Tradingview Weekly Market Wrap Friday 13 May 2022

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Are you ready for another recession? Economists continue to warn of yet another apocalypse, slashing forecasts for global growth. Among the main reasons, are the situation around Ukraine and the COVID-19 pandemic in China. Overall, analysts expect global GDP growth of 2.2% in 2022. For the United States it is 1.8% and for the eurozone 2.5%. For China, they expect a GDP growth of 1.8%. According to the Central Bank’s baseline forecast, Russia’s GDP in 2022 will decline by 8-10%, the Accounts Chamber expects a drop from 8.8% to 12.4%.

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The good news is that inflation in the United States shows signs of a slowdown. For the first time since last summer, the CPI fell to 8.3%. The increase in prices in April was 0.3% over March. The biggest contributors to inflation were increases in the cost of housing, food, airline tickets, and transportation. On a year-over-year basis, the rise in prices of goods other than food and energy was 6.2%. The energy cost rose by 30.3% year-on-year, and food by 9.4% (the highest level since 1981).

Overall, the inflation monster should soon tame as the effects of the “special operation” in Ukraine subside. In the meantime, the Fed is expected to continue raising rates, to 2.7% by the end of the year. According to Bloomberg consensus forecasts, the prime rate range will increase to 2.25-2.5% in December. The key question for investors is whether the US regulator will be able to contain inflation without triggering a recession.

Talking about the cryptocurrency market, it has lost around $800 billion in market capitalization in the last month. Ethereum, has fallen about 39% of its value since April 12. Among the main reasons for the spike in volatility, we could highlight the changes in US financial policy and the end of the bullish trend in the technology sector.  This week, however, the digital currencies market has been affected by the collapse of one popular stablecoins, Terra USD (UST). Stablecoins are a class of cryptocurrencies whose value is pegged to standard currencies.

 

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