Inflation in the USWhen it comes to inflation in the US, some will say that it has become entrenched, others that it has come to a halt.
The FED has over stimulated the economy and is late in the process of raising interest rates. It may be some time before you see the effect of an interest rate hike e.g. the bankers are supposed to warn interest rate hike etc., but now the FED is impatient to get price stability. It can end with a ketchup effect.
When the FED raises interest rates, it will strengthen the USD and it will have an inflationary effect on other economies. After all, they are going to pay more in their currency for goods traded in USD.
The interest rate curve is inverted, but unlike previously it is attributed to the fact that the economy has been over stimulated (artificially low interest rate and QE = money printing) (1). Putting the money press in motion produces empirical inflation.
Although GDP has been negative for two quarters, it does not resemble a recession in American society, see for example unemployment, PMI and consumer confidence (2).
The S&P 500 index is back in a declining trend in the medium term and will remain so until proven otherwise. On the 5 year chart there is a support around 3400.
Now Q3 will get some attention and it can go up or down a bit. Q3 may well surprise positively (3), but after that macroeconomics will take over. Markets are volatile and trying to find a bottom. The peaks of the VIX are steadily declining (4). It indicates that we are getting closer to the bottom.
Geopolitically, Ukraine in particular, but also Taiwan, is important.
Russia is using energy supplies to Europe as a means of pressure in connection with its assault on Ukraine. Energy prices will be high and this will have an inflationary effect.
One should diversify and not depend on totalitarian systems such as Russia and China.
I found it relatively easy to get out and in of the stock market in the big V-shaped correction in February-March 2020. Since the stock market then peaked and began to fall, the trend has been insidious. If you sell out, do you come out at the bottom?
I have mostly chosen to sit still, but I want to buy a little when I think the price is low and preferably not sell anything unless there is a good reason. The stock market is coming back up.
That's how I see it and not a call for specific dispositions.
(1)
www.nordnet.no
(2)
da.tradingeconomics.com
(3)
www.nordnet.dk
(4)
