Australian (ASX) Stock Market Forum

Inflation

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Just reminding anyone investing in it that gas is a regional commodity.

LNG, Liquefied Natural Gas, is a global one due to the ability to transport it but natural gas itself is a regional one absolutely. To the point that it's entirely possible that the LNG sitting in a tank has a very different value than gas in the pipeline connected to the same facility.

It's not a market like gold or oil where it's a similar price everywhere so if you’re going to invest in anything relating to it then location is critical.
 
divs4ever said:
Russia doesn't have to do anything about the gas

Russia is patiently waiting for the Germans to CERTIFY Nordstream 2 before passing gas through it , it COULD pump gas before certification but that would run litigation risk , but have decided the EU legal system is rather partisan rather than pragmatic

that certification might take years but chances are Russia can sell the gas elsewhere at higher prices than the existing German contract
Click to expand...
Nordstrom 2 won’t be certified now

www.theguardian.com

Nord Stream 2: how Putin’s pipeline paralysed the west

Gazprom’s $11bn project to deliver gas from Russia to Germany seems impossible to abandon and impossible to carry forward
www.theguardian.com www.theguardian.com

Gunnerguy
 
JohnDe said:
“The consequences of massive sanctions would be severe, and perhaps as damaging to Europe as to Russia”

Click to expand...
Russia was already moving strongly towards self-reliance , so there is every chance they are half a move ahead , well Europe .. they will have to sort their own problems , i doubt Russia will be swift to help next time

i WOULD expect Russia to move away from trading in euros ( as a precaution against sanctions on that )
 
Biden promised to keep a lid on rising energy prices. Not sure how effective that would be given its essentially controlled by OPEC... Perhaps waiving federal taxes?
 
From The OZ
New figures from the Wage Price Index show wages grew 0.7 per cent in the December quarter of 2021.

The data means wages grew by an overall rate of 2.3 per cent last year, with the December quarter being the fastest period of quarterly growth since March 2014.

Wage growth is still running behind inflation, which currently sits at 3.5 per cent, but the Reserve Bank has indicated they want to see wages grow more before lifting interest rates.

In the release, the ABS noted the demand for skilled workers and a strong labour market as factors driving growth.
Click to expand...
Wages growth is creeping up ever so slowly, but the rate increase is getting quicker each quarter.
Annualised, the rate is 2.8%, but I would bet next quarter it will be higher again.
MICK
 
Oil has moved 5-7% up and then down ON THE DAY today:

1234625624562624356245652.jpg24356245762457245762457624576.jpg

Coins now seem to be inversely correlated with inflation, for whatever reason:

234562457624572457542.jpg

So crypto is still your inflation play, just in the other direction now.

(Because f**k logic)
 
Oil also in massive backwardation as april futures are just under $93/barrel so tonight was a hell of a night if you were up for it.

I'm just kicking myself for not buying any 3LNI the other day :(
 
Food Inflation is one of the biggest worries for all countries except perhaps those on a subsistence level agricultural commodity.
Both Sobean futures and Pal ol futures have hit record highs.
From Bloombergs
Vegetable oil prices are booming around the world, raising costs of the raw materials used for everything from frying food to powering engines.
From soy to palm oil -- a product used in about half of all supermarket goods -- prices have surged to records or near multiyear highs this week. Cooking oils go into biodiesel and are churned into goods from soaps to salad dressings and sweets, so the rallies are more bad news for consumers and sectors also being hit by higher transport, energy and labor costs.

Drought crimping South American soybean crops has been the latest blow to supply. Rival oilseeds like palm and canola are also suffering shortfalls from adverse weather and worker shortages. And escalating tensions over Ukraine are stoking worries about sunflower-oil exports from the key Black Sea region.
The next U.S. grain and oilseed harvests will be crucial for relieving scarcity across crop markets, Rabobank analysts said in a note. “But incipient dryness, acreage constraints and inflation will likely keep Chicago Board of Trade price risk skewed firmly to the upside,” they said.
60x-1.jpg



Soybean oil futures in Chicago rose as much as 1.6% to 71.2 cents per pound, the highest since 2008 and closing in on a record. Canola futures in North America are also on the brink of an all-time high, and palm oil in Malaysia reached a fresh peak.

Sunflower-oil export prices in Ukraine are also rising. Agriculture flows from the Black Sea region are continuing despite a risk premium on freight rates, Paris-based adviser Agritel said in a report. Researcher UkrAgroConsult also said there are no issues with shipments, though fresh demand has ebbed.
The Bloomberg Agriculture Spot Index reached an all-time high on Tuesday, while a United Nations gauge of vegetable prices already hit a record last month.
“It is especially on sunflower oil that weighs the greatest danger,” Agritel director Michel Portier said. “Ukraine captures nearly 50% of the market share in the winter months, which puts all the logistics at the main importers at risks.”
Click to expand...
I suspect that the grain grown in Ukraine will find its way into Russia rather than the open market.
Mick
 
mullokintyre said:
Food Inflation is one of the biggest worries for all countries except perhaps those on a subsistence level agricultural commodity.
Both Sobean futures and Pal ol futures have hit record highs.
From Bloombergs

I suspect that the grain grown in Ukraine will find its way into Russia rather than the open market.
Mick
Click to expand...
Lots of energy goes into food production though.

