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Markets, anything can still happen and there are 5 reasons

The next week will be full of ideas for the markets, with 5 themes observed closely and capable of shaking the global financial markets.
From economic data on the Eurozone to the movements of the yen, up to the analysis of US consumer spending in the long-awaited Black Friday, the election outcome in Argentina and communications on the economy in the United Kingdom, investors are interested in understanding how upcoming events will have repercussions on the stock markets.
In a very uncertain and complex context due to two ongoing wars, geopolitical tensions, recession warning in world powers, will these 5 themes give a further boost to volatility? 1.
Black Friday The Christmas shopping season kicks off with Black Friday on November 24, at a time when investors are wondering whether the US economy, which relies heavily on the strength of consumption, is truly resilient.
This year's Black Friday comes as Americans grapple with rising interest rates and inflation that, while falling, remains above the Federal Reserve's 2% target.
October data already showed that US retail sales fell and therefore pointed to a slowdown in demand, although the decline was smaller than expected.
The trend in consumption on Golden Friday for purchases will be studied in detail, to detect signs of depressed demand or a still firm propensity to spend.
Weakness of the yen Yen increasingly weak? The response of investors remains in the balance and will depend on the choices of the Bank of Japan, which should be close to the end of its ultra-expansionary policy.
On the other, by the Fed, now seen at the end of its aggressive monetary policy path.
After falling from the 152 per dollar limit earlier in the week, receiving a lifeline from cooling US inflation data, the yen returned to 151 the following day.
Investors were not surprised, considering that the support from weak US payrolls data on November 3 lasted only a weekend.
While rate differentials between Japan and the US do not bode well for the yen, the change in policy directions should at least give the Japanese currency's slide a break according to analysts.
Meanwhile, the pressure on the Kishida government continues, as a weak yen is politically unpopular.
Soft or hard landing? Understanding whether the great economic powers will grow or not is not an easy task for investors.
The European Commission expects the eurozone to avoid technical recession, but growth in 2024 will be modest and revised downwards compared to summer forecasts.
Future flash November PMIs, due out next week globally, should help investors gauge recession risks and how quickly rate cuts will begin.
The eurozone PMI is already below the number 50, suggesting that economic activity is contracting.
The same is true in Great Britain, while the US manufacturing PMI for October fell sharply.
PIMCO, the bond giant, estimates the probability of a recession in the United States within a year at 50%.
Market prices for rate cuts suggest traders believe economic growth will slow fast enough for the Fed and European Central Bank to move to easing monetary policy.
And, of course, hopes of a soft landing could fade quickly if inflation falls faster and unemployment rises rapidly.
The future of the UK Finance Minister Jeremy Hunt will make a change in his autumn statement on 22 November, focusing on reviving growth ahead of elections due in 2024.
Analysts predict that the government, hampered by a stagnant economy and from a high debt, he will not make large investment commitments.
However, Hunt appears set to cut taxes for voters and businesses.
It could also scale back short-term lending expectations, temporarily boosting gilts.
Natwest says the UK could issue 10% more debt in 2024-2025 than this fiscal year, a turnaround that would amplify long-term concerns about government bond market oversupply.
Who will be the president in Argentina? The Argentines will elect a new president in a hotly contested and uncertain electoral contest, which pits the centre-left Peronist economic leader Sergio Massa against the libertarian outsider Javier Milei.
The two politicians have completely different visions for South America's second largest economy.
Milei proposes extreme solutions for the country in difficulty which has exhausted its currency reserves, has inflation exceeding 140% and is facing recession.
The pragmatic Massa promises a unity government and more gradual change to resolve the crisis that has worsened under his watch.
Investors are bracing for tough times ahead, with Argentina's crucial $44 billion IMF program on the ropes.
And emerging markets face more election-induced volatility, with Egypt, Taiwan, South Africa and India facing key votes in the coming months.

Author: Hermes A.I.

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