Bitcoin, stocks or otherwise, there’s no light at the end of the Fed’s 2023 rate hike tunnel, says Jim Bianco.
and other bulls won’t benefit from major US inflation policy change in 2023, analyst says.
In a December 20 Twitter thread, Jim Bianco, director of institutional research firm Bianco Research, said the Federal Reserve would not raise interest rates next year.
Bianco: Japan YCC move ‘is important for all markets’
Analysts have turned even more pessimistic about the outlook for risky assets this week given the surprise change in the Bank of Japan’s (BoJ) yield curve control (YCC).
As Cointelegraph reported, the move caused immediate pain for the U.S. dollar, and with Wall Street in sight, stock futures were trending lower at the time of writing.
For Bianco, the fact that the BoJ is now trying to follow the Fed in its anti-inflation tightening policy meant that the latter was unlikely to ease its own policy.
“Again, if JAPAN! NOW changes policy due to inflation. Remind me why the Fed would flip anytime in 2023? Part of a read message.
“The answer is they won’t. You can forget about a pivot.
The truly tangible consequences of Japan’s decision would only be felt later, Bianco continued. With rising bond yields, Japan should attract both domestic and foreign capital.
“The dollar falls against the yen (or the yen rises against the dollar). Japan gets a return again. This should bring funds back to Japan,” he wrote.
A return to lower interest rates is a key eventuality being priced in by markets beyond crypto, and it’s something that just isn’t paying off anymore, Bianco said. Although BTC/USD is already down nearly 80% in just over a year along with the Fed’s quantitative tightening (QT), the pain may not be over for a long time.
“Powell is a hawk,” he concluded, referring to Fed Chair Jerome Powell’s speech last week in which he tried to keep markets from pricing in policy easing.
“The Director of the ECB, Legarde (Madame Laggard), is now speaking sharply. Kuroda and the BoJ are (now) taking actions that show their concerns about inflation. Markets may need to reconsider their view of pivot central banks. »
Yield curve control annotated chart for Japanese 10-year bond (YCC). Source: Jim Bianco/Twitter
Fidelity director warns of ‘unstable’ year
Other outlooks attempted to offer a more optimistic view of the year ahead while avoiding implicitly bullish language.
Related: “Lower Wave” for all markets? 5 things to know about Bitcoin this week
Jurrien Timmer, director of global macroeconomics at asset management giant Fidelity Investments, predicts a “sideways” trading environment for equities in 2023.
“My sense is that 2023 will be a choppy market, with one or more retests of the 2022 low, but not necessarily much worse than that,” he tweeted Dec. 19.
“Anyway, I don’t think we’re anywhere near a new cyclical bull market.”
Annotated Market Cycle Comparison Chart. Source: Jurrien Timmer/Twitter
In later comments, Timmer added that while he believes a secular bull market has existed since 2009, the “question is whether the secular bull market is still alive.”
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