Considering the uncertainty caused by the war in Ukraine, the markets have held up relatively well. One thing that is not uncertain is the courage of the Ukrainian people. When fighting broke out The Dow plunged over 800 points but then rallied back and went positive. Talk about whiplash! Today the Dow finished off 166 points at 33,892 on heavy volume. IBD has markets in correction mode but the good folks over at BTS have gone back into high yield bonds as of last Thursday which is a positive call on the market. We hope to get comments from them about this soon. The NASDAQ finished the day higher which continues a bullish pattern of markets opening lower and then closing higher. Please remember that this pattern could change as conditions in Ukraine unfold so we recommend diversification and a bit of caution right now. .
The Economy and Earnings
Berkshire Hathaway reported earnings over the weekend and the results were outstanding. Revenue gained 12% and net profits grew 52% as insurance earnings rebounded along with strength in rail, utility and energy operations. Berkshire has a cash pile of over $140 billion and has been buying back its stock lately citing an inability to find “sweet deals” to invest in. The company said they were affected by supply chain issues and inflation just like everyone else but were dealing with these issues and expect good things going forward. Warren Buffett said that Apple is its largest stock holding and on the call he praised CEO Tim Cook for growing and managing the business like a champ. Berkshire stock continues to trade near all-time highs.
The conflict between Russia and Ukraine is affecting global energy and metals markets. While oil and gas was spared from sanctions due to US and European dependence on energy imports from Russia, other areas were not and these include steel and aluminum. Russia is the 5th largest steel producer in the world and also produces 6% of the worlds aluminum. While oil prices have held relatively steady, iron ore, steel and aluminum have shot higher but the longer this conflict runs the higher the odds of sanctions against oil and gas and the possibility of Russian being kicked out of the “OPEC+” group potentially sending oil prices higher.
For what it’s worth, while shares of oil and natural resource stocks generally rise shares of Taiwan Semiconductor have fallen sharply since the invasion. Could this be a signal regarding investor unease over China’s intentions regarding Taiwan?
Items of Interest
While in the Army I trained with the dragon anti-tank missile which was wire guided and required the operator to stay exposed while the slow moving missile loped along toward its target. This was replaced by the Javelin a few years later and from what I can see the javelin is a game changer since it is a “shoot and ski daddy” system that protects the operator and attacks the target from the top and not the side. The US supplied Ukraine with these over the past few years and rumor has it they are very effective against Russian tanks. Maybe our scout troop can pick up a couple of these on the black market and the scouts can get their “Javelin Merit badge”. One of my goals in life is to never be a Russian tank commander!
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