In 2021, the global economy recovers in volatility, and at the last point of 2022, COVID-19 mutant virus O'Micron strikes again, triggering a divergence of views among major banks on the biggest risk points in future development. From the point of view of the major banks, the consensus among institutions on the biggest risk points affecting the market is mainly focused on the uncertainty caused by the COVID-19 epidemic, high inflation and a series of reduction policies that may be brought about by the US Congress and the Federal Reserve.

Goldman Sachs Group CEO warns: stock returns will decline in the next few years, and inflation is the main risk.

"We don't expect returns on stocks and many other assets to reach the levels of the past few years," David Solomon, chief executive of Goldman Sachs Group, said on CNBC on Tuesday. "

Solomon believes that investors should not expect the bull market in stocks and other assets to continue and recommends proper risk management.

As an investor, I don't think double-digit compound interest is something you should expect. I have been involved in a lot of investment committees, charitable foundations, college boards and so on. Of course, my idea is that the returns we have received in the past three to five years are different from those we should expect in the future.

Solomon believes that in the process of cutting support policy, the main problem may be inflation, which is rising at its fastest pace in more than 30 years.

The Fed responded to inflation around 2004-2006, raising interest rates 17 times from June 2004 to June 2006. During this period, almost all assets were losing money, including stocks, and the only winners were oil and gold. Now I'm not saying that's going to happen, but I think we live in a world where people are forgetting history, and this may be a different time, and I think you have to be very careful. Appropriate risk management for possible changes.

Morgan Stanley: the Federal Reserve poses a greater threat to the stock market than O'Micron.

Morgan Stanley strategist said that compared with the emergence of a new strain of coronary disease, stock market investors may have more important things to worry about.

Morgan Stanley strategist Michael Wilson and others wrote in a report to customers:

Downsizing will intensify, which will lead to lower valuations, as is always the case at this stage of recovery. For a number of reasons, the stock market will continue the process of falling valuations that began nine months ago, with the forward price-to-earnings ratio of the s & p 500 expected to fall by about 12%, as investors' expectations of a sharp rise in long-term interest rates increase. Investors will start to demand a higher risk premium, which is likely to fall even more. "

Bank of America: the two biggest risks, the COVID-19 epidemic and rising inflation, will continue to hit the market in 2022.

In a new report written by several economists at Bank of America Corporation Global Research Center, which focuses on threats to the global economy in 2022 and beyond, BofA said:

The haze caused by the COVID-19 epidemic since the end of 2019 will not be dissipated until 2022. The future COVID-19 epidemic will be the biggest downside risk. On the bright side, the supply side will improve next year to meet the growth in demand.

In addition, the recent very strong inflation figures make people a little nervous. In the summer, most of the increase in inflation is driven by specific industries, but in the past few months, inflationary pressures have entered the middle stage of the widespread distribution of inflation.

BofA raised its global CPI inflation forecast from 2.4 per cent to 3.9 per cent this year and from 2.8 per cent to 3.8 per cent next year, compared with expectations a year ago.

The BofA report predicts that looking ahead, the Fed is likely to raise interest rates three times in 2022.

"inflation will fall from its current high in the future, but it will still be much higher than the target, and the Fed will take action. Although there will be excess demand and insufficient supply in 2021, we believe that 2022 will be a year of rebalancing, although the process will be gradual. This should ease some inflationary pressures, but not fast enough. The Fed is expected to raise interest rates three times from June and continue to do so at a quarterly pace. "

JPMorgan Chase & Co: the main risk facing the stock market in 2022 is the central bank hawks, not the COVID-19 epidemic.

In his stock market outlook for the coming year, JPMorgan Chase & Co predicted that the normalization process after the epidemic would continue around the world in 2022 and advised investors to take a more detailed view of the reopening.

JPMorgan Chase & Co strategists still expect the market to rise next year, but more moderately.

Earnings growth will be better than expected as supply shocks ease, overall conditions in emerging markets improve, and consumer spending habits normalize.

The shift to hawkish central bank policy is the main risk to their outlook, especially if post-epidemic chaos persists, such as supply chain problems and persistent labour shortages.

It is recommended to maintain pro-cyclical tendencies, especially in view of the recent correction, with a preference for inflation-sensitive sectors such as energy and finance over essential consumer goods and utilities; consumer services over consumer goods; healthcare over other defensive sectors; and small stocks over large stocks.

While technology stocks should continue to provide strong fundamentals, the long-term industry is likely to face multiple pressures from higher interest rates.