Worst Month's Over, but There Are No More Reasons for Optimism
January ended for the US stock market on a positive note, which, however, does not negate the fact that the month was one of the worst in history. To recap: S&P 500 down 5% (worst since March 2020), Dow down over 3% (worst since October 2020), Nasdaq Composite down 9% in January (or 12% from highs) November), making January the worst month for the index since October 2008.
Recall that the main reasons for the sales were the expectations of a tightening of the Fed's monetary policy (by the way, Goldman Sachs Group Inc. laid out their forecast for the number of Fed rate hikes in 2022 - 5 pieces), inflation, as well as problems with global logistics. That's not counting the omicron, the scaling back of fiscal stimulus, geopolitical risks, and so on.
Eurozone reported on GDP growth in the fourth quarter. 0.3% growth is not an inspiring figure. Especially when you consider that the main economy of the Eurozone - Germany - is at risk of sliding into recession in the first quarter of 2022 (the fourth quarter of 2021, the German economy closed with a decrease of 0.7%).
And in the US economy, everything is not cloudless, despite the excellent data on GDP for the fourth quarter. Goldman Sachs (NYSE:GS) cut its 2022 GDP forecast to 3.2% from a consensus forecast of 3.8%. The reasons for such pessimism are the same: fiscal support is weakening, and Omicron is pressing.
Therefore, it is more than premature to say that the worst is over and start buying everything in a row.
And finally, a few words about oil (one of the key drivers of inflation, by the way), whose prices are in no particular hurry to decline. This week, OPEC+ (another meeting at the start of the month) may support sellers by increasing oil production by 400K b/d once again. But the main problem is that it seems that with each new increase, market doubts about the ability of OPEC + to actually increase production are growing. OPEC+ is currently producing 600K b/d less than it should be according to plans.
Recall that the main reasons for the sales were the expectations of a tightening of the Fed's monetary policy (by the way, Goldman Sachs Group Inc. laid out their forecast for the number of Fed rate hikes in 2022 - 5 pieces), inflation, as well as problems with global logistics. That's not counting the omicron, the scaling back of fiscal stimulus, geopolitical risks, and so on.
Eurozone reported on GDP growth in the fourth quarter. 0.3% growth is not an inspiring figure. Especially when you consider that the main economy of the Eurozone - Germany - is at risk of sliding into recession in the first quarter of 2022 (the fourth quarter of 2021, the German economy closed with a decrease of 0.7%).
And in the US economy, everything is not cloudless, despite the excellent data on GDP for the fourth quarter. Goldman Sachs (NYSE:GS) cut its 2022 GDP forecast to 3.2% from a consensus forecast of 3.8%. The reasons for such pessimism are the same: fiscal support is weakening, and Omicron is pressing.
Therefore, it is more than premature to say that the worst is over and start buying everything in a row.
And finally, a few words about oil (one of the key drivers of inflation, by the way), whose prices are in no particular hurry to decline. This week, OPEC+ (another meeting at the start of the month) may support sellers by increasing oil production by 400K b/d once again. But the main problem is that it seems that with each new increase, market doubts about the ability of OPEC + to actually increase production are growing. OPEC+ is currently producing 600K b/d less than it should be according to plans.
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