The year began with faith that inflation would fade and the Fed would hold rates low. Then came a brutal reckoning.
Marko Kolanovic and John Stoltzfus, two of the loudest stock bulls on all of Wall Street, were convinced of one thing at the outset of 2022: The Federal Reserve would go slow, very slow, with its plan to lift interest rates. Nevermind that inflation had already soared to its highest level in four decades. The rate increases, they said, would come in increments so small that financial markets would barely feel them.
And so Kolanovic, JPMorgan Chase‘s co-head of global research, predicted a broad rally. He and his team pinned the S&P 500 Index at 5,050 by the end of 2022. Stoltzfus, the chief investment strategist at Oppenheimer, was even bolder: 5,330.
They were off by more than 1,000 points.
The two men — high-profile personalities at big-name firms — are the public faces of what can only be described as the blindsiding of Wall Street. With few exceptions, the best and brightest in stock and bond markets failed to appreciate how the inflation outbreak would upend the investing world in 2022. They failed to antici