| Amir Kahanovitz, Chief Economist, Phoenix-Excellence |
2022 is upon us, growth expectations are high, but paradoxically the biggest threat is suddenly the Fed, which is pushing harder in monetary terms. Today, the Fed’s final decision for 2021 will be made, in which it is expected according to the Bloomberg poll to announce an acceleration of the rate of completion of bond purchases by two, which will pave its way already in the first half of the year.
| Will the increases affect the cooling of inflation?
By the behavior of inflation expectations in the market no! This is when the effect of the supply side on prices is more dominant. And according to the US Small Business Survey (NFIB) published yesterday there are no signs of an effect on inflation cooling: seasonally adjusted, a net 54% of business owners plan price increases next year, a three-point increase from October and a 48-year record reading.
We also received further support for this yesterday in the US, which rose by 9.6%, higher than expected, and even though the planned interest rate hikes have been embedded in the market for a long time and have chained to financing costs. Are they like dead cups for inflation?
On the other hand their negative impact on growth may not be negligible at all which has been signaling for some time now the crashing slope of the yield curve, but not only that: in the NFIB survey 38%, also the lowest in 48 years.
Current data from China continue to indicate a horizontal slowdown in the economy, from data on new,, and investment. In the background, we will recall, is a crisis in some of the real estate giants in the country, and tensions with the US, which just yesterday added 8 more Chinese technology companies to the blacklist for investments.
In the background, China is facing the spread of the Omicron variant, with the World Health Organization reporting yesterday that its rate of spread is the fastest of all variants to date.
The US has been falling sharply in recent days and not because of the Fed – oil prices have been falling in recent days and especially yesterday, following the publication of the International Energy Agency’s latest monthly report, which described the global oil market returning to surplus and facing even greater supply in early 2022. Background Restrictions related to Omicron.
The futures contract for March 2022 is lower than the futures contract price in February (negative contango). The ball is now moving back to the OPEC + cartel whether it will stop expanding its planned output.
The European Central Bank estimates that by 2022 and 2024 the bloc will already be back below their target – 2% (the official forecast is expected to be published tomorrow after their monetary decision).
Today it will be announced in Israel that it is expected to remain unchanged (0.0%) and with an annual change of 2.5%, with the OTC market trading in a range of 0.0% to 0.2%.
The investors’ index will look, among other things, for indications of the extent of the acceleration in rental prices, an acceleration in car prices, a cooling of hotel prices, the effect of retail investigations on food prices and more.
The author is the Chief Economist of Phoenix-Excellence. This review is provided as a service to readers only, and should not be construed as an offer, recommendation, substitute for the reader’s professional judgment or investment advice or investment marketing, purchase and / or sale and / or holding of the securities and / or financial assets mentioned or of securities and / Or any other financial assets.