• Clifford Bennett, Chief Economist at ACY


• 14.03.2022 12:45 pm
#stocks , Clifford Bennett has over 36 years of market trading experience and was named the 'World's most accurate currency forecaster' by Bloomberg New York. He has advised some of the world's largest organisations, billionaire investors, and political leaders and spoken at the prestigious APEC summit on reserve currency issues. Clifford is the Chief Economist at ACY Securities.

People are only now waking up to the Food Threat.

Oil game may be over for the moment.

Military strikes within 10km of Polish border likely to overwhelm modest peace talks as the day progresses.

A hungry world.

Good morning,

The National Peoples Congress in China has just completed and they certainly have had a lot to talk about from the latest Covid outbreak to war in Ukraine and US trade restrictions.

China is attempting to navigate a course that does not alienate either Russia or the West, and will in fact continue to favour Russia in the current situation. At the same time however, China will be seeking the opportunity to shine as a piece maker if that is at all possible. China has announced it respects individual sovereignty and we should all be working to bring Russia and Ukraine to a peaceful resolution.

As with the reports from the negotiators that some 'progress' has been made, such lofty notions are continuing to be outdone by events on the ground. With military strikes by Russian forces on Ukraine facilities within a very close 10km of the Polish border. Having been fortunate to marry in the Polish capital Warsaw, it is all too obvious to anyone familiar with Poland that the anguish and distress already in pace over the risk of a widening war is already palpable. As Poland works diligently to support humanitarian efforts at the border, it has wisely not been prepared to sign up to yet another US plan that has no risk for the US regarding jet fighters. Poland is strengthening its border militarily and at the same time keen to avoid the repetition of past wars.

Nevertheless, the proximity of actual conflict now at its border greatly amplifies stress levels further and raises the risk of accidental conflict breaking out.

Hence, my feeling that any equity market rally at first today, clinging to the glimmer of positivity via negotiators saying they made progress, which sounds more like justifying continuing talks than any real breakthrough, that this initial rally in equities will not be sustained. Either later in the day or as the week progresses.

Basically, investors are getting tired of being advised to look across the valley, are now feeling real pain in their portfolios and are increasingly looking to get out of some or all of their shareholdings.

Let us not forget the world was already due a major correction to the giant tulip it had become.

The story of the frog in the saucepan as the water is slowly heating up keeps coming back to me. Today, that is the feeling I would very much attach to the looming food scarcity crisis fast approaching the world. That sounds alarmists, but one third the world's wheat supply comes from Russia and Ukraine. No planting in Ukraine this season means zero harvest next. Russian supply may continue, but is increasingly problematic and as the West builds a new iron curtain around Russia.

Oil may have run its course for the moment. We have certainly seen what looks to be a blow out top. That said, I think it is the high speculative position holdings that need to be unwound, rather than any real change to the fundamental outlook. That being, that the world could well face an actual energy crisis, particularly Europe, in coming weeks and months. I would be a buyer of the pullback in oil. Just a little patient for the time being.

Please note, this is a major WAR.

Hopefully it will not spill over, but as it is, there are already major long term implications for the world's economy and particularly energy and food supply and prices. With regard to food, it is not just higher prices, it is also a question of absolute quantity. Some regions of the world, and it could occur in the West too, may find themselves having to adjust their diet accordingly.

No apology here for again highlighting this is not a momentary temporary state of affairs. The world has changed and flow through processes such as ever higher food prices for the rest of this year are now like a tsunami that cannot be stopped.

Remain very cautious equities in the US, Europe and Australia, while becoming neutral short term on oil, but still very bullish the US dollar, and Gold.