US markets on the day all looked to be making an early start on the Easter break.
Rather than any real earth-shattering economic event, exhausted market participants hanging on for a well-earned rest may just be the dominant financial market force of the moment.
We saw US Producer Prices hit a record level not seen since the GFC, and this will be an ongoing theme.
Some are suggesting they are near the top in terms of inflationary forces. The very same people who were absolutely sure 5.4% had been the peak previously.
I would take a grain of salt with any early calls for an end to the current global inflation spiral. The inflation tsunami continues to circle the globe.
Markets, as we all know, only too well zig and zag. After nearly two weeks of steady US equity market selling, US dollar, and commodity buying, some form of breather is due.
My view is to look for some consolidation around current levels across all markets for perhaps 1-2 weeks.
This could involve some reversal moments in the above-mentioned markets. That is, small bounces in stocks and currencies, but the key point of the day is to remember to treat such movements with caution. Better still as opportunities to sell.
The war in Ukraine is going to last all of this year.
This means ongoing supply disruption in both food and energy markets. Neither food nor oil supplies is easily replaced.
With all the socially responsible and green energy investment of recent years, little has flowed toward new fossil fuel development. Making a substitution for the loss of the Russian energy supply is ever more problematic.
The big question to increasingly ask is to what degree ‘energy’ could become a weapon of choice in the coming months.
We have not seen the top in either energy or commodity prices. Big problems for the Fed and other central banks to persist well into 2023.
Market commentary from Clifford Bennet
