The recession is inevitable and now the question is how deep it will be. As Javier Etcheverry explains, from Activtrades, we are at the beginning and we have not yet seen how serious the recession can become, because the macroeconomic data continue to deteriorate, but the balance sheets of the companies do not yet reflect the harshness of the crisis .

The problem that we are having and that we will have with the energy, the supply shock and in an environment of rising inflation indicates that “it was impossible for us to have a mild crisis,” the expert points out. And the data that is becoming known shows that it is already a reality.

“We are talking about a recession after 10 years of political hyperexpansiveto which was added the outbreak of the pandemic”, without the central banks having room to tighten their policy and the economic cycle being carried out normally. “As monetary policy had not been relaxed, now there is no other choice to suffer a major crisis,” explains Etcheverry, who believes that the peak of the crisis will be seen in mid-2023.

One of the factors that is also marking the scenario in the markets is the strength of the dollar. “With such a strong dollar there is a shortage of dollar liquidity, how can it be? This rise in prices compared to other currencies makes the exchange rate very unattractive,” says the expert. On the yen, not only has it broken above the 150 level, but it has broken all the previous part and is no longer holding back until the area of ​​160 units per dollar.

Japan is suffering the most of this global crisis because it is the most indebted economy in the world, it has reached 360% of debt over GDP. “Japan has shown us that QE doesn’t work,” the expert stresses. Until now they were keeping the consequences of high debt at bay, but with the current inflation, they have gotten out of control.

Regarding the euro against the dollar, it is necessary to watch with special attention that it does not lose the zone of 0.9335 EUR/USD, but for now there is no prospect that it can recover parity. According to the expert, “Europe is taking measures that are not entirely effective and later than the US.”

How to protect our investment

According to the expert, two options can be assessed right now: first, take into account the necessary raw materials, agrocommodities. Prices are stagnating, we see it in soybeans, for example. There is a zone of settlement, of stagnation. It is very likely that this zone will not break down.

And secondly, incorporate or pay attention to whatever is in Global ETFs that have to do with the GDP of countries, with the MSCI World, etc. They can be interesting to take short positions, because a crisis is coming and that would be a good strategy.

In any case, the expert’s main recommendation is to be proactive, because in a scenario of high volatility, we have to study the different options and “if we don’t want to spend 10 years losing money, we shouldn’t stay in one product and wait for it to rise.” Explain. “We have to be proactive and smart and move in favor of how the market moves…and the market is very bearish. Therefore, let’s act with derivatives, according to the movement of the market,” says Javier Etcheverry.

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