Control Panel: spiking oil price

Investment Analysis Clubs Macro Economic Trends and Risks
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All METARs have lived through a variety of crises, but it’s been a while since there was a credible threat of World War 3.

Russian President Vladimir Putin has announced his intention of taking over Ukraine the old-fashioned way, by brute force. The frantic, ongoing diplomacy reminds me of Neville Chamberlain’s 1938 “Peace for our time,” except that Putin has turned up his nose at even a fake peace treaty.

https://www.history.com/news/chamberlain-declares-peace-for-…

Putin has clearly expressed his desire to reconstruct the old Russian empire. Including all lands in the Russian orbit would even include part of Germany. Once Putin conquers Ukraine, the next stop is probably the Baltic states, which are part of NATO. A few thousand troops will not be able to withstand the tsunami. The Russian military is 900,000 strong. Putin has protected his eastern flank with his recent friendship pact with China’s President Xi so he can focus on his west. Russia has a long history of disregarding casualties in their own armies as well as their enemies. Putin is merciless and relentless. It’s going to be a bloodbath.

The sanctions against Russia have caused the price of carbon-based energy products to spike.

https://oilprice.com/

Many METARs lived through the oil price shocks and recession of 1973-4. Rising oil prices fueled inflation and pressured corporate profits. For those who may have forgotten, look what happened to the stock market during and after those years. Here is historical data that is inflation-adjusted using the headline CPI. Each data point represents the month-end closing value. The inflation-adjusted SPX peaked in December , 1972 and did not reach that level again until October, 1987. It didn’t resume reliable growth until February, 1991. And that was without the threat of a hot war in Europe.

https://www.macrotrends.net/2324/sp-500-historical-chart-dat…

The Federal Reserve is planning a cycle of rising interest rates, starting with a 0.25% raise in about a week. With inflation pressure increased by oil prices, the Fed will put its obligation to keep inflation in check ahead of keeping the markets supported.

The stock market has been dropping since the beginning of 2022. The Fear & Greed Index is in Extreme Fear. Volatility is spiking. The trade is risk-off, as investors are buying Treasuries, the USD and gold. Junk bonds are falling along with stocks, typical of an expected recession. The percent of S&P100 stocks above their 200-day moving average has dropped to 40. The Treasury yield curve is dropping despite the expectation of the Fed’s monetary tightening.

The METAR for the rest of the week is stormy. The entire situation is fluid and could become much more dangerous. On the positive side, financial stress is low so there is no liquidity crisis to worry about at this time.

Wendy

https://stockcharts.com/freecharts/candleglance.html?VTI,$SP…

https://stockcharts.com/freecharts/candleglance.html?$IRX,$U…

https://stockcharts.com/freecharts/candleglance.html?$SPX,$U…

https://money.cnn.com/data/fear-and-greed/

https://stockcharts.com/freecharts/yieldcurve.php

https://fred.stlouisfed.org/series/STLFSI3

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Putin has clearly expressed his desire to reconstruct the old Russian empire. Including all lands in the Russian orbit would even include part of Germany. Once Putin conquers Ukraine, the next stop is probably the Baltic states, which are part of NATO. A few thousand troops will not be able to withstand the tsunami. The Russian military is 900,000 strong. Putin has protected his eastern flank with his recent friendship pact with China’s President Xi so he can focus on his west. Russia has a long history of disregarding casualties in their own armies as well as their enemies. Putin is merciless and relentless. It’s going to be a bloodbath.

This is why the successful solution MUST come from inside the Kremlin. Either by coup, or persuasion, or whatever method available, force of arms are NOT a rationale answer.

The master psycho Putin cannot be allowed down his delusional road of dreams. Outsiders will have little success in turning him around. It would be major loss of face.

If his friends in the Big K can’t take care of him, the blood and treasure path is dead ended. Surely there MUST be some in there who have a grasp on the real world and can take care of business.

