January 2022 / VIDEO
The Market Implications of Omicron’s Swift Surge
Omicron is significant, but it’s likely to move on swiftly without a large drag on current positive drivers of markets.
- The omicron wave is significant, but it’s likely to move on swiftly.
- It’s unlikely to have a large or lasting effect on corporate earnings, while supply chains should normalize soon, and company and consumer balance sheets remain strong.
- COVID-19 may soon become less of the singular driver of market sentiment it has been, leaving us optimistic for 2022.
COVID has had such a significant impact on markets over the past two years that we’ve been starting all of our weekly strategy meetings with an update on the science and the latest data from one of our Ph.D. analysts. He reads everything he can find, all the relevant medical and economic research on the topic.
The numbers related to omicron cases have been remarkable. Even though this variant has been less fatal, hospitalizations have increased significantly; many people can’t show up for work due to quarantine requirements, which is very disruptive; and a lot of employers have extended work-from-home policies.
We’re very acutely aware of the terrible human toll the pandemic has had. This virus is no joke. As an investment team, we try to make sense of the virus’s implication for the economy and financial markets.
On that front, the omicron wave is significant but it’s likely to continue to move on swiftly.
It’s unlikely to have a large or lasting effect on corporate earnings, which have been strong. And supply chains this year should begin to normalize. Remember also, company and consumer balance sheets remain strong.
While we will continue to have to live with COVID for some time, it looks like it may soon become less of the singular driver of market sentiment.
Ultimately, it’s been a much longer pandemic than we expected. But I wanted to take a minute to share that I’m optimistic for 2022. Thank you!
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