Politics: Global Outlook

June 23, 2023, 1:13 pm EDT

Global Outlook

When we look at the US stock market, it seems to be strong and optimistic. But global chaos would remind us to stay with reality by staying calm. 

Russia vs Ukraine

After the collapse of the Kakhovka Dam in Ukraine, the war is getting more intense on a daily basis. The arrival of F-16 jets with more heavyweight weapons added power to the Ukraine side. But Russia fights desperately that nobody knows how worse it could be in terms of its strategy. Needless to say, any nuclear levels of activities would trigger the coming disaster globally

US vs China

US and China head-to-head competition are getting hotter also. Although Blinken just visited China a few days ago, the US-China relationship is only getting worse, not better. India Prime Minister Modi visited Biden in these few days and also underlined the strengthening of the US-India tie before UC cut off more connections with China in economy, technology, business, and politics. After all, both sides are working hard to build all alliances. The US prepares for the coming conflict when China would help Russia with military support. 

High Inflation and Decay Global Economy

The improvement of inflation data like CPI and PPI made the stock market happy because it reduced the threat of inflation. However, its level of 4-5% is still way above the expected level of 2% set by the Federal Reserve. As mentioned in our 06/13 article, the rising rate cycle is not over. It would be back. Inflation is still a big problem to face. Furthermore, the Russia-China war and China’s slowdown would definitely hit the global economy with a deeper impact. In our view, the global recession is on the way. 

In conclusion, the recent spikes in the stock market can hardly find any grounds to support it. The risks are greater than the rewards in the big picture. Some individual stocks could perform well like the AI domain. But, traders and investors need to be smart to pick stocks in order to survive and make profits for the second half of 2023. 

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