Capitalight Research will be attending this year's Prospectors & Developers Association of Canada (PDAC) held in Toronto. Patricia Mohr from our team will be speaking on Monday, June 13 at 3:30 PM in Room 701!
We hope you can attend and stop by our booth #1215 for a chat!
June Market Minute
The war in Ukraine is now past its 100th day. Russia has taken control 20% of Ukraine’s eastern territory. The war has essentially closed the bread basket of Europe for business which is causing major problems with the food supply. The shortage has caused talk on the streets of an upcoming food crisis that the world is not prepared for. OPEC has agreed to increase its output yet the price of oil and gasoline continue to go up driving inflation higher. Raising interest rates to stave off inflation is starting to create weakness in the stock and housing markets. The Bank of Canada is calling for three more 50 basis points increases before October 2022. Expectations of increases by the Federal Reserve show a series of 50 basis point increases followed by 25 basis point increases at each meeting, to bring the fed fund rate to a range of 2.75%-3.00% by year end.
The tech heavy Nasdaq index saw some of its biggest names get throttled. Some stocks have since bounced but there is a high risk of more downside to come. Even Tesla isn't immune as Elon Musk announced that he will be looking to cut 10% off jobs. Gold and silver remain steady against many of the other trading instruments as seen in the chart below.
Prices for everything from gas, groceries, housing, cars, clothes and TV’s have spiked recently causing the Federal Reserve and the Bank of Canada to raise interest rates in the hopes of easing inflation. Many people are now facing a cost-of-living crisis across the world.
Food prices have moved up so much that many people are saying it’s too expensive to eat at home! There will be a shortage of wheat coming out of Russia and Ukraine which will add to the cost of food. The lack of fertilizer-potash from Russia will be a major problem for farmers for two reasons. Their crops yields will be smaller which will force them to ask for more when selling to the market. Secondly, some corn and soybean farmers in Michigan are seeing their fertilizer bill go up as much as $175,000 or more. The rising cost of fuel will continue to add upward pressure to prices.
Increased covid cases has both Beijing and Shanghai back on covid high alert on the heels of restrictions being lifted. The lockdowns which have lasted for approximately two months saw manufacturing and shipping grind to a halt. The impact of the extensive lockdowns has taken a toll on China's and the world economy. Shortages of parts and components needed mainly in the computer and automobile industries could persist for some time. Companies which buy their goods from China will have their earnings affected dramatically.
CRYPTO SELL OFF
On May 12th Bitcoin traded below $26,000 USD hitting its lowest level in 16 months. Some of the other crypto casualties were Ethereum which tanked below $2,000 USD, TerraUSD Luna and Stablecoin were all throttled. Terra Luna token was completely wiped out and is now worthless. Luna was trading at $145 USD in April and is now less than one cent resulting in a 55-billion-dollar loss. More than $200 billion was erased from the entire crypto market in just one day. At this point there appears to be a low-risk appetite for Crypto among traders and investors, especially after the Terra-Luna debacle.
Turbulent markets are likely to continue over coming months. Have some gold & silver exposure.
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