Eye On The Market

China and the Russian invasion of Ukraine

The bulk of this note is on China, Russia’s invasion of Ukraine and the surge in natural gas, oil, coal, electricity, wheat, copper, palladium and other prices which will probably drag Europe into recession, and impose a heavy growth drag on the rest of the world as well. But before getting into it, the chart below should hang in the offices of policymakers everywhere. Energy transitions are inherently slow moving, particularly when citizens of countries adopting them erect NIMBY barriers along the way (a topic we cover in this year’s forthcoming energy paper). As we have discussed often, capital spending by the world’s largest energy companies has fallen 75% from peak levels while global demand for oil, gas and coal are all at or above pre-COVID levels. Countries that reduced their supply of thermal energy at a much faster pace than they reduced their demand are paying a very stiff price for that right now. We expect some about-face movements on this in the days ahead.

Webcast replay: Russia, Ukraine and implications for investors

Listen to Michael Cembalest, Chairman of Market and Investment Strategy, Monica Dicenso, Head of Global Investment Opportunities Group, and Kathryn Pasqualone, Client Advisor, North America Institutional, discuss the current situation in Russia and Ukraine, and the implications for investors.

Risk unwind, supply chains and the Ukraine

Topics: Tracking the market risk unwind; Supply chain update; Ukraine; Invasion of the COVID Body Snatchers

Middle Ages

On equity markets, the Lombards, SPAC investors, Bone-setters, George Washington, COVID bots and Omicron.

The Thing

Some things just cannot be talked about. So in this year’s Thanksgiving piece, I wrote about something else.

Help Wanted

“Help Wanted”. We expect semiconductor, vehicle and other goods bottlenecks to resolve themselves in the months ahead, and interpret declining business surveys as the result of a temporary supply shock and not a sign of inadequate demand. As a result, growth should rebound in 2022, and positions that benefit from reflation should benefit (energy, value and cyclicals). However, while goods bottlenecks will dissipate, the US will still face tight labor markets and rising wages that are at odds with current Fed policy

Dude, Where’s My Stuff

The global supply chain mess will require increased global vaccination and acquired immunity, semiconductor capacity expansion and the end of extraordinary housing/labor supports to resolve. We expect all three to occur over the next few months, leading to a global growth bounce in 2022

Spaccine hesitancy

Topics: if people avoided SPACs instead of avoiding COVID vaccines, the US would be both wealthier and closer to herd immunity.  An update on our SPAC analysis from last February, and a look at the strange mathematical paradox that ends up understating some critical COVID vaccine efficacy data

Red Med Redemption

 Politics, vaccination resistance and the Delta variant; US economic recovery update; big tech reliance on acquisitions to fuel growth

Thy Brother’s Keeper

COVID and the Delta variant; the Fed as firefighter and arsonist; US-China economic divorce picks up steam; and the pig-snake inflation timetable (how long until we know if there’s a permanent wage/price rise).