Never mind how Omicron blows, no shortage of economic forecasts

the latest tech news, global tech news daily, tech news today, startups, usa tech, asia tech, china tech, eu tech, global tech, in-depth electronics reviews, 24h tech news, 24h tech news, top mobile apps, tech news daily, gaming hardware, big tech news, useful technology tips, expert interviews, reporting on the business of technology, venture capital funding, programing language

Never mind how Omicron blows, no shortage of economic forecasts

(NYTIMES) – The Omicron variant of the coronavirus could be dangerous enough to disrupt the lives of virtually everyone on the planet. Or it could represent a blip in a long-running pandemic – a worry, to be sure – but a relatively minor one.

the latest tech news, global tech news daily, tech news today, startups, usa tech, asia tech, china tech, eu tech, global tech, in-depth electronics reviews, 24h tech news, 24h tech news, top mobile apps, tech news daily, gaming hardware, big tech news, useful technology tips, expert interviews, reporting on the business of technology, venture capital funding, programing language

At this point, no one really knows. And given that uncertainty, the stock and bond markets are swinging haphazardly, like a weather vane before a storm, as the news about the new variant blows one way or another.

That is not stopping economists and market strategists from issuing precise forecasts for the year ahead. Wherever the pandemic may be heading, it is crystal ball-gazing season again on Wall Street.

Global Tech News Daily

It is the time of year when forecasters fire up their algorithms and release streams of projections that will tell you precisely where the S&P 500 will close in 2022, where the 10-year US government bond yield will end up and how high the inflation rate will be.

There are myriad forecasts with specific numbers – and if any of them turn out to be correct, it will be an accident.

Global Tech News Daily

Year after year, market predictions run headlong into a basic problem: It is simply impossible to forecast the economy or the markets with accuracy and consistency, as many academic studies have shown – and as I have pointed out in previous Decembers.

Last year, for example, I noted that the median Wall Street forecast from 2000 through 2020 missed its target by an average 12.9 percentage points – which was more than double the actual average annual performance of the stock market.

For 2021, Wall Street’s predictions are off the mark by even more than that.

A year ago, the median forecast for the closing level of the S&P 500 in 2021 was 3,800, according to a Bloomberg survey.

But by Dec 3, even after the stock market took a pounding in response to news of the first confirmed Omicron case in the US, the benchmark index stood above 4,500. That placed it about 20 per cent above the median year-end forecast.

The market may well drop enough by the end of December to make last year’s annual prediction look better than it does now – but if that happens, it will be because of random chance, not because of Wall Street clairvoyance.

Where will the S&P 500 close at the end of 2022? The current Wall Street consensus is 4,825, which would represent a minor increase over current levels. But I would not count on it. Forecasters cannot predict the market even one day ahead.

The S&P 500 has been oscillating with heightened volatility ever since it declined 2.3 per cent in light trading on Nov 26, which was Black Friday in the US and the first trading day after an Omicron case was reported in South Africa.

Until then, the prevailing narrative in the markets appeared to be that the global economy was recovering smartly from nearly two years of pandemic shocks.

Rising inflation, labour shortages, supply chain bottlenecks and the Federal Reserve’s likely response to these issues were the biggest problems on the horizon for the markets in the US.

They may still be, if Omicron turns out to be relatively benign. Or the various issues may intertwine: A virulent Covid-19 surge could shock the economy sufficiently to reduce inflation, slow overall growth and delay the monetary tightening that is increasingly being signalled by the Federal Reserve and other central banks. But this is merely speculation.

Although the World Health Organisation has already declared Omicron to be “a variant of concern,” it will take time before a scientific consensus emerges on exactly how transmissible Omicron is and whether it is more able to evade the protections of current vaccines or more likely to cause severe illness than other forms of the coronavirus.

These unanswered questions are impacting the plans of millions of people and the movements of the markets, moment by moment.

Traders are, understandably, confused. And despite the air of omniscience pervading many of the longer-term forecasts being issued these days, there is reason to believe that just about everyone churning them out knows that their ability to see into the future is quite limited, to put it politely.

For example, at the end of an annual outlook session conducted online recently, I asked a group of experts at BNP Paribas, the global banking giant, whether they believed their predictions could possibly be accurate, given the inability of humans to forecast the future. And if they were not confident in their forecasting abilities, why did they even bother?

Their answers were candid and, I think, quite reasonable.

Global head of strategy and economics research Olivia Frieser said: “These are our best efforts in having a framework and giving our views” to clients, who want to know what the strategists think.

Head of global emerging markets research Marcelo Carvalho went further.

“The numbers are meaningless in a sense,” he said, and continued, with an engaging smile: “Whenever I make a forecast – and I have done this for a number of years – I know it is going to be wrong.”

But, he added: “The numbers are an illustration of where things are going.” And they provide grounding, he said, to “have a thematic discussion with our clients”.

People in finance are frequently well-informed, even if their specific predictions cannot be counted on.

Bank of America’s year-end forecast is intriguing, for example. It signals trouble ahead in the US stock and bond markets, predicting that the S&P 500 will be virtually flat over the next year.

