Fukutomi Gazette – Misjudgment of markets

Steve Wong


If the majority do not make mistakes when investing, there must be more affluent than poor people in this world. I still remember that many expected the COVID outbreak to last only a few months or even a year in the early days of the epidemic. Once the epidemic problem is solved, everything will return to normal. Likewise, the inflation due to the Russian-Ukrainian war would last only a short period. The U.S. Federal Reserve bureau is raising interest rates to suppress inflation and may create a global economic crisis. How accurate are experts’ predictions? How should we plan our days ahead? It is still unknown.

At the beginning of the epidemic over two years ago, China maintained its economic activities better than other countries due to the successful implementation of city lockdowns. It was a big contrast with other countries where economic activities came to a standstill due to the outbreak of COVID, resulting in a fall in the GDP, stock market, and others. Many shops and enterprises could not operate normally and eventually had to close. And now, when most countries have resumed their economic activities, unexpectedly, China is still under city lockdown. As the world’s largest producer and second-largest economy, it is seriously affecting the global economy.

The Ukrainian war has affected the supply of many raw materials, and the shortage of some commodities has caused prices to soar. Due to the sanctions imposed by Western countries on Russia, crude oil rose to USD130 a barrel, and some experts saw it rising to USD150. However, today’s oil price has fallen from a high level to slightly above USD80. Whoever has invested heavily in crude oil futures contracts might have suffered heavy losses. How long the Russian-Ukrainian war will last is still unknown, but its adverse effect is far-reaching.

Recently, the U.S. Federal Reserve started to raise interest rates to suppress inflation. Many investors did not expect such a drastic move when the global economy is still not yet recovered and has caused a roller coaster-like situation. The U.S. government’s cash payout to relieve the effect of COVID has caused inflation, and many people started to invest in the U.S. property market to protect their

savings. After the interest rate hike, real estate and stock market prices quickly turned around and fell, and many investors suffered losses. Due to the unstable political situation and the interest rate hike in the United States, the demand for the U.S. dollar has dramatically increased, the exchange rate of the yen hit a 24-year high, and the exchange rate of the renminbi and the euro also increased by 10%. This

situation contradicts the general view two years ago that the US Dollar would fall due to bank notes’ reckless issuance. Things are indeed very unpredictable.

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