J.P. MORGAN ASSET MANAGEMENT - Investment Outlook 2022

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After the re-opening surge in 2021, growth in 2022 will moderate and central banks and governments will begin to remove stimulus. But we are far from worried about an abrupt stop in either economic activity or policymaker support. 

J.P. Morgan Market Insights team look ahead to 2022 and consider what might lie in store including: 

• The prospect of persistent inflation and its implications for monetary policy
• Why corporate earnings growth will remain robust despite rising costs
• How China is changing but investors shouldn’t be deterred
• The energy transition and its wide ranging implications
• The most compelling opportunities in a world in which valuations are optically-expensive.

The demand outlook is firm . . . in the developed world, demand is firing on multiple engines. The outlook for consumer spending appears particularly strong. Households are still sitting on considerable savings that they accumulated during the Covid lockdowns, although the rise in savings pales in comparison to the improvement in household balance sheets which has arisen from the strong asset price increases in the last few years. 

The problems are in supply... we are not concerned, therefore, about a shortage of demand in 2022. Our concerns are whether supply can keep up. The past year has seen a myriad of supply problems. The just-in-time global supply chain, which was an efficient and cost-effective corporate solution before the pandemic, has been sorely challenged. 

Central banks are unlikely to slam on the brakes. The key risk to markets is that central banks start to worry about mounting inflation pressure and slam on the brakes. We don’t see that as likely, however. Through the course of 2021, central banks have been very clear that they are not willing to take any risks with the recovery. Strategically, they would much rather be proven wrong for having tightened too late, than too early.

Key Themes

The six issues likely to have the most impact on global investments in 2022. 

• Earnings won't be eaten by costs
• Tapering without tantrums
• The pains and gains of the energy transition
• Change in China
• Finding value in value
• Central projections and risks

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Important Information:
This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature or other purpose in any jurisdiction, nor is it a commitment from J.P. Morgan Asset Management or any of its subsidiaries to participate in any of the transactions mentioned herein. Any examples used are generic, hypothetical and for illustration purposes only. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit and accounting implications and determine, together with their own professional advisers, if any investment mentioned herein is believed to be suitable to their personal goals. Investors should ensure that they obtain all available relevant information before making any investment. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. It should be noted that investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Both past performance and yields are not reliable indicators of current and future results.