2022 has been a massive year with a huge range of crazy events that have shifted markets around the world. As is the case every year, outlooks, forecasts and strategies formed at the start of the year have proven a long way off the mark. Listen in as we review the year that was:
The War in Ukraine
The largest event to have hit the world this year has been the war in Ukraine without a doubt. Host Andrew Baxter notes the significant impact the war has had throughout the year in particular on energy prices and markets in general. Many expected the war to be over quite quickly, however it started in early 2022 and is still raging on as we speak. Although the war itself has had a devastating impact on the lives of many, it has presented some opportunities in the form of some very lucrative trades. As noted, energy and oil have performed great over 2022 and even some other commodities like wheat and corn have provided some solid opportunities throughout the year.
Tension Between China and Taiwan
While Russia and Ukraine already escalated into an all out war, the tensions between China and Taiwan have been bubbling in the background. Andrew Baxter points out that China began to make some moves in the midst of the Ukrainian conflict while the West was seemingly distracted by the Russians’ invasion. It has been made clear that any overstepping towards Taiwan on the part of China would undoubtedly end with the US stepping in and engaging in a conflict. As of yet it has not happened, however with China’s aims for expansion there is a very real possibility of China making more moves.
Interest Rates and Inflation
The other main headline we have heard all year has been inflation and interest rates. Host Andrew Baxter has not seen inflation at these levels for many years while interest rates have seldom been hiked quite so aggressively by the central banks around the world. In times of high inflation, everything becomes more expensive. Not only does a new pair of shoes likely cost more but you may start feeling the pinch when you fill up your car or buy groceries for the week. Though Jerome Powell and the US Federal Reserve may have been a little bit late to the party, sustained aggression and determination to bring interest rates down has led to some decent results through the year while having communicated their intentions throughout the year.
This feature sets them apart from the RBA who were also a bit slow to the jump, but ineffectively communicated with the market and may have taken their foot off the gas a little bit too early.
Towards the end of the year, we have seen housing prices start to ease after a couple of years of extreme growth. The way Host Andrew Baxter sees it is that there have been different pockets of the market that have performed differently throughout the year. The Victorian housing market for example has been relatively slow following the harsh lockdown restrictions during the pandemic. The FOMO in the housing market saw many priced out of the market, now putting pressure on the rental market with an undersupply currently available. The rising cost of mortgages has caused rental rates to increase, forcing renters to shell out more money than before.. Unfortunately, it is a matter of the combination of multiple factors coming together to push prices higher.
Although most places put Covid in the past, China has kept some harsh lockdown in laws which at times have wreaked havoc on the market. Andrew points out that mass closures in one of the global manufacturing centres of the world has led to supply chain disruptions scattered throughout the year and has been just another factor pushing prices higher. All in all, so much has happened through 2022 but we thank you for joining us week in and week out and look forward to 2023!