FUNDAMENTAL ANALYSIS 1. (CURRENT GLOBAL ECONOMIC STATUS IN RELATION TO THE MARKETS)
Hello traders, everyone globally has felt the impact of the current economic pinch whether directly or indirectly. We've been in an economic recession all 2022 but now is when economists are talking about it as it has become a global concern. Inflation is at record high, car and housing markets are at record highs, financial markets are at record lows, bonds and commodities are getting hammered, there is a labor shortage in the U.S and a looming geo-political crisis that's affecting global supply chains.
A recession is a period of declining economic performance across an entire economy that lasts for several months. Its normally visible in real GDP, real income, employment, industrial production and wholesale retail sales.
The recession started in Europe and has slowly been affecting the global economy leading to food shortages in under developed nations since Russia is a global supplier of fertilizer. Oil shortages will lead to price remaining high until the Organization for Petroleum Exporting Countries (OPEC) reaches a deal with U.S and Saudi. Avoiding a global recession depends on the ability of world leaders to reach a passive agreement to relieve some of the pressure on supply chains. If supply chains open back then costs will reduce and stimulate the economy back to health. A rise in prices makes it very hard for people with low/medium incomes to keep up. People are forced to find second streams of income or relocate to cheaper areas. Problems arise when the cost of good and services arise but wages remain the same.
The Federal Reserve's (United States Central Bank) plan is to increase the cost of borrowing money so that people spend less. Their idea is that by spending less it'll increase the supply of goods, which will cause retailers and manufacturers to bring their costs down. Slowing down the economy will have a negative effect on the financial markets as we've seen since the beginning of 2022. The Federal Reserve is sacrificing the financial markets in order to save the real economy which is very risky since most big players in the economy are also invested in the markets.
In 2019, we almost entered a recession because of failed monetary policy but the Fed corrected its course and saved the markets. In 2020 the global economy got shook and we've been dealing with the consequences of printing dollars into the economy. The Federal Reserve introduced almost $14 Trillion into the economy through their quantitative easing strategy. This is more than 40% of the total dollar supply outstanding in the economy. The result of the money creation is that it inflated the prices of goods, services and assets.
People who own assets usually benefit from inflation because the price of their home, investments, art, jewelry and cars will appreciate in value. Asset owners become more wealthy in times of high inflation. Consumers on the other hand tend to get screwed in inflationary times because they don't own any assets and it becomes very difficult to buy them. The price of consumer goods also increases which can affect the standard of living for people as they pay more at the grocery store. This recession is being led by a combination of geopolitical pressures mixed with a Federal Reserve policy that is hindering economic growth.
A recession is a period of declining economic performance across an entire economy that lasts for several months. Its normally visible in real GDP, real income, employment, industrial production and wholesale retail sales.
The recession started in Europe and has slowly been affecting the global economy leading to food shortages in under developed nations since Russia is a global supplier of fertilizer. Oil shortages will lead to price remaining high until the Organization for Petroleum Exporting Countries (OPEC) reaches a deal with U.S and Saudi. Avoiding a global recession depends on the ability of world leaders to reach a passive agreement to relieve some of the pressure on supply chains. If supply chains open back then costs will reduce and stimulate the economy back to health. A rise in prices makes it very hard for people with low/medium incomes to keep up. People are forced to find second streams of income or relocate to cheaper areas. Problems arise when the cost of good and services arise but wages remain the same.
The Federal Reserve's (United States Central Bank) plan is to increase the cost of borrowing money so that people spend less. Their idea is that by spending less it'll increase the supply of goods, which will cause retailers and manufacturers to bring their costs down. Slowing down the economy will have a negative effect on the financial markets as we've seen since the beginning of 2022. The Federal Reserve is sacrificing the financial markets in order to save the real economy which is very risky since most big players in the economy are also invested in the markets.
In 2019, we almost entered a recession because of failed monetary policy but the Fed corrected its course and saved the markets. In 2020 the global economy got shook and we've been dealing with the consequences of printing dollars into the economy. The Federal Reserve introduced almost $14 Trillion into the economy through their quantitative easing strategy. This is more than 40% of the total dollar supply outstanding in the economy. The result of the money creation is that it inflated the prices of goods, services and assets.
People who own assets usually benefit from inflation because the price of their home, investments, art, jewelry and cars will appreciate in value. Asset owners become more wealthy in times of high inflation. Consumers on the other hand tend to get screwed in inflationary times because they don't own any assets and it becomes very difficult to buy them. The price of consumer goods also increases which can affect the standard of living for people as they pay more at the grocery store. This recession is being led by a combination of geopolitical pressures mixed with a Federal Reserve policy that is hindering economic growth.
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