The West Is Still Trying To Diversify Away From Russia
In his Daily Market Notes report to investors, while commenting on Russia, Louis Navellier wrote:
Brink of Inversion
Let’s start with the big one. The two-year, five-year, ten-year, and thirty-year Treasury yields are all above 2%, and the yield curve is very flat.
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Now, our Federal Reserve does not want to invert that curve because it destroys bank profits. So the Fed will probably hit the brakes. Market forces are shoving Treasury yields higher and the Fed has to respond.
There's all this infighting now on the Fed because St. Louis Fed President James Bullard is demanding we do twelve rate increases this year and get the federal funds rate to 3%. Now the irony is we'd still be below inflation.
Day of Reckoning
Now, the even bigger picture is the Modern Monetary Theory (MMT), the unlimited money printing we have been doing. There's a day of reckoning, and we apparently are there. The MMT, for lack of a better word, was too good to be true until it spun out of control, which is where we are now.
So there is a panic out there just to load up on any inflation stocks that you can find. Energy stocks, fertilizer stocks, steel stocks, any company that can raise prices.
Diversifying Away From Russia
Now, what could go wrong? When we plan for all this inflation, the only thing that could screw this up is if Vladimir Putin is thrown out of power, and then the west tries to re-embrace Russia so we could get all the oil and nickel and raw commodities from Russia.
But right now, the west is still trying to diversify away from Russia. President Biden is going to be meeting with France, Britain, Germany, Italy, all the key players in Europe, to try to come up with a policy, a united front to diversify away from Russian energy. And the squeeze is still on Russia.
There is depression in Russia and there is a recession in Europe. They have a fragile economy and their food costs are going up since Ukraine is their breadbasket. We, on the other hand, are not in a recession. The U.S. and Asia are the growth engines of the world, as well as some Latin American countries that are doing okay.
The dollar is still an oasis. Money is being reshuffled at a frantic pace right now. When you have this kind of inflation, you go straight to the companies that are profiting from them so we do expect this inflation to persist.
I also want to remind everybody that we are in a stagflation environment, where we have hideous inflation but we can't get above it which was best demonstrated by retail sales in February. Retail sales went up but not as fast as the inflation rate because gasoline prices rose 5.3%. Nevertheless, I'm pleased that inflation hedges are working out great.
Coffee Beans
India, South Korea, the U.S., and Germany are countries where the number of crypto users and owners increased significantly between 2019 and 2021. In India, for example, the number of those "invested" in crypto more than doubled from 7% to 18% over that time span. In the U.S., that number jumped from around 6% to about 13%. Source: Statista. See the full story here.
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