Week in review and what to expect in this coming week starting 14Mar2022

Surge in gas prices in US

The week ended lower with S&P 500 (^GSPC) closed the week at USD$4,204.31, a drop of $55.21 (-1.30%).  As per the news, the major macro components causing the downturn are the Ukraine conflict and Federal Reserves' coming announcement about the interest rate hike. 

S&P 500 1 Day as of 12Mar22

S&P500 YTD chart - down 11.79% since Jan 2022

A death cross looks to be formed and it will be confirmed over the next few days.  A death cross happened when the 50 days moving average line cut the 200 days moving average line from above, a typically bearish signal.

Economic Factors

These are some of the key economic announcements from last week.  Initial jobless claims turned out to be worse than forecast (227K actual versus 217K forecast).  

Some key economic news for the week ending 12Mar2022

Extract from Nikkei Asia news: 

Consumer prices surged in February to a 7.9% annual growth rate, according to the Labor Department, the hottest reading in forty years. "The (CPI) print was not far off estimates," Nolte added. "There will be more to come in the next month or two as some of the rising commodity prices get incorporated."

Extract from WSJ news:

Gasoline prices were up a seasonally adjusted 6.6% from the prior month, for an unadjusted annual increase of 38%. Groceries were up 1.4% over the prior month for an annual rate of 8.6%. Housing-rental costs rose at a slower rate, up 4.7% over the year.

As per the news, US inflation hit a record 7.9%, the highest in the last 40 years.  With the unemployment and inflation data on hand, the Fed will announce its interest rate decision in the coming week.

Current Week 

The most anticipated economic event will be the Fed's interest rate decision that is taking place on 16 Mar 2022 (EST).

Economic Calendar for the coming week

Coming to the interest rate hike, 25bps is expected but 50bps would not be surprising due to the war led inflationary repercussions. 

In fact, we can expect more inflationary pressure to flow into the system as the increase in fuel costs will filter into the rest of the economy.  We can expect an increase in the prices of goods and services, logistics costs, groceries and utilities.  The consumer will continue to feel the pain as the costs mount.  Should the Ukraine situation drag out, the ongoing sanctions will lead to global inflationary pressures.  With businesses boycotting or withdrawing from Russia, the new economic war front will unleash more disruptions in the coming weeks.  Sanctions will be measured to ensure that Europe does not fall into an energy crisis.

These will pile on top of the global supply chain challenges amidst a gradual but volatile economic recovery from Covid19.  From various news agencies, Kyiv could be circled within a few weeks and a long fight is expected as Ukraine put up their brave defence.

China has important news following their NPC.  The market reacted negatively as seen in the decline of their Megatech stocks like Tencent, Baidu and Baba.

How to trade in the coming week

Sometimes, not trading could be the best decision.  There will still be some opportunities to make money in short duration trades.  Personally, the macro factors are too volatile to make good sense of any fundamental and technical analysis.  I would choose to be a spectator, not an investor in the coming week as we watch major announcements unfold.