Small Caps And Global Banks Are Best Bets For 2022 According To Multi-Trillion Dollar Strategists

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While discussing the investment outlook for 2022, a pair of investment strategists from trillion dollar firms said that US small cap stocks and global banks are the two best areas to bet on next year.

BNY Mellon head of portfolio strategy Eric Hundahl, whose firm manages $2.3 trillion, expressed bullish sentiment on US small-cap stocks, hoping the current outsize between small- and large-caps will eventually correct.

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Brian Nick, chief investment strategist at $1.2 trillion Nuven, cited global banks, especially those in the European Union and the United States, as his best bet for 2022, with expectations of a strong year for the global economy. Taking his predictions a bit further, Nick said he sees the risk for returns over the next decade to be lower than in 2010.

Speaking yesterday at the Businesshala/Schook regional conference in Chicago, Nick presented a scenario where easing and improving supply chain conditions could help fight inflation and delay the much-anticipated interest rate hike into 2022 . He said much of the market’s response to inflation is less about its economic impact and more about what the Fed will do in response.

According to Nick, the market has set two and a half rate hikes next year, who says zero rate hike in 2022 is a more likely scenario than three.

Nick compared the current situation with the last time the Federal Reserve eased buying in 2014, after which he waited a year before raising rates. Nick feels the recently announced rapid tapering has given him more relief on rate hike decisions.

With all these actions by the central bank to counter inflation, Hundahl said he thinks we have reached peak inflation with supply chain improvements, a strong labor market and 3 million COVID retirements to bring down inflation. are completely ready.

Elaborating on the two biggest forces influencing market sentiment, Hundahl said it is a question to be seen whether Covid or inflation will remain high and the answer is probably inflation, adding that inflation is likely to be driven more by the markets. price is.

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