Independent market analyst Charles Edwards swims against the tide of negative investor sentiment by pinpointing data that suggests a recession in the U.S. could be averted, to the benefit of risk assets like Bitcoin.
for the first time in two years. However, with the crypto bulls pausing at the $25,200 level, the risks of a downturn alongside stocks are increasing.
There are some additional signs that inflation may remain sticky. The housing sector inflation, which commands more than 40% of the weightage in CPI calculation, has shown no sign of a downturn.It appears that the market is slipping back into the 2022 trend where increasing inflation corresponds to higher Fed rate hikes and poor liquidity conditions. The market’s expectation of a 50 basis point rate hike in the upcoming March 22 meeting has increased from single-digit percentages to 30%.
The release of February CPI on Mar. 12 will be instrumental in creating market bias in the short term.Despite high inflation levels, the risk of a recession in stock markets has reduced considerably. Edwards noted in the report that the job sector remains robust with low unemployment levels, which is striking, especially at the"late end of the cycle." He added,
However, the market is also more sensitive to rising unemployment from here. If the unemployment levels react to Fed's hawkishness, a stock market downturn due to recession risks could rise quickly. February's job sector report is set to release on Mar. 10.According to the report, the worst downturns in the S&P 500 index over the past 50 years when similar recessionary fears were prevalent have been -21%, -27% and -20%.
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