Record Perfect Storm... W38/156 The economic crisis that we had to face for 3 years.

By Dr. Kobsak Phutrakul, Executive Vice President Bangkok Bank Public Company Limited Perspective through #travelingtheeconomywithDrKob

Every once in a while, the economy will experience a major crisis. An important time in the past would be

The Great Depression 1929-1939

Oil Price Shocks 1970s

Global Financial Crisis 2008

Living in the contemporary crisis for economists It must be considered good fortune in life.

Because crisis is something that teachers rarely teach in schools. But you have to learn it yourself from what actually happened.

Worth recording as a memory What happened?

This is from the preliminary assessment. This round of crisis will probably take approximately 3 years from the beginning of 2022, which if we count from that point. last week It will be week 38 of 156, about ¼ of the way through. That will roughly consist of 4 periods.

• First period (first 6 months of 2022) – Investors rushed to exit the market. This period has already passed, resulting in an investment storm in the global financial market in the recent period. By those who speculate during the bull market during Covid. Trying to escape from the market After it was clear that Party is over
• Second period (early 2022-late 2023) – The Fed tries to increase interest rates to fight inflation. and inflation began to peak and come down some This second period has already started about 6 months ago. There is still about 1 year left in this period while the Fed speeds up interest rate increases. to a level that is likely high enough to manage inflation It must be at least 5% or more and remain at that level for a while. During this time Inflation will begin to decrease somewhat. But it is still at a high level.
• Period 3 (mid-2023-late 2024) – From interest rates increasing significantly in period 2, the world will clearly enter a state of Global Recessions in 2023, especially developed countries will have to face economic recession. People who are unemployed are increasing. Ultimately, inflation will drop closer to the 2% target, while on the other hand, problems in emerging markets will become more ripe. Causing a crisis in Emerging Markets
• Period 4 (mid-2024 onwards) – The Fed will begin to reduce interest rates. After being confident that inflation is already and entering a period of stimulus to revive the economy in a new round, and the Emerging Market Crisis will gradually subside in 2025, the world will enter a new period of growth.

During the first 3 periods, there will be 3 waves of problems in 3 points: the financial market, the real economy, and Emerging Markets. In the final period, During the return to normal There will be another type of volatility in the financial market. from lower interest rates and the value of the currency returning to normal again. However, this 4-period path is an important point of view from the economic mechanism. I can only secretly hope that Geopolitics between the United States, Russia, and China will not escalate. until causing a crisis upon crisis

Affects the above timeline and leads to a new, longer path.

As for the record of Perfect Storm, week 38, which has just passed, it must be said that the crisis has begun to enter a full new phase. That said like this Because it's clear that

(1) Fed meeting in the middle of last week It is an important turning point. That makes it clear to everyone that The Fed is serious about managing inflation without causing any damage. For that to happen, the Fed can accept it, only if it wins the inflation battle.

This caused the questions of society and journalists to begin to change from the original questions that were asked a lot. Is the Fed raising interest rates too slowly? Has the Fed gone up too little? Will the Fed keep inflation at bay?

Now the question becomes, Is the Fed doing too much? Is it overdoing it or gone too far?

Will the Fed stop raising interest rates to wait and see the results? How far will the Fed raise interest rates? When will the interest be reduced? So how many people will the Fed make unemployed? Has the Fed ever thought about these people who will lose their jobs?

It's a different movie from the previous period.

(2) The US economy has clearly begun to change from "busting" and "hot" to "slowdown" mode.

The Fed's interest rate increase is entering the Restrictive Zone, which has a significant impact on the economy. Interest on 2-year bonds increased to 4.2% from 0.25% one year ago. Interest on 1-year home loans increased to 30% from 6.29%. If investors were shaken in the beginning, from fluctuations in the prices of various assets During this time, it will become the manufacturing sector, real estate sector, real economy, and the general public that will be shaken instead.

(3) Investors who have returned to the market since the middle of June. are facing new kinds of problems Previously, stocks fell because people fought to get out. But the operating results are still good. causing many people to enter the market again, but now when the real economy is starting to be affected Performance of various companies Didn't start as intended The analysis agency therefore lowered the target prices of various stocks, causing investors to rush out of the market in the second round.

Most recently, the Dow Jones index has dropped below 30,000 points, lower than it dropped in the first round last June. and is lower than before Covid occurred. Causing another bubble that formed during COVID to disappear, the next target would be Nasdaq and S&P.

(4) The foreign exchange market front is becoming more intense. Everyone is starting to talk about the new Strong Dollar problem. Recently, the dollar's latest value has surpassed 113, making the dollar one of the Best Performing Assets this year, strengthening by approximately 20%.

As a result, the money of many currencies made new lows and lows again, causing various central banks to Stuck in place, needing to explain, needing to intervene. Need to accelerate the increase in interest rates in line with the yen, one of the world's main currencies. From being around 115 yen/dollar, it has weakened past 146, putting pressure on the Japanese authorities to intervene. For the first time in 24 years, it must be said that the Strong Dollar problem is still not easily resolved. There will continue to be pressure on every country for a long time, even though day-to-day and in the short-term will be unpredictable. Whether it's soft or hard

But in the long run, from the differences in the policies of the main countries And with ever-widening interest spreads, carry trades are making a comeback. It allows us to see new currency statistics. that has never been seen before The next target worth watching is the pound, where we may see 1 pound per 1 dollar.

” and the 5 areas of Geopolitics are equally intense. with the news of Mr. Putin continuing his invasion and rumors of Mr. Therefore it was considered a very colorful week. This week's part Let's continue to look forward to the MPC's interest rate increase by how much and to wait for the latest Thai economic data. How much will it be affected by the crisis?”