Nearly all of Wall Street – and the Fed – botched calls for 2022 as stocks, Treasuries, bitcoin slump in tandem

Name: Disney fans flock to Shanghai Disneytown ahead of theme park’s full reopening as lockdown ends
Uploaded: 2022-06-19T08:52:09.000Z
Duration: 1 min 57 s
Description: Disney fans flock to Shanghai Disneytown ahead of theme park’s full reopening as lockdown ends

Just about everyone on Wall Street have got it wrong this year as the Ukraine war, Fed lift-off and China lockdowns sent assets spiralling

The S&P 500 has lost 23 per cent while bitcoin shed more than half its value in 2022

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A screen on the floor of the New York Stock Exchange on June 13. The S&P 500 went into bear-market territory as investors continued to react to inflation and Fed tightening. Photo: EPA-EFE

Bloomberg

Published: 4:52pm, 19 Jun 2022

So far 2022 has been a year where just about everyone on Wall Street got it wrong. As did the Fed and a cadre of global central banks.

Back in December, strategists at the world’s top investment firms like JPMorgan Chase predicted the S&P 500 would gain 5 per cen in 2022. Economists saw the US 10-year Treasury yield hitting 2 per cent on average by the year’s end. And even Goldman Sachs lent credibility to the claims bitcoin was on track to hit US$100,000.

Yet six months later, an unprecedented confluence of shocks has ended one the most powerful equity bull markets and sent safe-haven government bonds and other assets spiraling. The S&P 500 is down 23 per cent, 10-year rates stand at 3.23 per cent and bitcoin has shed more than half its value.

The market has quickly turned from “buy everything” to “sell everything,” with the multi-year “there is no alternative” (TINA) phenomena in equities now gone. Unforeseen events including the Russia-Ukraine war have contributed to the highest consumer prices in 40 years. As a result, ultra-low interest rates and monetary stimulus – essentially the foundation of the post-pandemic rally – have evaporated as the Federal Reserve and its counterparts have sought to quell inflation.

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Disney fans flock to Shanghai Disneytown ahead of theme park’s full reopening as lockdown ends

“This is absolutely the end of TINA for the foreseeable future” said James Athey, investment director in London at abrdn, a UK asset management firm. “With 8 per cent inflation, not much is attractive on a real basis.”

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