I would not give that claim much credence, because until September, Bank of America predicted that the S&P 500 would end this year at 3,800. When the market surpassed that level, the bank raised its 2021 forecast belatedly, with the benefit of hindsight.

But Bank of America’s perspective has been consistent in this sense: It is negative about the US stock market.

In an online presentation last month, Bank of America’s head of US equity and quantitative strategy Savita Subramanian said the bank’s computer model for the S&P 500 “is now spitting out negative returns for stocks for the next 10 years”.

The last time that happened, she said, was in 1999 to 2000, shortly before the crash.

The current bull market has taken stocks to giddy heights and valuations are out of whack, she said. Over the long haul, that implies lower returns.

Long-term projections over a decade or longer have been shown to have greater accuracy than shorter-term ones, and I would take that projection as a sober warning.

Over the past 12 months alone, the S&P 500 has returned about 25 per cent, including dividends, pushing the market up to levels that may not be sustainable.

I do not know when it will happen or how, but at some point, the stock market will come back down to earth. That is a prediction you can count on.

News Related


Gaining financial literacy can help Hispanics save and invest money

Getty Images Whether it is saving for retirement or building wealth, Hispanics are lagging behind. They may also be staying away from traditional bank accounts. A number of reports highlight ... Read more »

'It's going to hurt us tremendously:' Parents worry about the end of monthly child tax credit payments

Getty Images Without the child tax credit, Stormy Johnson is worried about having enough to eat. Johnson, 44, works as a student support specialist in Preston County Schools in Kingwood, ... Read more »

What your budget might look like if you make the federal minimum wage

More than a third of U.S. states still adhere to the federal minimum wage in 2021. A full-time worker making $7.25 per hour will take home around $1,000 every month ... Read more »

Here are four unhealthy beliefs about money you may have learned from your childhood

Your relationship with money was most likely formed before you even had bills to pay. “We are living out a script around money right now that quite often somebody wrote ... Read more »

'The Power of Habit' author: Giving yourself more gifts can help you save more money. Here's how

Getting more gifts for your own stocking may be just what you need to save more money this holiday season.   Rewarding yourself can be a powerful tool to change ... Read more »

New $415 million bond backed by music rights for The Who, Tim McGraw

NEW YORK (BLOOMBERG) – Bond investors will soon be able to buy a piece of the music catalogs of a wide range of pop, country and classic rock acts including ... Read more »

Bitcoin lingers near lows as central banks ready stimulus cuts

NEW YORK (BLOOMBERG) – While Bitcoin lingers near recent lows after tumbling from its November all-time high, many crypto investors see an overarching theme that could be behind some of ... Read more »

Inflation and omicron are weighing on markets. Here's what to keep in mind

The “Charging Bull” statue at Bowling Green in New York's Financial District.Drew Angerer | Getty Images As the U.S. stock market is whipped by rising inflation and the new omicron ... Read more »

Student-loan forgiveness would mean everything to Latinx students stuck in a debt cycle

The amount of student loan debt in the United States is $1.8 trillion dollars — and counting. The price to get an education has never been more expensive. The student ... Read more »

Three ways to invest in your employees in 2022

Customer second, employees first. That is the adage of Sir Richard Branson, founder and chairman of the Virgin Group. A Gallup report says employees who are engaged are more likely ... Read more »

Transforming Asia's food system to tackle our food and climate crises

Technology could help the agri-food sector transform by bolstering climate resiliency and sustainable food production. If you want more of what you like to eat, it’s time to think and ... Read more »

Here's what a lot of college grads don't know about their first job offer

Throughout our lives as students, we work hard to get a good education that will lead us to a solid job and fruitful career. But we aren't prepared for what ... Read more »

You need at least $1 million saved to retire in these cities

Sporrer/Rupp | Image Source | Getty Images How much do you think you'll need to save for retirement? If you're in one of these major cities, the answer will be ... Read more »

These are the five best states for drivers in 2021

Commuting doesn't have to be a bad thing. Ohio ranked as the best state for drivers in 2021, according to a study by Bankrate. The best states for drivers include ... Read more »

Smart moves to make with your retirement portfolio before the end of the year

Cravetiger | Moment | Getty Images As you make your to-do list to wrap up the year, don't forget to include checking on your retirement portfolio. There are several moves ... Read more »

Making New Year's resolutions during Covid has paid off: Fidelity survey

Uwe Krejci | Stone | Getty Images New Year's resolutions can be easy to make and even easier to break, but having a goal can help keep you upbeat and ... Read more »

Crypto is the 'top contender' for correction, money managers say

NEW YORK (BLOOMBERG) – By many counts, 2021 was the year cryptocurrencies were finally embraced by institutions. Now those same money-managers say the asset class is ripe for a big ... Read more »

Figuring out these three budget numbers will help you pay off debt and save more for retirement in 2022

The start of a new year can be a great time to revisit your budget. Your first steps should be figuring out how much money you actually have and finding ... Read more »

