Putin's Price Hike
041: Recession looming, Ukraine conflict worsens, Inflation rampant
Well friends. Things have certainly deteriorated recently. CPI inflation came out today at 8.5% which the highest level since the 1970s. In my everyday life as I walk through NY, I hear people complaining about prices on their phones, gasping at total amounts on registers, complaining of poor service, businesses closing, crime increasing, and a war brewing overseas. The current administration is doing everything in their power to blame Putin and the war in Ukraine for the rapidly depleting state of the American economy, inflation levels, and supply chain issues.
Just yesterday a man shot up a NYC subway out of the blue. You can tell folks are tired and acting rash from the simulation we’ve been living in. First the pandemic, then high inflation, and now a foreign war under suspicious pretenses?
Most normal folks I know are skeptical of just about everything that’s been coming out recently and with good reason. Our government has gotten too big. Regardless of political leanings, the situation now with this current administration is absolutely woeful. But, there is opportunity in chaos. Are you allocated correctly for this environment?
MARKETS & CRYPTO
1Q earnings start reporting today, with Wall Street and investors tempering their expectations as the war in Ukraine continues, the pandemic lingers, and inflation hits an all time high since 1970. Crypto and equities saw a nice bounce today from local lows leaving investors and traders guessing which way we go next. Seems like it could be violent in either direction.
In regards to my portfolio and allocation I am being more conservative in terms of buying assets for the moment. While I still add a bit to crypto here and there, I want to wait and see how this market change plays out and while I realize holding cash has a downside I think I will continue to bolster my cash position in the event we see a more violent sell off.
The goal here - broadly - for young investors, is to prevent a need to sell your assets during times like this. Select assets can help you be insulated from the impacts of inflation. That’s how the rich get richer during inflation. They take out loans or use leverage paying negligible interest and aren’t effected by the value of the dollar as much. This isn’t financial advice, but in my eyes ideally you hold any assets in equities, real estate, commodities, and crypto as best you possibly can and then add when you can on these down periods and hold for the long term while continuing to stack cash.
On Wednesday after close the Dow Jones Industrial Average closed up about 1%, while the S&P 500 ended up, up 1.1%, and the Nasdaq gained nearly 2%.
Inflation hit 8.5 percent in the United States last month which is the fastest 12-month pace since 1981. Cricket time coming fast.
Former Ethereum developer Virgil Griffith is facing his sentencing in New York on April 12 after pleading guilty to one count of conspiracy to violate international sanctions against North Korea last September.
BlackRock is studying digital assets, including Bitcoin
and crypto.
MoonPay, a tool for buying cryptocurrency and NFTs, announced on Tuesday that it has collected $86.7 million in a new investment round. The list of investors names more than sixty celebrities including Bruce Willis, Diplo, Eva Longoria, Justin Bieber, Gwyneth Paltrow, and Paris Hilton (Gizmodo)
Noteworthy Earnings Reports Tomorrow (Kiplinger)
Michael Lewis cautioned that the value of cryptocurrency may dramatically plummet and its wide adoption could threaten traditional capital markets. But he also lauded crypto innovations that he says could establish fairness between traders.
"The whole thing may come crashing down," says Lewis, whose podcast "Against the Rules" recently returned for its third season. "Crypto is an act of faith — like gold, like the dollar." (Yahoo Finance).
MARKET SENTIMENT
"The CPI report I think actually has a little bit more good news in it than it appears right on the surface ... there're a number of things in here that suggests that we're starting to see inflation peak, and it will roll over in the next few months,"
Tom Simmons - Jefferies fixed income money market economist, told Yahoo Finance Live on Tuesday.
“Health Care has been heating up lately but following yesterday’s strong CPI number, Health Care underperformed the market while Energy was leadership on the day,” he wrote. “Energy remains in a strong relative uptrend vs Health Care suggesting the market still believes inflation has yet to peak.”
Kevin Dempter, analyst at Renaissance Macro Research (Market-watch).
GLOBAL NEWS
A terror attack in New York, Russia re-strategizing in Ukraine, and high inflation have all left a sour taste in people’s mouths as we near the middle of April. Fed policy is still being digested by investors and institutions after a choppy 1Q. Banks and financials have started off with subpar results hinting at themes many describe as indicating a recession is coming. Michael Burry the famous hedge fund manager, is back on twitter and predicting another crash.
President Biden has approved $800M in security assistance to Ukraine
More than 1,000 Ukrainian marines defending the besieged port city of Mariupol have surrendered, Moscow has said
China’s top offshore oil and gas producer CNOOC Ltd. is preparing to exit its operations in Britain, Canada and the United States, because of concerns in Beijing the assets could become subject to Western sanctions, industry sources said.
No humanitarian corridors will open Wednesday, Ukraine's deputy prime minister has said, accusing Russian forces of violating a cease-fire and blocking evacuation buses.
If you missed last weeks Arb Letter you can read about Russian War Crimes HERE.
A 62-year-old man, Frank R. James, was arrested in connection with the mass shooting on a subway train in Brooklyn, in which at least 23 people were injured (NY Times). James started shooting on a Brooklyn Subway car Tuesday morning and deployed some sort of explosives or smoke grenades. As of now however, it seems only 30 were injured and nobody is killed. Very odd. He was also supposedly dressed as an MTA worker and initial “info” indicates he is a Black Nationalist.
