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Economists started thinking about the possibility of a recession when it became apparent that inflation wasn't a temporary but a longer-lasting phenomenon. Expectations for a recession grew as rising prices persisted despite the Federal Reserve's decision to boost interest rates. For a long time now, economists have predicted a recession, and now most believe it will officially begin somewhere in the first half of next year. It can be argued whether it is shallow, deep, short, or long. However, the majority opinion among analysts indicates that the economy is entering a period of downturn. Many economists have included depression in their 2023 estimates. However, opinions on the exact date and depth of the downturn vary widely. Both sides blame the Federal Reserve's interest rate policies, even though the Fed came to the rescue following the last two recessions. Interestingly, part of the blame goes to the Covid-19 effects on demand and supply, caused by lockdowns that saw a large increase in online activity as most people got their entertainment from SlotoCash Casino and other online platforms. Why Economists Feel There is a Risk of Recession There are many potential causes or contributors to a recession; however, in 2023, there seem to be two that stand out as the greatest dangers to economic growth. Inflation is the biggest economic threat for 2023, and any investor that has not been hiding underneath a rock in the preceding year knows. In June 2022, the index for consumer prices climbed 9.1%, its biggest inflation figure in over 40 years. The second-largest risk factor in 2023 is the one thing that can help with inflation: increased interest rates. The cost of borrowing funds rises when interest rates rise, restricting businesses from using debt to finance growth investments. Higher rates also lower consumer spending, lessening demand pressures that contribute to rising prices. The Federal Reserve started its campaign of rapid interest rate increases in an effort to curb inflation. The Fed has increased its goal range for the federal funds rate from zero to its range of 3.75 percent to four percent. Thankfully, inflation has decreased from its June high of 9.1% to the most recent measurement in October's CPI of 7.7%. Nevertheless, 7.7% inflation still seems to be significantly well above The Fed's protracted target of 2%; thus, interest rates could likely move higher mostly in the coming months. The prolonged war between Ukraine and Russia has also sown confusion throughout the international energy market, especially in Europe. It seems conceivable that member countries of the union will be forced to do without Russian gas coming winter. A gas and oil price spike in the months ahead could devastate the already shaky U.S. economy. How Severe Will It Be If It Happens? A recession is defined as a period of economic contraction that lasts for two consecutive calendar quarters or longer and has widespread effects on the economy. When determining whether or not a recession has occurred, the National Bureau of Economic Research considers the downturn's severity, breadth, and duration. Nevertheless, the NBER may declare a recession when any of these factors become severe enough. For example, the 2020 pandemic slump was so severe and short-lived because of its fast onset and widespread effects. It is unknown how long regulators can sustain current high-interest rates. In the futures market, investors anticipate that the Federal Reserve will begin lowering interest rates by 2023. According to the Fed's own projections, interest rates will begin to fall in 2024. Swonk thinks the Fed will be forced to reverse course on rate hikes due to the recession, whereas Simons thinks a downturn may continue until the end of 2024, even if rates stay high. What Should Investors Do? Several broad tactics exist that investors can employ to mitigate losses and make the most of gains in a down economy. Before doing anything else, you should consider decreasing your dependence on volatile stocks and raising your cash reserves. While sitting on funds might not seem like the most thrilling move, it does limit exposure to market fluctuations and give you options in the event of a recession in 2023 that could lead to favorable buying conditions. In addition, savers can currently earn 3 percent or more with an online account, and that rate, along with others, will grow if the Federal Reserve raises its benchmark interest rate. Furthermore, value equities have often done better than growth stocks in times of higher interest rates. Discounted cash flow valuations of corporations suffer at increased interest rates, which is bad news for high-growth stocks. During economic downturns, certain equities and market sectors have a history of outperforming the market as a whole because they are more defensive. Income from utilities, healthcare, and consumer staples firms is relatively immune to economic fluctuations and consumer confidence, making them excellent candidates for defensive investments. Take Away While central banks combat inflation, China is reopening its economy following Covid-19 constraints, and the Ukraine war is driving the global economy into recession. Financial experts on Wall Street anticipate that the first quarter of the year will be volatile after the global markets had their greatest drop ever since the 2008 economic crisis. It is still anticipated that the US S&P 500 will close in 2023 at a little higher level than it opened the year.        Read More →

Some people think it's too "Chinese Chauvinist" to greet others " Happy Chinese New Year" because other places like Korea and Vietnam also celebrate this "Lunar New Year". Thus we should use " Happy Lunar New Year". This assertion is fundamentally wrong. The Chinese calendar is NOT a purely Lunar Calendar but an "Agricultural Calendar" (we call 農曆 in Chinese) which is a hybrid combination of both Lunar and Solar calendar. The Ancient Chinese has realized seasonal change depends on the calculation of the Sun's relative position or the Solar calculation and there will always be a difference in the number of days between lunar and solar year. Due to the need of setting agricultural dates, the Chinese incorporated the Solar calculation into their lunar based calculations. For every 2 or 3 years, they will add a month to the lunar based calendar to make up for the difference in the number of days as compared to solar year. Furthermore, they incorporated the 24 Solar terms into their Agricultural Calendar. Thus it is technically wrong to regard the Chinese New Year as Lunar New Year because it is a hybrid combination of both Lunar and Solar calculations. Vietnam and Korea were heavily influenced by Chinese culture and has adopted their Agricultural Calendar.   Goh Meng Seng      Read More →

1. I wish to suggest an alternative way to operate the electricity market in Singapore. 2. This is my understanding of how the electricity market operates at present: a) There are several power producers. They generate electricity and offer them to the market at their prices. The authority (EMA) accepts the offers based on the demand by end users (i.e. households and commercial users). b) During high demand, the electricity producers may charge high price to extract a high profit. This can cause the price to be quite volatile. c) To reduce the volatility, the authority has offered "vesting contracts" to certain producers to generate the electricity at agreed prices. They are not subject to the fluctuation d) The authority allows electricity distributors to take the electricity from the market and offer them to the end consumers at various pricing plans, which can be fixed or based on the benchmark prices (which can fluctuate from time to time). 3. Here are the changes that I propose: a) The authority should provide long term contacts at fixed prices for producers to provide electricity for up to 80% of the projected demand. It allows the producers to contract for long term supply of gas or oil at agreed prices and offer them to the market. The supply to meet the remaining 20% of demand can be based on the market price, which can fluctuate according to the world price for gas and oil. Although the "vesting contracts" offered by the authority to some producers already falls under this approach, I suspect that the supply covered by these vesting contracts is probably much smaller than 80%. b) The authority should have battery storage to handle the fluctuation between the low and high demand during the day. This allows the market to store the electricity during the low periods and draw the electricity from the battery during the peak period of the day. c) There is no need to have several distributors to reach the end users. The authority can offer the electricity to the end users based on the average price paid for the electricity plus a small markup to cover the cost of distribution. As a large portion of the electricity produced is based on prices for long term contracts, the price is likely to be quite stable. There is no need to offer fixed price contracts for end users. 4. The changes will have the following benefits: a) The electricity price will be quite stable over time, as a large proportion of the supply is based on fixed price contracts. b) The authority can benefit from the competition between the producers to find more efficient ways to produce the electricity. However, they do not need to speculate on the volatile prices as they can match their purchase of oil and gas to meet their commitments to supply the electricity to the market. c) There is no need to create wasteful spending on marketing and customer servicing by many distributors. 5. The above approach is based on my understanding of the electricity market in Singapore and the practice adopted by other countries.   Tan Kin Lian      Read More →