FNArena’s Weekly Insights – May 15 2023
In Weekly Insights this week:
US Recession Debate Is Tightening
-FNArena Talks
-Australian Banks; One Chart
By Rudi Filapek-Vandyck, Editor FNArena
US Recession Debate Is Tightening
The Federal Reserve started lifting the Federal Funds Rate in March last year and, incredible but true, 14 months later the global financial world is still debating whether the US economy will experience negative economic growth, when exactly, or not at all.
Whatever the actual outcome, and irrespective of when exactly this question will have an answer, the long-winded, elongated trajectory of the current inflation-targeting process must have many an investor tune out by now.
There’s only so much attention that can be spent on an event that has the financial world both worried and heavily divided.
Unfortunately, the definitive answer to that one crucial question comes with serious ramifications, either way, for equities and other risk assets across the globe. Probably no surprise thus, market trading volumes have thinned considerably and most indices are simply moving side-ways inside a lower volatility trading range.
We’d all like to know the answer, and move on, but that’s not how it works. Plus there are now a few additional question marks to blur the outlook, ranging from the US debt ceiling, to the US banking sector, to China’s uneven recovery, the RBA and the domestic mortgage cliff, and the ongoing war in the Ukraine.
One major change that occurred recently, and which could potentially mark an important turnaround pivot in a year-long negative trend, is forecasts for US corporate profits are no longer declining.
