The US stock market, property and the economy overall are all in decline.
The expected Stock Market ‘Crash of 23’, by some 20% to 30%, may well be starting early.
It’s looking a lot like a Santa rally for the Bears!
The US economy is faltering badly, heading immediately back into economic contraction. On the day, we saw data released showing Retail Sales, Manufacturing and Industrial Output were all negative.
We could even see a return to negative GDP growth in this current fourth quarter. That would mean the economy contracted for three of the four quarters in 2022, and the outlook for 2023 is even more dire.
No wonder stocks are now falling sharply. There is no good news on the economy. In fact, the Federal Reserve will be working extremely hard to make this economic downturn as extreme and long lasting as possible. In the hope of bringing inflation back to 2%. Not likely any time soon.
The economy will get worse and the Fed will raise interest rates. You couldn’t make up a more diabolical economic plot. And it is the same across all western economies. The permanent power shift toward Asia and the Middle East will gather pace during what will be a severe economic winter for Europe and the USA.
There is nothing wrong with a shifting of economic power. It is the result of the successful expansion of capitalism around the world and the more recent adopters making strong headway. Which is important for the global economy across the long-term outlook.
Right now, though, you have western economies losing ground rather quickly as their own heavily regulated and taxed economies struggle to remain competitive.
The higher US dollar will not help the USA, even though its leaders enjoy the ride politically. The US dollar is a bubble market, but the bubble could grow bigger as increasing economic distress leads to more and more fearful, not thoughtful, buying of the Greenback.
Stocks to fall further. Dollar bubble to blow larger for the time being, before the eventual inevitable collapse.
In 2012, I gave a speech at APEC, where I said there would be three equal superpowers, and therefore three equal Reserve currencies. US dollar, Euro, Yuan. President Putin commented in his speech the next day that the “currency guy” got it wrong, and there would be four. I still think three. I also met with a senior Chinese trade official that year, and asked if he thought Asia could one day create a regional currency to match the Euro.
His reply, we already have one… it’s called the Yuan.
Then, in 2012, I said the process toward three equal Reserve currencies would take 15-30 years. We seem to be on track with that time table. This is the inevitable end game as the rest of the world catches up to the USA.
Market insights and analysis from Clifford Bennett, Chief Economist at ACY Securities
