“The baseline is stagflation, what we are experiencing now – inflation high, growth slowing down.”
That may sound alarmist, but it’s what economist Mohammed El-Erian, the president of Queens’ College at Cambridge University, thinks is already happening.
He blames the Federal Reserve for mishandling the situation – and thinks there is a real danger that the Fed could make things worse.
“Unfortunately, it’s uncomfortably possible that the Fed is going to slam on the brakes and push us into recession.”
I agree that the Fed has been “consistently late” in confronting inflation – but if there is a recession, it can’t just be blamed on Chairman Jerome Powell.
There are deeper factors at work – not least the energy shortage hitting Europe and further shutdowns in China.
But that doesn’t mean stock market is doomed. We’re coming off an 823 point gain for the Dow on Friday.
The market for tech jobs remains red hot. Unionization efforts at retail jobs are a sign that workers feel like they have the power to demand more. While that might cut into corporate profits, it’s still a signal that we aren’t confronting any serious problems over unemployment.
The transition underway in Europe as the Continent attempts to break free from reliance on Russian gas and oil is also temporary. Europe is going to face catastrophic energy prices in the short-term – and that’s going to have huge political consequences.
Yet with the decision having been made, there is going to be more potential for clean energy that even the most optimistic people could have envisioned.
Many of these clean energy stocks that have been savaged recently might start coming back.
When we had a “Great Reset” a couple years ago, we saw companies few had even heard of surge to unbelievable prices.
Fortunes were made…
Now, I get the feeling that another such opportunity may be getting ready for us.
The signs are there but timing will be everything.
Stay connected and…
Keep Moving,
In this week’s Hood Talk, Chris looks at the market through three time frames – the daily, monthly, and weekly charts.
This isn’t just guesswork, but an analysis using tools that hedge funds are willing to pay millions of dollars to use.
WORD ON THE STREET
Z Army Advances, G7 Bans Russian Gold, Exxon Warns Of Price Hikes
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Russian Army Captures Major City – Both Russia and Ukraine acknowledge that all of Sievierodonetsk has fallen. Russia and its allies from the Luhansk People’s Republic now look to take the next major prize, Lysychansk. Ukraine dismissed its retreat as merely a “tactical withdrawal” to the next line of defense. Western intelligence has argued that Russia is running low on supplies, but the Russian army is still advancing. Ukrainian special forces have reportedly launched cross-border sabotage operations to undermine critical Russian infrastructure.
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G-7 Bans Russian Gold Imports – I didn’t think there was anything left to ban, but here we are. The G7, an international grouping of the world’s largest Western economies and Japan, announced it would ban imports of Russian gold. President Joe Biden argued this cuts off a “major export that rakes in tens of billions of dollars for Russia.”
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Up In Smoke – Vapers of the world, unite. The FDA ordered Juul, Inc. to stop selling all vape devices and cartridges, essentially shutting down the business. “Today’s action is further progress on the FDA’s committment to ensuring that all e-cigarette and electronic nicotine delivery system products currently marketed to consumers meet our public health standards,” said FDA Commissioner Robert Califf. Juul plans to appeal. Well, I would hope so.
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Up In Smoke – Vapers of the world, unite. The FDA ordered Juul, Inc. to stop selling all vape devices and cartridges, essentially shutting down the business. “Today’s action is further progress on the FDA’s committment to ensuring that all e-cigarette and electronic nicotine delivery system products currently marketed to consumers meet our public health standards,” said FDA Commissioner Robert Califf. Juul plans to appeal. Well, I would hope so.
HOT SPOTS: What’s Going on in Geopolitics
- UK: Price Of Russian Victory “Too High” – Prime Minister Boris Johnson, probably the leading hawk within the G7, defended sanctions on Russia even if they meant economic suffering for the West. “The price of backing down, the price of allowing Putin to succeed, to hack off huge parts of Ukraine, to continue with his program of conquest, that price will be far, far higher,” he said. “Everybody here understands that.”
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Chinese Economic Target “Difficult” To Achieve – Wang Yiming, an advisor to the People’s Bank of China, said “difficulties remain for the 5.5% target” the government has set. It’s a startling admission, especially as Chinese market analyst Hong Hao was banned from social media after expressing negative opinions about the Chinese economy. The ruling Communist Party derives a great deal of legitimacy from its ability to meet economic targets. So what happens if the government fails to deliver.
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Kyiv Slammed By Massive Airstrikes – More than 50 missiles hit Ukraine on Saturday in what was surely a signal of Russian resolve to the G7. Especially shocking were strikes on the capital of Kyiv, in which life had been returning to normal as the Russians shifted forces to the ongoing battle in Donbas.
CUTTING EDGE: What‘s Happening In Tech
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Seeing Through Walls – Tensions are high in the Middle East as Israel and Iran are close to waging a proxy war and another election for Tel Aviv looms. However, the IDF could have a revolutionary new weapon. The Camero-Tech Xaver 1000, which has a hilarious old-timey name, allows the Israeli military to detect objects and people behind walls. The company says the item is an “essential system” for militaries and law enforcement.
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Amazon’s Solution To Rising Labor Costs? – In this tight labor market, Amazon (AMZN) workers are seeing real progress in their attempts to unionize. One wonders if this is Amazon’s response. “Proteus,” an autonomous robot, will reduce the need for employees to lift heavy objects and prevent injuries. Of course, if automation goes far enough, it might replace some of those employees as well…
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Apple Bows To New Union – Unionization may be the new normal at Apple. The company said it will not challenge the results of a vote at a Towson, Maryland location. While this is the first Apple store in the United States to organize, it may not be the last. There are at least two stores in New York where employees are toying with unionization.
FOR YOUR CONSIDERATION
“Believe me, if you’re having trouble turning a profit or have had a string of losses that have you feeling like giving up, you aren’t alone. I’ve been trading for over two decades now, and I don’t think I’ve ever seen anything quite so turbulent.”
We get it. Trading can be addicting. But sometimes you need to be the calm center in the middle of the storm – and just ride it out.
“Your Options Coach” Chris Hood reveals why you want to stay liquid for now… and let the cycle run its course before making a major move.
The information in this email is intended for informational purposes only and does not guarantee specific results as there is a high degree of risk involved with trading. Also, our traders are real traders and may have financial interests in the companies discussed. Please see our Terms and Conditions for more information