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Input 13.05.2022

Good Day

“SELL in May and go away… remember to return in SEPTEMBER” is a well-known saying in finance. It is based on stocks› historical underperformance during the six-month period from May to October. This may refer to trading, but not long-term investing. Our assessment of the markets is that the present correction is an investment opportunity. Inflation has failed to materialize over the past week and the question is whether the destructive war in Ukraine can be blamed for everything. China’s zero Covid policy will also come to an end and GDP growth will recover. Supply chains are already feeling the stress of the Shanghai lockdown and ships are piling up in the world’s largest container port waiting to unload their cargo.

With reference to the war, it is interesting to follow the exchange rate of the Russian currency RUB; its value is stronger than before. But it is also interesting to see how Germany, for instance, has locked itself into long-term gas supply contracts with Gazprom – “take or pay” until 2036. So, in case Germany does not use the gas, Russia can sell it “twice”.

Russia’s seaborne crude exports continue to flow while European Union nations wrangle over sanctions to block purchases and make it harder for the country to ship its barrels elsewhere. Shipments of the nation’s crude were little changed, even as the volume sent to Asia from Russia’s western ports tumbled. Self-sanctioning of Russian crude by European companies has diverted flows to Asia, while having little impact on the overall level of crude shipments.

The CPI (consumer price index) in the US shows that the impact of energy and food makes a difference of about 2%. So, instead of linking everything to interest rates, why not reducing state duty on gas, as seen for instance in Italy, where cars can be fueled at a discount compared to, say, Germany https://de.globalpetrolprices.com/gasoline_prices/Europe/, as these lower prices would consequently affect transportation costs for food and other goods.

It is hoped that a new awareness will boost local production, which will bring the following benefits:

  • Shorter distances = less CO2 emissions
  • Benefits for local economy
  • Crossborder-free communication with manufacturers
  • Enhanced sustainable working conditions – buzzword ESG
  • Fast delivery – just in time

For further information, please feel free to contact us.

Best wishes

Your JIMAG Team