Political Appetite: Lockdowns > War

Macro Perspectives: Tue 29 Mar 22

Markets seem to be still digesting the inflammatory words from Biden over the weekend, about removing Putin.

To the sentiment headwind, Biden was out pushing his 2023 budget, which includes higher taxes and disincentives for investment (by taxing UNrealized gains!!).

I suspect it's clear to anyone, an aspiration from the West for regime change in Russia would trigger a long, messy global war. Therefore, oil prices would go UP significantly, as the supply/demand imbalance would be compounded, gold would go UP significantly (despite my current bearish stance on $GLD), as global capital would move to relative safety.

That said, both (oil and gold) went down significantly on the day. Meanwhile, tech stocks led the way up - from very early in the day.

Neither Biden's reckless foreign policy actions, nor his threats to curtail wealth at the top, could keep stocks down. Perhaps the White House policy news was overwhelmed by another factor: the return to lockdowns in China.

In fact, if we can read anything into market behaviour to start the week, it's that the market considers the political appetite for more lockdowns to be greater, than the political appetite for global war.

These stocks that thrive in a lockdown were big performers on the day;

Amazon was up 2.5%, Zoom was up 3%, Roku was up almost 4%, Docusign was up 4%.  Doordash was up 9%.