Your Weekly Blip 3/21/22

Your Weekly Blip 3/21/22

The Markets,
Last week’s trading action was constructive considering all the headline risk of late however market volatility and uncertainty is ever present so caution is advised. Stocks today closed lower with the Dow down 201 at 34,552. Trading volume was lower. Last week the Dow gained 5.5% or just over 1,800 points on heavy trading volume causing indicators like IBD and BTS to go green on equities.
The covid lockdowns in China grow as 28 of 31 provinces have been put under lockdown. This is adding to uncertainty in commodity markets since lockdowns reduce demand for oil and other raw materials and potentially offsetting price spikes caused by supply disruptions in Russian and Ukraine.
The Economy and Earnings
The Federal Reserve raised interest rates last week for the first time since 2018. The 25 basis point increase is just the start and economists like Brian “Westport Mafia” Wesbury at First Trust think that by the end of the year the short term rate will be 1.75% which means there will be a quarter point increase at every fed meeting for the rest of the year. Brian thinks that economic growth will continue for 2022 but that 2023 could see a recession since the Fed is behind the eight ball and needs to play catchup.
Battery grade lithium prices have gone crazy. A recent report from Adamas Intelligence said the number of lithium batteries deployed to roads during December 2021 increased 68% from a year earlier and the trend continues as EV sales are robust with Tesla leading the way at a market share of just under 70%. To meet demand for EVs, battery makers are racing to secure long term supply contracts however lithium miners are struggling to meet demand in the face of labor and supply chain issues. These events are leading gurus to predict there will be a 26,000 ton shortfall this year and that lithium shortages will increase each year after that. Lithium prices a year ago were under $100k per ton but are now just under $500k per ton. Chile is the largest lithium producer followed by China and Australia. China is now the largest lithium importer as EV sales last year jumped 157%.
It looks like Delta Airlines is lining up to order 100 Boeing 737 Max 10 jets. If true this would be the largest order from Delta ever and the first significant airplane order for Boeing in over a decade.
Items of Interest
The big news is that on May 1st, Greystone Financial and John, Cleo and I will be transitioning away from Securities America to become an independent registered investment advisory firm. While Securities America is a fine firm and serves advisors across the country from its headquarters in Nebraska, we felt that being local and independent would allow us to better focus on and serve our clients, employees and community. We will be sending information about this transition in the coming weeks and urge you to call if you have any questions about it.