HUIG's 3 Things this Week: Oct 14
Updated: Oct 30, 2022
A Whole Lot of Bracing for the Future…
1. IMF forecasts growth decline (Forbes)
On Tuesday Oct 11, the IMF published an annual report that forecasts a decline in global economic growth for the next year. With it, they also warn of potentially increasing inflation levels. This means investors should be weary of the outlook of the economy. Investments should be properly hedged, and expectations of growth and “easy” money making opportunities may be scarce. Perhaps we are out of the euphoria that has been the last 5 years.
2. Mortgage rates at 20 year high (WSJ)
With fixed mortgage rates at a 20 year high in the US, according to a report by Freddie Mac, the housing markets are likely to be affected. Unless something changes, it is very plausible that demand for homes will decrease as people will struggle to finance their homes. If this were to happen, then the housing market including: REITS, property management companies as well as those who work in the industry may struggle in the upcoming year.
3. Nobel Prize in Economics (The Economists)
The 2022 Nobel Prize was awarded to three economists: Douglas Diamond, Philip Dybvig and Ben Bernanke, a former head of the FED. The three laureates were awarded for their work on banks and financial crises. This award highlights the emphasis that the academic community is putting on the responsibilities as well as the impacts that banks have on the entire world economy. According to their work, banks are both crucial financial intermediaries that allow for the flow of information and money, as well as very dangerous players. In an environment with rising interest rates in many countries around the world to fight inflation, banks are undoubtedly going to be affected (as lending money is one of their biggest business). Thus, the stability of banks in these upcoming years of turmoil will be incredibly interesting.
Bibliography
The Economist Newspaper. (2022, October 10). Three economists win the Nobel for their work on Bank runs. The Economist. Retrieved October 13, 2022, from https://www.economist.com/finance-and-economics/2022/10/10/three-economists-win-the-nobel-for-their-work-on-bank-runs
Eisen, B. (2022, October 13). Mortgage rates hit 6.92%, a 20-year high. The Wall Street Journal. Retrieved October 13, 2022, from https://www.wsj.com/articles/mortgage-rates-hit-6-92-a-20-year-high-11665669624?mod=hp_lead_pos5
Ponciano, J. (2022, October 11). 'worst is yet to come': Imf cuts economic outlook and warns global inflation still hasn't peaked. Forbes. Retrieved October 13, 2022, from https://www.forbes.com/sites/jonathanponciano/2022/10/11/worst-is-yet-to-come-imf-cuts-economic-outlook-and-warns-global-inflation-still-hasnt-peaked/?sh=52055eaf2b05
Image from: https://www.nytimes.com/2022/10/11/business/imf-world-economy-forecast.html