Welcome to your nightmare: The spookiest predictions for 2023
It’s the most frightful time of the year!
So aside from trick or treating, let’s reflect on what we’re most afraid of these days. The world is experiencing rapid changes in a few aspects, which may affect the capital markets in the near future. How, what and why? Let's cover three spooky predictions that we should all be aware of.
The collapse of the real estate market
The collapse of the huge Evergrande company, and the fact that many people who are not able to pay their mortgages began to cause cash flow problems for the banks, will eventually lead to the collapse of small-medium companies.
As a result of an event of this size, the American housing market could be thrown into a crisis, as it's dealing with a jump in mortgage interest rates (which are already hovering around 7-8%) and high inflation. This may eventually lead to a domino effect and the collapse of the real estate market in Europe and the whole world.
The U.S treasury yield predicts recession
The widely-followed U.S. treasury yield curve has been inverted since early July, with short-term securities yielding more than long-term securities.
Many experts see this as an indicator that uncertainty about the future of the economy is increasing. That uncertainty may come from the potential rise of protectionism in the world, a potential trade war between the U.S. and China, political uncertainty, and so on. An inverted yield curve may also indicate that investors are uncertain about the future of the Federal Reserve's interest rate policy.
All of these may lead to a recession in the U.S economy within the next 12 to 18 months.
The control struggles between the US and China may lead to a currency crisis
The control struggles between the US and China for technological superiority and in particular, for control of the chip sector - might worsen the relations between the two powers which will push China to conquer its neighbor Taiwan. Taiwan is responsible for producing 65% of the world's chips and 90% of the world's most advanced chips.
The control of that sector is vital for the overall control of IT and the future of the economy. The chip sector is responsible for the production of some of the world's most important products, such as computers, smartphones, and medical devices. Furthermore, the production of microchips is an extremely competitive market as this sector produces a high volume of products and generates exceptionally high revenue.
Therefore, the USA might do everything in its power to prevent such a move by China, to the point of going to war. This kind of event between the two world powers may lead to particularly sharp drops in the currency rate.
In this ocean of fear, some tools can help traders navigate and understand, based on fundamental analysis, which companies and currencies to invest in.
The Deshe Analytics AI-powered research engine provides a deep stock analysis in every possible language, so trading platforms and financial institutions can offer their traders a reliable trading experience, they can really understand.