Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com 2022: A YEAR OF TRANSITION, BUT S&P 500 TO GAIN - WFII (1348 EST/1848 GMT) The Wells Fargo Investment Institute (WFII) is out with its 2022 outlook. WFII believes 2022 will be a year of transition for a global growth cycle that has been largely shaped by the COVID-19 pandemic. Although WFII expects a slowdown, it believes global economic growth will easily outpace the 3.3% annual average rate from 1980 to 2020. WFII expects the U.S. consumer to serve as the global growth engine through the first half of the year. And even though it sees the rest of the world as being less in sync with the United States, broadening vaccination rates should aid international economies in the second half of 2022. Among important economic data points, WFII sees U.S. CPI inflation falling from 6.2% (October) to 4.0% by year-end 2022. As for equities, WFII says that while it believes this market cycle is still in its early stages, it is likely past the peak rate of earnings growth. However, the institute also believes that above-average revenue growth, along with steady to slightly higher operating margins, will guide earnings higher. Overall, WFII thinks equity prices will be supported by the Federal Reserve"s monetary policy next year, even in the face of tapering, although fiscal policy should be less of a tailwind, and midterm elections may put market sentiment at risk. WFII believes that, given exposure to the tech sector, the S&P 500 and Russell Midcap indexes will be outperformers. And given that the cycle is aging, WFII"s tactical guidance remains most tilted toward U.S. large caps, while they recently upgraded U.S. midcaps to favorable. WFII"s S&P 500 year-end 2022 target is 5,100-5,300, or roughly 9%-13% above current levels. (Terence Gabriel) ***** STABLECOINS IN REGULATORY CROSSHAIRS, BUT (MOSTLY) UNFAZED (1310 EST/1810 GMT) Top cryptocurrency executives appeared before Congress on Wednesday to discuss regulations of the industry, and stablecoins were a key point of focus. read more Stablecoins are digital assets pegged to traditional and less volatile assets such as the U.S. dollar, and are typically used to facilitate trading in other cryptocurrencies. They have grown in popularity as the crypto and decentralized finance market has taken off. These assets have increasingly been a point of contention for regulators. However, investor appetite for stablecoins is still strong. According to a report from Delphi Digital, stablecoins have grown "substantially" in the last month, with the market capitalization of the top five stablecoins swelling to nearly $150 billion from $129 billion. Tether (USDT) and USD Coin (USDC), the most popular stablecoins by market cap were the primary drivers of stablecoin supply growth, Delphi Digital says. However, USDC has been slowly growing against USDT as it is considered less risky. While Tether is the biggest stablecoin, with a market cap of over $76 billion according to CoinMarketCap, it faces significant scrutiny over what is actually holds in its reserves. The company behind USDT has already been fined, and short-seller Hindenburg Research put out a $1 million "bounty" for undisclosed information on its reserves. read more Delphi Digital points out the USDC/USDT ratio has grown from 0.19 at the beginning of 2021 to 0.53 today, a sign of market preference for USDC. USDC"s supply grew $7.8 billon over the past month, compared to growth of $6 billion for USDT. Algorithm-based stablecoins have also grown in popularity. The market cap of TerraUSD, one such coin, has swelled to $8.57 billion in a little over a year. Meanwhile, Meta"s (FB.O) proposed stablecoin Diem, which kicked off a wave of concern in Washington when proposed, has yet to see daylight but the company has made another foray into the crypto world with its WhatsApp crypto payment pilot program. read more ***** TAKE A LOOK AT REITS AS WE HEAD INTO 2022, BOFA SUGGESTS (1225 EST/1725 GMT) Investors cautious about inflation, future gains in the stock market and higher interest rates next year ought to take a look at REITs, BofA Global Research says in a note out on Thursday. High quality real estate investment trusts can provide inflation protected cash flows, while potentially beating and raising guidance, analyst Jeffrey Spector writes in his note. "Our work inside shows REITs can underperform ahead of the first Fed hike but can actually outperform if rates are rising alongside a growing economy," Spector writes. The S&P 500 real estate index (.SPLRCR) has surged 34% in 2021, well ahead of the S&P 500"s (.SPX) 25% rise. That rally has occurred even amidst uncertainty about the long-term effects of the coronavirus pandemic on demand for office and brick-and-mortar retail space. Industrial, residential and self-storage are the three areas Spector favors heading into next year. His top picks include Alexandria Real Estate Equities (ARE.N), Extra Space Storage (EXR.N), Regency Centers (REG.O) and Rexford Industrial Realty (REXR.N). "While there are risks around core growth slowing in 2022, these sectors continue to surprise to the upside," Spector writes. (Noel Randewich) ***** S&P FLASHES CAUTION SIGNAL FOR LOWER-RATED U.S. TECH COMPANIES (1201 EST/1701 GMT) While good growth prospects are expected for the U.S. technology industry over the next couple of years, S&P Global Ratings said it was cautious about companies it rates in the below-investment-grade level of B-minus. In a report on Wednesday, the credit rating agency said significant market liquidity has enabled those companies, along with others, to increase their debt load to