Last year markets had a bad time although in 2023 they're looking different. There are broad measures of emerging-market share prices that have seen their best start to a year in decades. The article states that "America's s&p 500 is up by 5%. Since reaching its peak in October, the trade-weighted value of the dollar has fallen by 7%, a sign that fear about the global economy is ebbing." It also stated that although not long ago it felt as if a global recession was inescapable but now optimism is re-emerging.
Citigroup, a bank said that the probability of a full-blown recession is now about 30% in contrast with the 50% assessment that was prolonged in the second half of last year. Although the post says that these are breadcrumbs and the economy is still weak, investors will hold onto anything.
Actual statistics are still unclear. Recent retail and industry statistics for the United States performed below predictions. However, consumer confidence throughout the OECD has increased after falling to an all-time low in the summer. Though pandemic-related disruptions imply that these numbers won't be as trustworthy as usual, most economists were anticipating a reasonable number.
The labor markets also appear to be holding up. A recession is likely since unemployment is rising in certain wealthy nations, such as Austria and Denmark. There is seldom a day that goes by without a major technology business announcing that it is laying off staff. Yet just a small portion of jobs worldwide are in the technology sector, and unemployment rates are still low worldwide.
Investors are concerned about the labor markets, but inflation is what they are most concerned about right now. It's too soon to say whether or not this threat has passed. Before central banks can be sure that inflation is under control, a lot of work remains, especially in light of the rising commodity prices brought on by China's openings. Additionally, a recession-prone economy is unpredictable. Predicting the severity of a recession becomes challenging once people start to cut back on spending and lose their jobs. The article ends by saying that a lesson learned in recent years is that if something is going to go wrong it probably will, yet it's nice to have hope and be optimistic.
source: https://www.economist.com/finance-and-economics/2023/01/24/how-the-world-economy-could-avoid-recession
Investors being concerned about inflation is definitely a key indicator in whether or not the markets are optimistic or pessimistic in the short term. I raise the question...if the Fed is remaining strict on their interest rate projections due to inflation, then why are people still spending in the economy as a whole? Maybe it is savings that people are tapping into? Or unemployment remains low in which recessionary notions do as well.
ReplyDelete