Market and Economy
Diligence is the mother of good luck ~ Benjamin Franklin
Stay Cautious. Sanctions could spark a recession in Europe that may cause Spillover.
• Sanctions do come with severe economic ramifications.
• Europe imports much of its energy, food, and raw materials from Ukraine and Russia. It is likely this will cause a recession in Europe.
• Will it spill into the US? The entire world?
• Stocks could fall another 10-15% from current position if we enter a recession.
Tapering QE, Fed Balance Sheet, Interest Rates, Oh My!
Tapering QE, Fed Balance Sheet, Interest Rates, Oh My! March 11, 2022 Introduction The Federal Reserve (The Fed) is talking about Tapering Quantitative Easing (QE) and raising the Fed Funds Rate (FFR). The QE tool helped bail out the highly levered and bankrupt US financial system during the 2008 Financial Crisis. The Fed has used…
February 2022 Economic and Market Review
Economic and Market Review February 28, 2022 Russian Geopolitical Risk Geopolitical rifts emulating from the Russian invasion of Ukraine roiled financial and commodity markets globally as uncertainty arose surrounding the extent of the conflict. Ramifications from the conflict could take months or longer to unfold, as imposed sanctions on Russia may ripple through the global…
Negative Boomerangs from Sanctions: Oil & Gas, Food, Recession, Dollar Reserve Status Jeopardized
• Sanctions will prevent Russian export commodities which include natural gas and oil, metals, wheat and corn from making it to the global markets in the same volumes as historically.
• This will result in higher prices and shortages resulting in higher inflation.
• It will most likely push Europe into a recession and could spill over into a recession in the US as well
• Inflation over the near term will stay high across the globe and the US.
Russia mobilizes for assault on Kyiv as its troops storm Ukraine￼
Explosions heard in capital as Zelensky claims ‘saboteurs’ have entered city to assassinate him
How will Russia’s invasion of Ukraine hit the global economy?￼
Soaring energy prices alone could tip the world into a second recession in three years
Ukraine Invasion by Russia caused Stocks to Sell Down. Is It Too Late to Sell or Raise Cash ??
Time to sell and raise cash has passed.
Looking at items to buy.
Russian invasion telegraphed and largely discounted by market.
Possible accelerated erosion of dollar as single reserve currency.
31 Trillion Dollars US Debt https://www.usdebtclock.org/
Higher inflation is probable, pervasive, and permanent.
Buy gold and energy stocks if you do not own them today.
Energy Stocks Benefit from Limited Investment in Oil & Gas production. Low supply = Higher price.
• Recovery in Oil and Gas prices and stocks looks sustainable. Stocks still represent a good investment opportunity in our opinion. Energy stocks benefit from limited investment in oil and gas production and development.
Concerns over global warming and greenhouse gas emissions limit capital flows to the oil and gas industry.
• This lack of capital has reduced the amount of new development and production. US drilling activity down thus lowering supply.
• Demand for oil has recovered to 2019 levels and is poised to grow at 3% for the next several years.
• Increased demand has eaten into OPEC’s excess capacity cushion.
• Lower supplies of oil result in higher price. US supplies unusual lack of response to higher price means prices will stay higher longer.
January 2022 Economic and Market Review
Economic and Market Review Feb 1, 2022 Shifting Market Dynamics Market dynamics are shifting as the Federal Reserve outlines its execution of ending monetary stimulus in order to squash inflationary pressures. Analysts and economists are expecting market volatility to continue as the Federal Reserve prepares to embark on its interest rate increase initiative. Some believe…
Déjà Vu, Bubble Two ?? Nothing New, Popping Too ?? The year 2021 or is it 2000?
• Déjà Vu
• Year 2000 after Party Like it is 1999.
• NASDAQ bubble which went down 78% when it popped. Very Similar to today.
• Billion Dollar companies with little revenues and no profits.
• IPOs (Initial Public Offerings) and SPACs (Special Purpose Acquisition Corporations).
• Cathie Wood and ARK Innovation = ARKK. Jim Cramer and his Red Hots in 2000.
• Today’s NASDAQ looks very similar to 2000.
• Interest Rates headed up. 10 and 30 year treasuries rates are normally close to nominal GDP. 10 and 30 year treasuries rates could go over 5%.
• End of Quantitative Easing? Tapering by the Fed, will they follow through?
• Will the Fed be forced to have another round of Quantitative Easing? Watch the Fed and rates closely.
Keep abreast of opportunities and risks for your portfolio in the global economy and financial markets. We link you to news sources and insightful articles and add our own key analysis, observations and conclusions. We pull the essential market knowledge together here so you can focus on investing and finding the next great company. Or if you prefer, spending this time on your Passions and Interests.