2023/01/01 (138) Column

What, If
Central Banks 2023 !?


What, if the Federal Reserve stopped tightening interest rates? And that all year 2023? This thought has been on my mind for last days, around the Christian Christmas season 2022 and/or ahead of this New Year 2023. Just after the Jewish Hanukkah festival in 3597.

Because the point is this:
US inflation peaked summer `22. After had risen ambivalently at the same time since Joe Biden’s inauguration, due to his left-wing green social-democratic fiscal policy and economic policy. In particular, the state-organized economy of scarcity of fossil fuels (demonization of everything that is not green under the guise of liberal democracy) drove prices up. Clear! What else? Which also briefly drove the price of oil up to over $100 to over $130 during the outbreak of Russia’s war of aggression in Ukraine at the end of February 2022 and/or the beginning of March 2023. So that we can assume for the year 2023 that both will come down again, sooner or later, at the same time ambivalently, more or less. Assuming the war in eastern Ukraine doesn’t spread again to the center, let alone the west, in the Ukraine this year 2023. So that both warring parties are finally beginning to speak out in public for a civilized solution. And Putin and Zelensky sit down together at a table.

US inflation is currently at 7.1%. And the interest rate at 4.25%-4.5%.
So that the unoted states are currently suffering a real depreciation of the money itself by almost 3%.
Colloquially formulated; everything is on average 3% more expensive than last year. The annual inflation rate in the US slowed for a fifth straight month to 7.1% in November of 2022, the lowest since December last year, and below forecasts of 7.3%. It follows a reading of 7.7% in October. The Federal Reserve raised the fed funds rate by 50bps to 4.25%-4.5% during its last monetary policy meeting of 2022, pushing borrowing costs to the highest level since 2007, and in line with market expectations. It was a seventh consecutive rate hike, following four straight three-quarter point increases. Policymakers reinforced that ongoing hikes in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2%. So the Federal Reserve will sooner and/or later come to the conclusion that that was it with the rate hikes. Because if the Fed doesn’t do anything anymore from today. And US inflation continues to fall at the rate it has been falling since July 2022, then the FED, more or less, with the current interest rate, from July 2023, sooner or later, should be above the then current US inflation, yet. And that`s why we can’t and don’t should expect more from the FED, basically from central banks, than to fight it with a hawkish restrictive monetary policy when inflation has arisen. Because the main reason for the US inflation that has arisen can be found in the expansive, dovish fiscal policy. But more on that in another column.

Long story short,
a pronounced end to the current interest rate hikes in the USA will certainly not ensure that the US dollar willfall into the abyss, that the US yield curve will become cheaper than average, and or that Wall Street will climb through the ceiling. But it should tend to go in the directions just outlined! Sooner or later? More or less? When the central banks stop raising interest rates – in whatever currency area! Just like the Fed, which in the case of the most traded currencies, as central bank, was the pioneer in the fight against inflation in the past year 2022.
DEVISE 2 DAY 48h
– My Last Thoughts Abot Market Price Actions

It will be a busy week in the US with center stage taken by labour market report, FOMC meeting minutes, ISM manufacturing and services PMI, foreign trade, factory orders, and Jolts Job Openings. Elsewhere, inflation rates for December will be released for Euro Area, Germany, France, Netherlands, Turkey, Switzerland, Philippines, and Indonesia. Finally, investors will pay attention to manufacturing PMIs from China, India, Spain, South Korea, Canada, Italy, and Switzerland.

About central banks it should be realx week; only the BOI (Bank of Israel) and/or the PNB (Poland National Bank) have their regulary monthly meetings, this week. The BOI should raise up their rates wit 0.5% to 3.75% and/or the PNB should hold their rate at 6.75%.

Whatever, take a looh also on the Financial Markets 4XSetUps this week. Like every week, meanwhile I have prepared for you up to 18 different charts (including technical indicators as well as analyses); so that you can make even better trading decisions (buying/selling aor not trading) for the coming quarter (next 13 weeks). And this week once again about 5 shares of our german blue chip dax index; namely XETR-QIA (Qiagan), XETR-RWE (Rwe), XETR-SAP (Sap), XETR-SHL (Siemens Health), and/or XETR-SIE (Siemens).

