David Fain introduced our own John Adams, Sr. VP Investments at UBS and co-founder of Malaria Partners, as our Annual Economic Update speaker, “For years our January program has featured an economic outlook of what to expect for the coming year so we asked one of our own members to tell us where our economy is headed.”
John said that “there is a lot going on in the world” so he is “going to take us on a short tour” of the major issues and factors that will impact the economy and stock market this year.
Here are some of the slides that he shared with us:
- Economic growth should remain healthy in 2022.
- We saw strong economic growth in 2021 and is forecast to be strong again this year especially across developing and emerging markets.
- Why? The pandemic has dictated the economy over the last two years and now we are seeing COVID 19 cases decoupled from deaths and Omicron is less virulent than previous waves, so solid growth should continue per low-interest rates and an increase in disposable income and personal savings as a percentage of disposal income is high; we are seeing this even with supply chain worries and low inventories and a tight US labor market as wage increases are not seen as problematic and S&P 500 earnings are sharply recovering – earnings hit new levels in 2021 and 12% increase for 2022 is an expectation; margins typically remain healthy when inflation rises and businesses can usually adapt to inflation.
- Interest rates will likely trend higher, but we are coming off 100-year lows and they are still historically low, so he does not see interest rates getting in the way of economic growth.
- Stocks typically rise after the Fed hikes rates and interest rates are more important for particular sectors vs the full market.
- Valuations are often the most important factor and high valuations mean lower long-term returns but with solid market gains ahead.
- Rapid GPD growth benefits value overgrowth so he sees strong earnings growth for small and mid-cap stocks.
- He prefers: US mid and large-cap equities along with Japanese and Eurozone equities while his lower expectations are: Gold, US Gov fixed income, US Investment-grade corporate bonds.
John concluded with an invitation to learn more at an upcoming UBS seminar on February 1st where they will cover these and more economic outlook factors; reach out to him for more information.
President Jimmy opened the meeting by encouraging all of us to participate in our club member survey that is linked in the Newsletter. “We hope to you have everyone’s response in the mix by February 2nd.”
Bill Center accompanied by Todd Summerfelt introduced us to reworked “End of the Line” that highlighted our newest Rotary club founded by our own Virginia McKenzie that is focused on ending sex trafficking. Their kickoff is on Monday the 31st where the Rotary Rogues were set to perform in person, but due to the new uptick in COVID-19, the event has been changed to a virtual event. We are all encouraged to tune in:
Rotary Club Charter Invitation - January 31 at 5:30PST via ZOOM. http://evite.me/1xSP1pXuwc
Joel Paget’s inspiration focused on the Lunar New Year, the Year of the Tiger. He encouraged us to write a note to tell people how much we appreciate them; “take time to honor people in your past.” He also said that we “don’t need to live the same year; dream a new dream; we are never too old to do that.”
President Jimmy reminded us that “membership is the lifeblood of our club and that we celebrate the anniversaries of our fellow members each month with clever video montages created by Caroline!” This month was great and based on the opening credits of “Game of Thrones.”
Jon Bridge updated us on the Seattle Rotary Service Foundation annual campaign. “Contributions to our Foundation are a great opportunity to support the good work of our committees for our community. “We often hear of the great things being accomplished by our club’s committees, but it takes dollars.” Only 55% of members have made their annual obligation with $210,000 of our $250,000 goal raised so far, so he encouraged us to contribute now: https://www.seattlerotary.org/page/make-a-donation
The Downtown Seattle Association’s Jon Scholes provided a brief update on the renewed vitality of downtown and why we “should be hopeful and positive:” The 5th Avenue Theater has re-opened, “a fabulous” new downtown grocery store (PCC) opened last week, we will soon hear about whether Seattle will co-cost the World Cup and we will be hosting the upcoming MLB All-Star Game! DSA is also hearing that employers are looking to bring their employees back to the office. He thanked us for our partnership and invited us to attend their annual (and back to in-person) State of Downtown event on March 17th.
John Steckler announced two upcoming Fellowship events including a special Seattle Opera matinee event on February 27th.
