Comment of the Day
Video commentary for March 29th 2022
A link to today's video commentary is posted in the Subscriber's Area.
Some of the topics discussed include: inverted yield curve and recession probability within 18 months. oil and gold steady following initial declines, stocks rebound, led by the speculative sector, Europe continues to rebound with a stronger Euro, Dollar and bond yields ease.
Biden Says Wait and See on a Russian Pullback
This article from Bloomberg may be of interest to subscribers. Here is a section:
Ukraine and Russia failed to clinch a cease-fire in talks that ended in Istanbul on Tuesday, with Moscow saying it will reduce military operations in areas where its forces are being pushed back and Kyiv calling for security guarantees from European Union and NATO members.
U.S. President Joe Biden said he’ll see how Russia acts on a pullback and “see what they have to offer” in further talks with Ukraine.
A Ukrainian negotiator said his country is seeking guarantees for territory that doesn’t include Russian-controlled areas and that Kyiv is willing to discuss the status of occupied Crimea. Russia indicated a meeting was possible between President Vladimir Putin and his Ukrainian counterpart Volodymyr Zelenskiy.
Russia’s delegation left Istanbul, and no date or time was set for any potential future talks, according to a person close to the Moscow delegation. European nations expelled more Russian diplomats from their capitals, even as stocks rose and oil fell on optimism for progress in the negotiations.
My view - This brief history of Finland’s fight against the Soviet Union in 1939 and again in 1944 bears some striking similarities to what is going on in Ukraine today. The most likely outcome remains that Russia will hold the territory it has already won and will negotiate hard for a land bridge to Crimea. In return Ukraine will receive new security guarantees, adopt a neutral foreign policy and will eventually be allowed to join the EU.
(Don't Fear) The Yield Curve, Reprise
Thanks to a subscriber for this article from the Federal Reserve which may be of interest. Here is a section:
It is not valid to interpret inverted term spreads as independent measures of impending recession. They largely reflect the expectations of market participants. Among various terms spreads to consider, the 2-10 spread offers a particularly muddled view. Especially in the present circumstances when the 2-10 spread is very much out of step with the near-term forward spread, which offers a much more precise view of market expectations over the next year and a half, it is difficult to concoct a reason to be concerned about the flattening of the 2-10 spread. In contrast, if and when the near-term spread does contract, we know that investors will then be expecting a cessation in monetary policy tightening. While such a shift in expectations could well be precipitated by future concerns about a recession, that need not be the case. A more benign cause would be a marked easing in inflation and inflation expectations that allow for a cessation of policy firming.
My view - The benign outcome is more often referred to as a soft landing. The 10-2 year spread closed at 1 basis point and was inverted for a brief period intraday. The 10-year-3-month is at 189 basis points which is an historically wide diversion.
Email of the day on miners
Having subscribed for 20 plus years, firstly many thanks for your excellent advice. A quick question, appreciating that you are not a tip sheet. I have followed your comments of late with observations on particularly copper and to a lesser extent nickel.
I have looked in the Chart library and there are records of trading in copper, but it seems few actual copper mines. I have in fact invested in two companies that have done very well.
I am just wondering if there are other operating mines that perhaps are not in the chart library, or perhaps some I have missed that might be alternatives to those I have invested in. Incidentally the two I have purchased, approx six months back are behaving very well!!
My view - Thank you for your long-term patronage and I am delighted to hear your investments are doing well. A while back, I partially recreated my favourites in the public portion of the Chart Library under the Eoin’s Favourites section. Here is a link.
You’ll find sections devoted to copper miners, small cap copper miners, nickel miners, lithium producers, battery materials companies and a host of additional subsectors.
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Eoin's personal portfolio: equity index long closed at a small loss March 1st
One of the questions subscribers as most often is how to find details of my open trades. To make it easier I will simply repost the latest summary daily until there is a change.