February 2023: Monthly Asset Class Report

The USD led the way, hurting all other assets. [The Rude Awakening] March 01, 2023 [WEBSITE]( | [UNSUBSCRIBE]( February 2023: Monthly Asset Class Report - The USD was up 4% against the usual currencies. - Stocks, bonds, and commodities were all down in February. - Real estate fell as well. [Over 62 And Collect Social Security? Take Action Immediately!]( [Click here to learn more]( [If you’re over the age of 62 and currently collect Social Security, you need to prepare now](. Because Biden has given our country the worst inflation in decades – and many warn things will only get worse from here. Worse yet, the Social Security check you receive now may not keep pace with inflation… [Which is why, if you don’t act now, you could fall behind in the months ahead](. Is your retirement at immediate risk? [Click here now to get the simple, step-by-step actions to survive inflation](. [Click Here To Learn More]( [Sean Ring] SEAN RING Happy Hump Day from overcast Asti! It was a funny old month. Everything I thought was going to happen in January happened in February. Stocks, bonds, and commodities all fell. Why? Because the market has woken up to the fact that Jay Powell will raise rates again and keep them higher for longer. We’ve been writing about that for ages in the Rude. Finally, everyone caught up to us. Unfortunately, gold, silver, and real estate also took a hit. Cryptos also got hammered. There’s plenty of room to run on those. But for now, they’ll be licking their wounds. Let’s look at the charts to see… S&P 500 [SJN] It seems Jay Powell has gotten through to the stock market, right when I thought the market was most uninterested. It looks like we had a false breakout to 4,200, and then headed right back down after that. We’re stuck in the 3,800 to 4,100 range on the SPX. A breakout either way next time should show us the way. Nasdaq Composite [SJN] Another reversal of fortune. As soon as February started, the Nazzie turned around. We’re looking to the 200-day moving average as support. I also see the 50-day moving average potentially crossing above to create a golden cross. If we rebound, the next stop is 13,000. If not, 10,500. Russell 2000 (Small caps) [SJN] The Russell couldn’t get through the $200 level. We’re back down to a safe $188. I suspect we’ll try again. If we break through $200, we’ll go first to $205, then $220. If not, it’s $180, then $162 on the downside. The US 10-Year Yield [SJN] Of course, we whipsawed right when I’d given up hope. We’re already at 3.92%, but still suspect we’ll get through 4.20% on the way to new highs this century. Dollar Index [SJN] We indeed headed up to nearly 105 so far. I think we can head higher only because Jay Powell isn’t done hiking rates yet. After four straight weeks of rallying, it looks like we’re taking a break. The next level up is about 106.50, then 108. Below this, it’s 103.20 and 101. USG Bonds [SJN] This turned out to be a double top. We headed back down towards 100. We’re currently at 101.71. We’re looking at 92.5 on the downside. Investment Grade Bonds [SJN] We stalled at about 110.50. Then, we broke down toward our downside target of 105. Below here, we’re at 98. If we recover, back up to 110. High Yield Bonds [SJN] We got that breakdown to 74. We’re stuck in the 71 - 77 range. A definite break, either way, will tell us more. Real Estate [SJN] Real estate couldn’t capitalize on its rally, sadly. After topping out at 92, it headed back to 85. From here we can head to 82, then to 75. [LOCKED OUT of Your OWN Money?]( I don’t mean to scare you, but… President Biden recently signed a despicable executive order that could effectively LOCK YOU OUT of your OWN money! It is absolutely CRITICAL that you know what’s happening, so you can protect yourself and ALWAYS be able to access your hard-earned savings. [Click here for all of the important details](. [Click Here To Learn More]( Base Metals: Copper [SJN] The underlying macro woes are weighing on copper, though not as heavily as I’d thought. We’re still in bull territory, although we’re slightly down over the last month. A breakdown takes us to 3.70. A breakup, 4.90. Precious Metals: Gold [SJN] I’m still a gold bull, but I suppose someone had to smack it down to 1,836. I still think we’ll be well above $2,000 sometime soon. In the meantime, hovering around this level is nothing to sneeze at. Precious Metals: Silver [SJN] Nothing is more frustrating than silver. I wanted to get above $25 to feel super positive about silver. Instead, we turn around to $21. Awful. Cryptos: Bitcoin [SJN] Got the golden cross. Maintained the rally. Bitcoin has stayed just under $24,000. Still not a huge fan, but it is showing signs of life. Cryptos: Ether [SJN] About the same chart as Bitcoin. Same commentary as for Bitcoin. Still not a believer right now. Trad Asset Class Summary [SJN] Of course, everything flipped around from last month. As the market realizes Jay Powell isn’t lying about hiking rates higher for longer, the USD rallied as a result. Commodities were a touch off, down by -0.72%. The SPX gave away half its January gains, losing 3.62%. The 30-year bond finished February down over 6%. Crypto Class Summary [SJN] It was an ugly February for the crypto world. ETH and BTC were the least bad of the bunch, down just over 2% each. The rest performed abysmally. LTC was down over 6.5%, while the worst performer, Monero (XMR) was down over 15%. Wrap Up The market is now aware of Jay Powell and is acting more cautiously. All risk-on assets took a hit last month. It seems the market willed January to new highs, but February made them reconsider. March’s follow-through will give us information about how the rest of the year will look. Finally, let’s take a moment to enjoy the beach and the sun in this meme, courtesy of the Twitterverse: [SJN] Have a great day! All the best, [Sean Ring] Sean Ring Editor, Rude Awakening In Case You Missed It… Great Game or Great Friends? The Russia and Saudi Bromance. [Sean Ring] SEAN RING Good morning on this cold, overcast Tuesday morning from Asti. It’s the last day of February today. That means a Monthly Asset Class Report will be ready for you tomorrow morning. In the meantime, I thought I’d throw out a geopolitical piece today, as my good friend and Rude reader Cheltenham Ian wrote me last night. Ian and I have been friends for ten years. In fact, he poached me away from my old training company in 2013 to work for him in Singapore, covering the banks in Asia. I have drunk beer with Ian in more cities than most people I know. We’ve traveled together that often. And if it weren’t for the government-mandated private sector shutdown, that number would be even higher. But it’s been years since we’ve seen each other. So, we’ve had to resort to writing and talking on the phone, rather than beering it up in a good pub. In today’s Rude, I answer Ian’s question more thoroughly than I did in my reply to him for your benefit. What Was the Question? Here’s what Ian wrote: The angle that I don’t think is being written about much … Russia virtually stops selling to Europe directly etc. and starts selling a lot more to India and China at discounts. Builds a new distribution platform (sort of). All good so far. But are the key ME countries - especially Saudis - happy about this? Relaxed? I doubt it. A world in which Russia and Iran basically supply China. Middle East is relaxed at losing out? Not sure. Russia butts into Saudi’s major large-scale growth markets. Leaving Saudi more dependent on shrinking ‘western’ markets – places actively focused on reducing hydrocarbon use (albeit slowly). I can’t believe long term that will be thrilling for the Saudis. They’d probably like to maintain a balanced customer portfolio. It’s probably OK for now … at $80+ per barrel. But the longer-term feels a bit ‘loose cannon’ stuff and must have ripples out into the future? It’s also very interesting that the Middle East is choosing to ‘open up’ to western stuff - at the same time as Russia is choosing to ‘close off’ from the same. Feels like, again at $80, in the short term, not a lot is changing. But longer term my sense is Saudis will be thinking carefully about how they fit into that more binary world? Will it be comfortable for them to compete with Russia for China’s business? I wonder. Let’s get a critical item out of the way first. Why would Saudi sidle up to Russia, to begin with? - Economic benefits: As a major oil exporter, Saudi Arabia has a vested interest in maintaining stable relationships with major oil importers like Russia. The two countries have also discussed potential collaborations in other areas, such as investment, tourism, and nuclear energy. - Diversifying alliances: Saudi Arabia has traditionally been closely aligned with the United States, but recent tensions in the relationship have prompted the kingdom to seek out other partners. Developing closer ties with Russia gives Saudi Arabia more strategic options in a conflict or geopolitical crisis. - Syria conflict: Russia is a critical player in the Syrian conflict, which is of great concern to Saudi Arabia. By engaging with Russia, Saudi Arabia may hope to influence Russia's position on the conflict and potentially find a diplomatic solution. - Balancing against Iran: Saudi Arabia and Russia are regional powers concerned about Iran's influence in the Middle East. By allying with Russia, Saudi Arabia may seek to counterbalance Iran's regional influence. That