Your Weekly Blip 3/28/22

Your Weekly Blip 3/28/22

The Markets,
The big news last week was the jump in interest rates as measured by the 10 year Treasury bond yield which hit 2.46% as the Federal Reserve shifts into inflation fighting mode. How this affects housing and the economy is yet to be seen but we will keep an eye on it. Stocks continue to hold up well with the Dow ending last week with a 0.44% gain or roughly 150 points. Today’s market action was constructive as an early morning triple digit selloff gave way to a late rally which pushed the Dow into the black and a gain of 93 points at 34,955. Trading volume has been weak. Both IBD and BTS indicators remain positive. Bitcoin has jumped to $47,950 as it appears Russia is now taking payment for oil in rubles, Yuan, bitcoin and even Comanche wampum as it attempts to circumvent sanctions.
The Economy and Earnings
The most recent core capital goods orders reading dropped for the first time in a year. The gurus were expecting an increase so this reading was a negative surprise. Orders are still at an elevated level so a one month drop doth not a trend make however this was the last reading before the invasion of Ukraine and the latest Fed rate hike so the next reading will be indicative of how those events may be affecting the US economy.
Tesla officially opened its Gigafactory 4 in Berlin Tuesday last week in a ceremony attended by Elon “Megalomaniac” Musk who danced a jig with a drone as some guy jumped into his newly bought Model Y and sped away. Gurus are predicting a doubling of EVs on the road this year but the fly in the ointment is that mining and production of base battery materials like lithium, graphite, nickel, copper and cobalt are not anywhere near levels needed to make that growth trend a sustainable reality. With 13 battery plants scheduled to be built in the US and more in Europe these materials could be in short supply for the foreseeable future.
In energy markets, Reuters is warning of a shortage of diesel as production in Russia drops and diesel inventories in the US are at the lowest since 2014. Diesel is the fuel most directly correlated with GDP readings since every item going into or out of a factory or to a store is moved using diesel. Germany gets half its diesel from Russia and with sanctions on there are a growing number of oil experts speculating that Europe might need to ration diesel which in turn could hit EU economy hard.
Items of Interest
As you know, 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 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.
No news regarding the scouts. There is a crew hike this weekend that I will be on.