Is there a recession ahead? [Download special report]

Over the past years, major central banks have sought to achieve or maintain a low and stable level of inflation. The coronavirus pandemic disrupted global supply chains, which led to a drastic increase in the prices of goods and services practically all over the world. There are many consequences of too high inflation - the problem is that few investors remember about them. Are we facing an inflationary spiral similar to that of the 70s? Willing to answer this question, as well as to indicate the most interesting investment opportunities in the coming months, XTB has prepared special report. 

70's repeat

We associate the 70s with bells, colorful shirts, disco music and American muscle cars. This is because, after a while, we often remember only good and pleasant things, and eliminate the worse from memory. Perhaps that is why the 70s are associated with high inflation only by economists. Even when assessing the current situation superficially, the similarities to the first half of the 70s are significant. War (then in the Middle East) and the related price increase oil characterize both periods. Surprisingly, even the scale of the increase in raw material prices was similar. In the years 72-74 it was 182% measured by the GSCI price index, while currently (from April 2020 to June this year) it is 199%.  However, there are more similarities ...

Is there a recession ahead?

Jerome Powell's speech at the Jackson Hole symposium only confirmed what the Federal Reserve had been communicating for a long time. The US central bank is committed to fighting high inflation and intends to continue a restrictive monetary policy. Will the Fed be able to continue to tighten monetary conditions in the face of a potentially painful economic slowdown? 

Receive a free inflation report and find out:

• Why Fed did not beat inflation in the 70s? 
• What were the reasons for the current increase in inflation? 
• Which markets are worth monitoring in the coming months? 

The energy commodity market and inflation

The entire world is heavily dependent on conventional energy sources such as oil, natural gas and coal, so there is a clear link between energy commodities and inflation. When prices move moderately, producers do not react immediately because they can take advantage of economies of scale. The problem arises when the price increases several times and the producers' costs have to be passed on to consumers. XTB's offer includes CFDs on 26 commodity market instruments, including energy commodities such as oil, natural gas or petrol.

CFDs are complex instruments and involve a high risk of a quick loss of cash due to leverage. 81% of retail investor accounts record monetary losses as a result of trading CFDs with this CFD provider. Think about whether you understand how CFDs work and whether you can afford a high risk of losing money.