Michael Hakes' Top Picks: December 15, 2021
BNN Bloomberg
Top picks from Michael Hakes, senior portfolio manager, The Murray Wealth Group
MARKET OUTLOOK:
2021 has been another strong year for equity markets with the S&P up 24 per cent, the TSX up 19 per cent and the MSCI World index up around 18 per cent YTD. This the third straight year of double-digit equity gains.
2022 is an important year as we return to, hopefully, ‘normal’ from the last 2 years of pandemic. Supply chain issues will resolve, inventories will be replenished, and growth will de-accelerate from the high rates we saw off the bottom.
The U.S. Fed has its hands full as it deals with core CPI hitting 4.9 per cent in November, reaching 30-yr highs and unemployment hitting 4.2 per cent. The unemployment level is still above pre-COVID levels of 3.5 per cent.
Pricing power will be important in 2022. Brand strength will be vital if companies want to maintain margins and market share. Exposure to segments or categories with private label offerings could be a risk as customers may trade down to avoid higher prices.
As we all know, the Fed is going to raise rates in 2022 and it is expected that global earnings will grow by about 8 per cent in 2022. We think the market will grow slowly and inconsistently through 2022 but ultimately could end up mid-single digits as we work to the return to ‘normal’.
