"Dr. Doomsday" issues a warning: the global market will be clouded by 2022

Time:2021-12-30 Source: 890 views Trending Copy share

According to the Finance Association (Shanghai, editor Niu Zhanlin), Roubini, a well-known economist known as "Doctor Doomsday", wrote an article on Wednesday that although major economies and financial markets performed well in 2021, the impact of the new crown epidemic Certainty, 2022 will face new challenges. In addition to the tightening of monetary policies of central banks, geopolitical and systemic risks are also increasing exponentially.

Although the emergence of Omi Keron strain has brought some obstacles, 2021 will be a relatively positive year for economies and markets in most parts of the world. Compared with the severe recession of the US economy in 2020, the US financial market will recover strongly in 2021, and US stocks have repeatedly set new highs. In particular, the S&P 500 index has risen by more than 27% this year, partly due to the Fed’s ultra-loose monetary policy.

However Roubini pointed out that 2022 may be more difficult, and the epidemic is not over yet. Omi Keron may not be as toxic as previous viruses, but it is much more infectious, which means that the number of hospitalizations and deaths will remain high. The resulting uncertainty and risks will curb demand and increase pressure on the supply chain.

Supply chain disruption coupled with excessive savings, suppressed demand, and loose monetary and fiscal policies will boost inflation in 2021. Many central bankers who insisted that the inflation spike was temporary have now acknowledged that high inflation will continue. They are planning to gradually tighten unconventional monetary policies such as quantitative easing in order to begin normalizing interest rates.

If the central bank to raise interest rates , it will be on bonds, credit and equity impact the market. As debt accumulates on a large scale, the market may not be able to absorb higher borrowing costs. If there is panic in the market, the Fed will find itself in a debt trap and may reverse the process.

Geopolitical and systemic risks in 2022 will also continue to rise. For example, the recent border conflict between Russia and Ukraine, as well as new trade disputes.

2022 also brings some systemic concerns. In 2021, various natural disasters have exposed the real impact of climate change. The drought has caused a dangerous spike in food prices, and the impact of climate change will continue to worsen.

To make matters worse, the vigorous promotion of economic decarbonization has led to insufficient investment in fossil fuel production capacity before the supply of renewable energy is sufficient. Over time, this dynamic will lead to substantial increases in energy prices.

In this context, political failures in advanced economies and emerging markets are intensifying. The mid-term elections in the United States may herald a full-scale constitutional crisis. The United States is experiencing unprecedented partisanship, political deadlock, and radicalization, all of which pose serious systemic risks.

As 2021 draws to a close, there is still a bubble in the financial market. Real estate prices in the United States and many other economies are high, stocks, cryptocurrency assets, and special purpose acquisition companies (SPAC) have also set off a boom, and U.S. bond yields are still at ultra-low levels.

In 2022, when monetary policy begins to normalize, asset and credit bubbles may shrink. In addition, soaring inflation, slowing economic growth, and geopolitical and systemic risks may bring risks to the market in 2022. Regardless, investors may remain nervous for most of next year.

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