The European Central Bank (ECB) has raised interest rates by 25 basis points, marking its tenth consecutive rate hike since July 2022 and bringing the total increase to 450 basis points. The ECB is primarily concerned about high inflation levels, both current and projected, with concerns extending into the future.
Bewitching predictions for 2022
2022-11-23 • Updated
Hello from the far 2022! FBS analysts have used some magic to travel to the future and brought you some hilarious predictions. Enjoy the readthrough and remember: there's a grain of truth in every joke!
Traders and the Golden Stone
Do you know that the limits we face are in our minds? Most traders dream of opening a buy trade in XAU/USD and then chilling until they have enough money to buy a Golden Globe and other shiny stuff. And yet: what if such a thing is no longer possible? Will you give up or try to argue with the market almighty?
The truth is that the golden stone rolled down in 2022. Cryptocurrencies and the booming stock market had already stolen the spotlight from gold. The virus recedes, and the Fed starts raising interest rates. The story of 2013 is repeating: back then, XAU/USD dropped by almost 30%. Now we are at $1600, and it’s not 30% down yet!
Don’t panic, young apprentices of trading wizardry! Remember that buy trades and sell trades are equally good, so consider selling when prices decline. You need to follow the market! And if you don’t like downtrends, you can always turn your chart around so that you’ll be looking at the bottom and not the top. Don’t forget to choose the correct order button, though.
Always select the right button in the New Year!
Oil, gas, and the storage of secrets
Elon Musk made a revolution and became the world leader. His followers and crypto fans are his people and his army! Now the main goal of humanity is to move to Mars, and nothing else matters. This is what the great Musk said. He is already at the final step of building a rocket to transport people to the Red Planet. What is rocket fuel? The cleanest gas. So, you might guess what happened. Gas prices skyrocketed faster than Bitcoin on its best days! Does it reach $100, $200, $300? No, $1000000 for a gallon! Whereas, oil dropped to its lowest as nobody needs it anymore…
Enjoy the rest of 2021, and see you in 2022!
Turkish lira and the Prisoner of Erdogan
The world has changed more than ever. After Turkish President Erdogan replaced the central bank’s governor ten more times, the bank rate is now 0%, just like in Europe. Oh, wait, the inflation is 69% now. How is that even possible? Do Turkey’s citizens have a way out of economic collapse? Yes, of course, they have.
Turkey tried to move on to the dollar as the main currency in the country, but… You better not know what the Fed’s monetary policy in 2022 was. Anyway, the dollar is not an option as well. What to do?
Bitcoin is here to save the day! I mean, the year! The best crypto to fight inflation is the one that has a limited maximum amount of coins. So now every Turkish citizen uses Bitcoin, and lira’s inflation is not a problem anymore. You can make the rate negative, and no one carries about it anymore.
Diversify your portfolio, and have an excellent year!
Ethereum and the Network of Fire
The year 2022. Proof-of-work is now out of fashion. Miners moved to staking. But Vitalik Buterin, the creator of the Ethereum, finally found out how to write code fast, so from Proof-of-stake ETH moved to proof-of-time, then to proof-of-space, and eventually, to proof-of-proof, сonsensus mechanism that works without any complex explanations. You need to say that the transaction is fantastic and everything is fine from now. Also, fees for transactions are extremely low. How cool is that!
But what is up with the deflationary model? It has become so deflationary that every ETH that is mined gets burned. Moreover, you need to burn your ETH to mine ETH. Of course, this created astonishing supply slack, and now 1 Ethereum is worth way more than 1 Bitcoin. And you need to see it by yourself!
Everything is now working on Ethereum. Supply chains, smart contracts, video games, even the Internet itself. It is a great time to live with complete decentralization, the absence of restrictions, a free market, and no Covid whatsoever.
Buy only trust-worthy coins in 2022. Happy New Year!
Mr. Powell and the Order of the Hawks
How about a fairy tale?
Jerome Powell is sitting on a cozy sofa in his old-style cottage in Silver Spring. The weather is gloomy, and a mixed waterfall of snow and rain was knocking into the window. Behind the JJ (this is how his wife called him), a huge monitor is live-streaming the size of the US budget’s debt.
It seems like JJ is asleep. However, his mouth is murmuring words with his eyes shut.
“Inflation, jobs, coronavirus…”
He is not sleeping; he is mind traveling into 2022. Only true Chairs of the Federal Reserve can do that. So, what does he see?
Unsurprisingly to everyone, consumer prices kept rising in 2022. After ending the year with 6.8% in November, the US CPI accelerated and reached more than 7% in February – a crazy figure unseen from 1990. The economic activity was rebounding as well. The actions of the Federal Reserve were definitely needed. So, the Fed doubled the pace of its taper. However, inflation rose even more in April. So, the Fed tightened its policy even more. In May, inflation skyrocketed to 10%. Woah! EUR/USD hit the 1.0500 level! All media is panicking! “Does it mean that the US entered hyperinflation? What should we do? What should the Fed do?”
“HIKE! HIKE! HIIIKE!” – The Fed Powell wakes up screaming. The snow is falling outside, and everything looks peaceful, despite the red letters counting the US Debt on the wall. JJ exhales. It is December 31, 2021.
Elon Musk and Half-blooded Dog Coins
Long story short:
And then, this will happen:
So, we expect that in 2022 we will see more tokens being pumped by Elon Musk’s tweets. Will they be dogs, or maybe he will choose cats this year (the Year of Tiger)?
S&P500 and the Margin Hallows
January CPI in the US broke above 50%, and it is flying towards 100%. Groceries are growing in price while customers are reaching the checkout. The Fed keeps announcing that inflation is under control and it is still too early for tapering.
March The 20th strain of Covid-19 was spreading around the world. To stay healthy, people need to take an everyday injection. That is how the world became drug-addicted.
May Sell in May and go away? Not in 2022. More than 100 hedge funds got margin calls. It was a bad idea to “short” S&P500. The main US index broke through 8000.
August Moderna and Pfizer became the world’s largest companies with capitalizations over 40 trillion each. Moderna purchases Apple, Pfizer buys Tesla. The rally keeps going… Facebook finally released the Metaverse. The Crypto market outstripped the US economy by capitalization. However, Microstrategy corp got bankrupt. CEO’s should have been buying SAND instead of Bitcoins.
December Correction finally happens because you bought US500 ahead of the New Year rally.
By the way: Happy New Year! Enjoy the next ordinary year in the market!
The upcoming August inflation data may send mixed signals. The 12-month headline inflation rate is expected to rise to 3.6%, causing concerns for the Biden administration. However, core inflation, which excludes food and energy prices, is projected to decrease to 4.3%, aligning with the Federal Reserve's goals. Past price trends influence both figures, so looking at recent data for a more accurate picture is crucial.
Here we go again, my friends. It’s time to look critically into the future of what trading opportunities September might have in store for us. As always, it is essential to note that the views expressed here are mine and should not be considered financial advice without proper examination.
The past several weeks have been a real triumph for the bulls in the oil market. The Brent spot price grew by 8.5% during the last month.
Gold prices are rising for three consecutive days ahead of the Federal Reserve (Fed) interest rate decision, which is expected to remain unchanged due to declining inflation and a positive economic outlook. Investors are keen on the Fed's interest rate guidance, fearing a hawkish stance that could trigger market risk aversion.
Amid concerns of a Chinese economic slowdown, reports of declining investment often overlook China's efficient investment strategy in emerging sectors for long-term growth. China has taken measures to stabilize foreign and private sector investments, like reducing the reserve requirement ratio to boost investor confidence.