Skip to content
Opinion
John Authers

All This Market Optimism Faces a Big Dose of Negativity

Investors are in a better frame of mind than in the pandemic’s preceding two years, but is it really justified?

The opening bell rings Monday. What should be the balance between optimism and negativity for 2022?

The opening bell rings Monday. What should be the balance between optimism and negativity for 2022?

Photographer: Michael Nagle/Bloomberg

To get John Authers' newsletter delivered directly to your inbox, sign up here.

Happy New Year, everyone. So far, 2022 feels very much like 2021. This is particularly so as I write this in the U.K., where markets remained closed Monday and life continues to revolve around the coronavirus. However, two years scarred by Covid-19 didn’t get in the way of great market returns, and the chances are good that the pandemic will cease to be as much of an issue.

So, how is this year going to differ from the two that preceded it? A brief unscientific study of the landscape suggests to me that investors enter 2022 in a remarkably optimistic frame of mind. That isn’t totally irrational. But this does mean that such assumptions are embedded in market pricing. Meanwhile, optimism about the economy and financial markets co-exists with spectacular negativity about geopolitics. Poor views about democracy in the U.S. are everywhere — and I’ve been checking American sources, not just the baleful fare available in the U.K. China’s Xi Jinping and Russia’s Vladimir Putin are described as badly as any villains of the past, and both are plainly regarded as enemies.