Dear valued client,
Markets are closed today for Good Friday after sliding slightly in its 4-day trading week. Inflation and war in Ukraine remain at the forefront of investors’ minds.
Elon Musk offered to buy Twitter outright this week for 43B after refusing to join their board of directors. If the offer is accepted (I doubt it will be), Musk has expressed the desire to take the company private. How and when this would be done, I am not entirely sure.
The Consumer Price Index (CPI) showed an 8.5% inflation rate in the month of March compared to a year ago. This is the sharpest increase in prices since 1981. Gas is up 48%, meat prices 14.8%, and airfares 10.7%. There are only two main methods of taming these rising prices:
1. Organic causes; the smoothing of supply chains and consumers pulling back on spending.
2. Policy intervention; the Federal Reserve hiking interest rates to raise borrowing costs for consumers and businesses.
As I’ve mentioned previously, this is a delicate balancing act. One does not want policy intervention to have such a strong impact the economy begins to constrict and we spiral into a recession.
Canada’s inflation figures are set to be released next week.
As the war enters its 50th day, the Wall Street Journal released a report this week indicating three key reasons why Russia wants control over Ukraine. The first, they argue (and I’ve argued) is national pride. Putin is a Soviet nostalgist. Since he stepped into office over twenty years ago, he’s allocated significant time and energy to pulling former Soviet republics back into Russia’s orbit of influence. Ukraine has been his primary focus in this regard. The second: strategic resources. Ukraine is home to vast, fertile agricultural territory as it accounts for 10% of global wheat exports, 14% of global corn exports, and roughly half of the world’s sunflower oil. It also holds Europe’s second-largest gas reserves in Europe. The area is rich in natural resources. The third reason the WSJ provides is Putin’s attempt to regain influence on the global stage. In the past decade, the Kremlin has watched Ukraine drift farther and farther into the West’s sphere of influence with its willingness to join NATO and the European Union. As mentioned above, Russia believes it has a historic claim to Ukraine and will continue to act under this assumption.
I’d like to close this week’s newsletter with some passages from ‘Think and Grow Rich,’ a terrific book I finished reading this week. The book was originally published in 1937 and was written by Napoleon Hill, an individual who rubbed shoulders with some of the most successful business people in the past century, including JP Morgan and Andrew Carnegie, and extracted indispensable wisdom from these experiences. Here are some of my favorite quotes:
“Riches do not respond to wishes. They respond only to definite plans, backed by definite desires, through constant persistence.”
“People who succeed reach decisions promptly, and change them, if at all, very slowly. Men who fail reach decisions, if at all, very slowly, and change them frequently, and quickly. Indecision and procrastination are twin brothers. Where one is found, the other may usually be found also.”
“Remember, also, that every time you open your mouth in the presence of a person who has an abundance of knowledge, you display to that person your exact stock of knowledge or your lack of it! Genuine wisdom is usually conspicuous through modesty and silence.”
Have a terrific Easter weekend.
PW
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