Wells Fargo Investment Institute Releases ‘2022 Outlook: Which way to the recovery?’
December 08 2021 - 9:30AM
Business Wire
The U.S. is expected to serve as the global economy’s growth
locomotive, as inflation likely remains above long-term trend for
much of 2022
Wells Fargo Investment Institute (WFII) today released “2022
Outlook: Which Way to the Recovery?” a report examining how markets
have reached a crossroads at the start of 2022. Despite a third
straight year of strong price gains in the S&P 500 Index, many
investors now perceive a delicate balance between further equity
gains and the unraveling of the high risk-taking environment since
the economy reopened in 2020.
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2022 Outlook Report (Graphic: Wells
Fargo)
“The economy continues to perform well as we see jobs coming
back, companies are profitable, new businesses are opening, and
stock prices remain at strong levels,” said Darrell Cronk, chief
investment officer of Wells Fargo Wealth & Investment
Management. “But looking at next year, we have a new virus variant
to consider and economic growth should be slower. We also expect
inflation to remain above its long-term average but to retreat
somewhat as supply shortages ease.”
The report outlines each of the asset classes and risks to the
outlook:
- Global equities: We expect the rate of earnings growth to slow
in 2022 but still see record profitability levels potentially
sending U.S. equity prices to new all-time highs.
- Global fixed income: The Federal Reserve (Fed) will attempt to
keep interest rates low; however, if inflation becomes more acute,
the Fed could bring policy rate increases forward at a faster pace
than we expect.
- Global real assets: We expect the ongoing economic recovery to
support increased commodity demand and higher prices. We remain
favorable. Real Estate Investment Trusts (REITs) should keep pace
with equity prices, but rising interest rates should prevent REITs
from outperforming equities.
- Global alternative investments: We pivot our hedge fund
guidance in 2022 away from recovery and high-beta opportunities
toward strategies that should provide diversification and returns
that do not correlate with global risky assets.
“All investments float on the tides of historical precedent, and
their course is influenced by the winds of economics, politics, and
human nature. We believe wise insights drawn from the study of
history and an understanding of fundamental economic principles can
offer investors the perspective they need as they stand at a
crossroads,” Cronk said. “It is not the crossroads itself that
matter, but rather the decision of how to respond that equates to
the greatest success or harm.”
The outlook also provides five portfolio ideas for 2022:
- Favor U.S. assets amid an uneven global recovery
- Look for opportunities to add risk judiciously
- Seek assets that perform well when inflation is above
average
- Remain cautious on yield-sensitive assets
- Diversify: return contributions change over time
Join the WFII Outlook 2022 webcast on Wednesday, Dec. 8, from
4:15 – 5:00 p.m. Eastern Time. Click here to register.
Investment and Insurance Products are:
- Not Insured by the FDIC or Any Federal Government
Agency
- Not a Deposit or Other Obligation of, or Guaranteed by, the
Bank or Any Bank Affiliate
- Subject to Investment Risks, Including Possible Loss of the
Principal Amount Invested
About Wells Fargo Investment Institute
Wells Fargo Investment Institute is a registered investment
adviser and wholly owned subsidiary of Wells Fargo Bank, N.A., a
bank affiliate of Wells Fargo & Company, providing investment
research, strategy, manager research, and thought leadership within
the Wealth & Investment Management division, with the goal of
supplying world-class advice to the company’s financial and wealth
advisers. Wells Fargo Wealth & Investment Management, a
division within the Wells Fargo & Company enterprise, provides
financial products and services through bank and brokerage
affiliates of Wells Fargo & Company.
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a leading financial
services company that has approximately $1.9 trillion in assets,
proudly serves one in three U.S. households and more than 10% of
small businesses in the U.S., and is the leading middle market
banking provider in the U.S. We provide a diversified set of
banking, investment, and mortgage products and services, as well as
consumer and commercial finance, through our four reportable
operating segments: Consumer Banking and Lending, Commercial
Banking, Corporate and Investment Banking, and Wealth &
Investment Management. Wells Fargo ranked No. 37 on Fortune’s 2021
rankings of America’s largest corporations. In the communities we
serve, the company focuses its social impact on building a
sustainable, inclusive future for all by supporting housing
affordability, small business growth, financial health, and a
low-carbon economy. News, insights, and perspectives from Wells
Fargo are also available at Wells Fargo Stories.
Additional information may be found at www.wellsfargo.com |
Twitter: @WellsFargo.
Risks
All investing involves risks including the possible loss of
principal.
Forecasts are not guaranteed and based on certain assumptions
and on views of market and economic conditions which are subject to
change.
Stocks may fluctuate in response to general economic and
market conditions, the prospects of individual companies, and
industry sectors. Bonds are subject to interest rate,
credit/default, liquidity, inflation and other risks. Prices tend
to be inversely affected by changes in interest rates. Real
assets are subject to the risks associated with real estate,
commodities and other investments and may not be suitable for all
investors.
Alternative investments carry specific investor
qualifications which can include high income and net-worth
requirements as well as relatively high investment minimums. They
are complex investment vehicles which generally have high costs and
substantial risks. The high expenses often associated with these
investments must be offset by trading profits and other income.
They tend to be more volatile than other types of investments and
present an increased risk of investment loss. There may also be a
lack of transparency as to the underlying assets. Other risks may
apply as well, depending on the specific investment product.
Cautionary Statement about Forward-Looking Statements
This news release contains forward-looking statements about our
future financial performance and business. Because forward-looking
statements are based on our current expectations and assumptions
regarding the future, they are subject to inherent risks and
uncertainties. Do not unduly rely on forward-looking statements as
actual results could differ materially from expectations.
Forward-looking statements speak only as of the date made, and we
do not undertake to update them to reflect changes or events that
occur after that date. For information about factors that could
cause actual results to differ materially from our expectations,
refer to our reports filed with the Securities and Exchange
Commission, including the “Forward-Looking Statements” discussion
in Wells Fargo’s most recent Quarterly Report on Form 10-Q as well
as to Wells Fargo’s other reports filed with the Securities and
Exchange Commission, including the discussion under “Risk Factors”
in our Annual Report on Form 10-K for the year ended December 31,
2018, available on its website at www.sec.gov.
CAR 1221-00294
News Release Category: WF-ERS
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version on businesswire.com: https://www.businesswire.com/news/home/20211208005170/en/
Media Jackie Knolhoff, 314-875-4044
jackie.knolhoff@wellsfargoadvisors.com
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