This post is comprised of two key parts. We'll start with the views of yours truly, and then move onto your views.
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My outlook for 2022
The US, and most other world markets can be expected to continue broadly pushing upward. The one wild card is... well, I can't talk about that here. Assuming the 'wild card' doesn't play out, we can expect net yearly gains. Soft target is psy' 5K. I have to wonder if 6K is a valid target, but that won't be easy, even if we see only one correction of around 10%.
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In terms of individual stocks, I'd like to give particular attention to FCX, SLB, and BAC
Natural target for Freeport are the 2011 historic $48s, which will likely require copper near/at $5.00. I'm suspicious we'll see a spike in copper to the $7s, which might see Freeport hyper spike to $100. Regardless, all of those EVs will each require a literal wheel barrow of copper.
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Soft target for Schlumberger are the June 2021 $36s, with a grand target of the $54s. The latter will likely require WTIC sustainably at/above psy' $100.
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Soft target for Bank of America is psy' $50, with a grand target of the $70/75 zone. I'd accept the latter as bold, but higher rates are inherently bullish for the banks. The only concern is a yield curve inversion - which would adversely impact net interest margins, but that seems unlikely.
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Special mention for Twitter (TWTR)
Twitter was net lower for 2021 by -20.2%. Trump was (not entirely surprisingly) kicked off the platform in early Jan'2021, with p/t CEO Dorsey (from the rumours) recently pushed out.
The new CEO appears 'problematic', seemingly more interested in tightening the vice of censorship, rather than welcoming new people to the platform.
Whilst Trump's 'Truth Social', will likely be a train wreck (especially in the early days, via server overloads and hacks), it will be a platform where I expect tens of millions to sign up. If some of the mainstream also follow, Twitter faces a sustained exodus into 2023. Could we expect 25% of the current 200M (approx') user base to switch across, and leave Twitter to slowly die?
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Economy:
The US economy can be expected to continue to fare better than almost
anywhere else, not least relative to the economic basket-case of Europe. There remain trillions sloshing around the system, and it should be enough to prevent a recession this year.
Print Central:
The Fed can be expected to have fully spun down the printers within March/April. I expect at least two rate hikes. Its possible we'll see a rate hike at every FOMC from March onward, which would make for as many as SEVEN hikes, taking rates to a range of 1.75-2.00%. Even if double digit headline inflation, I don't expect any single 50bps hikes.
Commodities:
WTIC
- demand/supply issues should show further improvement relative
to 2021. Having recently printed the $85s, psy' $100 looks realistic late spring/mid 2022. Key
stocks: OXY, SLB, KMI, CVX, XOM, MRO, RIG
Gold - 2021 was a bearish leaning mess, if ending the year on a positive note. Soft target are the recent $1879s, psy' 2K, and then the August 2020 historic $2089s. The $2400/2500 zone looks a stretch in 2022. Key stocks: GOLD, NEM, AEM, KGC.
Silver - old resistance of the $21s is new core support. So long as the $21s hold, the door is open to psy' $30, but that would still be a pitifully low level, relative to copper. Key stocks: AG, PAAS, WPM, HL
Copper - 2021 saw a new historic high of $4.88. Next soft target is psy' $5.00, which looks realistic by April/May. A monthly close >$5.00 will open the door to the $7s, which would be a very considerable further 40% to the upside. Key
stocks, FCX, VALE, TECK, SCCO
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Your views
First, many thanks to those that voted, and who retweeted some of the polls, to help pick up some extra voters.
Most notable is that only 6.4% believe we'll see the SPX settle >6K.
Only 23.1% of you believe gold can power above $2500, and I agree... it looks a stretch.
61% of you believe WTIC will print $100 or higher... and I agree. $125 looks realistic by mid year. Perhaps we should be looking for a multi-decade double top of around $147 ?
Surprisingly, over half of you believe Bitcoin won't be able to clear >100k.
A poster noted 'Non-transitory Inflation or excess wage inflation that spurs
recession'. Indeed, its a risk, especially as many of the psychopathic populace will be (understandably) screaming for higher wages to counter higher food/energy.
My biggest concern is 'health related', but I can't talk about that here.
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Most recognise rate hike'1 is coming this March/April, with another 2-3 seemingly inevitable.
Only 13.8% of you believe we'll see double digit inflation, and I see that as overly complacent, and reflective of many having originally believed in the Fed's 'transitory' nonsense.
A broadly split vote... not surprising.
Of the four, I'd certainly favour energy, but financials and cyclicals would be a close second and third. To be clear, I'm NOT bearish tech!
Poster responses: CLF, DIS, OXY, QCOM, BA, F, MOS, SONY, RBLX, U, and 'anything that drills'. My top three are FCX, SLB, and BAC... in that order.
Poster responses: PTON, COIN, DASH, DKNG, PINS, MRNA, GRUB, ZM
I'm certainly skeptical about Twitter, and I have 'issues' with both Pfizer and Moderna.
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A brief reflection on last year's outlook
see: https://tradingsunset.blogspot.com/2021/01/the-outlook-for-2021.html
I
was very pleased with how OXY and SLB played out. With Trump being kicked, TWTR duly struggled across the year. Gold and silver were notable fails.
My year end call for sp'4210 was a rather massive 556pts (11.7%) short of actual, if still better than most of the mainstream.
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Final note
2022 is well underway, and we can expect
some 'drama' probably within Feb'/March, as Print Central fully spool down the printers and begin to raise rates. To be clear though, I do NOT fear higher rates. Indeed, it remains ironically the case, that the ultimate equity sell signal is a rate cut.
Q.
What is my year end guess for the SPX? Assuming at least two corrections of around 10%, and a couple of minor 5% ones, if I had to pin a
number, my best guess is 5249.
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I will end with thanks to my mini legion of subscribers, and those who regularly comment, request a chart, and retweet my work on Twitter.
Subscriptions > https://www.tradingsunset.com
*the next post will be around 5pm EST, Monday January 10th.
