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🔥 Meet 2023: three «hot» topics for stock speculators
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👉 The outgoing year broke the principles of technical analysis, forced us to adapt to panic and taught us to look for drops of positivity in the most unpleasant news. In addition to the aggressive increase in interest rates by monetary regulators, life has offered us a political crisis in the UK, an invasion of Ukraine, foreign exchange intervention by the Bank of Japan and a new COVID crisis in China.
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No matter what strategies you prefer and what assets you trade, you should keep a close eye on the following factors:
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High inflation and the threat of a global recession.
If inflation remains in the 4-6% range, and the economy continues to show resilience, the Fed will be forced to raise interest rates above the 5.1% level (this was already discussed at the December FOMC meeting). In this case, the overnight rate will almost certainly exceed 6%.
As US data deteriorates, we are likely to see a stock market drawdown, panic buying of US Treasuries and selling of risky FX assets.
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Japan's currency aggression and the threat of a sharp rise in the yen.
The head of the BOJ, Kuroda, is retiring in April, and plans for correcting monetary policy are again relevant. Risk of abandoning negative rates and raising the YCC BOJ target to 50 bp very high. Banks and pension funds are already actively returning capital to Japan to generate more attractive returns in the JGB market. But how a change in monetary policy will encourage capital inflows into the JPY is still difficult to understand.
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Geopolitics and war.
It is extremely difficult for traders to work in conditions of military risk. It is already clear that the China-Taiwan conflict will be added to the Russia-Ukraine war, as well as new currency and trade wars − governments will try to save national economies.
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But we are sure of one thing: the market will be extremely volatile, and you can make great money on it.
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Profits to y’all!