Fed Has A Safe Landing

Fed Has A Safe Landing

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2022-07-19 18:26:52

Market situation

Bitcoin has risen slightly to around $39,000. Altcoins also rose slightly in the same trend.

US stocks rose slightly in the Dow Jones and S&P 500 indexes in the past day. Futures markets were more upbeat and bullish in all three indexes. Oil fell slightly to 100 USD/barrel. And gold down to 1883 USD / ounce.

The earnings report information of major companies continues to be a factor affecting US stock market prices as well as crypto. Meta (Facebook) earnings report is pretty good. Meta’s earnings per share were $2.72, up from $2.56 expected. However, total revenue was only 27.91 billion USD while investors’ expectation was 28.2 billion USD. Plus, daily active users rebounded slightly from 1.93 billion in Q4 2021 to 1.96 billion. But monthly active users fell short of expectations of 2.97 billion people and came in at only 2.94 billion.

With this business result, the CEO of Meta, Mark Zuckerberg, attributed this decline to both internal and macro factors. Recently, Facebook has focused on short videos, but advertising revenue is lower than traditional advertising services. Along with that, Facebook is also dealing with privacy changes in iOS when Apple prevents Facebook from collecting users’ private information. This makes advertising for iOS users ineffective and reduces revenue.

Like Snap and Google, Facebook is also being affected by Russia’s invasion of Ukraine. So Facebook blocked in Russia and the social network stopped accepting ads from Russian advertisers globally and lost this part of the revenue.

Up to this point, the prices of many stocks of large technology companies in the world have returned to the level of May 2020, returning the growth of the past two years. However, BTC compared to two years ago has achieved a huge growth from about $ 4,000 to now $ 39,000.

Fear of financial recession

Deutsche Bank predicted a deeper recession than its previous forecast for the US economy in a report to clients. Deutsche Bank economists have warned that the US will suffer a major recession next year. The bank also believes that the sooner and more aggressively the Fed acts, the less damage it will do to the economy in the long run. The tightening of the currency, raising interest rates is what the Fed needs to do. Currently, US inflation is at a high of 8.5%.

However, several other major investment banks, including Goldman Sachs and JPMorgan, are less pessimistic about the future outlook of the US economy. Goldman Sachs recently estimated there is a 35% chance of a recession in the next two years. The bank also acknowledged that it would be difficult to reduce high inflation.

Fed Chair Jerome Powell also emphasized that the central bank is willing to raise interest rates continuously. The Fed’s expected increase will increase by 0.5% to control inflation. Many have commented that the Fed’s most difficult job is to raise interest rates without pushing the US economy into a recession, what economists call technically a “safe landing”. Because, if the Fed does not raise interest rates, inflation continues to rise, leading to a financial crisis. And the Fed raises interest rates to adjust inflation, if it increases too quickly, it also makes a financial crisis possible.

With his personal opinion, Thuan said that financial crisis often occurs when investors least expect it. When the market very few people think that a financial crisis will happen. The market in the short term is often unpredictable and there may be unexpected events that can happen, such as epidemics, wars, etc. Then the person who has the knowledge, knowledge and preparation will be the one who will Seize the opportunity whether the market is up or down.

Like Michael Burry, who has been shorting the US real estate market since 2005 because he found the US real estate market to be too high. He was steadfast in his analysis and judgment and achieved great results in 2008 when the financial crisis hit. From the knowledge, judgment and perseverance that helped Michael Burry’s investment fund succeed and raise more than 700 million USD in 2008.

Another venture capitalist, Mike Novogratz, founder and CEO of Galaxy Digital, entered the crypto market early on. He bought 30,000 Bitcoins (BTC) and half a million Ethereum (ETH) between 2013 and 2017. With his steadfast hold and belief in the bull market, by 2020 his investment has paid off.

Therefore, one thing Thuan always emphasizes is that when entering the market, learn and equip yourself with the necessary knowledge. At the same time, choose for yourself a suitable and right investment direction and keep your beliefs. Thuan believes that the uptrend is the long-term trend of BTC. So, over the years, Thuan has been averaging prices into BTC and crypto regularly and believes in the long-term growth of this market.

Some other information:

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