The good news is that 2022 finally saw the world shake off the grip of Coronavirus as it transitioned from a pandemic to endemic (albeit it’s still causing problems in China). However, the past year turned out far more difficult for investors than might have been thought a year ago:

Inflation, which already rose in 2021 surged to levels not seen for decades, largely reflecting pandemic related distortions to supply and reopening & a stimulus driven surge in demand & floods in Australia.

• Russia invaded Ukraine, leading to a surge in energy & food prices.

• Central banks moved to aggressively withdraw monetary stimulus and

  raised interest rates at the fastest pace seen in decades to deal with

  inflation and rising inflation expectations.

• Bond yields surged in response to the rise in inflation & interest rates.

• Chinese growth fell sharply, reflecting its zero-Covid policy and a

  continuing property downturn despite policy stimulus.

• Geopolitical tensions surged with war in Ukraine and worries about a

  Chinese invasion of Taiwan following President Xi Jinping’s power

  consolidation, although there were hopes of a thaw near year end.

• As a result of all this, investors increasingly fretted about recession.

• Tech stocks and crypto currencies, having been the biggest winners of

  the Covid lockdowns & easy money, were hit hard by reopening and monetary tightening, ultimately proving no hedge against inflation.

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