18th July 2022: Fridays closed orders given +3.103%; Dollar Growth Forecast; Profitability of the Chinese economy is declining; Probability of recession in the US is 36%
Fridays closed orders given +3.103%
Symbol: UK100; Type: BUY; Open Price: 7065.52; Close Price: 7246.41; Profit: +2.496%.
Symbol: FR40; Type: BUY; Open Price: 5886.82; Close Price: 6100.61; Profit: +3.504%.
Symbol: EURUSD; Type: BUY; Open Price: 1.04425; Close Price: 1.0140; Profit: -2.897%.
Dollar Growth Forecast
As a result of worries over the rate of global development, the Bloomberg Dollar Index has reached its highest point ever, and the value of the US dollar has reached multi-decade highs compared to other currencies such as the euro and the yen. According to Jon Turek, the founder of JST Advisors, the fear is that we will see a dollar “doom cycle” on a scale that has never been seen before. The crucial question is to determine the extent to which the stronger currency inhibits the Fed’s propensity to go any farther in terms of increasing interest rates. A stronger currency in the United States can lead to a tightening of financial conditions worldwide and a decline in actual investment. When investors are anxious, they have a tendency to seek the security offered by assets denominated in dollars. Because of this, the United States dollar holds a unique place in international markets.
The recent resurgence of the dollar runs counter to forecasts made earlier this year that the invasion of Ukraine and the sanctions that followed may represent a turning point for the US dollar. On the other hand, the timetable for diminishing the role of the dollar as the world’s reserve currency was not anticipated to be a rapid one at any point in the future. The dollar’s value might continue to rise, prompting other countries to look for viable alternatives.
The profitability of the Chinese economy is declining
The possibility of a problematic era marked by a de-globalization of the banking system looms over Xi Jinping. Money managers, formerly lured by China’s juicy returns and massive tech businesses, report that reasons to shun the nation outweigh motivations to purchase. They highlight everything from erratic regulatory campaigns to the economic damage caused by stringent Covid-19 laws, not to mention the mounting dangers resulting from an unstable real estate market. According to a source, the pressure from US investors caused a London-based hedge fund to cut its long bets in China down to just one position. The new $8.5 billion Asia fund being launched by Carlyle Group Inc. will have an exposure to China that is smaller than typical, with markets such as South Korea, Southeast Asia, Australia, and India making the difference.
Less than 4 percent of Artemis Investment Management LLP’s worldwide fund is directly invested in China. According to Luca Paolini of Pictet Asset Management, the country’s government bonds continue to provide investors with an opportunity for diversification. The increasing difficulty of turning a profit in China gives the country’s inherent dangers a greater sense of urgency. Since reaching its high point almost 17 months ago, the CSI 300 Index of companies has experienced a decline of approximately 27 percent. China’s yield advantage over U.S. Treasuries has been eliminated due to policy differences with the United States. Investors who have purchased high-yield dollar bonds issued by China have seen their returns reduced by 34% this year.
The probability of recession in the US is 36%
As inflationary pressures continue strong and the likelihood of a recession increases, it is possible that a recent rebound in stock markets may prove to be short-lived. Peter Oppenheimer, the chief global stock strategist at Goldman Sachs, was recently quoted as saying, “I do not believe a serious recession is being priced now.” The model used by Morgan Stanley estimates a 36 percent chance of a recession occurring in the United States during the next twelve months. These probabilities continue to rise. According to the strategists at JPMorgan Chase & Co., markets could be able to look over additional adverse earnings-related newsflow during the course of the summer. According to a report published Monday by a group of strategists led by Mislav Matejka, it is common practice for stocks to reach their apex at or before the earnings trough. However, Wilson of Morgan Stanley expressed “skepticism” over hopes that margin pressures would ease beyond the second quarter.
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