fund dividends, mergers, and acquisitions. About 40% of U.S. tech companies rated by S&P are in the B-minus category. S&P noted that plans by these companies to deleverage are based on the continuation "of favorable economic conditions that support business growth and access to capital markets that enable flexibility to build and expand their offerings through acquisitions to remain competitive." "Market conditions will eventually turn, and we are closely monitoring highly leveraged B-minus rated companies based on patterns of companies we downgraded to CCC-plus or below," the report said. It added that over the next few years, the number of companies upgraded from B-minus is expected to be with limited due to "the absence of financial sponsors" incentives to lower their financial risk tolerance, good growth trajectory in tech sector that favors M&A transaction, as well as opportunistic debt-financed dividends." (Karen Pierog) ***** JOBLESS CLAIMS WITH SEASONAL DECORATIONS (1052 EST/1552 GMT) With the number of Americans filing new claims for unemployment benefits dropping to its lowest level in more than 52 years last week, JPMorgan and Jefferies took a look. With labor market conditions continuing to tighten amid an acute shortage of workers, initial claims for state unemployment benefits tumbled 43,000 to a seasonally adjusted 184,000 for the week ended Dec. 4, according to the Labor Department. In comparison economists polled by Reuters had forecast 215,000 applications for the latest week. read more "We think that filings are continuing to trend down over time as the labor market keeps recovering. But we also think that recent low levels of filings in the seasonally adjusted data may be being exaggerated by the seasonal factors," wrote JPMorgan economist Daniel Silver. Also he wrote that "the tight labor market may be limiting the amount of seasonal layoffs that take place around this time of year relative to norms." However, before seasonal adjustment he noted that initial claims jumped 64,000 during the week ended December 4. Silver reminds readers that the filings can be noisy from week to week, pointing to the week ended Nov. 27 when seasonally adjusted filings increased 38,000 to 1.992mn. Also Jefferies money market economist Thomas Simons threw a little caution on the data saying: "The labor market is very strong, but not quite this strong." Simons suggests the picture look better than it should due to a Department of Labor methodology change for calculating seasonal adjustment last summer to help it deal better with larger numbers when claims were still in the millions. So he writes, "the risk of even more extreme prints remains high throughout the next month and a half," and suggests that the Labor department will "need to address this seasonal adjustment issue soon" and that two prints in the last 3 weeks with 1960s levels maybe motivate them to change their ways. (Sinéad Carew) ***** U.S. STOCKS MODESTLY RED IN EARLY TRADE (1003 EST/1503 GMT) Wall Street"s main indexes are modestly red in early trade on Thursday after logging three straight days of gains. With the U.S. 10-Year Treasury yield coming back under the 1.50% level, small caps (.RUT) are among weaker indexes. That said, with communication services (.SPLRCL) and tech (.SPLRCT) roughly flat, the NYSE FANG+TM index (.NYFANG) is posting a rise, and outperforming. In any event, the S&P 500 (.SPX) is only around 0.3% shy of its November 18 record close of 4,704.54. All eyes are now on consumer prices index data due on Friday. A hotter-than-expected reading could strengthen the case for aggressive policy tightening ahead of the U.S. central bank"s meeting next week. Here is where markets stand in early trade: (Terence Gabriel) ***** NASDAQ 100: BACK ON TRACK? (0900 EST/1400 GMT) The Nasdaq 100 (.NDX) has roared back this week. In fact, this index of the one hundred largest non-financial companies on the Nasdaq is on track for its best week since early February. This strength is coming just one week after the NDX suffered a one-week slide of as much as 7.3%, and once again flirted with its rising 20-week moving average (WMA): Since being reclaimed in mid-April 2020, the 20-WMA has been proving to be a resilient support for the NDX. Over this period, and despite a number of intraweek violations, the NDX has only ended below it once, in the week ending October 30, 2020. The index finished just 0.1% below this longer-term moving average that week before then immediately vaulting higher the following week. As a result, the moving average"s one-week rate-of-change did not turn negative at that time. In fact, the 20-WMA has now not ticked down for 87-straight weeks, which is its longest such run since a 126-week streak from May 2016 to October 2018. In any event, since mid-April 2020, all tests of the 20-WMA have ultimately led to higher peaks and troughs, as the NDX has steadily made new highs. It now remains to be seen if this most recent flirtation with the 20-WMA will lead to new highs, but the NDX ended Wednesday only a little over 1% from its November 19 record close, and only about 3% from its November 22 record intraday peak. CME e-mini Nasdaq 100 futures are down modestly ahead of Thursday"s open. A more decisive closing break of the 20-WMA than was seen in late-October 2020, with the moving average then ticking down, could signal a sea change in trend. read more (Terence Gabriel) ***** FOR THURSDAY"S LIVE MARKETS" POSTS PRIOR TO 0900 EST/1400 GMT - CLICK HERE: read more Terence Gabriel is a Reuters market analyst. The views expressed are his own Our Standards: The Thomson Reuters Trust Principles.