Dipping Commodities and the fear of nearing Recession

Yesterday, Marko Kolanovic, a strategist at JP Morgan, widely regarded as a "bull" on Wall Street for being an investor, said, "It's time to trim Stocks, and buy commodities". With the world's national banks and the Federal Reserve increasing interest rates, it is hard to contradict his words.

Past History - With the gas and oil prices rising in the early months of 2022, the demand for oil dropped, which in turn lowered the current price of oil and gas. This leads to the prices of almost every commodity such as gold, copper, etc to drop significantly. Also, the US President, Joe Biden visited UAE and talked about pumping more and more oil. As the cheap oil is produced, logistics for other commodities eased out. 

Today even Iran-USA nuclear deals went ahead, which could potentially reduce oil prices further by pushing Iran's Crude exports. 

Effects - With the winter approaching, and Russia still not supplying oil to Europe amidst its heatwaves and harsh approaching winter, prices of oil are likely to increase in the longer run, thus increasing the prices of every commodity. On Wall Street, high-interest rates are taking large sums of money out of the market, thus creating possibilities of stock market recessions.

Hence even the "staunchest" Bull said to move away from stocks for a while.

What's in it for you - The banks have already increased their rates by a lot in the past quarter, and the economy was in a drop for the last 2 consecutive quarters, which signifies a *potential* recession. Thus the idea to diversify the portfolio is the best risk-free idea currently.

Support Links

Gas price lowering

Marko Kolanovic's Advice

Iran's deal, and the lowering of commodities

In case of suggestions or complaints -

Email - thetabloid24@gmail.com

Twitter


Comments

Post a Comment

Popular posts from this blog

The need for divesifiaction in imports

Image
Topic: International Trade  What is in it for you:  Of the 6,000 plant species humans have eaten over time, the world now mostly eats nine, of which just three —  rice, wheat, and maize —  provide 50% of all calories . The cheaper the food gets, and the lower the imports from the government, the dependence on the above-mentioned crops rises and given with it the dependence on a few select countries . In addition to that, people now have diets with more fats and carbohydrates, and fewer nutrients.  Effects:  The UN estimates soaring costs will push 71 million people globally below the poverty line .  Global crop yields could fall about 30% because of climate change, while food demand is expected to jump 50% in the coming decades, according to United Nations estimates. New opportunities and Future insights:  It will be a long road for any of these initiatives to make a notable difference against the trend for homogenization the industrialized supply chain promotes.  Both the current
Read more

Saudi-US Tensions Simmer

Image
A dispute over oil risks causing irreparable harm to US relations with Saudi Arabia, a crucial partner for Washington in the Middle East. Causes: Nearly two weeks on from a decision by OPEC+ to cut oil production, tensions are escalating. White House National Security Adviser Jake Sullivan fired the most recent salvo, saying the US would consider changes to the security and military support it provides Riyadh. “The president isn’t going to act precipitously,” Sullivan said on Sunday to CNN. Biden will “take his time to consult with members of both parties put over oil risks causing irreparable harm to US relations with Saudi Arabia, a crucial partner for Washington in the Middle East. Effects: In response, officials across the Middle East have denied the supply decrease was politically motivated or a reflection of support for Russia following its invasion of Ukraine. Saudi Defense Minister Khalid Bin Salman said the decision was “due to purely economic reasons,” while ministers from
Read more

The Winter is Coming

The Oil and gas from Russia are exceptionally essential for serving the winter in Europe. After all, even Hitler succumbed to it.  Causes -  The diesel which is used for generating electricity is now available in historically low amounts in North-Western Europe, so much so that by this November, an energy crisis, including blackouts and lack of fuel and electricity for large-scale industries is extremely essential. Adding to his discussion is the large-scale drying up of the Rhine (river in Germany), which supplies and transports all the diesel in Europe. The forecast of this news is so gloomy, that this river which controls trades over 80 billion USD will stop. Effects - Adding to this the already food shortages in Europe due to the war, the survival of the poorest will be challenging in the coming months. The signs of relief from the Western Superpower are low because they are themselves dealing with extreme inflation (CPI peaked at 0.2% in June).  What is in it for you - Well in mac
Read more