”. By virtue of these forecasts, Blackrock predicts that the ECB will wait until 2024 for an initial intervention on the cost of money. A very different strategy from that of the USA, where the Fed will raise rates as early as next year.
ITALY
Positive forecasts also for Italy which "will continue to grow quite sustained next year and at a higher rate than that of the Eurozone".
At the community level, however, Rovelli identifies three political risks: the elections in Portugal, the elections for the Presidency of the Republic in Italy and the presidential elections in France. “Our underlying idea however – he said – is that political risk for the Eurozone today is a fraction of political risk as we saw in 2017-2018 which was a time when political risk in the Eurozone was entered in an important way in the determination of the pricing of the assets. We do not expect a situation of this type in 2022 and I think this is a significant difference compared to 2017-2018".
