馃敭 EXPECTATIONS 2024: INTEREST RATES AND STOCK MARKET 馃敭
As I warned you in a previous post, once interest rate increases peak (taking the curve for 10-year treasury minus 2-year treasury), some recession usually hits after 12 or 24 months. The FED has ended the cycle of interest rate increases and has announced the possibility of reducing them in the first half of 2024. Statically, this could mean the probability that something happens between second half of 2024 and 2025.
On the other hand, in 2024 will be celebrated 40 presidential elections over the world (the mains are Taiwan, Russia, United States, UE, India and Iran). Curiously, some of them are going to be anticipated. That might suggest a possible relevant event in 2025. Therefore, some scenarios can be drawn:
A: The world economy slows down and central banks reduce drastically their interest rates. A recession knocks at the end of 2024 due the unexperienced increases of rates in less time, and the market could crash. In 2025 there will be interests near to 0 again.
B: The world economy is slowing and central banks are not reducing their interest rates enough. However, the new trend of State Control driven by a mix between Agenda 2030 and Nationalization Regimes, there will be more liquidity injections in public spending, which will cause a new inflationary shock and a more serious repetition of what was experienced in 2020-2022 towards 2025. The sensation will be the beginning of a new decade of the 70s.
C: The world economy is slowing down and central banks are appropriately reducing their interest rates. In fact, they will not go down as much as the market expects because inflation will be persistent due to the new state intervention trend. The problem is that there will be cuts in the supply chain due to geopolitical tensions, so governments will have to keep making up numbers and expanding public spending as everyone prepares for a war economy (economic boost) in the next decade.
For J. Joel Padilla, the probabilities are: 20% A, 30% B and 50% C. There are bases to think of this as cycles in interest rates [ https://t.co/rfvuugPyEZ ], cycles in the stock market [ https://t.co/aOYCvGIuKu & https://t.co/I9PHJy89NB ] and the current geopolitical climate. What do you think could happen?
The best analysis is yours!
J. Joel Padilla
Copyright: Joel Padilla 2023
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