Predicting the direction of the global economy may be easy when you’re traveling on a free highway on a sunny day,but on a transatlantic caught in a big storm in the ocean, it’s a little bit hard. Since I think that we have now passed the peak point of the storm, and that we have survived the danger even though we are still passing through the waves, I found the courage to make this prediction so please let me continue first the subject from my main point:
The pandemic process will take its place in history as one of the critical turning points in the history of humanity. The fluctuation in global economic activities, which has the largest share in guiding and satisfying human needs, will undoubtedly be one of the biggest sub-titles. We can summarize this fluctuation in a couple of sentences : The slowing demand at the beginning part of the pandemic , there was a reflux phase of a tidal movement. I think it would be more accurate to say the withdrawal before the flood of tsunami.Approaches such as the only cost-oriented efficiency management in the supply chain, which already aims optimum levels in inventory cost management, have also caused the sea to accumulate extra power for the post(drawing forward)pushing movement, caused an overload.But after the vaccination process, we can see that , even if there will be fluctuation on pandemic cases, major wave has passed.Then accumulated demand freed and next step has begun.Container problems, the intensification of one-way trade from East to West, the effect of full went /empty returned ships on the logistic costs, the effect of the increase in oil prices on logistics costs, the increasing demand of all the goods from food to raw materials, from energy to real estate and similar cases, it would not be hard to guess the debate point:Is Global Inflation permanent or temporary?
When we remember the facts that the debt level of the USA , and the largest US bonds holder is China, keeping in mind that the global competition is not only in the field of trade and finance, we can guess that this global inflation process would be used as a policy for benefit of the USA in order to share it’s own inflation effects with the globe with minimal resistance. When we look at the flow of money to the stock market and the cryptocurrency market and the processes of managing the prices of precious metals, it cannot be said that those who manage the global economy have failed in their aim to spread the US inflation globally by covering it in global inflation of goods and raw materials. Then If I were FED(Federal Reserve of USA) increasing the interest rates in small portions lower than expected by spreading them over maturity, which is my biggest trump card, this will be a success. I am one of those who see the probability of stagflation to occur as very very low. Global inflation wave seems to be managed even if it keeps rising .Why? First ,China must keep its productivity and trade figures for at least internal balances, and must keep its advantages to rising competitors such as India, Vietnam and others which are suppported by the West in order to diversify the global supply chain.These rising global supply scenario will force the rising prices downward and the China’s new problem about real estate companies’debts seems to force China to handle the situation calmly but quickly.
In the debate about whether the inflation is temporary or permanent, the answer also depends on the perception of time and acceleration momentum of the prices.Now I think we are at the top of the rising wave of the prices and the momentum will calm down, so even if it takes a little bit more time,it will be manageable.The experience of the professional global finance drivers is enough to manage the situation.Neither global knowledge nor the politic circumstances are the same with 1970’s.
And also need to be mentioned,Green Deal, ESG , and climate change issues are not so good for China at first glance, but there is a possibility that China can adapt to this new era faster than expected.
As for major commodities, Gold will react downwards even to small interest rate hikes. In the scenario above, which predicts that the process can be managed, it would not be wrong to say that Gold will also be kept under control. However, the margin of safe control is between 1600-2200. Although it is difficult to suppress it, also possible to bounce off but temporary. As the main price driver does not want to give the Gold in cheap prices and does not want to make gold more expensive and give free resources to the states stockpiling gold. To speak more precisely,by the tapering and the rate increase process – seems has to be started sooner than expected ,by the first half of the 2022 but small portions -FED will allow inflation to go one step further than interest rates; so this policy will give a cause buyers to push the price higher but everybody knows who the Boss is in Gold, so the control channel will be allowed to occur higher.
Oil, on the other hand, does not want to descend from the throne for a while, contrary to popular belief, with the expectation that demand will decrease permanently with changes such as electric cars, etc. However, this product will not get out of control. As the price approaches 100 USD, we will see that OPEC cannot remain silent to production increase demands. And for downside we will see that it’s forced like a suppressed spring effect as it approaches 50 USD.
About real estate cases , I think the capital is really interested in the land itself but not buildings, which is the basis of humankind’s most profound perception of existence,and will be used for agriculture, which is its oldest purpose. There are definite reasons for the issue of climate changes to be on the agenda, but I have a habit of thinking about every issue by taking its derivatives; I have not seen its harm until today, I recommend it.
Finally, stock markets: In 2022, in the scenarios that I tried to explain above, I predict that the developed country stock markets leading SP 500 will give an opportunity for big short hunters which are bored to be trapped enough, but will not remain dropped. Because in the philosophyof the stock markets, the play is based on going upside.And the inflation debates will force the play be more volatile.But especially in the emerging markets stocks, there will be serious opportunities in the first quarter of 2022.Just keep an eye on Turkey,especially.
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