James has nine prior arrests around and in New York dating from 1992 to 1998, including the possession of burglary tools, a criminal sex act, and theft of service, NYPD Chief of Detectives James Essig said. He also had three arrests in New Jersey in 1991, 1992 and 2007 for trespassing, larceny and some disorderly conduct, Essig said (CNN).
I am a strong proponent of the 2A and while this is a tragic event, I can’t help but take into account the convenient timing for this episode. Reminds of me of the Las Vegas shooting, which still to this day is an absolute mystery as to what the shooters motive was, if you’re interested you can also read about eyewitness accounts of multiple shooters and vans in the parking lot after that but I digress.
If you can’t read between the line I am referring to false flag events in which the government or other agencies/actors that are pro gun control incite or potentially construct these events to change the public narrative and sentiment about gun control. This isn’t novel concept and many of the world’s events you’ve witnessed and more importantly the information and media coverage from the last two years have been thoroughly engineered and tailored for the public. I think about:
A.) A strong very recent and swelling anti gun agenda from Biden
B.) the fact midterms are coming up with some incredibly damning foreign and economic issues commanding people’s attention. I also think the war in some regards is acting as a cover for many of our domestic issues 9 gas, supply chain, inflation).
Just smells fucky to me. Very odd event. The 3 cameras in this station out of nearly 10,000 in NY also just happened to not be working at the time. We’ve heard and seen this story before when Epstein got deleted in his cell.
I will write a 2A deep dive as I think there are many misconceptions about gun ownership in America, but this event is a clear example of why the cities and regions with stricter gun control put people at risk everyday. by only truly harming law abiding citizens rights to carry for protection. Knives, certain pepper spray and other items are also illegal in NY, so here you’re expected to just yell at people trying to harm you. Seriously.
This guy was willing the shoot at humans in close quarters on a fucking subway and use explosives/smoke grenades. His rap sheet is absurd. He has Black Nationalist videos on Youtube talking about killing people. Do you think he is going to follow ANY gun laws? No, he’s fucking not. He’ll carry it wherever he wants, buy whatever he wants on the street/black market, and do what he did because he’s a bad guy. Does that make sense? So the only people at risk because you can’t carry a firearm in NYC are law abiding and innocent people. You’re literally a chicken in a coop and a fox just came in. You’re a seal in the South African waters that just got it’s midsection yeeted into two pieces by a Great White. Point is, had this happened in Texas or any other state where decent citizens around or on scene were armed, it would’ve been over very quickly and the shooter never would’ve been able to leave the scene. Something to be said about deterrence. You’re helpless in NY or other anti gun states/regions. No two ways about it. More on that next week maybe.
Unless you are living under a rock you’d also have heard by now that a rogue undercover federal informant, secretly trying to help the Gretchen Whitmer kidnap plot suspects snatch the governor, tipped one man off that the feds were onto the group, and tried to thwart their arrests and continue the scheme LMAO. Court filings suggest that the Federal Government actually may have encouraged and prodded the suspects who are now acquitted, to try and kidnap the governor. Makes you think about the implications of this and January 6th, at least it should.
The conflict in Ukraine continues to transform with Russia appearing to have pulled back forces and concentrated more of their strength around the Donbass region with rumors of a larger attack planned on Kyiv. There have been some larger and more concerning updates coming out of the conflict recently including Russian using Chemical Weapons, instances of sexual assault, and other war crimes like mass executions. Important to keep an open mind as we continue to see content and information bleed out of this debacle as there are surely sinister narratives being promoted for various reasons. Continuing tales of Russian atrocities have come out of Ukraine in past days and video content of firefights and tanks being struck by missiles continues to flood twitter and social media.
What do you think the US should do, if anything, in Ukraine? Should we continue to support them through proxy or be more direct with our actions against Putin? Let me know below. See you guys Saturday.
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*DISCLAIMER - None of this is financial advice, it is important that you do your own research and make your own investment decisions. I am a former trader and currently work within sales/financial technology/brand building/e comm
Because I have built such a massive digital network building Arbitrage Andy & Arb Letter, Arb Letter looks to leverage that information and sentiment for you to make informed decisions that cut through the noise and bias of modern media and news.
Love the lettter, but disagree with the gun control issue. Why are there so few cases of a civilian stopping a gun-man? And on the other side many more gun related accidents that injure/ kill people?
My homie, I love your letters and I must leave one opposing comment. I’ve had my letters published in newspapers on the topic (not a flex, just an indication of my seriousness in the discussion): as a wildly liberal dozens-of-gun-owning person I’m always in the minority with whomever I’m speaking with. To indicate Biden’s plan to ban ghost guns is anti-2a astounds me. It reminds of how absurd it is that you need a FFL background check to transfer a J-frame 5-shot .38 but not a 30 round 5.56 “rifle”. It’s asinine to think you’re anti-2a if you require guns to have serial numbers and be made from manufacturers with actual processes that keep the shooter safe. That is all. Keep up the good work!