Horrific War Implications - People Should Be Careful!
As the war in Ukraine continues the implications for the rest of the world get more and more clear. Not only investors will be under a lot of pressure in the coming weeks but the whole world economy. Unfortunately, this situation will hit the ordinary people the most. In this article I want to talk about some reasons why we are about to head into a recession and why everybody should buckle up for a bumpy ride in the coming weeks.
Rising Energy Prices
First and foremost we have to talk about the rising energy prices. Like I mentioned before, this hits the ordinary people as they have to pay a lot more for fuel and housewarming. On the other hand we also have to talk about several industries that are dependent of gas and need energy to be able to work. In general, we are talking about every company that is out there. Whether it is the retail business, delivery companies or chemical plants. Everyone of them needs energy or fuel to operate. It is getting so bad that some businesses are shutting down because it is not profitable to operate anymore. Many fishermen have stopped going out to the sea because the cost of fuel went through the roof. This also affects the supply chain issues that we already are dealing with because of the pandemic. This will make the situation not better and will bring inflation further up. In some cases it is even so bad that people have to work to be able to afford the drive to work! That is absurdity at its finest.
Chip Market and Food
But that are not the only problems coming from this war. There is a big impact on the chip market as Ukraine has several companies involved in this industry. More precisely some companies are working in the Nickel production that is heavily needed for chips and batteries. But stay with me here, it will get worse! Ukraine is also one of the biggest weed suppliers in Europe. Because the production seems to get skipped this year the price of bread and other food will soon sky rocket as well. This will certainly not help to combat inflation and will certainly not work in the overall favor.
Hard Times Ahead
All of this is leading to a heavy stagnation in different industries which makes the economy growth decline. In some cases a decrease will be inevitable as big companies will start to lay off their workers. This situation will not be easy and this is why the upcoming Wednesday, March 16th, will be very important. In this meeting the FED will announce their approach to battle inflation, but it seems to me that there will be no easy way out. Even with the best possible solution, it does not seem like we will be able to go around a recession. That means that the next few months will not be very bullish for investors. With that being said, if you have the opportunity to invest, this would be a good entry point to invest in solid investments. These would be companies that are producing constant value or a broad index ETF like the S&P 500. I think that crypto has also some use case, especially Bitcoin. With the recent EU announcement that the ban of BTC is of the table it seems like the politicians are starting to acknowledge and accept crypto more and more. Last but not least it is important to say that if you believe in a project and nothing fundamentally changed in this project you should never sell it but treat it as future investment. Everything other than that would be gambling and that is not what smart investors do!