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2023 Economic Forecast: Are Investors Prepared for a Financial System Crash?

It is said that economic forecasts mainly serve to make astrologers seem a little more credible. A look at the success of last year’s predictions adds weight to this not very flattering bon mot. Instead of the most expected recession in history, the US economy expanded at a rate of 5.2 percent in the third quarter. Despite the Fed’s tough tightening campaign, the S&P 500 recently hit an all-time high. Will the prospects for this year be better?

In the first months of 2023, investors focused almost obsessively on the threat of an accident in the financial system. The latter was dependent on zero interest rates and liquidity injections for a long time. An aggressive cycle of rate hikes by major central banks has raised concerns that sooner or later something will break in the monetary system. These fears almost came true when Silicon Valley Bank (SVB) collapsed spectacularly in March. However, the cascade of accompanying bankruptcies did not materialize. Investors soon understood that the collapse of SVB was an isolated incident caused by a catastrophic failure of risk management within the bank. For the rest of the year, the financial system proved immune to shocks.

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2024-02-05 04:01:05
#Investing #Invest #Time #War

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