Commodities continue to run. Interest rates are hitting new highs, and stocks are holding their gains from last week. Nothing has changed on the geopolitical front and all eyes are once again focused on the Fed and its’ next meeting in May 2022. What else is new? Stocks have been surprisingly resilient this week in the face of dire predictions that a recession is just around the corner. Many investors, and those who preach to them, are convinced that the Federal Reserve Bank is intent on hiking interest rates to a level where the economy will collapse as inflation continues…
Insights & Advice
Tag: commodities
U.S. shale producers can’t rescue us
Oil prices are up 70% since last year. Prices at the pump are well over $4.25/gallon. Everyone from President Biden on down is scrambling to find a way to reduce energy prices. Why, therefore, aren’t we looking at our own domestic oil producers? Unlike Saudi Arabia or the United Arab Emirates, which can increase the global oil supply with a flick of a switch, the shale energy community would need to increase spending in areas such as exploration, drilling and production. That is something they are not willing to do for a variety of reasons. For years, shale drillers have…
Gold is back but for how long?
Commodity prices are flying. Nickel doubled in price in two days. Wheat is up 50% and has experienced trading halts for five straight days. Gold has breached $2,000 an ounce and we all know what has happened to the price of oil. How long can it last? As longtime readers know, I formally recommended commodities as out-performers back in January of 2021. At that time, I was bullish on oil, copper, and soft commodities like food and lumber. I also liked crypto currencies. As for precious metals like gold and silver, not so much. Back then, most market participants had…
Do not chase stocks
Commodities are soaring. Interest rates are falling. Stocks can’t get out of their own way. All of this is occurring while the first war in decades continues to rage in Ukraine. Seems to me that any gains in the market averages next week will remain dead cat bounces in this bear market. Yes, I hate to be a squeaky wheel, but I’ve got to call it like I see it. We have a much greater chance of sliding lower from here than higher. Here’s why. Investors received a new lease on life this week when Fed Chairman Jerome Powell, testifying…
A Russian oil embargo?
Crude oil hit $110 a barrel this week. The price of natural gas rose in sympathy. In addition to the already-announced economic sanctions, demands to add an embargo on Russian energy exports are increasing. Be careful what you wish for. Most of the world governments have already instituted several hard-hitting sanctions against Russia. Financially, the harshest step so far has been barring Russia’s central bank and several large Russian banks from using the Society for Worldwide Interbank Financial Telecommunications (SWIFT) system. SWIFT is a messaging network used by almost all financial institutions to quickly and accurately receive information such as…
Investors should take a deep breath
The war drums are beating. Oil and gas prices are soaring. Inflation is at a decades-long high. Bearish sentiment is exploding. And the stock market is giving investors angina. What to do? Take a deep breath and remember that whatever the circumstances, this too shall pass. I know that is easy to say, but a longer-term perspective might prevent you from doing something foolish like selling into this downturn. Let’s address the present fear that today’s geopolitical tension will somehow escalate into possibly WWIII. Sure, anything can happen, but is war the most probable outcome? The present reaction by the…
Stocks bouncing in a box
Over the next three weeks, equities will likely trade in a wide range. The caveat to that forecast: if the Fed suddenly changes policy, or if a shooting war erupts in Ukraine. Those are two big ifs. Unfortunately, I can neither forecast when or what the next Fed head will say, nor predict Vladimir Putin’s next move. The next Federal Open Market Committee (FOMC) meeting occurs in mid-March. The latest CPI and PPI inflation data show inflation accelerating at a rate much higher than economists and the Fed expected. It is all but certain, according to the bond market vigilantes,…
Crypto crashes (again)
While investors focus on the losses that are piling up in the stock market, the cryptocurrency space has suffered far more. The bears say it has further to go, but that may depend on what happens to stocks. Bitcoin, the grand daddy of crypto currencies, is trading around $38,400 per coin as of January 25, 2022. It has suffered a 50% decline since its record high in November 2021. Ethereum, the second most popular coin, has dropped from almost $5,000 to $2,400. In total, the combined crypto market has lost $1.4 trillion over the past week. At one time, crypto…
Dropping out of emerging markets
When I make trades in my investment portfolios, I like to keep you informed. Not that you should do what I do. I mean, what I do in my portfolio or portfolios of clients may not represent your objectives. But you can use it as a guideline for what you are trying to accomplish. On Friday, October 8, 2021, I sold our position in the Innovator exchange-traded fund (ETF) MSCI Emerging Markets Power Buffer (symbol: EJAN). EJAN is a hedged investment that tracks the performance of Emerging Market stocks (EM). We also sold various non-hedged EM positions, which, aggregately, were…
Stocks grind higher
The major indices have been working higher over the last few weeks, while rotation among sectors continues unabated. The higher markets climb, the more investors begin to question how long the bull market can sustain its upward trajectory. “Thin” would be the way I would describe the movement upward in the S&P 500 Index. The same term could be used for the slight downward drift in the NASDAQ and technology stocks in general this week. It is August, after all, and volumes dry up as many on Wall Street take vacations. Technically, we are trading in the middle of a…
Markets grind ever higher
The S&P 500 Index is up 14% so far this year. Most other averages have similar double-digit gains. July is normally a fairly positive month (in general) for equities. Does that mean we can expect equities to continue their bull run through the summer? It certainly looks that way. Any pullbacks in stocks will likely be met by dip buyers. That could limit declines to a manageable level. A sustained rise in interest rates will likely wait until investors know—with certainty—the Fed’s next move. The thinking is that there will be an announcement on tapering bond purchases, which may not…
Fed feels inflation heat
This week’s Federal Open Market Committee meeting was a game changer. Fears that inflation may be rising faster than expected forced the Fed to adjust their timing on when to begin withdrawing monetary stimulus. The markets didn’t like that. It was a downside surprise that sent the U.S. dollar soaring, commodities plunging, and some equities sinking. What investors feared most at first was another “Temper Tantrum.” In 2013, and again in 2018, the Fed’s decision to withdraw monetary easing sent interest rates soaring and stocks plunging. However, it looks like this time around, the markets are taking the change in…
A churn at the top
It was a sleepy week in the markets for the major averages. Stocks flirted with the old highs, only to fall back by the end of the week. Energy and a few meme stocks occupied most of the attention. Crude oil spiked higher, nearing almost $70 a barrel (bbl), pulling energy stocks along with it. Energy traders were heartened by the latest OPEC meeting. The cartel expects demand to outstrip supply by more than a million barrels a day for the foreseeable future. As a result, the members intend to gradually increase production as the global economy gathers steam. Most…