10 Financial Predictions For 2022
10 Financial Predictions For 2022
2022.08.21 22:11
10 Financial Predictions For 2022
In this article, we look at 10 Financial Predictions For 2022 , including a positive outlook for Bitcoin. Bitcoin adoption will reach 113% in 2022. We’ll also look at ARKK outperforming the Nasdaq-100 and META adding $1 billion in assets. And we’ll cover a bearish prediction on inflation. Inflation will get worse before it gets better. Here are 10 more predictions for 2022:
Bitcoin adoption is growing at a 113% rate
If you look at the adoption rate of different forms of cryptocurrency, bitcoin is growing at a rate of over 113% annually. This growth rate is far greater than the internet’s growth of 63% per year. By 2024, it is projected that there will be 1 billion users and 4 billion by 2030. Whether or not the growth rate is sustainable is another question entirely. Regardless of whether it is sustainable, Bitcoin’s price is certainly helping with adoption.
In fact, El Salvador is the first country to adopt bitcoin as legal tender, and newsflow indicates that it won’t be the last. Already, more El Salvadorans have a Bitcoin wallet than a bank account. In Panama, a similar bill has been introduced, and Paraguay has proposed new crypto regulations. The country also opened its first Bitcoin ATM. And even Ukraine is catching on.
The number of countries using Bitcoin has skyrocketed. Compared to the previous year, it has grown by 881%. However, while Bitcoin’s adoption rate is rising, its volatility is declining as the demand increases. In addition, it has been shown that Bitcoin is correlated with internet usage, which was far more prevalent when it first began to spread. Furthermore, if the trend continues, by 2025, there will be one billion users of bitcoin.
META will add $1 billion in assets
As a result of its austerity drive, Meta has been forced to cut costs. With the launch of its virtual-reality headset maker Oculus, the company is no longer subject to the rules of Apple and third-party companies. For Meta to remain profitable, its revenue and earnings per share must grow by more than 23% annually. For META’s current multiples to be unchanged, it will have to add $1 billion in assets by 2022.
Despite a tumultuous year, Meta’s social networking businesses are on the rebound. Instagram is the company’s biggest contributor to growth, but it also competes with TikTok. While Reels is less profitable than Instagram, it doesn’t make nearly as much money from ads as its other products. In response to the change, Meta’s CEO recently noted that social networking companies like his are having a difficult time competing with the younger audience of TikTok. It also pointed to changes to iOS that will impact their ad business.
Facebook CEO Mark Zuckerberg has stated that his company’s executives view Reels as an important part of their vision for a discovery engine. In April, he said the change from short video to longer video would be a headwind in the short term but would boost revenue gradually. Meanwhile, Meta executives have also said that they saw revenue growth opportunities in business messaging and in-app shopping tools, which could help offset the signal loss caused by Apple’s privacy changes.
ARKK will outperform the Nasdaq-100
If you are considering investing in ARKK, you should be aware that the current market cap of the company is around $34 billion. However, this doesn’t mean that the stock will have to fall that low in order to see gains. Moreover, ARKK is currently active, and its weighting is very high on speculative stocks. According to Colas, ARKK will outperform the Nasdaq-100 in 2022.
Wood also noted that the ARK strategy has outperformed the market and that his firm was right when it came to its investment thesis. Although he acknowledged that the projections of Tesla Inc. were wildly unrealistic, he said that his firm studied the company extensively in 2014 and 2015. He pointed out that 4.8 million electric cars were sold globally last year. While this was a low number, it does mean that ARKK will outperform the Nasdaq-100 in 2022.
The Nasdaq-100 outperformed the technology sector in 2000, and ARKK’s price action has been compared to that of the technology bubble in the late 1990s and early 2000s. In addition to this, passive ETF analysts have incorporated minimal fundamental research. Some of these strategies have mimicked the behavior of the Nasdaq in 2000-2001 by shorting ARKK on near-term valuations and betting against innovation. Other “active” strategies have sold non-benchmark stocks and diversified back to benchmarks.
Inflation will get worse before it gets better
A recent poll indicates that inflation will continue to rise in the next year, but will become less extreme after that. The primary factor driving the excessive inflation is the COVID-19 pandemic. If policymakers don’t act to curb inflation expectations, it could get worse. Inflation is already a major problem and overreaction to it could worsen the situation. The following is a breakdown of the main factors driving inflation in the next year.
The cost of living has been rising since the beginning of the decade, and people are beginning to shift their spending habits. Rents are rising rapidly as Americans compete for limited apartments. Food and labor costs have risen. And airline tickets and hotel rooms are getting more expensive, thanks to high demand. Inflation is also hitting the poorest households the most. The cost of food and rent is rising faster than wages, and it is particularly hard for the working poor.
The US economy will need structural fiscal reforms if it wants to keep inflation in check. The Federal Reserve has already pledged to hike interest rates seven times by 2022 in order to achieve its goal of 2 per cent inflation. This will erode the purchasing power of the US dollar. However, the US economy may not face the same challenges. And with global demand for goods and services rising, the economy will need to address the issues before inflation becomes more widespread.
S&P 500 and Nasdaq-100 are at all-time highs
The S&P 500 and Nasdaq 100 could reach all-time highs in 2022, but a year later, it could be a bear market. As a result, many investors are preparing for a year of heightened volatility. Although there are many factors to consider when determining if a year is a bear market or a bull market, the year-to-date stock market activity can serve as a microcosm of what is to come. While we’ll have to wait and see what happens, we can bet that it will be a tight battle between positives and negatives.
The S&P 500 and Nasdaq indexes have been in a prolonged period of volatility. Continued inflation worries, expectations for Fed rate hikes, and geopolitical tensions have contributed to the recent volatility. The S&P 500 index closed in correction territory in late February, which is defined as a 10% pullback from the previous all-time high. The recent turbulence has been the worst since the 34% decline in Q1 2020.
However, the S&P 500 and Nasdaq have fallen sharply over the past few weeks. During the Russian war in Ukraine, the S&P suffered a loss of almost 4%. This loss pales in comparison to the losses incurred by many people and refugees. Furthermore, the onset of the COVID-19 pandemic triggered a 20% bear market in the first quarter of 2020.
Fed’s stance will remain “accommodative”
The Federal Reserve’s latest rate announcement affirmed that its monetary policy stance will remain “accommodative,” but it also flagged an indeterminate number of rate increases this year. Powell also signaled that the central bank would be moving faster to reduce its balance sheet, which is currently $9 trillion. Powell and Biden also chose former Atlanta Fed vice chair Christine Lagard to lead the Fed, a move that may have helped European markets.
The COVID-19 crisis, which started in the fourth quarter of 2018, had its biggest impact during the second quarter of 2020. At that point, real GDP was just 1.4% below potential. The Fed began aggressively easing monetary policy and used several tools. It was not immediately clear how monetary policy was affecting the economy, but it was still largely “accommodative” when the crisis began.
While inflation readings remain front and center when determining the direction of interest rates, many members of the FOMC concurred that the impact of recent supply chain disruptions is likely to exacerbate the risk of a soft landing. Moreover, a moderate slowdown in the pace of economic growth will likely put additional downward pressure on the unemployment rate. Meanwhile, the Russian invasion of Ukraine is likely to weigh on economic activity. Also, the COVID-related lockdown in China could exacerbate supply chain disruptions.
