First detected in November 2021, Omicron is the latest variant that looks set to impact 2022.
Short term volatility is unavoidable and we cannot predict the outcomes of Omicron; much less the possibility of another variant in the future. What remains unchanged is the market regime that we are in now, which is the strong recovery growth state. Your balanced and diversified portfolio should withstand the test; adjustments are called for when there is a change of market regime.
How about the fears of hyperinflation? It can perhaps be attributed to Quantitative Easing (QE); where an increase in money supply is meant to encourage lending and lower interest rates in hopes of encouraging economic growth.
We have also experienced QE in the last decade, which has not resulted in massive inflation compared to the current state.
With the Fed tapering by buying lesser bonds each month, it might solve the issue of too much money chasing too few goods. The net result will be a decrease in money supply. However, monetary policy has its constraints and other factors come into play:
- Until people feel safe to return to the workplace, problems of supply chain disruptions and labour shortage will not be effectively solved.
- When that is resolved, inflation rate may stabilise. With strong growth rate, it will imply we continue to be in a strong recovery growth state.
Omicron and any future virus will impact the economy but will not drastically affect inflation and growth rate. What you can do now, is to speak with us to ensure your long-term investing strategy is optimised to tide through the unexpected turns.
Exclusive Content
Be Part of Our Exclusive Community
Subscribe to our newsletter to get the latest updates of our news and events.
