As the holiday season is upon us, and the S&P 500® is delivering one of its best returns in 10 years, up 27% as of Dec. 10, we should be content with this year’s strong market performance as our Christmas present. After all, the pandemic is showing no sign of slowing down, with the Delta variant still lingering and the new Omicron variant bringing back travel bans. Meanwhile, inflation levels are reminiscent of the Paul Volcker Federal Reserve era.
Nevertheless, as has become our annual tradition, we challenged ourselves to determine what could be the single-most important catalyst to drive markets higher in the New Year and put that at the top of our wish list for Santa. Last year, we asked Santa for a reacceleration in earnings growth and got it. In fact, Jolly Ol’ Kris Kringle is on pace to deliver the best earnings growth in 15 years for the S&P 500® at more than 45%. We already resigned ourselves to the fact that growth is set to decelerate from the peak levels set in 2021, thus we focus our sights on other potential upside surprises for 2022, namely regarding inflation pressures. For 2022, the top of our shortages and bottlenecks.