In this weeks 'Midweek Trading Report we look at another bout of rate hikes. The BOE decision is due shortly.

The Fed Raise Rates Again.

Just like every Wednesday, I nearly did the midweek trading update yesterday but then thought that it would likely be a pointless commentary as the FOMC interest rate decision was due to take place last night, and that was bound to change everything – one way or another.

The week got off to a relatively poor start, but a little headway was being made yesterday before the 7pm meeting.

After the decision to raise 0.75% as expected, and while Jerome Powell was speaking the Dow rallied up towards 31,000 again and FTSE futures reached 7280. All was well. A decision had been made and it was the one we were expecting. Great.

Apparently not. The last hour before the US close, between 8pm and 9pm UK time, the markets collapsed once again. The Dow bottomed out at 30,100 and the FTSE fell to 7180.

Why the FTSE is so affected by what the US does is an eternal annoyance, but one we have to live with. Our own market is more affected by US interest rates than our own interest rates. The US have all the money, and so they decide where the market goes.

Anyway, enough rambling, where are we now?

The European open has actually added a little stability. The huge volatility in the US is partly due to the fact that they treat the whole thing as a money-making/losing game. Buy sell buy sell, destroy, rally etc.

The FTSE this morning has gone back to roughly where it finished out the day yesterday at 7,230 as it probably should, having moved 50 points either side during the US mess. If the Americans are in a buying mood, then this could work well and the week could finish strongly, but there is just no telling.

It is at times like this that we remind everyone to set their sights a little further back. A recovery will come, but it is taking longer and longer as inflation and Putin seem more and more stubborn. Both are determined to ruin the year of traders and wealth managers, but both issues will eventually be resolved and we will all make money once again.

INFLATION IS COMING DOWN. Despite what you are hearing, it is coming down every month, just not very quickly (but then it never does). Prices go up much quicker than they come down, just look at the petrol pumps.

Oil is now trading below where it was before the invasion. If you owned a petrol pump you would increase very quickly but take your time to lower the prices as you need to make sure you aren’t left out of pocket. This is inflation. It takes time to come down, but it is coming down so don’t panic.

If you want something to panic about, it’s this:

Putin is escalating the situation.

How does it end? I don’t think we know. The nuclear threat is one that just doesn’t bear thinking about, but now we have to start. If he wins the referendums in Donetsk, Luhansk, Kherson and Zaporizhia, which he will, then he will claim they are now part of Russia, and he will claim victory.

At his point, any move into the regions by Ukraine, or NATO, will be an invasion of Russia itself.

Russia has 5,977 nuclear warheads – this is the biggest in the world. The US has 5,428 and the mighty UK have 225 (slightly fewer than France).

The total number at this point isn’t really that relevant given it would only take one intercontinental ballistic missile to destroy London and it would be here within 20 minutes of launching. Each missile has a yield of between 00 and 800 kilotonnes – 300 tonnes is enough to take out Washington.

It has become real, but it still isn’t the most likely outcome so don’t evacuate yet! This situation does however need to be dealt with or we will just have the same problem again in years to come. A ceasefire/negotiation resolution still needs to be plan A, and is still probably the most likely result.

If referendums are done properly, can we really argue against them given the regularity with which we have them in the UK? If the UN were organising them, and the votes went the same way, would this be a democratic solution?

If Scotland eventually choose to leave, then the rest of the UK would accept that decision. If the Donbas region wish to be part of Russia, why can’t they be if that is the majority vote? This might not be a popular statement as Russia are the ‘baddies’, but democracy is the righteous side in any conflict.

Let’s all hope that someone in Russia decides it’s time for a new government. They could apologise for the previous megalomaniac dictator and promise not to do it again. Sanctions would be lifted, gas flow resumed, (and the markets would absolutely love it).

This may just be a dream, but for the sake of the human race, I hope it’s one that comes true.

One thing is for sure, it's creating a volatile market climate for our traders. We don't actually mind volatility as many of our traders will buy into market retracements. We always say to our clients, that if we have a larger position on the way up, than we had on the way down we'll do very well indeed.

All we need now is a small-mid sized pop up in the markets.

Let's hope that Putin doesn't do anything stupid.


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