Trending: Investing in Bitcoin / 5 reasons to invest in Amazon / Investing in the Metaverse
Wednesday, January 25, 2023
INVESTOR TIMES
  • Home
  • News
    Bets increase on a soft landing in the U.S

    Bets increase on a soft landing in the U.S

    69% of investors believe metaverse entertainment will change social lifestyles

    69% of investors believe metaverse entertainment will change social lifestyles

    European oil companies want to follow in Chevron’s footsteps to operate in Venezuela

    European oil companies want to follow in Chevron’s footsteps to operate in Venezuela

    Amgen buys Horizon Therapeutics for US$ 25 billion

    Amgen buys Horizon Therapeutics for US$ 25 billion

    Europe prepares law to make airlines that pollute more pay higher costs

    Europe prepares law to make airlines that pollute more pay higher costs

    Why are Asian investors selling their tech stocks?

    Why are Asian investors selling their tech stocks?

    Here’s what the economy and markets will look in 2023, according to JP Morgan

    Here’s what the economy and markets will look in 2023, according to JP Morgan

    Are technology stocks coming to the end of their reign?

    Are technology stocks coming to the end of their reign?

    Amazon fined millions for manipulating algorithms in its favor

    Amazon fined millions for manipulating algorithms in its favor

  • Markets
    Bets increase on a soft landing in the U.S

    Bets increase on a soft landing in the U.S

    What are CFDs and what are their advantages?

    Getting started with CFD trading

    Goldman Sachs lands with more strength at Santander and BBVA

    Goldman Sachs lands with more strength at Santander and BBVA

    With inflation in recession, what stocks should you consider?

    With inflation in recession, what stocks should you consider?

    Should payment for order flow be maintained in the stock market?

    Should payment for order flow be maintained in the stock market?

    Why are Asian investors selling their tech stocks?

    Why are Asian investors selling their tech stocks?

    Here’s what the economy and markets will look in 2023, according to JP Morgan

    Here’s what the economy and markets will look in 2023, according to JP Morgan

    Are technology stocks coming to the end of their reign?

    Are technology stocks coming to the end of their reign?

    Inflation is starting to ease but not enough

    Inflation is starting to ease but not enough

  • Investing
    Two biotech stocks that could explode soon

    Two biotech stocks that could explode soon

    Ideas for investing in the electric vehicle industry

    Ideas for investing in the electric vehicle industry

    Mercado Libre could be one of the best investments for the long term

    Mercado Libre could be one of the best investments for the long term

    Three cheap tech stocks for 2023

    Three cheap tech stocks for 2023

    Where to invest in 2023? These are the most likely trends

    Where to invest in 2023? These are the most likely trends

    Will Ford shares be profitable in 2023?

    Will Ford shares be profitable in 2023?

    Some interesting options for investing in leisure and travel companies

    Some interesting options for investing in leisure and travel companies

    Plug Power’s commitment to green hydrogen

    Plug Power’s commitment to green hydrogen

    Investing in Auto Trader: vehicle sales at a turning point

    Investing in Auto Trader: vehicle sales at a turning point

  • Technology
    Banning TikTok in the U.S. could benefit Meta

    Banning TikTok in the U.S. could benefit Meta

    Microsoft leads the ranking of the best-managed companies in 2022

    Microsoft leads the ranking of the best-managed companies in 2022

    Apple: consequences of the Foxconn conflict will continue until 2023

    Apple: consequences of the Foxconn conflict will continue until 2023

    5 must-have skills to get a job in 2023

    5 must-have skills to get a job in 2023

    UK changes strategy on Internet content control

    UK changes strategy on Internet content control

    EU organized a party in the metaverse and nobody attended

    EU organized a party in the metaverse and nobody attended

    The metaverse companies with the highest revenues in 2022

    The metaverse companies with the highest revenues in 2022

    Electric vehicles: China aims to boost its dominance

    Electric vehicles: China aims to boost its dominance

    Nintendo sells 10 million Switch in 3 days and its shares rise

    Nintendo sells 10 million Switch in 3 days and its shares rise

  • CryptocurrenciesTRENDING
    69% of investors believe metaverse entertainment will change social lifestyles

    69% of investors believe metaverse entertainment will change social lifestyles

    Bitcoin falls after Fed decision to raise interest rates by 0.50%

    Bitcoin falls after Fed decision to raise interest rates by 0.50%

    The future of cryptocurrencies, according to Larry Fink

    The future of cryptocurrencies, according to Larry Fink

    How Much Bitcoin Should You Buy: 5 Factors to Consider in 2023

    How Much Bitcoin Should You Buy: 5 Factors to Consider in 2023

    Between two extremes: what will the price of Bitcoin be in 2023?

