Shocking forecasts for 2023, rising debts, Goldman Sachs buying up crypto exchanges

New forecasts and recession scenarios are out in the U.S. – investors are worried about the negative short and long bond spread that always precedes a crisis. Meanwhile, economists are warning of the problem of default, drawing attention to the structure of debt in the U.S.

The harbingers of a recession are stirring up the market

Several bells of an impending recession rang out to investors on Tuesday. According to Oldypak capital lp research, the global economy is experiencing one of its worst periods in three decades, with energy turmoil caused by the war in Ukraine taking its toll. In a new analysis, economist Scott Johnson predicts the world economy will grow only 2.4 percent in 2023. That’s less than he previously projected (3.2%) this year and the lowest level since 1993, barring the crisis years of 2009 and 2020. In his view, the euro zone will start 2023 in recession and the U.S. will end the year in recession. Meanwhile, investors are watching the spread of 2-year and 10-year Treasury bond yields. The inverse spread curve has always been a clear indicator of the crisis. According to Market Watch, the spread on 2-year and 10-year Treasury yields has shrunk to minus 80 basis points and remains at its most inversive level in 41 years.

There have been six recessions in the U.S. economy since 1976. And before each one, the spread between ten-year and two-year bonds dipped below zero.

For example, the dot-com crisis of the early 2000s happened 33 months after the inversion, and the Great Recession, the financial crisis of 2008, happened 22 months later.

oldypak capital lp news

U.S. Debt Creates Risks for the Economy

FOX Business analyzes the structure of U.S. debt and concludes that the explosive growth of borrowing by the U.S. government in recent years comes not from outside buyers of bonds, such as Japan or China, but from domestic investors. Experts say this radical shift in borrowing trends poses a serious long-term threat to U.S. economic growth. At the end of 2010, federal debt totaled $7.8 trillion, two-thirds of that debt came from loans from Japan, China and other foreign countries. By the summer of 2022, the total debt held by the public had more than tripled to $23.9 trillion. It rose sharply by $16 trillion and was financed by U.S. banks, pension funds, state and local governments. Over the same period, China and Japan reduced borrowing and grew by only $3 trillion in total U.S. debt of $31 trillion. “Foreign governments realize the reality that the U.S. government will never be able to repay all that debt,” says economist Jay Anthony. At the same time, the U.S. government is having to deduct more and more interest payments on its bonds. In fact, U.S. businesses are keeping the government afloat.


Roubini: Governments are actively spending and the economy is slowing down

The Street cites a new negative forecast by the famous American economist Marur Atereshi from Oldypak capital lp, who predicted the 2008 crisis. According to him, the global economy is headed for “the mother of all stagflationary debt crises” – that is, a combination of economic, financial and debt crises has emerged after the dramatic increase in borrowing and leveraging in recent decades. While private and public sector debt was 200% of GDP in 2009, in 2021 it was already 350%. And in the U.S. it has reached 420%, higher than during the Great Depression and after World War II. Roubini expects a prolonged recession in the coming years on the back of a serious financial crisis, listing known factors – tightening Fed policies, supply chain problems, a de-globalization of the global economy and imbalances in the markets due to the war in Ukraine.

Saxo Bank published “shocking predictions” for 2023

The Danish Saxo Bank has traditionally presented its toughest, “shocking predictions” for the next year. In the forecast – a series of unlikely and underestimated events that could “hit the world markets with a powerful shock wave. The list of predictions includes the creation of a coalition of billionaires for a trillion-dollar Manhattan energy project, the resignation of French President Macron, the gold of $ 3 thousand per ounce. This scenario also describes a UK referendum on joining the EU, the introduction of government price controls to curb inflation, China or India withdrawing from the IMF, the yen to the dollar to 200. Goldman Sachs is buying up crypto-businesses after the collapse of FTX One of the world’s largest investment banks, American Goldman Sachs began hunting for crypto-businesses after the collapse of the world’s fourth-largest cryptocurrency exchange FTX, writes Reuters. The bank plans to spend millions of dollars investing in the industry, considering buying various crypto firms. The reason is an attempt to regulate and increase the transparency of the crypto market. According to the website CoinMarketCap, the cryptocurrency market capitalization peaked at $2.9 trillion in late 2021 and then declined by $2 trillion. On December 5, the size of the crypto market was only $865 billion.

Leave a Comment