last one is a big one. So we’ll save that for a bit later. Ian’s got the Russian oil rearrangement right except for one thing: Russia was already selling a shit-ton of oil to China. Here are the 2020 stats on imports to China: [SJN] Source: [( They’re already the biggest two. Do the Saudis love that? Probably not. But what are they going to do? A critical point to remember is this: Russia pipes its oil and gas to China. Saudi ships it. That’s much more time-consuming and expensive. The distance between Saudi Arabia and China is quite large, so transporting oil by sea is the most practical and cost-effective method. The oil is typically loaded onto tanker ships at Saudi Arabian ports, such as Ras Tanura or Yanbu, and transported through the Red Sea and then the Indian Ocean to ports in China, such as Qingdao or Shanghai. The journey can take several weeks, depending on the route and weather conditions. There have been discussions in recent years about the possibility of building a pipeline to transport oil from Saudi Arabia to China. But as of now, there is no such pipeline in operation. Remember, if China can figure out how to grow again, the Russians and Saudis can sell plenty more crude. According to [The Wall Street Journal]( North Africa is also picking up the Russian slack; it’s not just Asia. [SJN] Credit: [WSJ]( [“The Situation Is Getting Worse By The Day”]( That’s what the President of the US Chamber of Commerce just said about the supply chain. If you thought the supply chain issues were over, think again… Things are about to get much, much worse. And everything from your local grocery store to your gas station could be impacted. That’s why I’m urging everyone I can to prepare now… [To see the #1 move to make before this problem gets any worse, click here now.]( [Click Here To Learn More]( Economic Interests Besides Oil As for Saudi becoming more dependent on Western markets, Ian makes a good point by intimating it’s silly, considering The West is hellbent on getting rid of fossil fuels. But that’s what the Saudi/Russian relationship is about. First, they work together to keep oil prices as high as possible. Second, they’re trying to find other ways to trade to diversify their economies. The five main areas of bilateral trade are military equipment, agricultural products, construction materials, chemical products, and tourism. The Iran Issue Obviously, the Middle East isn’t one entity. I imagine the Saudis are far more uncomfortable about China and Russia canoodling Iran into the SCO than Russia selling China oil. That’s a far bigger deal. According to [The Cradle]( Russia and Iran just inked a new defense deal: The news of a potential deal between Iran and Russia to supply Tehran with 24 Sukhoi Su-35 combat aircraft is significant and not a passing event, as tensions between the two states and western nations continue to escalate. If Iran also sends short-range precision-guided ballistic missiles to Russia in conjunction with this agreement, those tensions will further intensify. While there has been no official announcement yet about the deal, Iranian officials have expressed interest in acquiring the Su-30 and Su-35 fighter jets and the fifth-generation Russian Su-57. On 15 January, a member of the Iranian National Security and Foreign Policy Committee, Shahryar Heidari, confirmed that the fighter jets will arrive next March and that Tehran requested other military equipment from Russia, including air defense systems, missile systems, and helicopters. That’s big and certainly not something that would make the Saudis happy. But Iran is the main country on the BRI; by a trick of geography, Saudi isn’t. That’s not fixable. [pub] Credit: [The Cyber Economist]( Wrap Up Russia and Saudi Arabia are building a relationship based on mutual benefits. That’s just how any two countries should do it. But there are complications. However, those complications are nothing to the alternative: being at the mercy of a West that hates fossil fuels and wants nothing more than complete subjugation, if not outright destruction. Have a great day ahead! All the best, [Sean Ring] Sean Ring Editor, Rude Awakening [Paradigm]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2023 Paradigm Press, LLC. 808 Saint Paul Street, Baltimore MD 21202. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. To end your Rude Awakening e-mail subscription and associated external offers sent from Rude Awakening, feel free to [click here.]( Please note: the mailbox associated with this email address is not monitored, so do not reply to this message. We welcome comments or suggestions at feedback@rudeawakening.info. This address is for feedback only. 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