Ford Motor Company strikes back with 20-year share price high
Just as the celebrations of the New Year began to give way to the stark reality of heading back to work, executives at motor manufacturing giant Ford Motor Company had good reason not to be needing to consider a cost-saving ‘dry January’.
On January 5, just a few days into the corporate year, Ford’s stock jumped up to an astonishing 20-year high. The success of the evergreen ‘blue oval’ badge that has been a staple of America on the move for over 100 years has always set an example of how to give customers exactly what they want and is as much of a symbol of American folklore as Coca Cola or Elvis Presley.
Therefore, if Ford represents tradition and Tesla represents disruption, it makes sense that Ford stock is held for years by long-term, sensible-shoes investors whilst Tesla stock is high-cap, market-dominating and up there with Amazon and Google as a ‘big tech’ player rather than a car manufacturer.
Ford got its own back on January 5, however, as it announced the imminent launch of the all-electric version of the bestselling vehicle in North America, the F150 truck. The F150 for generations has been the nation’s number one, and now with electric power, Ford has combined its ubiquity and familiarity with Tesla’s zero-emissions and zero fuel ideology. Disruption meets tradition, and up go the stocks!
A Yen For Stability
On January 7, Japan’s finance minister Shunichi Suzuki made a public announcement about the need to stabilize the Yen and showed his concern about the nation’s sovereign currency having recently declined against the US dollar.
In the first few days of 2022, the US dollar reached a five-year high against the Japanese Yen, at 116.35 to 1 US dollar.
The Bank of Japan did what most other banks in free market developed nations are trying to do, and kept the interest rate low despite the worldwide inflation problem becoming a serious strain.
Policymakers in Japan saw very little opportunity to stem the decline of the Yen against the US dollar at the beginning of January, and the shortages of semi-conductors and raw material logistical implications mean that Japanese manufacturing giants have had their output impeded, which certainly does not help.
The decision was made not to intervene in the currency markets, a policy in line with Japan’s notorious conservatism, however economists in Japan are looking at the longer term and trying to ride out the period of a weakening economy as productivity is still sustainable, and if the dire public finances and slipping competitiveness could be reversed it may be a slow way out.
FTSE 100 striding ahead as open economy faces closed neighbours
By the middle of January, it had become clear that the British government, despite speculation that a ‘planned lockdown’ was on the cards, would be unable to instigate any more arbitrary and anti-business curtailments on liberties in the United Kingdom after the tabloid press exposees showing senior government officials doing what they told the public not to do during the height of the previous lockdowns.
This removed any credibility and showed that the people making the draconian rules were not scared of what they repeatedly told the public to be scared of, and hey presto, Britain became suddenly free of even the most trifling of restrictions, with no likelihood of them returning.
By contrast, some of the larger European Union member states have forged ahead with strict restrictions on business, travel and in some cases excluding some members of society altogether from participating in certain areas of everyday life, hurting the economy even further.
The result of this was that by January 17, the FTSE 100 blue chip index of the most highly rated stock on the London Stock Exchange rallied ahead compared to all of the indices in mainland Europe.
The FTSE 100 raced to a 1 year high at 7,611, with energy and utility companies Severn Trent and National Grid contributing greatly, alongside major homebuilders.
In France, the CAC 40 index was fluctuating but had closed down 1.41% over that trading week, and Germany’s DAX index went down 0.77% on the week ending January 14.
Open for business means a healthy outlook, however the fluctuations on two of Europe’s major exchanges show that investors are nervous in areas where the long arm of the government is still very long indeed.
Luxury comes at a price, but investors are confident
Garmin may be a name that motorists would associate with the early years of this Millennium and associate it with stand-alone satellite navigation systems that stick onto the windshield, now a long-obsolete item, but the company has an illustrious history making marine navigation systems and outdoor navigation equipment and is still coming up with new products.
Its latest, two new luxury smartwatches, the Epix and Fenix 7 Series, went on sale in mid-January, causing Garmin stock to climb and finish at a 2.14% rise on January 18.
Garmin is an S&P500 component, so it is a big player to say the least, and despite mainstream ubiquities such as Apple Watch and Samsung Galaxy Watch being omnipresent, Garmin’s premium products are attempting to stand themselves out as luxury items with long battery lives and that bit of panache not offered by the mainstream.
Clearly, investors think this is a worthy venture.
Crypto volatility as news reports of potential conflict abound
Whenever there is news that a possible conflict between nations may arise, markets become volatile. There are those who think it is an almost unwritten rule among traders and investors to buy before a predicted conflict starts whilst the market is low, however in the case of the Russia and Ukraine news, even cryptocurrency has dived in value.
It would have been perhaps predicted that the opposite would happen, given that the public’s faith in the Ukrainian and Russian economies and currencies has been decimated over the past few years and that many would look to store their value in cryptocurrency, but there is more to it than that.
Globally, it is likely that the western economies will suffer more, and therefore prudent approach to investing has come up.
Surprisingly, bitcoin went down to 50% lower than its November high in the third week of January, as no ‘bank run’ has taken place among investors in Russian raw materials or among Russia’s citizens.
It’s business as usual for most people, however the potential sanctions that any European nation or the US may attempt to put on Russia would likely result in Russia’s president restricting the gas or oil supply as a bargaining tool, therefore all eyes are on commodities and not crypto.
In this case, it is Russia’s raw materials-based resource-rich economy vs the timid, consumer-based society of the west. That’s why there is volatility!