Covid mortgage bailout is expiring. Here's what to do if you still can't pay

courtneyk | E+ | Getty Images Covid relief programs allowed millions of struggling Americans to pause mortgage payments, and many of those bailouts are now expiring, putting cash-strapped borrowers at ... Read more »

BlackRock, Goldman opt for China over more pricey India stocks

(Bloomberg) In a change of tone over the world’s two biggest emerging markets, global investors overseeing billions of dollars are slowly starting to favour China over India – reversing a ... Read more »

Inflation-proof gifts with your time and schmaltz

Consider the gifts of tech, travel and time, says the writer. (NYTIMES) If groceries, petrol or cars were any part of your budget this year, inflation has hit you hard. ... Read more »

Australia's $3.3 trillion pension pot reaps dividends with ESG

Australians are moving their money to reap not only benefits for society and the environment, but also their retirement savings. (BLOOMBERG) Responsible investing is paying dividends for Australia’s A$3.4 trillion ... Read more »

Investors snap up metaverse real estate in virtual land boom

A tower in Decentraland that hopes will generate revenue from leases and advertising. Digital realms may appear as cartoonish, gummy-coloured fantasy worlds, or digital applications of places we know. ... Read more »

Four keys that could unlock a better, more sustainable world

To reduce the world’s reliance on fossil fuels and reach net-zero emissions by 2050, global investments in clean energy must triple by the end of the decade, says the International ... Read more »

How much you'll need to invest to earn $35,000, $40,000 or $50,000 per year in interest for retirement

Living off your investment returns can help remove one of the biggest fears about life after leaving your job: Will my money outlast me? Once you decide how much you ... Read more »

Did you work from home this year? When you can claim the home-office tax deduction

Did your “Great Resignation” lead you to start a business or become your own boss this year? You may be able to write off the cost of your home office ... Read more »

This is how you can make the world a better place as you invest

With the range of investment opportunities offered by Prudential, investors can protect and grow their wealth while playing their part to leave a better world for the future. Our roles, ... Read more »

Making sense of insurance amid uncertain times

With a wide range of insurance policies available, it is vital to understand the differences before you commit. Insurance is crucial to better prepare for life’s uncertainties. Paradoxically, the wide ... Read more »

How much you can expect to get from Social Security if you make $30,000, $35,000 or $40,000 per year

The largest Social Security cost-of-living adjustment increase in decades is set to go into effect in 2022. The 5.9% pay bump was meant to help seniors cover the cost of ... Read more »

How a government shutdown would affect your Dec. 15 child tax credit payment

lisegagne | E+ | Getty Images Millions of American families with kids are set to receive the last of six advance monthly child tax credit payments Dec. 15. Yet, just ... Read more »

This millennial saved $100,000 and quit her marketing job by age 25. Here's how she did it

Having an emergency fund should be a cornerstone of household budgets. Experts commonly recommend you have at least three months of expenses in savings to handle unexpected setbacks. But how ... Read more »

The metaverse, crypto and EVs are among 2021's big tech winners

SAN FRANCISCO (BLOOMBERG) – When Americans gather around the Thanksgiving table this week, the blistering rally in technology, electric vehicles and crypto-related stocks is likely to be a part of ... Read more »

7 ways college students can help save the environment — and not go broke

The environment is one of the top concerns for Gen Z — even amid a pandemic. And, while some products that are billed as sustainable cost more, there are a ... Read more »

Fintech tools take the guesswork out of investing

The recent integration of Central Depository investment data to the SGFinDex further democratises financial planning for investors of all levels. When the pandemic hit last year, human resources executive Ms ... Read more »

If you don't get a 6% raise, are you taking a pay cut due to inflation? Here's what experts say

A worker helps a customer at the Presidente Supermarket in Miami on April 13, 2020.Joe Raedle | Getty Images Workers across the U.S. are wondering how rising inflation might be ... Read more »

Suze Orman: Can you afford to join the Great Resignation? Answer these 5 questions

Charnchai | iStock | Getty Images Working is not working out for a record number of us. According to federal data, the number of people quitting has never been higher ... Read more »

How much you need to invest per month to retire with $500,000, $750,000 or $1 million, broken down by age

Saving for retirement traditionally takes more than 40 years of work. Given that kind of time, investing a little extra cash every month can pay off exponentially in the stock ... Read more »

As inflation rises, here's where to find opportunities to make and save money

LeoPatrizi | E+ | Getty Images Rising inflation has Americans worried about purchasing power and their retirement plans. Yet there are some opportunities to make and save money in this ... Read more »

The 'Great Resignation' may help you land your dream job. What to know

Ben Hasty | MediaNews Group/Reading Eagle | Getty Images Thinking of quitting your job soon? It may help you find a better gig. Many Americans are leaving their current employers ... Read more »

Temasek offers Singapore retail investors rare opportunity to buy its bonds

SINGAPORE – Temasek Holdings launched a $350 million five-year bonds sale on Monday (Nov 15), part of which will be available for purchase by retail investors in Singapore. The state ... Read more »