5 Signs the World is Heading for a Recession
1. The mighty US dollar
2. America’s economic engine stalls
3. Corporate America tightens its belt
4. Welcome to bear territory
5. War, soaring prices and radical policies collide
There’s now a 98% chance of a global recession, according to research firm Ned Davis.
The mighty US dollar –
It creates destabilizing effects for Wall Street, as many of the S&P 500 companies do business around the world. By one estimate from Morgan Stanley, each 1% rise in the dollar index has a negative 0.5% impact on S&P 500 earnings.
America’s economic engine stalls –
The No. 1 driver of the world’s largest economy is shopping. And America’s shoppers are tightening their belts with inflation.
Corporate America tightens its belt –
For eg. Apple is scrapping plans to increase iPhone 14 production after demand came in below expectations.
Welcome to bear territory –
Starting 2022, the Fed began raising interest rates and unwinding its bond-buying mechanism that had propped up the market. In an unfortunate twist, bond markets, typically a safe haven for investors when stocks and other assets decline, are also in a tailspin.
War, soaring prices and radical policies collide –
A chain effect… for eg. Britons, who are already in a cost-of-living crisis, with inflation at 10% — the highest of any G7 economy — are now panicking over higher borrowing costs that could force millions of homeowners’ monthly mortgage payments to go up by hundreds or even thousands of pounds.
The real danger will be with the continuous rise in interest rates and yet the dollar starts weakening, just like the pound. Not happening now, I am keeping watch on this closely.
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Modify on 2022-10-14 16:55
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