“The United States Headed For Recession!! » Editorial by Charles SANNET

My dear impertinents, dear impertinents,

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The financial markets do not understand much and do not anticipate much in reality. What you need to understand is that day trading, or “daily” trading, occurs within a time horizon…daily, one day. And a market day doesn’t even have 24 hours. The Paris Stock Exchange opens at 9:00 am and closes at 5:30 pm. When dealers tell you they work a lot, they lie!

Admittedly, you have to be focused, but by 6pm they’re already gone and compared to a bricklayer on a construction site, you can also say that they are not physically handicapped!

You will have understood that I do not admire this profession very much, but my few months spent in the trading room of a large bank have allowed me to develop an exceptional know-how in the fight against rubber bands through the desks at the end a pencil lead. I have some other leftovers, but that’s not the point.

What I’m trying to share with you is that “markets” only understand two things. Buy or sell. expansion or recession. Apart from these 4 parameters, they don’t think. If they think the business is expanding you can wage war on Covid they buy without thinking outside the box. When they start to realize it’s the recession, they dive in and sell.

A trader is stupid like cabbage, carrots or tomatoes. In addition, at first it was good to sell lettuce in the markets, although now it is allowed to tell lettuce.

A few days ago I told you to watch out for a recession on the horizon, particularly in the United States.

The United States will enter a recession in 2023

Everyone seems to know except the markets. Even Le Figaro sees it coming. In the article below source Le Figaro.fr here.

The recession in the United States, a scenario that is taking hold

“Since the sanctions imposed on Russia, Americans no longer believe that the price increase will slow down over the summer

High inflation and tightening monetary policy could slow growth.

Credible voices, growing in number, herald a recession in the United States. While there is full employment again and the consensus of economists puts growth at just under 3% this year, the forecast is quite alarming. According to a survey, 81% of Americans see this scenario before the end of the year.

For months, the worst inflation in forty years has been eroding their purchasing power. And with the recent sanctions imposed on Russia, they no longer believe that the rise in energy, food, rent and transport prices will dissipate over the summer. By announcing a long string of rate hikes, the Federal Reserve is attempting to break through inflationary expectations that are fueling a spiral of wage, cost and price increases. Its executives claim that demand and attitude are strong enough to withstand these multiple turns of the screw..

We will clearly see the health of the economy and American growth, especially as interest rates rise, when all Americans are variable rate borrowers, unlike the French, where we are very fortunate to have fixed rate borrowing.

Added to this is the rise in energy prices.

Added to these energy gains is general inflation.

The salaries remain unindexed for the time being.

On the one hand, if everything is going up and the salaries are not indexed, then you have to be a trader not to see that things get stuck quickly.

If the financial markets understand that we will have less growth, less globalization, less cheap energy, less everything and therefore less profits, then they will fall sharply. So much for the medium term.

When they see that China is on lockdown, they will tremble in the short term and it’s a matter of days.

Oil prices begin to fall amid war in Ukraine as China shuts down and its energy use falls.

But when Chinese energy consumption collapses, Chinese production collapses too.

And if Chinese production collapses, we will have fewer Chinese devices, fewer sales and fewer profits at home.

It will be some time before this gets through to the minds of our “day traders”!

It’s already too late, but all is not lost.

Prepare yourself!

Karl SANNAT

“Insolentiae” means “impudence” in Latin.
To write to me charles@insolentiae.com
To write to my wife helene@insolentiae.com

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