FNArena’s Weekly Insights – March 07 2022
In this week’s Weekly Insights:
-Risk Is Tangible, And On The Rise
-Conviction Calls & Post-Reporting Season Notes
By Rudi Filapek-Vandyck, Editor FNArena
Risk Is Tangible, And On The Rise
2022 is not 2008, but there are a number of similarities that deserve to be highlighted, in particular since so many financial market reports this month include observations like “highest price/first time since 2008”.
Fourteen years ago the world had a problem inside the financial sector but few knew exactly what was going on, and even fewer people had somewhat of an idea about how things might develop. Equity markets started the new calendar year by selling off, and continued falling for weeks.
In similar fashion as with Quality and Growth companies today, nobody wanted to touch banks and other financials back then; after all, we didn’t know how bad this problem could become. But resources were considered okay as the Supercycle and stronger-for-longer narratives dominated investors’ perception and outlooks.
Energy in particular quickly became too hot to ignore with the price of a barrel of crude doubling in a matter of months, ultimately peaking at US$147/bbl amidst forecasts and projections that oil soon would be priced at US$180/bbl and beyond.
What is different today, and what seemed completely forgotten about back then, is that today investors know full well that if the price of oil rises too far, it will kill off the global economy.
So how high is too far?……………