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Russia Ukraine War - Inflation - Stock Market

Russia Ukraine War - Inflation - Stock Market
By Rakshith Pai M • Issue #1 • View online
No:1
Hi everyone,
I welcome you all to this week’s top news regarding Investment, Economy & Personal Finance. 
Russia Ukraine War! More like Russia v/s the USA
There was never a Russia-Ukraine war. It’s been since the beginning all about the two strong nations and their massive Ego. 
Whether there’s a war to be seen is another topic for another day. But, the panic that this about-to-be war is creating is also making the weak hands much weaker and the strong hands doubt their position. Thus, we had a minor correction in the market.
But, there’s a much bigger threat here! A threat human humanity has been avoiding for ages. No, I’m not talking about the Nuclear War! I’m talking about a much subtle word that could kill the democratic system we live in.
Inflation!
The root cause of all misery! 
With rising Oil & other commodities or the way way to say it… With heavy printing of worthless fiat currency, we have called upon ourselves the one thing we should have avoided!
Prices of a variety of commodities have soared to new heights, increasing quarter after quarter and spanning almost the entire commodity complex. At moments like this, the FMCG sector’s commodity character becomes apparent.
All FMCG businesses do is sell attractively packaged and well-marketed chemical concoctions for beauty and personal care products, or food products that have been made with preservatives to keep them fresh and safe.
Sustaining an increase in crude oil prices, supply chain limitations, and China’s output limits have all contributed to a price spiral in chemicals and crude-based derivatives. Of course, the colossal elephant in the room is palm oil and palm-based derivatives. 
The increase in the price of this commodity has affected the cost of manufacturing a variety of items, ranging from soaps to beauty/personal care products to food products. Additionally, freight and packing expenses have increased.
We now have one of the highest inflationary periods in about 2 - 3 decades. And, the same is showing no signs of slowing down.
Oil is estimated to cross 150 dollars a barrel! A price hike in Oil is said to affect every other industry & sector out there. Even those that have remotely anything to do with modern society.
Because Oil is everything. It’s the fuel not just for motors. It’s the fuel for the economy!
So, brace for high inflationary periods. Everything you ever consumed is gonna get costlier. Hedge your bets against Inflation by investing in Gold.
Know these Best Ways to Invest in Gold, take full benefits. CLICK HERE! To know more.
Cost of Inflating Money supply!
Consumer prices in the United States rose by 7.5% in January 2021, the largest annual increase since 1982. Inflation is wreaking genuine and serious economic havoc that cannot be overlooked any longer.
The Federal Reserve has been long overdue to address this issue head-on, and Congress and the administration must be careful before adding more fuel to an already smoldering economy.
The continuance of inflation has hidden the advantages of a booming job market, which has performed far better than projected even in recent months as the Omicron type of coronavirus spread across the country. Increased prices have also restricted wage growth.
Companies coming out with Q3 results are already showing the effects of inflation. Companies on a larger scale are showing an increase in the top line. But, due to higher costs and margin impacts, the bottom line has shrunk.
India is taking a defensive stance. This is evident in RBI’s rationale for maintaining the current monetary policy stance and rates is as follows.
The US government bond market is signaling that the Federal Reserve will be able to contain inflation without suffocating growth in the world’s largest economy in the coming years. 
With the Fed’s interest rates being near zero. And Inflation roaring loud. Whether Big Brother can tame the situation is yet to be seen.
What to Expect from the Market?
The market has rallied well these past 2 years. The same cannot be expected for 2022.
We are already in the high end when it comes to Company earnings and Stock Price. The Earnings show no sign of aggression, then why should the stock price show aggressive growth? 
Due to Global tensions (momentary) and Inflationary pressure (not so momentary), the companies have shown weaker bottom-line margins though some put out a strong top-line growth.
This weak PAT (Profit After Tax) earnings have been noted amongst the Investment community and they are not going easy on their holdings. 
Chances are that we may not see the “aha” moment this year. Well, maybe we do in the commodity market but, definitely not in the Equity market.
With no growth in earnings or even if in case of Sales growth but subdued profit figures. The market will be nothing but low growth high valued high-risk platform. Many will avoid and those already in the game will sell out!
Foreign Investor sees the Indian market and asks, “Where’s my profit?” 
It’s already factored into the stock price! Either the Stock price should drop to justify the valuation or the listed entities should come up with better earnings and mainly better profit. Until then, it’s all a hope game.
News for the Week:
  1. The Indian government allocated an extra Rs 19,500 crore to the FY23 budget to fund a production-linked incentive program (PLI) for home-grown solar module production. - What is PLI Scheme? Importance of PLI in Indian Economy?
  2. The Indian government launched the first phase of its highly publicized Green Hydrogen Policy. India’s new strategy would establish distinct industrial zones, waive interstate power transmission prices for 25 years, and give green hydrogen and ammonia manufacturers priority access to electric networks in order to incentivize production. The government wants to cut the cost of green hydrogen from $3-6.5 per kg to $1 per kg by 2030 in India. By then, India should have a capacity of five million metric tonnes of green hydrogen per year (MMTPA).
  3. The transition from the digital ecosystem to the metaverse, in which a person feels immersed in a virtual world, will increase data consumption by 20 times globally by 2032. Bharti Airtel and Reliance Jio, two Indian telecom companies, are in a good position to profit from the surge in Indian phone use.
  4. Bitcoin fell more than 7% to $40,500 on Thursday, the biggest one-day drop since January 21, as investors fled riskier assets for safe havens like gold after reports of the Ukrainian military and pro-Moscow separatists exchanging fire in eastern Ukraine.
That’s all the major updates for the week. See you next Sunday at 10:00 AM. Until then, Work hard, stay safe, and most importantly… Always be an Optimist!
Week’s Website Articles & YouTube Videos:
  1. DP Wires Ltd - Stock Analysis. Is it Worth Investing?
  2. Russia Ukraine War! Will the Stock Market Crash? What Should Retail Investors Do?!? 
  3. What is PLI Scheme? Importance of PLI in Indian Economy?
  4. Top 11 Electric Vehicle Companies to Invest in India
  5. What is an NFT? How to Invest in NFTs?
  6. What is a Stable Coin? How to Invest in Stable Coin?
  7. Best Ways to Invest in Gold?

 

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Rakshith Pai M

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