Thursday 24, March 2022

Norway, commodities

Norway supplies 7% of Europe’s oil and 16% of it’s gas. Read more at the Visual Capitalist. It seems to me that NOK.SKR has to be a buy, but what do I know? Brazil has to benefit from increasing commodity prices. I’ve been bullish about it for a long time, but political uncertainty is a drag. For what it’s worth, Brazilian stocks look good. This is something that Vincent Deluard has been saying for a couple of years. The thesis is that in a time for soaring inflation, commodity producing countries will do well.

I think the possibility of a global recession/stock market crash is the the problem. EM has always struggled to have the same returns as developed economies (probably because of bad governance), and especially high beta relative to the SPX.

Russia is well on the way to liquidating its holdings of US Treasuries. It’s easy to see why. The $64e12 question is what China will do. China knows that if it steps out of line on Taiwan, the govt. and the kleptocrats in charge of it will be targetted. It’s easy to see that running down their holdings of US Treasuries is a no-brainer. Or it would seem that way to me, but … China!

Wrap

The energy complex was down. Equities were up. Bond yields are still going up: US 10Y now at 2.37%. Stocks generally were up, although Chinese indexes were an exception. The promises by the Chinese govt. to support stock prices only goes so far.

Thought of the day

“Nothing sedates rationality like large doses of effortless money.” -Warren Buffett

— Chris Franco (@ChrisFranco) March 22, 2022