Energy is THE inflation driver of the world.
 
"Step aside from the horrors of the Russian actions and we have a sharemarket that is in correction mode but not in collapse. And the bond market is telling us that the interest rate rises will not be as severe as many expect."

"If the situation deteriorates markedly and forces much higher interest rates then it will be an entirely different ball game for sharemarkets."

Wall Street has placed clear bets on the outcome of the Ukraine war and the sanctions against Russia – it will be business as usual for most global corporate giants outside the international banking system.

This is not the outcome that western leaders are looking for.

When markets opened in New York there was a wave of selling with the Dow index down more than 800 points and NASDAQ falling by 3.5 per cent.

But it was a fall driven by emotion and outrage at Russian actions, and soon pragmatic buyers appeared concentrating on the biggest tech stocks led by Amazon, Netflix, Alphabet and Microsoft. The buying quickly sent those stocks into positive territory.

The fact that the buying surge was led by technology stocks indicates that the market is confident that the US giants have the systems that can cope with the looming global cyber war, which is a likely to follow the military action.

Very sadly Russia hold the big guns if a sanctions war develops.

This makes many of the New York analysts confident that the western sanctions will not be made so severe that Russia will retaliate and use its market positions to greatly damage western fabric.

Russia can squeeze western oil and gas supply which is pushing prices higher. But if the increases continue it will send inflation skyrocketing which may require central banks to tighten the screws via greater interest rate rises. But to underline the fact that markets do not expect that to happen, we saw US bond prices rise and yields fall.

In the case of oil, there are many non Russian sources of supply albeit that Russia is very important in the market.

Through long term foolishness, the US has allowed itself to become very dependent on Russia and China. This dependence has been one of the factors that has kept US inflation low but it means that if Russian sanctions are too severe, then Russia can do far more damage to the US than US can harm Russia.

China has already taken steps to lessen the western impact on Russia by buying more of the country’s gas and wheat. This potentially has a great impact on Australia.

The US depends on Russia (and Ukraine) for C4F6 gas, neon, palladium and scandium. C4F6 gas is used for etching node logic devices; neon is essential for chip making and palladium is used for computer memory.

Chips and computers are vital in our technology society and clearly markets expect supply to continue.

The west’s aerospace industry led by Boeing depends on Russia for titanium. Again to underline the markets confidence that Russia will continue to supply Boeing with titanium, the airline stock, after an early sell-off recovered most of the lost ground.

But the markets are telling us that there are several areas of global business that are particularly vulnerable to the sanctions. At the top of the list are European and major global banks. European banks were hammered with some falling around eight per cent. On Wall Street, JPMorgan was hit hard and the other big banks suffered. These banks make a lot of money from the Russians and freezing assets in banks reduces confidence in their position as a safe place to leave money.

As expected the rush to safety saw gold rise in price but Bitcoin initially fell partly because it is seen as being linked into the world banking system, but actually it runs on block chain which is outside the system.

About 10 to 15 per cent of the Russian population own cryptocurrencies, led by the very rich sectors of the population. Crypto buying suddenly emerged (possibly from Russia) and most of the cryptocurrencies moved into positive territory. Gold also lost some of its early gains.

Step aside from the horrors of the Russian actions and we have a sharemarket that is in correction mode but not in collapse. And the bond market is telling us that the interest rate rises will not be as severe as many expect.

It looks as though the US 10-year bond has a ceiling in the vicinity of two per cent. If that ceiling holds, then the interest rate rises that are coming will not be as great as many expect.

If the situation deteriorates markedly and forces much higher interest rates then it will be an entirely different ball game for sharemarkets.

ROBERT GOTTLIEBSEN BUSINESS COLUMNIST
Click to expand...

 
JohnDe said:
"Step aside from the horrors of the Russian actions and we have a sharemarket that is in correction mode but not in collapse. And the bond market is telling us that the interest rate rises will not be as severe as many expect."

"If the situation deteriorates markedly and forces much higher interest rates then it will be an entirely different ball game for sharemarkets."



Click to expand...
Agree with that article. 3.89% for 3 years fixed from Athena. Doesn't suggest the market expects large rises either.
 
frugal.rock said:
So, if not euro's, what then?
Russia has been moving away from USD. Perhaps the Yuan...
Click to expand...
China SEEMS to avoiding it's chance of being the benchmark currency so probably not the yuan

for several years they tried to get a BRICS common currency afloat , but BRICS has some troubles ( although all this distress might be the perfect opportunity , they might have to boot India and replace it with Iran to get it up and running )

if BRICS can claim two billion citizens ( between them ) i think they can make it a goer

however both Russia and China are exploring their options ( and neither are stupid governments )
 
mullokintyre said:
Food Inflation is one of the biggest worries for all countries except perhaps those on a subsistence level agricultural commodity.
Both Sobean futures and Pal ol futures have hit record highs.
From Bloombergs

I suspect that the grain grown in Ukraine will find its way into Russia rather than the open market.
Mick
Click to expand...
but wasn't there a risk of that before the Eastern part does tend to be more fertile ( hinting the ethnic Russians are likely to be SOME of the farmers )
 
US inflation numbers out tonight...

Retail may take a hit but energy prices have been on an upward trend for the past month, and that's ignoring the Russian spike!

Any bets? I'm going for 0.8-1% for Feb
 

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