Top 10 Forecasts for 2022
Today, Chief Trends Strategist Matthew Carr and Engineering Strategist David Fessler will each provide their top five forecasts for the year ahead.
These predictions span the general financial markets, cryptocurrencies, renewables, precious metals and more. And their insights could help you position your portfolio for success in the year ahead.
Let’s take a look…
- U.S. Stocks Struggle: We’re entering the second year of the U.S. presidential cycle. With midterm elections and the inevitable shift of power in Congress, the second year tends to be a difficult one for stocks. I believe we’re in for a market similar to what we saw in 1990, 1994, 2002, 2014 and 2018. Expect less-than-favorable year-over-year growth comparisons. If the Dow finishes 2022 up more than 3.1%, I’ll consider that a victory.
- Cryptocurrencies Crash: Bitcoin, Ethereum and a whole host of other coins set all-time highs in 2021. A lot of that momentum was triggered by Bitcoin’s reward halving in May 2020. A reward halving leads to a two-year bull market. But that bull will transform into a bear in 2022. This is another four-year cycle that we’ve seen play out time and time again.
- Crude Tumbles to Less Than $60: Crude oil consumption has exceeded demand for five consecutive quarters. But inventories will once again begin rebuilding in 2022. We can also see “backwardation” in the oil futures market – meaning future prices for crude are less than the current price. I think U.S. oil will decline into the $50 range – and maybe even below it – in the year ahead as the market normalizes.
- Gold Catches a Bid in 2022: During times of uncertainty, safe havens perform well. And gold is one of the most recognized and embraced safe havens out there. This is why gold has averaged a 16.6% gain during midterm election years. I expect the precious metal to revisit the all-time highs it set in 2020 before cooling off in 2023.
- Chinese Tech Rebounds: One of the worst-performing sectors globally in 2021 was Chinese tech. The Hang Seng Index fell more than 11% last year, but the Hang Seng Tech Index tumbled more than twice that amount. All the concerns over regulations and delisting will fade in 2022, triggering a massive rally in this woefully undervalued group.
- Digital Transformation Quickens: Since the pandemic began, more and more companies have begun the process of fully digitalizing. And the growth rates for digital transformation investments are accelerating. Analysts are forecasting growth of 16.5% per year between 2022 and 2024, which should bring investment levels up to $6.3 trillion for that three-year period. I believe these numbers will prove to be on the conservative side.
- Green Hydrogen Will Be King: The green hydrogen market was valued at $445 million in 2021 and should reach $702 million in 2022. It’s expected to grow 57.7% per year to reach $6.8 billion by 2027. There are currently 57 global green hydrogen projects operational, with another 58 in development and another 92 in the planning stages. These numbers are only going to increase as the growth of green hydrogen continues.
- Solar Capacity Doubles, Storage Capacity Leaps: About 23 gigawatts of new solar capacity was installed in 2021. 2022 should see almost double that amount – 44 gigawatts – come online. Solar installations are increasingly being paired with energy storage systems. And energy storage is expected to increase at a compound annual growth rate of 31% through 2030.
- Electric Vehicle Raw Materials Prices Take Off: A key part of the shift to a green economy is the move to EVs. To support this growth, we need more raw materials like copper, lithium, cobalt and nickel. By the end of 2022, the price of copper could reach $6.50 per pound.
- U.S. Offshore Wind Gains Traction: Every coastal state from Maine to Georgia has plans for offshore wind development. By the end of 2022, the 800-megawatt Vineyard Wind project in Massachusetts should be well under construction. And there are no fewer than 15 additional projects already in the permitting stages that could start construction in late 2022. The offshore wind pipeline grew 24% in 2021 and now has projects in various stages of development totaling 35.3 gigawatts. Additionally, the federal government wants to fund 30 gigawatts of offshore wind by 2030 as part of its Build Back Better plan.
There you have it!
We’ll be sure to revisit these top 10 trends throughout the year to check on their progress.
P.S. Do you have any predictions as to how the market will fare this year? Let us know in the comments!
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