Global markets, in which Turkey positively differentiated, entered the last quarter of the year with a mixed course. At a time when cashiers are looking for an opportunity to re-enter the game and questioning the timing, developments and agendas from China to America are intense.
➔If we follow the order of the sunrise, let’s start from China. The most important event in China, whose economy has slowed down with the effect of Covid measures, is that the 20th Congress of the Communist Party of China, which rules the country alone, will start on October 16.
➔In previous congresses, officials used to discuss their current achievements, explain their new 5-year plans for the future and discuss the projects.
➔However, the situation will be very different at this meeting. Because while the country is struggling with Covid on the one hand, it is increasingly trying to fight economic risks on the other.
The high debt of companies and the current housing crisis have combined to make the banking sector problematic.
➔The strategy that China will follow in the face of international companies starting to move their supply and production centers from the country, and whether it will change its economic policy can be determined at this congress.
EUROPE WAS MISSING A BANK PROBLEM
➔The Swiss financial giant Credit Suisse First Boston, which has recently come to the fore with its scandals and heavy losses, is having a hard time.
Investors’ distrust that the bank’s current strategy will not be enough to get out of the difficult situation the bank is in caused a record decline in company shares.
➔Therefore, the $3 billion corporate bond repurchase auction announced by the Bank was not enough to compensate for the insecurity.
➔The bank is preparing to announce its new financial strategy on October 27 to get out of the difficult situation it is in.
➔Credit Suisse is not the only financial institution in Europe to be wobbly. It is the first institution to be counted after the German Deutsche Bank.
It is known that Spanish, French and Italian banks are also struggling with weakness and similar problems.
➔Authorities will do their best to prevent a new Lehman Brothers incident from happening. Because Europe does not have a single banking problem.
➔Europe is waging an economic and political war with Russia in the midst of its energy crisis. Government debt is very high and a recession is expected in the economies.
➔If the banking crisis is added to all these, or if it leads, Europe may be thrown from one to the other, which opens the door to great disaster.
DO THE WILD’S NAILS GROW OR PIGEON?
➔The meltdown in the British Pound seems to have stopped for now.
➔However, two steps back and forth in the budget plan announced by the new government did not give any confidence to the markets.
➔A very difficult period awaits the country, which is certain to enter recession with double-digit inflation.
➔A potential future prospect for the UK economy or politics The bad news could put bonds under great pressure again, along with the pound.
➔This week, important data will be released in the USA, including inflation figures, retail sales, consumer confidence and Fed minutes.
➔A lot of investors still on Wall Street He hopes that the Fed will abandon its policy of drastically increasing interest rates and become dovish with the arrival of figures pointing to a decrease in inflation.
➔But next Thursday A bad data in the CPI figures may make the Fed more hawkish, and the hawk’s nails may grow longer. This may cause market hopes to be shelved for a long time.
➔ CPI, which was 8.3 percent in the USA, is expected to decrease to 8.1 percent in September. The positive development for the markets is that it falls below 8 percent. Any number above expectations has a negative effect.
The Fed minutes to be announced on Wednesday are of great importance in terms of shedding light on the authorities’ views on inflation and the future of the country’s economy.
WHEN IS IT RIGHT TO TAKE THE TRAIN?
➔Many investors left the markets and stock markets and turned to cash due to the fluctuations in the markets recently.
➔But they also know that they have to return to the market-stock market for a solid and lasting return.
➔It is extremely difficult to schedule in the current situation. For this reason, the question that many players in the investment world, especially Wall Street, ask themselves is: Is it right to hop on the train now or later?
➔Investors will try to make a decision by looking at the company balance sheets after the important figures to be announced in the USA next week.
➔If these expected numbers are bad, investors are worried about another 20% decrease.
TAKING THE SHORT WAY TO INFLATION
➔The markets are looking for a new game plan. The last version found is the recession game. Let there be a fabricated recession in the USA as soon as possible, “Let’s get rid of this inflation scourge as soon as possible” view began to emerge.
➔Because it was understood that, If the job is to be driven only by interest rate hikes and monetary policy, it will take longer and take years. Interest rates will continue to increase, then stop and wait for the results for a few quarters, and if inflation does not fall as it should, interest rates will be adjusted again.
It will take time for central banks to narrow their balance sheet. Financial markets will pay a price for this whole process.
➔Financial markets, on the other hand, are short-term and impatient, they want the job to be done as soon as possible so that they can make money.
They found the formula for shortening this time that would take years, in a fabricated recession that would eventually increase unemployment and slow down demand.
➔After all, the Fed still complains about the tightness of the labor market despite the interest rate hike.
➔According to the latest data, the unemployment rate fell from double-digit figures in the pandemic to a historical low of 3.5 percent in September. While the monthly increase in employment was 562 thousand last year, this year it has decreased to 418 thousand on average, but it is still a high course.
More than 400 thousand people find a job every month, causing them to spend, prolonging and complicating the task of reducing inflation through interest rate hikes.
➔However, in a mild recession that will last for several quarters, it would be good if the new employment increase decreased to 50 thousand people per month, according to Wall Street’s new game plan. Interest rate increases will not be increased any faster and will take effect without needing to go too high.
➔If this game, which will benefit the markets, is staged, it will lead to the continuation of unemployment of millions through low employment growth. With this formula, which also includes moral risk, expenditure and consumption will be shortened, and it will be easier and shorter to reduce inflation.
➔However, while the Fed’s main task is to reduce inflation, it does not have a mandate to reduce employment.
➔This poses a moral risk in the new game. But oh well, that’s how Wall Street boils for now. The market wants to see itself in the millet barn again.
IMF-WORLD BANK MEETINGS
➔IMF and World Bank annual meetings will also be held in Washington on October 10-16.
➔Meetings that have been held online for 3 years due to Covid will be held as face-to-face meetings for the first time after 2019.
Many issues will be discussed, from high inflation to the food and energy crisis, from ever-increasing borrowing costs to climate change and banking crises.
Due to the global crisis, countries such as Ghana, Egypt and Sri Lanka are already in need of economic support.
➔However, there are concerns that more countries will be added to this list in the coming months.