Swamponomics: A Nickel for Your Thoughts

What's the deal with nickel? This industrial metal has become a critical component in the post-pandemic economy as everyone races to purchase limited supplies to advance the green energy agenda. Nickel is crucial for lithium-ion batteries and energy storage systems. But have you seen the price lately? Nickel prices topped $100,000 per ton for the first time in history on Mar. 8, before easing back to $48,000 a ton. Prices soared so much that the London Metal Exchange (LME) suspended all nickel transactions.

"The LME has taken this decision on orderly market grounds,” the LME, one of the world’s top commodity exchanges, said in a statement. "The LME will actively plan for the reopening of the nickel market, and will announce the mechanics of this to the market as soon as possible."

But, like many other commodities, nickel's situation has been merely exacerbated by the crisis in Eastern Europe, with inventories at LME-registered warehouses standing at a three-year low. Moscow presently supplies about 10% of the globe's nickel, meaning that the renewables sector is also vulnerable to the geopolitical tensions unfolding. Market analysts believe this could be the new normal for the nickel market in the coming months, even once the Ukraine-Russia conflict subsides.

It turns out that if somebody offers you a nickel for your thoughts, you better execute the transaction!

The Great Resignation Persists

Lost in the market volatility and 40-year high inflation was the latest data pertaining to The Great Resignation. In January, job openings totaled 11.263 million, topping the market estimate of 10.925 million, according to the Bureau of Labor Statistics (BLS). Job quits eased to 4.3 million to kick off 2022, but it was higher than some forecasts. This comes after Pew Research Center data identified the reasons why workers handed in their letters of resignation over the past year: low pay, few advancement opportunities, disrespect at the office, a lack of benefits, and child care issues. With a job market tilted in the favor of workers, experts believe that the present trend will continue for the next year, possibly heading into 2023.

Two Bears at a Party Talk About a Recession

Goldman Sachs has joined the chorus of financial institutions, market analysts, and regional US central banks cutting first-quarter gross domestic product (GDP) forecasts and raising the odds of a recession. The Wall Street titan trimmed its growth projections to 0.5%, down from the previous estimate of 1%. It also raised its odds of a recession to 35%.

"Oil and commodity prices have risen sharply since Russia invaded Ukraine. Our commodity strategists’ near-term crude oil and agricultural commodity forecasts imply an effective 0.7% drag on real disposable income that will weigh on spending in 2022," said Jan Hatzius, the Goldman chief economist, in a research note.

Right now, the expectation is either stagflation or recession amid soaring commodity prices, the Federal Reserve tightening monetary policy, and inflation weighing on every corner of the US economy. Also, how do you know an economic slowdown is coming? Treasury Secretary Janet Yellen revealed that she does not "expect a recession in the US." This is the same person who dismissed inflation fears and repeatedly claimed higher prices would come down last year.

Despite average hourly earnings climbing at an annualized rate of 5.1% in February, inflation-adjusted wage growth remained negative. Real wage growth tumbled 2.6% last month, according to BLS data. This has been the case for millions of Americans since April 2021. With the annualized inflation rate standing at a 40-year high of 7.9% and the consumer price index (CPI) widely expected to top 8% next month, it is becoming harder to ensure your head is above water in President Joe Biden's America. That is unless your wages or salary can exceed swelling prices. But these folks are in a small camp as a recent Capital One Insights Center survey found that fewer than one-fifth say their earnings are keeping pace with the current inflationary environment.

A Digital Dollar is Coming, A Digital Dollar is Coming!

President Biden signed an executive order on Mar. 9 requiring the federal government to study the benefits and risks of creating a central bank digital currency (CBDC). The EO also explores other cryptocurrency issues, including regulations. Crypto prices surged on the news before paring their gains. This comes months after the Federal Reserve studied digitizing the greenback. For nearly two years, China has been employing a digital version of the yuan, prompting other governments and central banks to consider releasing their own CBDCs. As a result, the war on cash has gone into overdrive.

US Consumers Have Abandoned Hope

The University of Michigan released its latest indexes of consumer sentiment and expectations. The preliminary figures were not good. The Consumer Sentiment Index fell to 59.7, worse than the median expectation of 61.4. Current conditions eased to 67.8, while expectations plummeted to 54.4. The one-year inflation expectation surged to 5.4%, and the five-year prediction remained unchanged at 3%.

"The year-ahead expected inflation rate rose to its highest level since 1981, and expected gas prices posted their largest monthly upward surge in decades," noted Richard Curtain, the Surveys of Consumers chief economist, in a news release. "Personal finances were expected to worsen in the year ahead by the largest proportion since the surveys started in the mid-1940s."

Many years ago, the world had the musical relief of Johnny Cash, the comedy stylings of Bob Hope, and the technological innovation of Steve Jobs. Today, there is no cash and no hope, but there are still plenty of jobs around that millions of people do not desire to fill. In this economic landscape, who the heck wants to be a new normal kind of guy?

~ Read more from Andrew Moran.