Brooke Thackray's Top Picks: December 23, 2021
BNN Bloomberg
Top picks from Brooke Thackray, research analyst, Horizons ETF Management Canada
MARKET OUTLOOK:
The year 2022 will probably be the year of inflation bifurcation. Some products and services will continue to rise in price at a rapid rate and others will probably rise moderately or decline.
Loose monetary policies and government stimulus, combined with supply bottle necks, pushed inflation higher in 2021. The price of almost all goods and services increased.
In 2022, government stimulus will be dramatically reduced and at the same time, central banks are planning on tightening monetary policy. With less money in the system, consumers are going to have trouble affording luxury items as they spend more money on higher priced necessities.
In 2022, companies that specialize in luxury items will probably struggle. Companies that are able to pass on their higher costs are expected to do relatively well. Seasonally, investors often “switch horses” or sectors of the market in January as they position themselves for the new year. Look for a lot of sector rotation in January. The stock market is a forward-looking mechanism.
Look for the stock market to perform well sometime early in the new year as the Omicron wave starts to recede or the number of deaths is lower than expected. If and when this happens, we could see a mini-reopening boom that could provide a burst of performance to some of the cyclical sectors of the stock market.
