Education Series: Single-Stock ETPs

Slowing Inflation Boost Bets for Lower Hikes

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Websim is the retail division of Intermonte, the primary intermediary of the Italian stock exchange for institutional investors. Leverage Shares often features in its speculative analysis based on macros/fundamentals. However, the information is published in Italian. To provide better information for our non-Italian investors, we bring to you a quick translation of the analysis they present to Italian retail investors. To ensure rapid delivery, text in the charts will not be translated. The views expressed here are of Websim. Leverage Shares in no way endorses these views. If you are unsure about the suitability of an investment, please seek financial advice. View the original at

Global growth slowed through 2022 on a confluence of unprecedented events, fiscal and monetary tightening, China’s Zero-COVID restrictions and the Russia-Ukraine war, which led to significant declines across asset classes.

The events from last year have a profound impact on the outlook for 2023, affecting not only economic growth and inflation, but also central bank policy, interest rates, credit quality, earnings, valuations, investor sentiment, and other critical performance indicators.

On Tuesday, the World Bank has issued a revised growth forecast for 2023, which bears dire implications for the global economy. The new projection of a mere 1.7% GDP growth is the lowest recorded outside of recessionary periods since 1993 and represents a substantial decline from the June 2022 forecast of 3.0% and the 6% growth of 2021.

Furthermore, the bank forecasts a modest 2.7% growth for 2024, and an average growth rate of under 2% for the entire 2020-2024 period – the most anaemic five-year span since 1960. The bank also cautions that major slowdowns in advanced economies such as the United States and the Eurozone may portend an impending global recession.

The World Bank’s recent assessment of global economic conditions highlights that while some inflationary pressures have begun to ease towards the end of 2022, partially helped by declining prices for energy and commodities, the potential for new supply disruptions remains high.

The bank noted that core inflation may persist at elevated levels and central banks may need to adjust policy rates more drastically than currently anticipated, potentially exacerbating the already pronounced global economic slowdown.

The U.S. Bureau of Labor Statistics reported on Thursday that annual inflation as measured by the Consumer Price Index declined to 6.5% in December from 7.1% in November, and in line with market forecasts. This is the lowest reading since December 2021, encouraging hopes that the Federal Reserve will shift to smaller 25 basis point increments and could soon stop raising interest rates. On a monthly basis, the CPI declined by 0.1% following November’s increase of 0.1%.

The annual Core CPI, which excludes volatile food and energy prices, rose by 5.7% on a yearly basis in December, compared to a 6% rise in November and in line with forecasts. The monthly Core CPI rose by 0.3%, compared to a 0.2% rise in the prior month, also in line with expectations.

Despite core inflation dynamics still looking strong the U.S. dollar index dropped, as investors priced in an earlier and lower end to the Fed’s monetary tightening cycle. Nonetheless, we should bear in mind that markets have tried several times to anticipate peak rates, but so far have failed each time.

Source: Tradingview

The cooling inflation print for December; however, signals that we are getting closer to peak rates, even if we’re not quite there yet. Market expectations of a 25-basis point rate hike by the Federal Reserve in February spiked to 91% after the release of the CPI data, from 77% previously.

Despite remaining well above central bank targets at present, inflation should continue to moderate further as the economy slows, the labour market weakens, and supply chain pressures continue to ease. Now the focus will shift to fourth quarter reporting season as consensus view is that earnings will collapse, bringing the stock market down with them.

Friday kicks off the start of the fourth-quarter earnings season for S&P 500 companies with number of big U.S. banks reporting. The U.S. banks are forecast to report lower fourth-quarter profits, as lenders stockpile funds to prepare for an economic slowdown. Still market bulls are hoping the slowdown in inflation may pave the way for the Fed to be able to bring down consumer prices without severely supressing growth.

Active traders looking for magnified exposure to U.S. indices could consider our 3x Long US 500 and -3x Short US 500 ETPs.

Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.

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Sandeep Rao


Sandeep joined Leverage Shares in September 2020. He leads research on existing and new product lines, asset classes, and strategies, with special emphasis on analysis of recent events and developments.

Sandeep has longstanding experience with financial markets. Starting with a Chicago-based hedge fund as a financial engineer, his career has spanned a variety of domains and organizations over a course of 8 years – from Barclays Capital’s Prime Services Division to (most recently) Nasdaq’s Index Research Team.

Sandeep holds an M.S. in Finance as well as an MBA from Illinois Institute of Technology Chicago.

Violeta Todorova

Senior Research

Violeta joined Leverage Shares in September 2022. She is responsible for conducting technical analysis, macro and equity research, providing valuable insights to help shape investment strategies for clients.

Prior to joining LS, Violeta worked at several high-profile investment firms in Australia, such as Tollhurst and Morgans Financial where she spent the past 12 years of her career.

Violeta is a certified market technician from the Australian Technical Analysts Association and holds a Post Graduate Diploma of Applied Finance and Investment from Kaplan Professional (FINSIA), Australia, where she was a lecturer for a number of years.

Julian Manoilov

Senior Analyst

Julian joined Leverage Shares in 2018 as part of the company’s premier expansion in Eastern Europe. He is responsible for web content and raising brand awareness.

Julian has been academically involved with economics, psychology, sociology, European politics & linguistics. He has experience in business development and marketing through business ventures of his own.

For Julian, Leverage Shares is an innovator in the field of finance & fintech, and he always looks forward with excitement to share the next big news with investors in the UK & Europe.

Oktay Kavrak


Oktay joined Leverage Shares in late 2019. He is responsible for driving business growth by maintaining key relationships and developing sales activity across English-speaking markets.

He joined LS from UniCredit, where he was a corporate relationship manager for multinationals. His previous experience is in corporate finance and fund administration at firms like IBM Bulgaria and DeGiro / FundShare.

Oktay holds a BA in Finance & Accounting and a post-graduate certificate in Entrepreneurship from Babson College. He is also a CFA charterholder.

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