We don’t normally pay too much attention to short-term market movements, but there’s some concern brewing in markets that we might be on the cusp of a significant event.
Ultimately our view is that each and every time the US Federal Reserve seeks to raise rates, the economy and growth will break and send us back to square one. The most vulnerable sectors of the economy are at risk, tech for example is already breaking with layoffs being announced by the hour.
We now need to watch out for contagion events, the markets are more intertwined than 2008, and leverage is everywhere including crypto markets which are off-grid. The risk is in the unknown.
Bottom line: Our investment thesis at Wealthi has been to enter 2022 with caution. We expected rate rises this year and while everyone is focused on a rising trajectory, we’re a bit more cautious and believe that rate rises will be limited with global growth breaking down.
If we see a contagion event like 2008, it could send central banks back to ultra-low rates and money printing to prevent a catastrophe. It might be crypto, it might be carbon credits, it might be commodities. We just don’t know and that’s the reason to be cautious.
Market insights and analysis from Peter Esho, co-founder at Wealthi, an investment property platform.
