🔴Macroeconomic effects of external shocks in oil prices and the critical role of central banks in this process:

1. Basic Timeline and Critical Factors
• The effects of external shocks typically last longer than a week; sudden spikes in oil prices generally peak within three months.
• Two fundamental elements determine the course of the process: The duration of the shock and the Fed's (Federal Reserve) response function.
2. Three Conditions Needed for a Bear Market:
• Size of Price Increase: A sustained increase of at least 50-100% in oil prices, lasting several months.
• Hawkish Policy Response: Central banks implementing steep interest rate hikes to combat inflation (as seen in the 1979 and 2022 examples).
• Macroeconomic Damage: The shock being strong enough to push an already slowing economy into recession (stagnation).
3. Upcoming Fed Meeting and Expectations
• Although the Fed is currently in a "silent period," next week's meeting carries vital importance.
• Hawkish Stance: An inflation-focused hard stance will have immediate negative market reverberations.
• Dovish/Balanced Stance: If the Fed emphasizes the "recession" risk of stagflation more, market stabilization becomes more likely.
4. Current Uncertainties and Market Conditions
• Lack of Data: Concrete macro data showing the effects of the war and shock have not yet been released.
• Search for Bottom: Without clarity on the duration of the war and central bank responses, it's impossible to say whether markets have reached a "bottom."
• Market Perception: Monday's volatility shows that events in US markets are still being met with relative optimism.
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