2022 Year-End Macro Report
2022 is an extraordinary year. The epidemic continues around the world; trade disputes and sanctions have caused supply chain disorder; the conflict between Russia and Ukraine has caused food crises and energy shortages, and crude oil prices have hit a 14-year high. Multiple factors combined caused high global inflation.
All countries made serious mistakes in judging the impact of inflation. The Federal Reserve was very optimistic about inflation in early times until they found out that prices and wages are spiraling up, and inflation is out of control. Only then did they realize that inflation had become a long-term problem.
We counted the Fed’s speeches on inflation and economic recession when U.S. inflation started to rise and found that every time it was a wrong judgment against the real data.
Fed Chairman Powell’s misjudgment on inflation:
2021–2–25: A one-time price increase may not necessarily push up inflation (seasonally adjusted CPI annual rate of 1.7%)
2021–4–09: High inflation is temporary (seasonally adjusted CPI annual rate of 5%)
2021–9–10: Inflationary pressure will ease in the first half of next year (seasonally adjusted CPI annual rate of 5.3%)
2021–12–16: Inflation is already well above target, but we are very well positioned with the current interest rates and a strong economy (seasonally adjusted CPI annual rate of 6.8%)
2022–3–17: Inflation is expected to rise, but will be lower than that of last year (seasonally adjusted CPI annual rate of 7.9%)
…
The Fed started raising interest rates, but it seems to have misjudged the recession:
2022–5–5: Looks like no recession
2022–6–2: Could be a recession, but it is not intended
2022–6: Economic data is still resilient, requiring higher interest rates
2022–9: Raises interest rates even despite recession
2022–11: High interest rates have hurt the economy, and it is necessary to slow down rate hikes
…
Based on the Fed’s misjudgment of the macro data, the probability of an economic recession in 2023~2024 is very high.
Global Inflation Ranking
High Inflation Countries
Global Interest Rate Ranking
When all the countries found that inflation was out of control and became a long-term problem, they started the era of global interest rate hikes. With the advent of high interest rates, the world has entered a tightening cycle.
Interest Rate Hike in Some Countries
Global GDP Annual Growth Rate
With rising global inflation and rising interest rates, the GDP growth rates of major economies have stagnated or even recessed. Compared with the data in 2020 and 2021, the economy in 2022 is seeing stagflation or recession.
Annual GDP Growth Rate of Major Economies
Global PMIs
The global manufacturing PMI has been below the threshold for three consecutive months.
Business Data by Countries
Retail Sales by Countries
Major economies also saw sustained declines in retail sales.
Business Confidence Index
In the context of the decline in GDP, falling PMI, and declining retail sales in various countries, the business confidence index is also sliding.
Market Performance
As the U.S. CPI peaked, the Federal Reserve announced a slowdown in raising interest rates. the strong U.S. dollar begin to go down, and various non-U.S. assets rebounded or bottomed out.
The strong dollar caused a large correction in gold first and the dollar weakens, and gold rallied again.
Under the strong dollar, the Euro kept dropping until the dollar entered correction when the Euro returned to 1 and continued to rebound.
Japan kept an easy monetary policy during the period when other countries follow the US hikes. Thus Yen continued to depreciate, falling below 130, 140, and 145, and it was on the verge of a collapse. The pullback of the dollar finally eased this danger, and the Yen started to recover.
The U.S. stock market entered a correction under the Fed’s rate hike cycle, and rebounded sharply when the Fed slowed down rate hikes and the U.S. index peaked and fell. Due to the impact of limited rate hikes and economic recession, it continued the correction.
BTC is greatly affected by macro-monetary policies. During the tightening period of various countries around the world, BTC continued to fall on account of the liquidity shortage. When the U.S. index fell and U.S. stocks rebounded, BTC broke the correlation due to the FTX incident. With the macro still tightening, it begins to consolidate and seek the bottom.
Anthropological Data
The current global population has exceeded the 8 billion benchmark. As of the time of this report: there are 8,008,261,966 people around the world.
The total number of deaths this year exceeds 60 million. As of the time of this report: 66,865,770.
2022–12–16 the total number of people infected with COVID-19 in the world exceeded 650 million, and the death toll exceeded 660,000. (No accurate data was provided afterward)
Luckily, the vaccination rate in countries around the world is constantly increasing, which has effectively reduced severe illness and mortality.
Global carbon dioxide emissions continue to increase at a rate of 1,000 tons per second, as of the time of this report: 36,346,409,293 tons.
Summary
2022 is a year of drastic changes around the world. Issues such as epidemics, trade disputes, geopolitical conflicts, food crises, energy crises, and high inflation are all acute.
Many countries have chosen the most extreme method, wars, in dealing with geo-conflicts, and they have not handled well enough in dealing with issues such as public health issues and carbon emissions. Geo-war alone has brought hundreds of millions of dollars loss.
The overall performance of various financial markets in 2022 is poor and it is full of various uncertainties and variables. The central bank, the Fed, misinterpreted CPI data. High-level banks and financial institutions also made wrong operations on various financial assets. As a result, many well-known investors and funds suffered big losses. Big sovereign fund Norway’s Sovereign Wealth Fund lost more than US$174 billion in half a year, Berkshire Hathaway’s loss exceeded US$45 billion from January to June, and the Japanese Government Pension Investment Fund (GPIF) lost nearly US$440 million in the same period…
The world’s major economies are also falling into recession, and the world could also fall into the crisis of nuclear war and World War III.
2022 is an extraordinary year for the whole world. Looking back on the whole year, whether it is the financial market, investment, or trade, the world has all shown a decline. Only wars and military conflicts are on the rise. It seems that bad news overtakes the good ones. However, with the squeeze of various asset bubbles and the outbreak of various black swans, the worst and many uncertain risks have been priced in. As countries reopen and trade resumes, the remaining risks are downgrading, on the condition that World War III is not triggered by a nuclear bomb. Anyway, time always tells.
Completion of this report: 2022–1230–18:20 (UTC+8)
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