Inflection point for US stocks in 2022?

Goldman Sachs Believes 2022 Will Enter Inflection Point After 2021 Disconnect

For 2022, the basis on which the market can take risks is changing, and it is difficult to say with certainty that the growth prospects will be spectacular, nor that fiscal and monetary policy will remain completely unlimited.

The market has already crossed a near-perfect peak in trading activity and liquidity in 2021. And, when you go from that extraordinary outlook to something "not so good" or "not the same", that has a huge impact on the expected returns of asset markets.

The new crown era has brought the return to risk ratio of the "six stocks and four bonds" portfolio in the US market to a very high level. For now, it is difficult to see clearly when the tail of the upside will end.

So the era of "irresponsible bullishness" is over.

As for, is the bull market over?

From now on, the bull market can still continue if the downside variables can be maintained:

(1) Financial conditions are expected to remain fairly accommodative, as real 10-year U.S. Treasury rates are currently 15 basis points lower than last year before the Pfizer vaccine approval news.

(2) The U.S. economy is expected to continue its strong momentum next year, with GDP growth of 3.5% expected to remain well above trend.

(3) If the S&P 500 achieves 8% earnings growth over the next year, the index has an important fundamental stabilizer.