    Between two extremes: what will the price of Bitcoin be in 2023?

    FTX crash spreads and affects BlockFi

    FTX crash spreads and affects BlockFi

    EU organized a party in the metaverse and nobody attended

    EU organized a party in the metaverse and nobody attended

    Why does The WSJ continue to question Tether’s financial health?

    Why does The WSJ continue to question Tether’s financial health?

    Brazilian Congress approves bill to regulate cryptocurrencies

    Brazilian Congress approves bill to regulate cryptocurrencies

S&P 500 (USA) 
4.016.95  2.86  0.07%  
NASDAQ Composite (USA) 
11.334.27  30.14  0.27%  
Dow Jones (USA) 
33.733.96  104.40  0.31%  
FTSE 100 (United Kingdom) 
7.752.36  5.00  0.06%  
EURO STOXX 50 (Europe) 
4.134,54  18,48  0,00%  
Nikkei 225 
27.395.01  95.82  0.35%  
VIX 
19.90  0.09  0.45%  
Bitcoin (USD) 
22.617.72  312.90  1.36%  
Ethereum (USD) 
1.548.39  77.33  4.76%  
  • Home
  • News
    Bets increase on a soft landing in the U.S

    Bets increase on a soft landing in the U.S

    69% of investors believe metaverse entertainment will change social lifestyles

    69% of investors believe metaverse entertainment will change social lifestyles

    European oil companies want to follow in Chevron’s footsteps to operate in Venezuela

    European oil companies want to follow in Chevron’s footsteps to operate in Venezuela

    Amgen buys Horizon Therapeutics for US$ 25 billion

    Amgen buys Horizon Therapeutics for US$ 25 billion

    Europe prepares law to make airlines that pollute more pay higher costs

    Europe prepares law to make airlines that pollute more pay higher costs

    Why are Asian investors selling their tech stocks?

    Why are Asian investors selling their tech stocks?

    Here’s what the economy and markets will look in 2023, according to JP Morgan

    Here’s what the economy and markets will look in 2023, according to JP Morgan

    Are technology stocks coming to the end of their reign?

    Are technology stocks coming to the end of their reign?

    Amazon fined millions for manipulating algorithms in its favor

    Amazon fined millions for manipulating algorithms in its favor

  • Markets
    Bets increase on a soft landing in the U.S

    Bets increase on a soft landing in the U.S

    What are CFDs and what are their advantages?

    Getting started with CFD trading

    Goldman Sachs lands with more strength at Santander and BBVA

    Goldman Sachs lands with more strength at Santander and BBVA

    With inflation in recession, what stocks should you consider?

    With inflation in recession, what stocks should you consider?

    Should payment for order flow be maintained in the stock market?

    Should payment for order flow be maintained in the stock market?

    Why are Asian investors selling their tech stocks?

    Why are Asian investors selling their tech stocks?

    Here’s what the economy and markets will look in 2023, according to JP Morgan

    Here’s what the economy and markets will look in 2023, according to JP Morgan

    Are technology stocks coming to the end of their reign?

    Are technology stocks coming to the end of their reign?

    Inflation is starting to ease but not enough

    Inflation is starting to ease but not enough

  • Investing
    Two biotech stocks that could explode soon

    Two biotech stocks that could explode soon

    Ideas for investing in the electric vehicle industry

    Ideas for investing in the electric vehicle industry

    Mercado Libre could be one of the best investments for the long term

    Mercado Libre could be one of the best investments for the long term

    Three cheap tech stocks for 2023

    Three cheap tech stocks for 2023

    Where to invest in 2023? These are the most likely trends

    Where to invest in 2023? These are the most likely trends

    Will Ford shares be profitable in 2023?

    Will Ford shares be profitable in 2023?

