My dear impertinent, dear impertinent,
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The financial markets do not understand much and do not anticipate much in reality. What you have to understand is that day trading or “daily” trading is done within a time horizon… daily, one day. And a market day is not even 24 hours. The Paris Stock Exchange opens at 9 am and closes at 5:30 pm When traders tell you they work hard, they are lying!
It is true that you have to be focused, but at 6 pm they are already gone and, compared to a bricklayer on a construction site, you could say that they do not have any physical impediments!
You will have understood that I do not have a great admiration for this profession, but the few months that I spent in the trading room of a large bank allowed me to develop an extraordinary know-how in the battle of rubber bands through the desks at the end of a tip of pencil. I have some other leftovers, but that’s not the point.
What I want to try to share with you is that the “markets” only understand two things. Buy or sell. Expansion or recession. Apart from these 4 parameters do not think. If they think the business is expanding, you can put Covid, a war, they buy without looking beyond the tip of their nose. When they start to realize it’s the recession, they dive in and sell.
A merchant is stupid like cabbage, carrots or tomatoes. In addition, the markets, at first it was good to sell salad, although now it is allowed to say salads.
A few days ago I told you, beware of a recession in sight, especially in the United States.
Everybody seems to know it, except the markets. Even Le Figaro sees it coming. In the article below the source Le Figaro.fr here.
The recession in the United States, a scenario that takes hold
“Since the sanctions imposed on Russia, Americans no longer believe that the price increase will dissipate during the summer
High inflation and monetary tightening could slow growth.
Credible voices, more and more numerous, announce a recession in the United States. While full employment reigns there again and the consensus of economists places growth this year at around 3%, the forecast seems rather alarmist. According to a survey, 81% of Americans see this scenario materializing even before the end of the year.
For months the worst inflation in forty years has reduced their purchasing power. And since the recent sanctions imposed on Russia, they no longer believe that the spike in energy, food, rent and transportation prices will dissipate over the summer. By announcing a long series of interest rate hikes, the Federal Reserve is trying to break through inflationary expectations that are fueling a spiral of wage, cost and price increases. Its leaders maintain that demand and hiring are strong enough to resist these multiple turns of the screw..
We will clearly see the solidity of the American economy and growth, especially with a rise in rates when all Americans are borrowers at variable rates, unlike the French where we are very lucky to borrow at fixed rates.
Added to this rise in rates is the rise in energy prices.
Added to these energy increases is general inflation.
Salaries remain unindexed for the time being.
If everything goes up on one side and salaries are not indexed, then you have to be a trader not to see things get stuck quickly.
When the financial markets understand that we will have less growth, less globalization, less cheap energy, less of everything and therefore less profit, then they will fall sharply. So much for the medium term.
When they see that China is closed under lock and key, in the short term they will tremble and it is a matter of days.
Oil prices begin to fall amid war in Ukraine as China shuts down and its energy consumption plummets.
But if Chinese energy consumption is collapsing, Chinese production is collapsing.
And if Chinese production collapses, we will have fewer Chinese gadgets, fewer sales and fewer profits at home.
It will still take a bit of time for this to get into the brains of our “day traders”!
It is already too late, but all is not lost.
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