Pre-market stocks: Wall Street can’t decide what 2022 will hold
So what is planned for 2022? Wall Street admits that on many fronts this is not entirely certain.
It just fell: New reports from Morgan Stanley and Goldman Sachs note that a significant degree of economic uncertainty persists, especially around inflation and how policymakers might react.
In a study released Sunday, Morgan Stanley said he believed US inflation would fall “decisively” next year while remaining above the Federal Reserve’s 2% target.
The bank’s strategist team predicts as a central scenario that the Fed will still suspend interest rate hikes until 2023. But they can’t be sure.
“The supply constraints that have held back growth and pushed inflation this year could easily persist or worsen,” its strategists wrote. “In such a scenario, we would have significantly lower growth but higher inflation, and judging by the central bank’s communications, more aggressive political tightening. Indeed, in this scenario, we see the Fed raising prices. interest rate in the middle of next year. “
And there is also another caveat: “Supply constraints, for goods and the labor market, could also return to normal more quickly than expected.”
Goldman Sachs strategists take a slightly different view. They have already said that rising consumer prices – which are rising at their fastest pace in 30 years – will force the Fed to act sooner.
“The US economy has largely followed the fast track to the recovery we expected this year and is on track to complete the recovery next year as most of the remaining effects of the pandemic wear off,” said they wrote on Sunday. “But this year has also brought a major surprise: a surge in inflation that has already peaked in 30 years and still needs to go further. Mainly for this reason, we recently moved our forecast on schedule to the first one. Fed rate hike until July 2022. “
Still bullish: Morgan Stanley predicts the US economy will grow 4.6% next year after growing 5.5% in 2021. Goldman Sachs expects slightly more subdued growth of 3.9% in 2022 as activity has cooled in recent quarters.
Chinese Xi Jinping gets his favorite scholarship in Beijing
The scholarship was first announced by the head of the Chinese Communist Party in September. It aims to help small and medium-sized businesses raise capital.
The latest: The first batch of 81 companies started trading on Monday, including 10 initial public offerings from tech and manufacturing companies, reports my CNN Business colleague Laura He. Shares of those IPOs surged at breakers opened and tripped, before closing with an average price increase of 200%.
Automotive component maker Tongxin Transmission was the top performer with a staggering 494% gain. The other 71 Beijing-listed companies previously traded over-the-counter for unlisted companies on China’s major Shanghai and Shenzhen stock exchanges.
Take a step back: The launch is of strategic importance to Xi’s economic and political vision. It is the first time that a stock exchange has been established in Beijing, giving the capital and political center of the country more influence in the world of business and finance.
It also comes as Xi takes on some of the country’s biggest tech giants, which until recently were growing at an almost breakneck pace. The Communist leader’s campaign aims to ensure that wealth and capital are not concentrated in the hands of a few behemoths in the industry.
Coming up: The project kicked off hours before Xi held a virtual summit with U.S. President Joe Biden, the first such meeting since Biden took office in January. Investors will closely follow the talks, which are expected to focus on trade, China’s struggling real estate sector and climate goals, as well as human rights abuses and Beijing’s military build-up in the South China Sea.
Americans still give up in record numbers
The big picture: Workers are quitting in search of better pay or jobs, which is a fundamental shift in the U.S. job market, reports my CNN Business colleague Anneken Tappe.
The trend was particularly pronounced among workers in retail trade and food service workers.
“The pace of dropouts from the workforce is remarkable,” said Nick Bunker, director of economic research at the Indeed Hiring Lab. “But the concentration between a few industries is striking. Quits are on the rise most in industries where most of the work is face-to-face or relatively low-paid.”
This could indicate lingering fears about the Delta variant in September. But it also reflects a broader dynamic forcing employers to consider increasing pay to attract and retain staff.
“Labor now has the initiative, and the era of paying people less than a living wage is over,” said Joseph Brusuelas, chief economist at RSM US. “This strongly suggests that rising wages are going to be an integral part of the economic landscape going forward.”
Also today: The Empire State Manufacturing Survey is released at 8:30 a.m.ET.