Everyone Got 2022 Market Calls Wrong; Wall Street, Fed, Central Banks And Nearly All

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Nearly all of Wall Street and the Fed botched market calls for 2022

So far 2022 has been a year where just about everyone on Wall Street got it wrong. As did the Fed and a cadre of global central banks.

Back in December, strategists at the world's top investment firms like JPMorgan Chase & Co. predicted the S&P 500 would gain 5% in 2022.

Economists saw the U.S. 10-year Treasury yield hitting 2% on average by the year's end. And even Goldman Sachs Group Inc. lent credibility to the claims Bitcoin was on track to hit $100,000.

Yet six months later, an unprecedented confluence of shocks has ended one the most powerful equity bull markets and sent safe-haven government bonds and other assets spiraling.

The S&P 500 is down 23%, 10-year rates stand at 3.23% and Bitcoin has shed more than half its value.

The market has quickly turned from from “buy everything” to “sell everything,” with the multi-year “there is no alternative” (TINA) phenomena in equities now gone.

Unforeseen events including the Russia-Ukraine war have contributed to the highest consumer prices in 40 years.

And as a result, ultra-low interest rates and monetary stimulus -- essentially the foundation of the post-pandemic rally -- have evaporated as the Fed and its counterparts have sought to quell inflation. 

“This is absolutely the end of TINA for the foreseeable future” said James Athey, investment director at abrdn in London. “With 8% inflation not much is attractive on a real basis.”

Even Jerome Powell, the central bank chairman, didn't see the turbulence that was coming from inflation.

He expected price gains to decline to levels closer to the Fed's longer-run goal of 2% by the end of 2022.

But now bond markets are flashing recession signals as the Fed's aggressive