An Unpopular Opinion
Michael Spencer
A.I. Writer, researcher and curator - full-time Newsletter publication manager.
The Bubble Will Pop Potentially Due to Geopolitics
If you want to reach my more serious and frequent articles on the stock market you can do so on Stock Quest, here.
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The Pentagon’s top officials warned Friday that a Russian invasion of Ukraine would result in a “horrific” aftermath. I actually think the Ukraine invasion will cause the market bubble to burst completely, without reservations. That’s the unpopular opinion and looming problem as you invest in 2022.
Furthermore to talk about geopolitical risks, I think there’s a 25% chance China invades Taiwan in the first half of 2022 as well. Geopolitics is a huge problem for the stock market in 2022, even with interest rate hikes, and a slowing economy in both China and possibly other areas of the world as well. You can't convince me that there wasn't a significant slowdown in the U.S. in January, 2022.
Here’s the situation: Apple’s incredible Earning saved the Nasdaq from officially entering correction territory. The?Nasdaq somehow avoided first five-week losing streak since 2012.
Supply chain pressures isn’t going anywhere and consumer sentiment is plummeting. The backdrop for being bearish on the stock market is really increasing.
A drop would have been the fifth straight weekly loss for the tech-heavy index, a losing streak it hasn’t seen since November 2012. This week Tesla started its downward pressure that will put even more pressure on indices.
Russia’s posture along Ukraine’s border is unlike anything we have during the last four decades.
Among those how had incredible Earnings were:
And it doesn’t matter one bit. Because interest rate hikes, poor guidance and Ukraine’s invasion are coming, and there’s likely nothing we can do about it. The American system has 40% more liquidity pre-pandemic, but cash is king in such a crazy environment.
Earning is relevant but irrelevant too when inflation is at a 40 year high. The Ukrainian invasion could spike inflation higher than we can today imagine! I’m not usually an alarmist but I am pretty worried.
Russia even has blood supplies near the Ukrainian border. Russia's military buildup near Ukraine has expanded to include supplies of blood along with other medical materials that would allow it to treat casualties, in yet another key indicator of Moscow's military readiness as reported in late January, 2022.
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That’s practically a declaration of war. This isn’t a regional conflict, as such a conflict would create outrage all over the world and possibly even a Third world war.
Given the type of forces that are arrayed, the ground maneuver forces, the artillery, the ballistic missiles, the air forces, all of it packaged together. If that was unleashed on Ukraine, it would be significant, very significant and I think the stock market would plunge. More than it will plunge when it realizes Omicron BA.2 is 1.5x as contagious creating a 6th major wave in March and April, 2022 that will topple many hospitals and ICU departments globally.
I expect 2022 to be a very volatile year for the stock market. We’ve already seen multiple bubbles burst and correct and now the EV sector of meme-stocks has started in the last week of January, 2022.
If Tesla, Bitcoin and BigTech are defeated in the stock market, confidence will really take a hit. The problem is it’s almost inevitable to occur after 23 months of significant market optimism and almost a sense of invulnerability with Fed QE support.
I think you’d have to go back quite a while into the Cold War days to see something of this magnitude, and there’s nothing quite like the Olympics ending as to herald the beginning of potentially World War 3.
Investors aren’t crazy, it’s an incredible amount of uncertainty we are facing. Fear moves the markets even more than the Fed and the Fed will have limited tools to fix supply-chain and inflation issues come the world in just a few months.
In this cycle, we’ve been so spoiled since 2009, and more so even since 2020 that we don’t even remember what real market cycles feel and look like. We have been trading and buying stocks on an equity market divorced from the real world. I think by mid February we’ll know the truth if Ukraine is something to big. My hunch is that it is a big deal.
If you want to reach my more serious and frequent articles on the stock market you can do so on Stock Quest, here.
https://stockquest.substack.com/subscribe
Thanks for reading!
What do you think??Will global conflict impact the stock market.
Life & Property Insurance expert
2 年What is that suppose to mean?Is it the end of the world?
Investment Banker | Senior Mortgage Originator | Lean Six Sigma Expert | Intelligent Investor | Philanthropist #investmentbanker #HardMoney #lending #capital #commerciallending #finance #financing #mortgage
2 年Inflation is a bigger driver than any threat to the market , take inflation out of the calculation and then I can see the danger of this possible and probable event.
Maximizer, Developer and Connector of People and Teams
2 年Interesting and insightful Michael Spencer It is said, you can usually tell the difference between fact and fiction by how popular the tale. Although not the most optimistic picture you paint here, it speaks much to truth, no matter how unpopular it may be.
A.I. Writer, researcher and curator - full-time Newsletter publication manager.
2 年If tensions ramp up between Russia and Ukraine and China and Taiwan, the stock market (even with 40% more liquidity) could still see a fear momentum selling spree that makes this NASDAQ correction look like a minor blimp.