    Some interesting options for investing in leisure and travel companies

    Some interesting options for investing in leisure and travel companies

    Plug Power’s commitment to green hydrogen

    Plug Power’s commitment to green hydrogen

    Investing in Auto Trader: vehicle sales at a turning point

    Investing in Auto Trader: vehicle sales at a turning point

  • Technology
    Banning TikTok in the U.S. could benefit Meta

    Banning TikTok in the U.S. could benefit Meta

    Microsoft leads the ranking of the best-managed companies in 2022

    Microsoft leads the ranking of the best-managed companies in 2022

    Apple: consequences of the Foxconn conflict will continue until 2023

    Apple: consequences of the Foxconn conflict will continue until 2023

    5 must-have skills to get a job in 2023

    5 must-have skills to get a job in 2023

    UK changes strategy on Internet content control

    UK changes strategy on Internet content control

    EU organized a party in the metaverse and nobody attended

    EU organized a party in the metaverse and nobody attended

    The metaverse companies with the highest revenues in 2022

    The metaverse companies with the highest revenues in 2022

    Electric vehicles: China aims to boost its dominance

    Electric vehicles: China aims to boost its dominance

    Nintendo sells 10 million Switch in 3 days and its shares rise

    Nintendo sells 10 million Switch in 3 days and its shares rise

  • CryptocurrenciesTRENDING
    69% of investors believe metaverse entertainment will change social lifestyles

    69% of investors believe metaverse entertainment will change social lifestyles

    Bitcoin falls after Fed decision to raise interest rates by 0.50%

    Bitcoin falls after Fed decision to raise interest rates by 0.50%

    The future of cryptocurrencies, according to Larry Fink

    The future of cryptocurrencies, according to Larry Fink

    How Much Bitcoin Should You Buy: 5 Factors to Consider in 2023

    How Much Bitcoin Should You Buy: 5 Factors to Consider in 2023

    Between two extremes: what will the price of Bitcoin be in 2023?

    Between two extremes: what will the price of Bitcoin be in 2023?

    FTX crash spreads and affects BlockFi

    FTX crash spreads and affects BlockFi

    EU organized a party in the metaverse and nobody attended

    EU organized a party in the metaverse and nobody attended

    Why does The WSJ continue to question Tether’s financial health?

    Why does The WSJ continue to question Tether’s financial health?

    Brazilian Congress approves bill to regulate cryptocurrencies

    Brazilian Congress approves bill to regulate cryptocurrencies

INVESTOR TIMES
Home Markets

Bets increase on a soft landing in the U.S

The chances of a recession in the U.S. economy are great, but optimism is beginning to take hold.

Alejandro Gil by Alejandro Gil
1/24/2023 - 12:35
in Markets, News
Reading Time: 4 mins read
Share on FacebookShare on TwitterShare on LinkedIn
  • Optimism seems to be reviving among Wall Street pundits and analysts about a possible soft landing.
  • Until recently, betting on the least painful scenario seemed like a Federal Reserve fantasy.
  • Today, the number of analysts who believe in an ideal landing is increasing under the inspiration of macroeconomic data.

Entering the second half of last year, analysts and investors were convinced that a U.S. recession was imminent. The stakes were centered on the size and duration of the contractionary state of the U.S. economy. There were few cases that spoke of a soft landing, especially given the rising inflation in the U.S. at the time.

Although interest rate hikes began in March, inflation was not affected by the Fed’s tightening measures. Such strength in the rise of consumer prices in resisting the central bank’s prescription made Wall Street fear the worst. Calls for a possible soft landing by central bank officials were met with skepticism and even derision.

But developments over the last few months of the year seem to have radically changed the financial face. Inflation numbers are receding rapidly and the labor market looks to be in full retreat. Even during the month of December, wages fell beyond forecasts. In this sense, hope seems to be back on a board that until recently was totally pessimistic. However, a probable Goldilocks scenario, i.e. a Fed defeating inflation without damaging the economy, does not rule out the danger of recession.

Is a soft landing possible in the US economy?

The normality is to think that everything that happened in 2022 will lead the US economy into a recession or painful stagflation. The soft landing remains a bet of a limited, but growing number of analysts. As mentioned above, the root is in the labor market data and inflation that seems to be steadily receding.

