🥲🍞 Ketogenic Diets, Anyone?
Happy Hump Day everyone,
This past week we saw McDonald’s exit Russia after 30 years, NYC at near high Covid-alert level, Warren Buffet unloaded some serious dough, Finland and Sweden are set to seek NATO entry, Ford continued to dump Rivian shares, and the U.S. boosted baby formula imports after a nationwide shortage.
Enjoy this week’s Hump Days!
- Humphrey, Rickie & Tim
In the Markets
Featured Story
Take a look at this chart showing the price of wheat over the last 6 months.
That first spike at the 3 month point is a result of the world’s #1 exporter of wheat invading the world’s #7 exporter of wheat. Thought that was bad? Starting to see your groceries get a little more expensive over the last few months? Well I wish I had some good news for you but it seems as though the price of wheat is going to continue to shoot up…
Just last week, India came out and moved to restrict exports of wheat and the price subsequently shot up as seen at the end of the chart above. Earlier this year, India faced record breaking heat waves during a crucial growing period for the crop which slumped yields. Their decision to restrict exports came as a response to manage their own food security which drew criticism from the agriculture ministers of the G7 nations, who said that such measures would make the world’s crisis worse.
The fact that India’s decision had such a major impact on the price of wheat, considering they are only #8 in global wheat exports, shows how tight the global supply is. However, the reason why the price has shot up is not only because of India, nor is it solely because of Russia & Ukraine. Droughts, floods and heat waves have been threatening yields in most major producers such as France, Canada, the U.S., and China.
“If this ban occurred in a normal year the impact would be minimal, but the loss of Ukraine volumes exacerbates the issues,” said a grains analyst at Thomas Elder Markets.
This hit to the price of wheat does not seem to be going anywhere anytime soon so we’ll just have to learn to live and deal with it for now. In the meantime, we can add bread to our growing list of things that got significantly more expensive as of late.
Weekly News Roundup
China’s Economic Activity Collapses Under Xi’s Covid Zero Policy (Bloomberg)
China’s economy takes a massive hit from the government’s Covid zero policy, with major cities like Shanghai locked down for several weeks. Industrial output unexpectedly fell 2.9% in April from a year ago, retail sales contracted 11.1% (estimated 6.6%) and the unemployment rate climbed to 6.1%. Investors sold out of Chinese securities to U.S. index futures and oil.
RH: It’s a tough time to be a business owner in China, to say the least.
HY: Not sure what this means for the global stock market quite yet, probably something to keep an eye on. We’re already facing rising interest rates, so this may threaten the global economic situation if things get dire…
Wheat Surges Amid Fears of Shortages as India Restricts Exports (Bloomberg)
Wheat jumped to near a record high after India’s move to restrict exports, exposing just how tight global supplies are during the war in Ukraine. The Indian government decided on May 13th to suspend overseas sales of wheat to manage its food security which will result in driving up the price of food even more.
HY: Some things are getting cheaper, but airline fares, fuel, and now wheat are not.
Musk Says Twitter Deal at Lower Price Not Out of the Question (CNBC)
Elon Musk hinted that he could seek to renegotiate the price of his Twitter acquisition, saying a deal at a lower price was not “out of the question," at a summit hosted by Chamath Palihapitiya among others. The stock closed down ~8% on fear that Musk will walk back on his agreement to acquire for $44B.
RH: Elon put the deal on hold as he researches the proportion of fake accounts to real accounts on the platform.
Charts of the Week
Bank of America recently surveyed 331 fund managers with a collective $1 trillion in assets under management. The results were quite fascinating.
Here are the highlights…
Needless to say, investor sentiment and risk tolerance are at historical lows.
While it seems like the market is going no where but down, peak negative investor sentiment has historically proven to be a inverse indicator of when the market bottoms…