🍋 Wall Street's '22 Outlook

Author

Short Squeez
December 27, 2021

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"I don't care about two years ago. I don't care about last year. The only things I care about is this week." – Tom Brady

Good Morning! Hope y'all had a fantastic Christmas break and were able to explain NFTs at your dinner table. US markets remained closed on Friday as Covid dominated news stories. Omicron continued its rapid spread across the globe and caused a wave of last-minute flight cancellations due to staff shortages. If you are feeling bad about consuming a lil too many adult beverages over Christmas break, according to a new study fitter people drink more alcohol. đŸ’Ș

1. Story of the Day: Wall Street's 2022 Outlook

Wall Street top firms' outlook for 2022 has 3 common themes:

1) Inflation ain’t going anywhere until supply chain issues are fixed

Inflation might yet turn out to be transitory (whatever this word means at this point) as on average in 2022 oil prices are expected to decrease, supply chain issues are expected to diminish and government aid to low/middle-income households dries up. Central banks will have to find the right balance of fighting inflation (raising rates) without destroying consumer demand.

2) Company capital spending expected to increase

2021 was a great year for corporate America as the Fed pumped billions of dollars in the economy and consumers came roaring back to buy goods & services. S&P 500 closed at a record on Thursday and is up 26% year-to-date.

Strong company profits and low-interest rates will fuel capital spending and inventory rebuilding and should contribute to broader economic growth. Also as more consumer spending shifts to services, businesses will get a breather and restock inventories according to JP Morgan.

3) Uneven Covid-19 recovery

Covid-19 is expected to show an uneven and unequal recovery pattern. Emerging markets with lesser resources are more vulnerable to economic shocks and new Covid strains.

Short Squeez Takeaway: The biggest threat to economic growth remains Covid-19. Omicron has already shown that the pandemic is not over by any means and can wreak havoc in a matter of weeks. A best-case scenario is where "monetary policy tightens less than investors fear," with strong capital spending, improving supply chains and global health, continue to push growth according to Morgan Stanley, which has a consensus outlook of 4.7% for global GDP growth for 2022. Let’s hope Morgan Stanley is right.

Source: Axios

2. Top Reads

  • Streaming pushes TV to new heights (Variety)

  • Asset bubbles? Champagne outfizzes Big Tech and bitcoin in 2021 (Reuters)

  • Asset Management work environment will never be the same (II)

  • Mark Cuban took a trip to celebrate selling his company for $5.7 billion – and ended up in coach in a middle seat (CNBC)

  • Airlines cancel thousands of holiday flights due to Omicron surge (Axios)

  • Crypto donations to charity are booming. What to know before making a year-end gift (CNBC)

  • Podcasts ‘are the new soundtrack of our lives.’ (InsiderRadio)

  • Spotify acquires Australian podcast tech company Whooshkaa (Axios)

  • Rapper LatashĂĄ, who has sold NFTs for as much as $30,000, expects to be a millionaire ‘very soon’ (CNBC)

A Message From Sweater: The Venture Capital Fund for Everyone

Sweater is opening venture investing for everyday investors. 

The last decade has seen a rise of retail investors keen on taking investment power into their own hands. Every year, more technology and resources allow investors (like you!) to make well-informed decisions for where their money goes and how it grows.

But the most lucrative long-term investment strategy—venture capital—is still out of reach for the majority of investors, until now. 

Venture capital is no longer just a club for the uber wealthy—it’s our time to put stake in the companies we want and know will change the world. Sweater, the VC Fund for everyday investors is coming soon. 

3. Book of the Day: The Knowledge Illusion: Why We Never Think Alone

Humans have built hugely complex societies and technologies, but most of us don’t even know how a pen or a toilet works. How have we achieved so much despite understanding so little? Cognitive scientists Steven Sloman and Philip Fernbach argue that we survive and thrive despite our mental shortcomings because we live in a rich community of knowledge.

The key to our intelligence lies in the people and things around us. We’re constantly drawing on information and expertise stored outside our heads: in our bodies, our environment, our possessions, and the community with which we interact—and usually we don’t even realize we’re doing it.

The human mind is both brilliant and pathetic. We have mastered fire, created democratic institutions, stood on the moon, and sequenced our genome. And yet each of us is error prone, sometimes irrational, and often ignorant.

The fundamentally communal nature of intelligence and knowledge explains why we often assume we know more than we really do, why political opinions and false beliefs are so hard to change, and why individual-oriented approaches to education and management frequently fail. But our collaborative minds also enable us to do amazing things. The Knowledge Illusion contends that true genius can be found in the ways we create intelligence using the community around us.

“The human mind is both genius and pathetic, brilliant and idiotic.”

4. Short Squeez Picks

  • Web 3.0 guide

  • 4 biggest myths of the US economy with Morgan Housel Podcast

  • The craft of economic storytelling Podcast

  • How Matt Levine panics his way into a daily finance newsletter

5. Daily Visual: SUVs Conquer Earth

SUVs as a share of global car sales

Source: Axios

6. Daily Acumen: Little Ideas

Sturgeon’s Law: “90% of everything is crap.” The obvious inverse of the Pareto Principle, but hard to accept in practice.

Cumulative advantage: Social status snowballs in either direction because people like associating with successful people, so doors are opened for them, and avoid associating with unsuccessful people, for whom doors are closed.

Impostor Syndrome: Fear of being exposed as less talented than people think you are, often because talent is owed to cumulative advantage rather than actual effort or skill.

Normalcy Bias: Underestimating the odds of disaster because it’s comforting to assume things will keep functioning the way they’ve always functioned.

False-Consensus Effect: Overestimating how widely held your own beliefs are, caused by the difficulty of imagining the experiences of other people.

7. Crypto Corner

8. Memes of the Day

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