Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24
How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - 17th Feb 24
Why Rising Shipping Costs Won't Cause Inflation - 17th Feb 24
Intensive 6 Week Stock Market Elliott Wave Training Course - 17th Feb 24
INFLATION and the Stock Market Trend - 17th Feb 24
GameStop (GME): 88% Shellacking Yet No Lesson Learned - 17th Feb 24
Nick Millican Explains Real Estate Investment in a Changing World - 17th Feb 24
US Stock Market Addicted to Deficit Spending - 7th Feb 24
Stocks Bull Market Commands It All For Now - 7th Feb 24
Financial Markets Narrative Nonsense - 7th Feb 24
Gold Price Long-Term Outlook Could Not Look Better - 7th Feb 24
Stock Market QE4EVER - 7th Feb 24
Learn How to Accumulate and Distribute (Trim) Stock Positions to Maximise Profits - Investing 101 - 5th Feb 24
US Exponential Budget Deficit - 5th Feb 24
Gold Tipping Points That Investors Shouldn’t Miss - 5th Feb 24
Banking Crisis Quietly Brewing - 5th Feb 24
Stock Market Major Market lows by Calendar Month - 4th Feb 24
Gold Price’s Rally is Normal, but Is It Really Bullish? - 4th Feb 24
More Problems in US Regional Banking System: Where There's Fire There's Smoke - 4th Feb 24
New Hints of US Election Year Market Interventions & Turmoil - 4th Feb 24
Watch Consumer Spending to Know When the Fed Will Cut Interest Rates - 4th Feb 24
STOCK MARKET DISCOUNTING EVENTS BIG PICTURE - 31st Jan 24
Blue Skies Ahead As Stock Market Is Expected To Continue Much Higher - 31st Jan 24
What the Stock Market "Fear Index" VIX May Be Signaling - 31st Jan 24
Stock Market Trend Forecast Review - 31st Jan 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Russian Sanctions Stagflation Driver

Economics / Stagflation May 07, 2022 - 06:10 PM GMT

By: Nadeem_Walayat

Economics

Knock out 20% of the world's gas exports and 10% of the worlds exports and how can you not expect even higher inflation. Even worse for Europe where several nations such as Germany rely on Russia for upto 40% of their gas. Whilst for the UK 4% of russian gas may not sound like much but the impact has been on gas prices that had already soared several fold before the Ukraine invasion have now doubled once more. with the risks that the sanctions blitzkrieg prompts Russia to pull the plug on EU gas that will trigger gas rationing among many nations such as Germany and Italy which means INDUSTRY will take a hit thus further disrupting supply chains and hence continuing to put upwards pressure on prices as component and finished goods supply chains are further disrupted which easily translates into EU inflation surging higher by an additional 2% and reduction in GDP of at least 0.5%.


Whilst it is beyond the scope of this article to forecast oil prices, nevertheless if the West sanctions Russian oil and gas then how can that not push oil prices to new highs, maybe not as far as $200 that often gets bandied about but to at least $150 a barrell that would both be highly inflationary and at the same time deflationary in terms of global economic output, RISING PRICES, FALING ECONOMIC OUTPUT = STAGFLATION!

You want to know the playbook for what could transpire, go back to to the mid 1970's with the wars in the middle east for how bad things could get, which also acted to worsening an existing out of control inflation trend as looks likely to rhyme with the Ukraine war in 2022. With full employment how long before workers start demanding real terms pay increases and then we will be off to the inflation races for a whole DECADE! This is what happens when governments and their central banks lose control of inflation, it is not easy to get back under control! Which is all that high interest rates will do is to dampen economic activity to SLOW the rate of INFLATION rather than to bring it down.

Why do you think I am taking the risk of buying AI tech stocks ahead of probable economic contraction? A drop in corporate earnings that will send most stocks sharply lower because at least I have a fair chance of good stocks being indexed to the inflation mega-trend and thus survive the inflation blood bath whilst all those waiting for the bottom will be buying with fiat currency that has lost perhaps 50% of it's value! And thus all that they will be able to buy are the garbage stocks with contracting or even worse no earnings. At these times you want to hold the BEST STOCKS NOT GARBAGE stocks which are for bull market FOMO mania"s and not during times of economic stress!

This article in an excerpt from my most recent extensive analysis focused on UK House Prices Three Trend Forecast 2022 to 2025, where I pealed away multiple layers of the UK housing market of to arrive at a high probability of trend forecast.

UK House Prices Trend Forecast 2022 to 2025

THE INFLATION MEGA-TREND
WE HAVE NO CHOICE BUT TO INVEST IN STOCKS AND HOUSING
High Inflation Forecast for Whole of this Decade Due to Rampant Money Printing
Fed Inflation Strategy Revealed
Russian Sanctions Stagflation Driver

RECESSION RISKS 2023
UK Debt Inflation Smoking Gun
Britains' Hyper Housing Market
UK Population Growth Forecast 2010 to 2030
UK House Building and Population Growth Analysis
UK Over Crowding Ratio
Overcrowding Implications for UK House Prices
UK Housing Market Affordability
UK House Prices Real Terms Sustainable Trend
UK House Prices Relative to GDP Growth
UK House Prices Momentum Forecast
UK House Prices and the Inflation Mega-trend
Lets Get Jiggy With UK INTEREST RATES
Is the US Yield Curve Inversion Broken?
UK house Prices and Yield Curve Inversions
Interest Rates How High WIll they Go?
Work From Home Inflationary BOOM?
Formulating a UK House Prices Forecast 
UK House Prices 2022 to 2025 Trend Forecast Conclusion
Peering into the Mists of TIme
Risks to the Forecasts
US House Prices Trend Forecast 2022-2024

Which was first made available to patrons who support my work.So for immediate first access to ALL of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $4 per month. https://www.patreon.com/Nadeem_Walayat.

Whilst my most recent analysis is in the rrisks that the likes of Apple and Microsoft pose to the stock market indices Why APPLE Could CRASH the Stock Market!

My Main Analysis Schedule

  • UK House Prices Trend Forecast - Complete
  • US House Prices Trend Forecast - 70%
  • Global Housing / Investing Markets - 60%
  • US Dollar / British Pound Trend Forecasts - 0%
  • Stock Market Trend forecast into End 2022 - 0%
  • High Risk Stocks Update - Health / Biotech Focus - 0%
  • How to Get Rich - 85%
  • Gold and Silver Analysis - 0%

Again for immediate access to all my work do consider becoming a Patron by supporting my work for just $4 per month. https://www.patreon.com/Nadeem_Walayat.

And ensure you are subscribed to my ALWAYS FREE newsletter for my next in-depth analysis.

Your analyst BUYING the panic selling falling knives.

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2022 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Housing Markets Forecast 2014-2018The Stocks Stealth Bull Market 2013 and Beyond EbookThe Stocks Stealth Bull Market Update 2011 EbookThe Interest Rate Mega-Trend EbookThe Inflation Mega-trend Ebook

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in