ADR BLOG

In October of 2022 I wrote about what's going on in the stock market, bond market and the war (Geo-Politics). This is the first update to that piece which nearly received more reads than I have followers (1,150 followers).

Markets:
1) Oil prices have gone from $87.55/barrel to $73.28 (down 16%); Expect further decline, despite summer months approaching.
2) Russian GDP has fallen every month at an annualized rate of 3-5%;
3) Since the war started a little over a year ago, Russia has lost nearly 400% more young men and prisoners than the USA lost over 8 years in Vietnam (approaching 200,000 dead and untold wounded);
4) The US Dollar has weakened by about 15% from October 2022 (a variant given that the Fed has been raising rates). Inflation in the US dropped from 7.7% to 5% over this period;
5) Overnight rates (short term) have risen by about 30 bps since 10/22 (not nearly as high as the press would have you believe). This number is important as the Fed will raise rates again on May 3, 2023. I think by 3/8ths.

Conclusions:
The war will rage on as Russia attempts to influence US Politics (remember, 2024 is a Presidential Election year - 11/5/24). This will keep gas prices in the $75-80 range. But the US won't replenish the strategic oil reserve until prices drop into the $60 range (which may happen shortly after the election).

Short term interest rates will march higher, as no one is talking about anything worse than a mild recession. The Fed usually likes to have some fear in the markets so look for more rate increases.

I suggest staying in short term instruments (80-90%) and defensive stocks (maybe 10-20%). This should all play out after 11/5/24 and why risk a 20+% decline when you can make 5% tax free in short term instruments.

Disclosures may be found at www.adrmortgage.com. This is one person's opinion.