We caught up recently with our chief investment strategist at Nuveen, Brian Nick, for a conversation on markets and the economy:

“We are at an inflection point in two important respects; first, 4Q was the best quarter of 2021 from a GDP perspective. Last year growth was 5.5%, best since 1984. But even if we only get half of that rate of growth in 2022, it would still be above trend since the GFC. But the other inflection point has been the hairpin turn by the Fed. We went from one 2022 hike, maybe, back in September to 4 or 5 hikes as of today!

“It’s certainly gotten the attention of markets, starting with a tantrum in January. Everything’s selling off in unison with nowhere to hide. Markets are adjusting to a new regime with a more hawkish Fed, new valuations and a different set of winners and losers than we saw last year.”

How do we get back to normal? “We need more Covid normalization. People are buying a lot of stuff, paying up for goods, including food and energy. The sheer volume of things people are buying is really high, putting pressure on supply chains. Those did pretty well last year, producing more around the world, but demand just grew too fast. And that’s why we saw prices for goods going up.