Inflation over the last year ending in December retreated to 6.5%, indicating that the Fed’s actions are working. In that sense, central bank officials now have more credibility as their forecasts begin to take shape. Recently, Fed Governor Christopher Waller hinted that his prediction had been accurate, at least for the time being.

Such a situation leads the Fed to implement interest rate hikes with some moderation, as in the case of December. During the four immediately preceding Federal Open Market Committee (FOMC) meetings, rate hikes were 75 basis points. But in December, macroeconomic data allowed for an exception and a 0.5% increase. On February 1, a 25 basis point increase will probably be announced.

With these circumstances in mind, it must be said that the authorities seem confident about the possibility of a soft landing in the US. Consequently, had there been greater dangers, the hawks would not have allowed a moderation and even the possibility of additional interest rate increases would have already been announced.

As already stated, the danger of recession remains latent and any minor mistake by the central bank could lead to it. Likewise, a wage hike and a drop in unemployment could increase the long-term inflation forecast.

Fed Governor Christopher Waller expects a soft landing in the U.S
For Federal Reserve Governor Christopher Waller, the U.S. economy does not necessarily have to go through a recession. In his opinion, there are great possibilities of achieving the so-called soft landing, which consists of doubling inflation without hurting growth. Source: Bloomberg.com

Soft landing: a dream scenario

A soft landing would be ideal for financial markets, as inflation would be quickly brought back to the Fed’s 2% target. Also, by avoiding recession, it would allow a return to a growth path commensurate with the size of the world’s leading economy. The result would be an early interest rate reduction, which would favor industries dependent on the low cost of credit.

“The soft landing would be an event that could propel markets to the threshold of green numbers sooner than many expect.”

As such, employment and consumption would rise rapidly, driving retail liquidity into growth stocks and other risk assets. In other words, there would be a date in sight for a coming growth avalanche, leading investors to buy more confidently into financial assets in the face of the impending upswing.

In this way, the recovery would be much faster and those who do not react in time would miss out on the fruits of the bull market. As can be guessed, this would be an almost idyllic scenario for battered investors. It would be closer than ever and that mere possibility would be behind the recent green shoots in the major indices and in other sectors such as the cryptocurrency market.

Either way, the soft landing would turn out to be a boon for the US economy. However, there are many reasons to expect the worst. The latter means that the danger has not passed and many analysts warn investors not to sing victory in the face of the optimism generated by the current environment.

Don’t celebrate victory

Taking for granted the warnings of some analysts such as Bloomberg’s Allison Shrager, the danger of recession is latent. In her opinion, a Goldilocks situation is not assured. She even goes further and argues that a possible soft landing would not be as soft as it sounds. He states that “high interest rates throughout 2023 could destabilize the financial system”.

If anything, the equivalent of the current situation could be found in what the HBO Max series, Dragon House, calls “the false dawn.” Shrager believes that the longer the battle against inflation continues, “the more households will burn through their savings. There is already evidence that they are racking up credit card debt.”

At the same time, customers of major U.S. banks are reportedly increasing their loan applications to maintain their spending levels. The latter, according to specialized media reports, suggests that JPMorgan, Bank of America and Citigroup expect at least a moderate recession.

Another aspect of singular weight is history. Even though a soft landing is expected, the U.S. economy has moved according to clear patterns throughout its history. One of them suggests that “it has usually taken an economic recession to end a sustained period of high inflation,” The New York Magazine notes.

On the other hand, the latter portal considers that the recession will not be present this year. “The economy will improve before it gets worse. Or so several indicators seem to suggest”, comments the author of the paper. Another aspect that should not be overlooked is the fact that China’s recovery after the confinements could cushion the blow.

Big U.S. banks warn against exaggerated optimism
Three major U.S. banks, led by JPMorgan Chase, warn people not to get carried away by the euphoria of optimism. They understand that the longer the fight against inflation drags on, the more people increase their reliance on borrowing to maintain their spending standards. Source: Ft.com

Worst-case scenario fear loses ground

The possibilities are centered between recession and soft landing. According to the vast majority of experts, the former scenario is the most likely. But the latter continues to gain traction and the level of fear and nervousness seems to be dropping. One of the factors that could bring relief is China’s much-talked-about reopening. This is a breath of fresh air for battered Western businesses.

