Tue. Jan 18th, 2022


This is an audio transcript of the FT News Information Session podcast episode: Forecast of the world in 2022

Marc Filippino
Good morning from the Financial Times. Today is Monday, January 3rd, and this is your FT News Briefing.

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The US is absolutely being hacked by Omicron. And Tesla leads the electric vehicle charge, but how long will his rule last? On top of that, 2022 starts with a lot of Covid news, inflation news and the possibility that volatile stocks will keep up. The FT will therefore predict how these stories will play out this year.

Neil Buckley
We try not to be doomsters and gloomsters, but you know, realistically, that’s what we’re aiming for.

Marc Filippino
I’m Marc Filippino and here’s the news you need to start your day.

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The US is experiencing record high Covid cases due to the Omicron variant. The seven-day moving average on Saturday was nearly 400,000. This is the highest daily total since the beginning of the pandemic. The FT’s Stefania Palma reports on the Omicron boom and says it surprised even top officials.

Stefania Palma
So Anthony Fauci, who is Joe Biden’s chief medical adviser, actually said on Sunday that the acceleration of cases we’ve seen in the US is without a doubt “really unprecedented and has gone far beyond anything we’ve seen before”, which I think really was a call to concern. Fauci also kind of made the point that he was very, very worried about the possible constraint on the hospital system.

Marc Filippino
So Stefania, the Center[s] for Disease Control and Prevention shortened the isolation guidelines last week for anyone testing positive. It is down from 10 days to five days if the person who tested positive has no symptoms. Now many people are dissatisfied with the CDC for this recommendation. Is the agency reconsidering this?

Stefania Palma
This is quite interesting, Marc, actually, because we, Fauci, are now signaling that there may be a bit of a U-turn on Sunday about these recently issued guidelines when asked about the real setback there was to this relaxation of the rules. . Fauci said that it is now actually being considered to require testing at the end of this five-day period, so it is very clear that the CDC is obviously reviewing the new guidelines you just mentioned.

Marc Filippino
Now how did the boom affect businesses? I know airlines, for one, have been hit pretty hard.

Stefania Palma
So as a result of this latest boom, there has been enormous disruption. Even if we just look at this past weekend for New Year, thousands of American flights have been disrupted. This is obviously going to have an effect on airlines, but I’m also thinking of any kind of business that obviously has a number of employees in the US and the world, honestly, during the holidays.

Marc Filippino
Stefania Palma is usually our American legal and enforcement correspondent. Today she covers the Omicron variant. Thank you, Stefania.

Stefania Palma
Thank you.

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Marc Filippino
Tesla shattered its own production and delivery records at the end of last year. The electric carmaker posted figures for the fourth quarter, boasting 40,000 more deliveries above the average Wall Street estimate. The boom is not only a sign of success for Tesla, it is also an indication that the appetite for electric vehicles is growing stronger. And while the FT’s Richard Waters says Tesla is still leading the group, the competition is creeping into its rearview mirror.

Richard Waters
You know, the Tesla story is really at a crucial moment, because now that we know they can produce, we know the demand is very high. But it is also the point at which we expect serious competition. In electric pickups, for example, Rivian is already out. Ford, with its hugely popular F-150, has an electric version available in the spring. Now we do not know if those companies can really scale their production. But you know, I think the key here is that they come out ahead of Tesla’s Cybertruck. So this is one very popular category where Tesla will not be the first to reach production.

Marc Filippino
But Richard says, do not underestimate the edge that Tesla has.

Richard Waters
This is therefore an uncertain year for Tesla, as they are slower with some of their newer models and competition is increasing. So to start the year on such a strong note, and I think it shows, you know, where their advantage now lies, that they can produce on a scale, their cost of lowering their margins is strong. They are, you know, they hit their groove at a time when the rest of the industry is just trying to scale up.

Marc Filippino
Richard Waters is the FT’s west coast editor.

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2022 is already starting to get busy when it comes to news. At the FT we want to know how some of the top stories will shake off as the year progresses. That’s why we asked our top columnists and reporters to make predictions for the coming year. Joining us now is the guy who helped put these predictions together, the FT’s lead author Neil Buckley.

Marc Filippino
Hi, Neil.

Neil Buckley
Hi!

Marc Filippino
So, Neil, before Christmas, the big concern was the Omicron variant that spilled over into 2022. Before Omicron, it was the Delta variant. Should we be worried about another dangerous variant this year?

Neil Buckley
Yes, we asked that question to Clive Cookson, our science editor, and his answer is that we should be concerned. You know, there are still so many millions of people in the world who have not been vaccinated. The possibility of further mutations is very high and so there is a danger that we may see something even worse than Omicron. And that’s Clive’s prediction, that yes we will. But it obviously depends on whether we can get more vaccinations to more people, especially in the developing countries where the vaccination rates are extremely low. And the extent to which richer world countries are also able to limit the spread of Omicron and get more reinforcements in their populations so that we can start bringing down Covid infections worldwide.

Marc Filippino
And whether Omicron sits down or not, or another variant increases, it has an effect on how central banks respond. The Federal Reserve needs to deal with the recovery rate and also one of the other major concerns of 2021, inflation. The Fed expects to raise interest rates three times this year. Will that be enough to get inflation back around the Fed’s 2 percent target?

Neil Buckley
Well, what our forecast says, and it is done by Martin Wolf, our chief economic commentator, is that he does not believe that inflation will be back at the Federal Reserve’s 2 percent target by year-end, even with the three tightenings now is predicted. Of course, very much depends on Omicron, and Martin says that, you know, it’s possible that it will not be as bad as we fear and that supply chains will start to recover and the kind of shortages we saw last year. due to supply chain issues, it will appear to be temporary. But he says there are a number of other factors. The labor market is very hot at the moment. Unemployment is very low. There are currently high vacancy rates in the economy that could put pressure on inflation. And Martin’s view is that even what is currently being anticipated by the Fed is not going to be enough to get back to the target.

Marc Filippino
Hmm. If we look at markets now, the S&P reached new highs after new highs in 2021. Will it continue in 2022 or will it decline? And if it goes down, how bad is it going to be?

Neil Buckley
Well, I think this is not an unrelated question at all, because the level of interest rates is obviously one of the two or three key things that investors are watching for for the coming year. We therefore ask the question about the S&P 500 to our market editor Katie Martin and ask if she thinks that the S&P 500 will decrease by more than 10 percent. Katie says yes, she thinks it will and mentions inflation as one of the key issues or rather the fact that the US Federal Reserve is going to be forced to apply the monetary brakes to cool inflation. And it’s inevitable, we think,’s going to have an impact on stocks. We’ve seen them go up and down with the bull run for a very long time. Our forecast is that it will reverse this year, although we set the demand at only 10 percent, not 20 percent. So it is not our prediction at the moment that we will enter a bear market.

Marc Filippino
Well, we have Katie here weekly at the FT News Briefing and she’s a bit of doom and gloom, so I’ll have to speak a word to her when we meet her this week.

Neil Buckley
We try not to be doomsters and gloomsters, but you know, realistically, that’s what we’re aiming for.

Marc Filippino
Neil Buckley is the FT’s lead author. Thanks, Neil.

Neil Buckley
Thank you.

[MUSIC PLAYING]

Marc Filippino
You can read more about all these stories at FT.com. This was your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

This transcript was generated automatically. If there is an error, please send the details for a correction to: tikfout@ft.com. We will do our best to make the amendment as soon as possible.



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