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Summing up the Week of 04/15 - 04/22

2022, Apr. 22

A broad overlook

The week from the 15th. to the 22nd. of April has seen a lot of volatility with the associated volatility index of the S&P 500 moving up around 3.7 points which is equivalent to roughly 15.5%. Furthermore we have seen a dramatic fall in all the major stock markets with the Dow and S&P extending losses with both around a 2.25% loss on the week while the Nasdaq falls 2.20%. A noticeable exception has been Wednesday as the markets turned green most likely due to investors anticipating positive announcements though on Friday the stock market has dropped below the gains made the two days before.

Demand Shifts due to the Federal Reserve's monetary policy

Due to the rising cost which have been created by the federal government by printing more US-Dollars, the economy has to struggle with fewer purchases in non-essential goods such as the now preeminent canceling of dozens of Netflix subscriptions. This is a result to the demand curve, with a now higher budget constraint, falling, which as a result leaving not enough cash in consumer’s hands to afford considered luxury products and leaves non-essential products, and in the stock market stocks either out of the shopping cart or out of circulation in the marketplace.

Meaning for Investments

As a result of this transformation investors should invest in value stocks and in particular stocks which have a good record of increasing in price this year. Those are companies involved in the creation of or in the selling of commodities. By virtue of that, Mining or Agriculture Companies are a good pick.

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