Even the head of the International Monetary Fund (IMF) herself, Kristalina Georgieva, said her agency would lift its recession forecast for 2023. “We have, demonstrably, the strength of labor markets that translates into consumer spending and keeps the economy going,” she said last Friday in Davos.

“With China reopening, we expect growth this year to again exceed the global average,” he stressed during his invention at the World Economic Forum.

At the other extreme, in the U.S. economy the expected indicators are suggestive. Thus, fourth quarter growth could be the justification for all the optimism. It should be remembered that the first two quarterly quarters of 2022 were contractionary, which in theory marks the beginning of a technical recession, which was not announced only because of the strength of consumption and the labor market.

Subsequently, in the third quarter, the mood began to change for the better, with GDP up 3.2%. For the last quarter of 2022, growth of 2.7% is expected. Other data such as industrial production, retail sales and housing starts show negative signs of exhaustion. All this does not negate that the hope for a soft landing continues to permeate among US analysts.

[elementor-template id="23172"]
Tags: economyFEDSoft landingUnited States

Related articles

69% of investors believe metaverse entertainment will change social lifestyles
Cryptocurrencies

69% of investors believe metaverse entertainment will change social lifestyles

by Santiago Contreras
— January 24, 2023
What are CFDs and what are their advantages?
Markets

Getting started with CFD trading

by David Romero
— January 24, 2023
European oil companies want to follow in Chevron’s footsteps to operate in Venezuela
Companies

European oil companies want to follow in Chevron’s footsteps to operate in Venezuela

by Alejandro Gil
— December 17, 2022
Goldman Sachs lands with more strength at Santander and BBVA
Markets

Goldman Sachs lands with more strength at Santander and BBVA

by Pablo Petovel
— December 17, 2022
Amgen buys Horizon Therapeutics for US$ 25 billion
News

Amgen buys Horizon Therapeutics for US$ 25 billion

by Pablo Petovel
— December 16, 2022

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Last published articles

Bets increase on a soft landing in the U.S
Markets

Bets increase on a soft landing in the U.S

by Alejandro Gil
— January 24, 2023
69% of investors believe metaverse entertainment will change social lifestyles

69% of investors believe metaverse entertainment will change social lifestyles

by Santiago Contreras
  January 24, 2023

What are CFDs and what are their advantages?

Getting started with CFD trading

by David Romero
  January 24, 2023

European oil companies want to follow in Chevron’s footsteps to operate in Venezuela

European oil companies want to follow in Chevron’s footsteps to operate in Venezuela

by Alejandro Gil
  December 17, 2022

Goldman Sachs lands with more strength at Santander and BBVA

Goldman Sachs lands with more strength at Santander and BBVA

by Pablo Petovel
  December 17, 2022

Facebook Twitter LinkedIn Telegram RSS

ABOUT INVESTOR TIMES

INVESTOR TIMES is an independent publication of economic, finance and investment content, owned and operated by Altas Ventures.

MORE ABOUT US

  • Our team
  • Work with us
  • Advertise on IT
  • Contact
  • Corporate information
  • Terms of Use
  • Cookies Policy
  • Privacy Policy

INTERNATIONAL EDITIONS

Investor Times in English

Investor Times en Français

Investor Times in Deutsch

Investor Times in Italiano

Investor Times em Português

Investor Times po Polsku

Investor Times на русском языке

El País Financiero (edición en Español)

© ATLAS VENTURES SLU, all rights reserved. Any information contained in INVESTOR TIMES is for educational and/or informational purposes only, it is not financial and/or investment advice. INVESTOR TIMES may obtain economic retribution by recommending services or products of third parties. INVESTOR TIMES does not accept, nor will it accept in the future, subsidies or funds from Governments, political parties or public institutions.

No Result
View All Result
  • Home
  • News
  • Markets
  • Investing
  • Cryptocurrencies
  • Technology

  •  EXCLUSIVE  3 Russian men are the real perpetrators behind Juicy Fields, says Glanse

     NEW  Compound Interest Calculator

     TRENDING 
    Investing in Bitcoin Investing in the Metaverse 5 reasons to invest in Amazon

© ATLAS VENTURES, all rights reserved.