Monday Market Update – March 28

Forefront‘s Monday Market Update

Stop the Hyperbole

I read an article this weekend that said if the war between Russia and The Ukraine continues there is a chance the world will run out of wheat. Yes, this was what the article was about, and it used a really good fear mongering statistic. The article stated that Russia and Ukraine produce 25% of the world’s wheat exports.


When a headline reads “25% of world wheat exports missing” it is pretty natural to become alarmed and think we need to come up with 25% more wheat to feed the world out of thin air. Before I cause a panic, let me be clear, the actual global wheat amount that is being impacted by the war in Eastern Europe is .9% of global wheat. Let’s break it down, and see how headlines are used to invoke emotions, but never tell the real story.

A lesson on wheat

Black Sea Wheat (wheat from Russia and Ukraine) makes up 25% of all wheat EXPORTS, that is wheat that is shipped internationally. The thing is, most countries just eat the wheat that is  produced within their own borders. India and China grow MASSIVE domestic wheat crops, and consume nearly all of it themselves. What the headline doesn’t tell you is that wheat exports are a tiny fraction of the actual global wheat crop. But that doesn’t stop CNBC from telling you to stock up on Frosted Flakes™ because of a global wheat shortage.

How much are we losing?

The global wheat shortfall from the Russian invasion is roughly 7 million tons. That sounds like a huge number, expect when you look at the total global production of 778 million tons, you realize it isn’t that much after all. We need to make up for a .9% loss in global wheat, but countries had already been planting more wheat months ago. The US planted 4 million more tons of wheat last fall than usual. Australia, Canada, Argentina, South Africa, and Brazil to just name a few have all increased wheat production as well. Remember, markets are pretty forward looking. Russia invaded Ukraine only a little while ago, but futures on wheat started rising last fall.

The lesson 

As times passes, we continue to walk down a path where investors are going to need to analyze and process information much more independently. The sources we previously looked at for even a small amount of guidance and education have fully committed to caring more about clicks and eye balls than the actual job of delivering news.

I know that I write about this often, but we are in a time where fear and panic are ready to bubble over with each new headline. We are inundated with negativity and pessimism, and if something isn’t negative enough, talking heads resort to click bait headlines, and comments meant to incite fear and panic. One of the biggest obstacles investors will face over the next twenty years will be tuning out the noise and focusing on the process, and understanding the incentive and motives behind news channels will serve us well.

So What?

So how does this impact all of you?

  • There is no global wheat shortage.
  • Don’t rely on talking heads and news stations to reliably analyze and decipher data for you.

Stock market calendar this week:

8:30 AM Trade in goods, advance report
9:00 AM Case-Shiller national house price index (year-on-year)
9:00 AM FHFA national house price index (year-on-year)
10:00 AM Consumer confidence index
10:00 AM Job openings
10:00 AM Quits
10:45 AM Philadelphia Fed President Patrick Harker speaks
6:30 PM Atlanta Fed President Raphael Bostic speaks
8:15 AM ADP employment report
8:30 AM GDP revision (SAAR)
8:30 AM Gross domestic income (SAAR)
8:30 AM Corporate profits (year-on-year)
9:15 AM Richmond Fed President Tom Barkin speaks
1:00 PM Kansas City Fed President Esther George speaks
8:30 AM Initial jobless claims
8:30 AM Continuing jobless claims
8:30 AM Nominal personal income
8:30 AM Nominal consumer spending
8:30 AM PCE price index
8:30 AM Core PCE price index
8:30 AM PCE price index (year-on-year)
8:30 AM Core PCE price index (year-on-year)
8:30 AM Real disposable income
8:30 AM Real consumer spending
9:45 AM Chicago PMI
8:30 AM Nonfarm payrolls
8:30 AM Unemployment rate
8:30 AM Average hourly earnings
8:30 AM Labor-force participation rate, ages 25-54
9:05 AM Chicago Fed President Charles Evans speaks
9:45 AM Markit manufacturing PMI (final)
10:00 AM ISM manufacturing index
10:00 AM Construction spending
Varies Motor vehicle sales
1:00 PM New York Fed President John Williams speaks

Most anticipated earnings for this week:

About Amit: I am a first generation American, the son of a working-class Indian family, and I lived through my parents’ struggle to find their place in this country, to put down roots that would sustain them as well as their children in a new land. As they encouraged me to excel in school and fostered my hobbies and interests, I was keenly aware of the dynamic between them. I understood that there was a difference between where they came from individually and where we were now. They worked hard in their individual capacities, but they weren’t always on the same page about financial issues – and that can make or break a family’s future. I didn’t know it at the time, but this laid the groundwork for my passion towards financial services and helping families succeed.