$Li Auto(LI)$Signs of Recession approaching!

Stock markets as well as cryptocurrencies are down drastically, inflation up all time high since early 1980s at 8.5% in Mar 2022 while next CPI to be announced tomorrow looking grim. Currencies are volatile.

The FTSE all world barometer that represent equities all around the world falls 3% which is substantial and largest since Jun 2020.

Are these signs of a great recession or just a slow down? What's behind the scene actually?

The overall economy uncertainty, the war in Ukraine and flare up of next COVID-19 variant, all these unknown variables pushes investors to be caution or move away from such assets. On other hand when the FED increase 50 basis point interest rate it causes the dollar to be stronger, the higher yields attract investment capital from investors abroad seeking higher returns on bonds and interest-rate products. In short when dollar is strong, your local currencies will fall.

In just the last 4 months Asian markets lost 2 trillion dollars includes china Japan India and SEA nations.

Unfortunately, when most nations open up from COVID-19 lockdown. China remain closed and this affect much of the trade and tourism broadly all around the world and especially Asian where china is the main economy drive. This closure leads to material shortage and more expensive parts and finally the end products. The whole of china economy essentially comes to a halt which has wide spread implication. China export hit 2 year low.

There is also rising cause of debt which affects developing many countries and many may face default just like Sri Lanka. With rising interest rates, this will further implicate global economy from recovering and contribute to higher inflation. These developing countries can only borrow to repay debt leading too eventual collapse.

The Ukraine war also causes much uncertainty and to how far Russia will take this to and with it's nuclear threats.

The real estate is also feeling the heat of slow downand usually has a direct relation to how the stock market performs.

All these factors and uncertainties overrides all the earnings, positive upsides and forecast for most individual companies.

As long as these factors and uncertainties persist, we will not see any positive upswing in the market and may very well have to be prepared for a recession in the coming months or year.