Here are the latest news items and commentary on current economics news, market trends, stocks, investing opportunities, and the precious metals markets. We also cover hedges, derivatives, and obscura. Most of these items are from the “tangibles heavy” contrarian perspective of SurvivalBlog’s Founder and Senior Editor, JWR. Today, we look at higher crude oil and fuel prices. (See the Commodities section.)
Precious Metals:
Silver hits a strong support zone.
o o o
India’s May gold imports surge 677% to $5.83 billion.
Economy & Finance:
Hedge fund redemptions accelerated in March. JWR’s Comments: This is just the beginning of a trend. Unless you are invested in a contrarian or counter-cyclical hedge fund, then I’d generally recommend exiting. Keep in mind that with many hedge funds there is a 30 to 120 delay between your filing your request to exit and your disbursement. (Commonly called a “lock-up” period.) In the midst of a crashing market, that period might seem agonizingly long. As Bob Griswald says: “Panic now, and beat the rush.”
o o o
o o o
Lagarde says ECB likely to abandon negative rates in September. JWR’s Comment: This may begin tit-for-tat rounds of interest rate increases, leading to protracted stagflation. Monetary policymakers have run out of arrows in their quivers, on both sides of the Atlantic.
Commodities:
The recent run-up in the price of crude oil is noteworthy. West Texas Intermediate (WTI) Crude was priced at just over $17 per barrel, two years ago. But when I last checked, it was $118.40 for a barrel of WTI crude. There will be some profound and far-reaching economic effects stemming from that price rise. Higher fuel prices will drive up both train freight and trucking costs. That equates to higher prices for nearly everything on store shelves. The resin used for plastics is of course also made (indirectly) from oil. So anything made of plastic or that is packaged in plastic will go up in price. And, of course, airline ticket prices are directly tied to the cost of aviation turbine fuel (ATF). There are two main types of ATF: JP-8 and Jet A-1. Both are cracked from crude oil, and are quite similar to kerosene.
Bottom line: If crude oil continues to rise to rocket past $140 per barrel as many analysts predict, then we should anticipate $9+ per gallon gasoline and $11+ per gallon diesel, possibly before August. Plan accordingly. Or should I say, Honda Accord-ingly. Yes, folks: It is time to buy a used, well-maintained, and very fuel-efficient runabout vehicle, if you don’t already own one. In fact, I’d be tempted to consider a reliable motorcycle with a sidecar, to run shopping errands. But since I live in very dense deer and elk country, that would probably be too dangerous, for me. Owning a 30+ MPG runabout might soon prove crucial, if you commute to work, via a highway or freeway.
Oh, and if high fuel prices persist, then I predict that the current multibillion-dollar order backlog for RVs will quickly evaporate. – JWR
o o o
Over at the OilPrice News site: Yellen: It Is “Virtually Impossible” To Avoid Oil Market Shocks.
o o o
Gas prices spike after explosion at US LNG plant leaves Europe scrambling for supplies. (Thanks to H.L. for the link.)
o o o
China has created a shortage of urea. It is noteworthy that urea is widely used in fertilizers. It is also used in the diesel fuel additive DEF, which is formulated with urea (32.5%) and water (67.5%). The current generation of diesel engines in the U.S. depend on DEF. It wouldn’t take much to trigger panic hoarding of DEF, and that would lead to a transportation crisis, and concomitantly to empty supermarket shelves. Independent truckers are already staying home because of spiking fuel prices. Just wait until they cannot find any DEF.
Inflation Watch:
Reader H.L. sent this: This hedge fund manager called inflation early. He now says consumer prices will finish 2022 at a level that `screams failure by the Fed’.
o o o
At Zero Hedge: Inflation Is The Top Financial Concern For Americans; New Poll Finds.
o o o
Chart of the Day: How Are Shoppers Coping With This Staggering Inflation?
o o o
No, you’re not imagining it — package sizes are shrinking.
Forex & Cryptos:
You may have noticed that the Euro is approaching parity with the US Dollar. And the Swiss Franc (CHF) and Euro crossed the parity line early in May. Then the CHF and USD crossed the parity line in mid-May. and, in the longer term, there is the risk that the British Pound (GBP) could drop to Dollar parity. With so many key currencies coincidentally so close to parity this year, it must be mighty tempting for the Powers That Be to announce a global currency. And that would surely be a global cryptocurrency.
o o o
U.S. Macro Pressure Responsible For Entire Bitcoin Downtrend.
o o o
Some speculation by Jameson Lopp: Ensuring Your Second Life with Bitcoin.
o o o
“The Mashinsky Moment”: Celsius Pauses All Withdrawals.
Tangibles Investing:
The inevitable chain of events: Interest rates rise, fewer homebuyers qualify for mortgages, and hence housing demand drops, leading to an economic slowdown.
o o o
Old VHS tapes could be worth a small fortune: ‘Rarity and nostalgia’
o o o
Chasing The World’s Rarest 78 RPM Records.
Provisos:
SurvivalBlog and its Editors are not paid investment counselors or advisers. Please see our Provisos page for our detailed disclaimers.
News Tips:
Please send your economics and investing news tips to JWR. (Either via e-mail or via our Contact form.) These are often especially relevant because they come from folks who closely watch specific markets. If you spot any news that would be of interest to SurvivalBlog readers, then please send it in. News items from local news outlets that are missed by the news wire services are especially appreciated. And it need not be only about commodities and precious metals. Thanks!