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Many METARs lived through the oil price shocks and recession of 1973-4

Forgot the “lived thru” part.

October 1962 Cuban missile crisis. Working my way thru school. Grocery store.

We rolled everything out of the back room. Filled the shelves, stacked cases of food down the center of all aisles. Bleach sold out the first day. Lots of other stuff. Panic buying lasted the better part of a week. Warehouses emptied out. Dispatched truckloads of unordered product to backfill the stores.

Never saw the likes of such a scenario ever. Before or since.

The young President Kennedy (in office only 21 months at that point) was a knowledgeable negotiator. Got the coarse Nikita K. to back down. For being such an oaf, Nikita still had brains enough to know when to withdraw.

Nikita got to keep his Berlin Wall that he built a year earlier. Should have been told to take it down then.

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Nikita got to keep his Berlin Wall that he built a year earlier. Should have been told to take it down then.

Would have never happened if the CIA hadn’t been sent in to re-impose the brutal US supported dictator that the Cubans had kicked out.

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The METAR for the rest of the week is stormy

Sign me up for Camp Capitulation. Sold out of my 3 riskiest stocks. Up to 13% cash. I have another 15% in volatile ETFs that I’m close to pulling a trigger on.

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Well,

regarding the obvious “civic duties” of whoever might be in the Kremlin as anything like a nation’s ruling class or caste or guild – whether crude piratical plutocrats, aristocrats of inherited wealth and heriditary military and political power, or some more at least demoratic appearing equivalent;

says BrerBear regarding the Kremlin:
"Surely there MUST be some in there who have a grasp on the real world and can take care of business."

Well, i thought the exact same thing when it looked like Boris Johnson was about to lock UKofGB into disaster. I said and wrote “Ain’t gonna be no Brexit” because it was utterly shriekingly obviously an insane goal in the current real world. I was dead wrong. In the current world utterly insane irresponsible narcissists seem to be in power with alarmingly increasing frequency.

david fb

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How many missiles did BJ fire at Brussels?

What were the results of Putin’s Ukraine invasion referendum?

The Captain

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I was dead wrong. In the current world utterly insane irresponsible narcissists seem to be in power with alarmingly increasing frequency.

david fb

Okay, then.

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Well, i thought the exact same thing when it looked like Boris Johnson was about to lock UKofGB into disaster. I said and wrote “Ain’t gonna be no Brexit” because it was utterly shriekingly obviously an insane goal in the current real world. I was dead wrong. In the current world utterly insane irresponsible narcissists seem to be in power with alarmingly increasing frequency.

david fb

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Good point and I was in agreement with you all the way. However, I do not think Brexit is really a done deal. The full effects have not been realized on the people of UK. And if Boris Johnson is defeated, the whole Brexit issue rises to the top of the agenda in UK (assuming Ukraine is saved and Putin’s army sent running back to Russia).

Jaak

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Once Putin conquers Ukraine, the next stop is probably the Baltic states, which are part of NATO. A few thousand troops will not be able to withstand the tsunami. The Russian military is 900,000 strong. Putin has protected his eastern flank with his recent friendship pact with China’s President Xi so he can focus on his west. Russia has a long history of disregarding casualties in their own armies as well as their enemies. Putin is merciless and relentless. It’s going to be a bloodbath.

NATO won’t allow an invasion of the baltics (which are member states) - the Russian army is having trouble capturing Ukraine and will be bogged down trying to hold that territory. If Russia moves beyond Ukraine it would mean they have decided to escalate with the nuclear option.

tecmo
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NATO won’t allow an invasion of the baltics (which are member states) - the Russian army is having trouble capturing Ukraine and will be bogged down trying to hold that territory. If Russia moves beyond Ukraine it would mean they have decided to escalate with the nuclear option.

Exactly.

The other options for moving beyond Ukraine–assuming they can actually take over the country–would be Moldova and Georgia, but I think resistance in those countries, along with the Baltics will be beefed up substantially in the coming months and years.

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