There is no analysis here derived from lots of data, statistics, and charts to follow but i just think that given the global situation, i dont see how interest rates can go up much further. Will this create a sharp bounce in markets? perhaps initially but i think after this quarter of earnings will be indicative enough to say ok, the supercharged economy of the covid days has been unwound and longer term projections of growth could be tempered but also not significantly down or up. the economies that really matter are the west and china. china has already received a beating and i suppose they could have an impact on future inflation but thats where there system works perfectly- its only a capitalistic society for very few and a lot of them get chopped off if they are seen to be above the ccp's grasp. those type of measures on productivity and entrepreneurial spirit should be deflationary, even though one could argue that lockdowns are still having deflationary impacts. not on all things like say pork, but overall it could be net deflationary. i think demopgraphics will play a big role in this deflationary environment.
so as M2 plateaus and excess is slowly squeezed out of the global economy by a variety of factors, namely banded interest rates (baring any other black swans occuring such as putins nuclear incompetence) and also the down side of the bullwhip effect, i think it could be ok times. stock selection obviously will be key but i tink high growth of the last 10 years will not be replicated unless of course youre talking about healthcare and perhaps energy. energy is a tough one to sell if global growth will indeed moderate from the last 10+ years since the gfc, since energy has already outperformed immensely atm. a new secular trend in moderate growth will be the result of this extraordinary injection of cash and loose monetary conditions. this was always going to happen but our dumb pandemic response shortened this secular growth trend and altered the structure of it in ways we will only find out as time passes.
we can certainly bet on volatility to prevail as this new normal is found, as i still think once the evidence of deflationary become more mainstream will cause people to overreact, probably on the down side. but soon enough reality will hit people about this new low growth environment going forward. which is also ok. cut the excess and stop using money in absolutely ridiculous ways. being more prudent and more realistic about what matters in life? perhaps thats a bit too altruistic.
however, out of a pure gut feeling. i think peak interest rates are in. perhaps not the worst time to become a bond investor or chase plays that work inversely to increasing yields. lots of holes in this swiss cheese analysis of course so take it as the musings of a 20 year old living in their parents basement who dropped out of highschool but read some of their grandparents books on investing.
happy to hear all reasons as to why this does or doesnt make sense. im sure a lot here who are successful and smart people can contribute in one day or another.
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