Here is a perfect example of why Energy Prices soaring is very dangerous for the broader economy. The Ongoing war in Ukraine against Russia and the threat of limiting Oil imports from Russia will keep these prices soaring for the foreseeable future. War does not care about market patterns.
Each time there has been a significant deviation from the trend paired with high Oil prices, it has triggered a Recession. This has happened 6 times since 1970. I can only show 3 examples here because of chart limitations. We could be faced with the 7th time as the recipe for this to happen seems to be stellar at the moment.
With the Macro environment as it is with a weakening economy even when rates are at 0, the FED is going to find itself in a very tough spot. Pair this with the ongoing war, a threat to Taiwan by China, possible Global Recession, High Inflation , Energy prices soaring (which is possibly the most important thing to take note of here), the chances of all these factors coming to the same conclusion grows by the day.
I think the chances of a recession have multiplied at this point and I'd wager the FED is fully aware of this. They could potentially pivot here and instead of letting it happen, they may want to cause the recession to give themselves breathing room to work with. As odd as it sounds. Since a recession comes both ways.
It is more logical to Raise Rates + Taper as you don't want a recession hitting (which it is) with Rates at 0 and QE. And they cant lower rates at 0 or even worse inject more money.
The FED causing the recession has happened before in the 1980s when the FED was headed by Volcker. Just recently Powell was asked, "Are you prepared to do what it takes to get inflation under control?" to which Powell responded, "I hope history will record that the answer to your question is Yes".
Pair this with my AAPL analysis and a similar picture might start to present itself. Only time will tell.
Thank you for checking out the analysis, if you have any questions or comments please leave them down below. Interesting in getting your opinions.
Huh, this was a really good read thanks. And I agree war does not care about market patterns but isn't it interesting that it happens just as indexes look ripe for correction, FANG and many top stocks capitulating or on the brink. It seems quite a coincidence.
NoOneWhoIsSomeone
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@dRends35, Thank you! Now that you mention it, I have silently been noticing similar "coincidences". Always seems like an "Event" occurs right at resistance or support. I always think, how is that possible exactly? Is timing really that Unique? It is interesting, to say the least. Maybe I give Putin too much credit here but I'm sure he has top economists in his circle, its possible he used this current market weakness as an opportunity to put pressure on the West. It is quite clear his moves exceed beyond Ukraine and seek to restructure the World Order. Capitalizing on the West's economic weakness is one of the best ways to do it. It makes sense for him to play the long game and try to force our economy to bend. Very speculative, obviously.