And don’t forget to read all Technical Analysis 4XSetIps this week also, because I decided to formulate 3 new long 4XSetUp Trading Capabilities this year alongside our long 4XSetUp Dow Future.
Which? From page 51 more (from Sunday to Wednesday)…DEVISE 2 DAY Another 48h
– Some Last News About Market Price Actions

Wall Street Heads For Worst Year Since 2008
European Bourses Have Worst Year Since 2018
Russian Stocks Plummet 44% In 2022
FTSE 100 Outperforms In 2022
Pound Has its Worst Year Since Brexit

Wall Street Heads For Worst Year Since 2008
The Dow lost over 300 points on Friday, and the S&P 500 and Nasdaq 100 were down 1% and 1.2%, respectively, with investors reassessing the outlook for growth and monetary policy after a dismal year that could mark Wall Street’s worst annual performance since 2008. Governments and central banks grappled with stubbornly high inflation arising from years of ultra-ease monetary policy and the fallout from Russia’s war in Ukraine. At the same time, it is now widely expected that the developed world is heading for a severe recession in 2023 amid an aggressive tightening from major central banks to rein in such price growth, ultimately leading to job losses and downward earnings revisions. For December, the Dow is currently down around 4.4%, the S&P 500 lost 6.4%, and the Nasdaq 100 dropped 10.2%. Regarding 2022, the Dow is down 8.9%, while the S&P 500 and Nasdaq 100 plunged 19.7% and 33.5%, respectively.

European Bourses Have Worst Year Since 2018
European equity markets closed lower in the last trading session of 2022, with the benchmark Stoxx 600 suffering a 12.8% yearly loss, the biggest since 2018, after a 22.2% jump a year earlier. Domestically, the German DAX also tumbled more than 12%, nearly reversing a 16% surge in 2021. Surging covid cases in China added further pressure to an already challenging 2023, as a recession is looming, inflation remains elevated, the ECB is set to continue to raise interest rates and the war in Ukraine is far from over, leaving the energy crisis unresolved.Russian Stocks Plummet 44% In 2022
The ruble-based MOEX Russia index closed Friday at 2,154, plummeting 44% on the year as the Russian invasion of Ukraine and consequent sanctions by Western countries triggered an investor’s exodus. The sell-off came despite strict measures by the Moscow Exchange and the Central Bank of Russia to stop the losses, including closing the stock market for one month at the end of February, banning foreign investors from “unfriendly” countries, and prohibiting short selling. In the meantime, Russian companies were excluded from foreign bourses and global equity indexes. Oil giant Lukoil closed the year down 40% amid embargoes and sanctions against Russian oil that sent Urals benchmarks plunging. Gazprom sank 54% despite posting record profits, as the Russian state heavily taxed its profits to finance its war chest. Lastly, Sberbank fell 53% as the West excluded Russian banking from the Swift system, isolating the Russian economy. The MOEX will be closed on Monday for the New Year holiday.

FTSE 100 Outperforms In 2022
Equities in London came under renewed selling pressure on Friday, with the blue-chip FTSE 100 index closing below the 7,500 mark, dragged by losses in the real estate and industrials sectors. Persimmon and Ocado Group were among the top losers, down more than 2% each. Mounting concerns about persistently high inflation, monetary policy tightening from central banks, and a potentially prolonged period of sluggish economic growth rattled investors in December, with the benchmark down roughly 1.5% this month. Still, the export-oriented FTSE 100 added nearly 1% this year as higher commodity prices and a weaker sterling have helped it to outperform its European and US peers. The FTSE 100 will be closed on January 2nd for the New Year holiday.

Pound Has Its Worst Year Since Brexit
The British pound ended 2022 nearly 11% lower at $1.2, its worst year since the Brexit vote in 2016, amid a general cautious mood regarding the economic outlook for 2023, political uncertainty, and as a hawkish Fed sent the USD higher. In September, the pound touched a record low of $1.06 after a mini-budget and tax cuts proposed by the government of Liz Truss spooked investors. The pound recovered after Rishi Sunak became the new prime minister but still remains under pressure, as the recession is looming while the Bank of England appears more dovish compared with its peers.DEVISE 2 DAY 48h
– Where I Was Wrong, Where I Was Right

Due to the death of our German Pope Benedict from Bavaria, I will want to keep this week a little bit shorter. Because I feel obliged to travel to Rome – and to pay him my last respects.

As a German Croat, of Roman Catholic parents, from the former SFR Yugoslavia, it is a matter of course for me to travel to Rome. And attend the funeral ceremony. For better and/or for worse, this is due to the Franciscan religious upbringing of my parents, especially my father Ivan and his brother Darko, who baptized me when I was a small child. And because my father always took me to every funeral ceremony of a fellow human being he knew, even as a small child. And by the way always reminded me how important it was and is for him – and that he had been taught it that way by his father.

That`s why no much talk about our new 4XSetUps this week in this year 2023. But for the time being with a little restraint. Because there are more important things than making money on the financial market. And or to help my fellow human beings to earn money on the financial market, also thanks to my info brokerage. What I really really like to do. But this week everything is different.

But let me write again briefly that we will be repositioning ourselves this week for the year 2023. And without another 4XSetUp in the UKOIL – but still long in the Dow Future. In addition, I think it might be worth formulating a long 4XSetUps for the EURUSD exchange rate, for the DAX Future, and for the TESLA share. What I will also do during the week…