My darling impertinent, dear impertinent,
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Financial markets don’t understand much and don’t anticipate much in reality. What you need to understand is that day trading or “daily” trading is done within a time horizon … daily, one day. And a market day doesn’t even last 24 hours. The Paris Stock Exchange opens at 9:00 am and closes at 5:30 pm. When traders tell you they work a lot they lie!
Of course, you have to be concentrated, but at 6 pm they have already left and, compared to a bricklayer on a construction site, you can also say that they are not handicapped!
You will have understood that I do not have a great admiration for this profession, but the few months I spent in the trading room of a large bank allowed me to develop an extraordinary know-how in the battle of the rubber bands across the desks at the end of a pencil lead. I have a few more leftovers, but that’s not the point.
What I want to try to share with you is that “markets” only understand two things. Buy or sell. Expansion or recession. Apart from these 4 parameters they do not think. If they think the business is booming, you can put Covid, a war, they buy without seeing past the tip of their nose. When they start realizing it’s the recession, they dive in and sell.
A trader is as stupid as cabbage, carrots or tomatoes. Furthermore, at the beginning it was good to sell salads at the markets, even if now it allows us to talk about salads.
A few days ago I told you, beware of a recession in sight, especially in the United States.
The United States will enter a recession in 2023
Everyone seems to know, except the markets. Even Le Figaro sees it coming. In the article below source Le Figaro.fr here.
The recession in the United States, a scenario that is gaining momentum
“Since the sanctions imposed on Russia, Americans no longer believe that the price spike will dissipate over the summer
High inflation and monetary tightening could disrupt growth.
More and more credible rumors are announcing a recession in the United States. Although full employment reigns there again and the consensus of economists puts growth this year at nearly 3%, the forecast looks rather alarmist. According to a survey, 81% of Americans see this scenario materialize even before the end of the year.
For months, the worst inflation in forty years reduced their purchasing power. And after the recent sanctions imposed on Russia, they no longer believe that the spikes in energy, food, rent and transport prices will dissipate over the summer. By announcing a long string of interest rate hikes, the Federal Reserve is trying to break inflationary expectations that are fueling a spiral of wage, cost and price increases. Its leaders argue that demand and hiring are strong enough to withstand these multiple crackdowns..
We will clearly see the strength of the US economy and growth, especially with a rate hike when all Americans are floating rate borrowers, unlike the French where we are very lucky to borrow at a fixed rate.
To this increase in the rate is added the increase in energy prices.
To these increases in energy is added general inflation.
Salaries remain unindexed for the time being.
If everything goes one way and salaries aren’t indexed, then you have to be a trader not to see things crash quickly.
When the financial markets understand that we will have less growth, less globalization, less cheap energy, less everything and therefore less profits, then they will fall heavily. This is for the medium term.
When they see that China is locked down, they will tremble in the short term and it’s a matter of days.
Oil prices begin to fall amid the war in Ukraine as China closes and its energy consumption plummets.
But if Chinese energy consumption is collapsing, Chinese production is collapsing.
And if Chinese manufacturing collapses, we will have fewer Chinese widgets, fewer sales and fewer home profits.
It will take some time for this to reach the brains of our “day-traders”!
It is already too late, but all is not lost.
“Insolence” means “impertinence” in Latin
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