I can’t imagine that there will be too many investors who are going to put 2022 into their ‘favourite years’ scrapbook. The 31st of December 2021 pretty much marked a relative high point for most major markets and they have struggled to varying degrees as 2022 has unfolded.
It is quite remarkable to think just how many ‘black swan’ events we have had in the past few years and 2022 has certainly added fuel to the fire in that respect.
The year opened with increasing fears about inflation and rising interest rates – a theme which has persisted throughout this year.
To add insult to injury, the Russia / Ukraine situation escalated into a full blown conflict towards the end of February, further exasperating the inflation situation as energy and commodity prices spiked astronomically.
These stories have effectively persisted throughout the year and continue to make up a large part of the narrative today.
There is however some light now starting to appear at the end of the tunnel. Inflation in the US seems to have peaked and the market expectation for US rate rises has calmed slightly. The UK has been about 3-6 months behind the US in this whole journey so let’s hope we start to see similar data emerging in the UK as well.
As our friends at Square Mile have been commenting for a while now, we now have a lot of bad news priced into markets and there are many ‘known unknowns’ including the future path of inflation and interest rates, the conflict in Ukraine, the situation in China and generally softer consumer demand in light of the cost of living crisis.
Of course there is always the possibility of more unexpected events, but we have to hope (don’t we) that the last few years have given us plenty to contend with and perhaps 2023 will be a slightly more ‘normal’ year (if there is such a thing anymore).
My one piece of advice to clients is to totally ignore ‘market predictions’ or ‘what to expect in 2023’ type articles. In the same way that these predictions got it woefully wrong in 2020 (who had Covid in their predictions in December 2019?), the same happened with 2022 as very few commentators had factored in a full blown conflict in Ukraine.
The continued and expanding strike action on the part of everyone from postal workers to driving instructors reflects perhaps a growing sense of frustration and exhaustion with the current state of play.
I think in many cases, people have felt like 2022 has been a year lived in catch up mode, having never really had a break following the tumultuous period that was 2020-2021. These stresses around time and balance have been exacerbated with the cost of living crisis and I think people are wondering ‘when will it all end’?
As a business owner I see both sides of this particular fence. Let’s use Royal Mail as an example. As a business it is struggling with rising costs, reduced demand and much greater (and perhaps objectively better) competition. The business is losing money in many areas and of course we all know that is simply not sustainable for any period of time.
Contrast that with Postal Workers who feel as if they have put in additional effort during the pandemic with little reward and who are feeling their pay and conditions being squeezed and you have a very difficult impasse to which it is tricky to see a solution.
Of course the strikes are then placing further pressure on much of the rest of the economy and individuals as we have to rearrange our lives and schedules to fit around them. I can’t keep count of the number of times we have had to contact clients this year to rearrange an appointment due to the train strikes or delay a meeting because a document we needed has not arrived in the post, or where I have needed to change an ‘office day’ to a ‘home day’ because the trains are not running!
I think what I am getting at here is that a lot of people need a break. They need some quality time to rest, recharge, disconnect and be with loved ones and for me that is what the festive period is all about.
Whatever you have planned, I wish you and your families a very merry festive season and a happy and prosperous 2023!
