What is the Fed really thinking? They will probably er on the side of lower rates to avoid recession, running the risk of entrenched wage growth. Soft landings are the stuff of myth! How it effects the global economy is critical.
I’ve no idea what might happen in 2023, but I don’t think its going to be as bad as some expect, but neither will it be as rewarding as others predict. Its likely to be another year of trading on what the mood is, what the numbers mean, and hoping to call it right. Hope, as they say, is only a strategy when you simply don’t know!
Last week saw a succession of fundamental shifts in how the global economy is working: inflation, China’s reopening, western politics, crypto, Climate Change, Tech stocks, and in Ukraine. These all have significant potential market implications.
In Bonds There is Truth – but until Real bond yields turn positive they remain financially repressive. If Central Banks “pivot” from tightening rates to address inflation too early, markets will remain fundamentally distorted.
While Jamie Dimon warns of recession, Ben Bernanke is picking up a Nobel Prize – yet the roots of the multiple crises threatening to overwhelm markets and topple capitalism lie in the solutions they led 14 years ago. They saved the world then – who will rescue it this time?
Risk does not disappear. It hides in plain sight – as the investment industry will increasingly discover as crises mounts. Fortunately, there are SOB’s who have seen it before and are too aged to panic…
As we start a new week of dismal markets, depressing political news, rising inflation and lots of what next worries… relax.. the Sun will come up tomorrow. Not so sure about the economy though…
The Fed just aggressively hiked 75 bp in the midst of the first major correction since 2009, making clear the game has changed, and we’re into a whole new cycle. While the market correction remains ongoing, when it flips, it will flip swiftly. Already there are positive signals to be seen – but only if you look outside the box.
We’re officially in a bear market, but markets are still massively overvalued. The laws of Mean Reversion are immutable – some stocks are going lower. Inflation, Bond Markets and Confidence are all flashing danger signals.
Dead Cat Bounce or a renewed upside trend? The range of opinions and views on where markets are headed is diverse and confused – will bonds and stocks recover, or will energy, food and inflation shocks further destabilise sentiment. These are dangerous times, but fools will always rush in.
