Hello everybody!
This is the first article in the new column by a good friend of mine! He’ll be talking about local California news, stocks, and US finance.
Take it away, Ragavan!
Intro:
Hi, this is Ragavan! I am the new columnist for Reed’s newsletter. My hobbies are playing the violin, investing, and spreading unbiased news to everyone I know! I am delighted and grateful that Reed has given me a chance to do what I love!
Local - California
“The Enemy of my Enemy is NOT my friend”?
Asian hate has critically escalated throughout America, and we have all witnessed this sudden rise in hatred towards Asians, through real-life experiences or anecdotes. In response to this crisis, many have started movements, uniting to overcome their struggles. But even today, certain Asians themselves are not united at all, and create and spread hatred among Asians. In Laguna Woods (Orange County), CA, a Chinese gunman opened gunfire on a Taiwanese Church, containing many elders. He claims this act of violence is fueled by his hatred of Taiwan. He had additionally hidden firebombs inside the Church and locked the doors. A local hero appeared in the midst of the gunshots, Dr. John Cheng, who tackled the gunman, and saved many of the elders. Even in massacres, it warms our hearts to hear that many are trying to avoid the hatred and to avoid spreading it as well.
California will also establish a new state park, in the San Joaquin Valley. This is a record, as the state of California has not inaugurated a state park in 13 years. It will become the 280th state park in California, and Gov. Newsom has designated $5 million as a part of his revised budget proposal. This park is meant to serve “a park-poor region” and to “encourage recreation”.
California will also hold a primary election on the 7th of June. The method of voting is by mail. Governor Newsom’s authority will be challenged by Senator B. Dahle (District 1 - CA), who represents California’s rural population.
Economy/Finance
Major Stock Indexes from 16 May 2022
Why Are Gas Prices so High?
“Gas is so expensive! Have you seen the prices?”... “Of course I have! At this rate I might just buy a Tesla instead…”
Demand. Who used cars in quarantine? And then offices started to open… and the rest is history. Let’s take a step back here. When the pandemic hit America in March 2020, the demand for gas plunged. According to “AAA,” the “typical driver halved their driving.” In April 2020, the national average for gasoline was $1.94 a gallon. Then, as the US economy started to recover, and as inflation and vaccinations kicked in, Americans began to feel the urge for safety and belonging in the community. This made people start their cars again, and gasoline prices rose. Secondly, OPEC, or “Organization of the Petroleum Exporting Countries,” including Russia, started to cut drilling petroleum during the pandemic, because demand was low. How does petroleum relate to gas? Gasoline is a product of petroleum or crude oil. Anyways, this sudden cut to oil production took a while for Russia and the US to recover, increasing gas prices for the time being. What does this mean for the average consumer? Well, as you can guess, at one point the OPEC countries will start to drill to a faster extent, which means the supply will be higher too. As demand is already high, supply will also be high, reducing prices. Inflation is when supply is low, but demand is high, and that is a crucial part of why you’re seeing gas prices at upper $4 or $5, and even around $6 a gallon in California. Finally, as all of us have heard, the Russo-Ukrainian War has impacted petroleum imports severely. Russia is the major OPEC country, and most countries get their oil from Russia. But, President Biden, on 8 March 2022 banned Russian oil and gas imports in protest to the unjust war, as most of you know. How does this affect US gas prices, as the US can drill petroleum themselves? The surge in gasoline prices is actually due to the global oil market, and how the United States’ policies' effects are heard worldwide. As De Haan, an economist, says, “When the U.S. issues sanctions, that has wide ramifications on the ability of Russia to export oil. We don't import a lot, but somebody else does and we are making it difficult for Russian oil to flow to the global market, and prices are reacting to that." Concludingly, we can definitely see lowering gas prices as inflation lowers. This will take time, but it’s not the end of the world. Hang in there, folks!
Unpredictableness at its Best
Volatility. At one point we thought Bitcoin was a volatile coin, going down and up 15% the same day. Now, even stocks and stock indexes are heading in a similar direction. Why are the markets so volatile right now? Is my money safe in the market? Fear has been accumulating for months now, after the Federal Reserve increases inflation rates, to accelerate the gripping US economy. Boosted inflation increases consumer demand and consumption, which drives economic growth. Anyways, too much inflation, or hyperinflation (Zimbabwe, Venezuela, anyone?), can lead to low economic growth because the average consumer wouldn’t be able to afford anything, leading to low consumption. Consumption is the driver's seat of America’s economic growth; without it, the car would crash. If you are wondering if your money is safe, the simple answer is yes and no. It depends on your patience. It is very important not to panic about market volatility because it is inevitable that economic growth will prosper over a recession, as it did after 2008. But, the market tends to panic at a stage like this, and that is why we’re seeing a lot of volatility. It has a very short-term mindset. If you trust the Federal Reserve, that they won’t let the economy go into a recession, then yes, your money is safe. Whenever making decisions in the market, do not do it in haste; think through and decide. As Warren Buffett has said, “Unless you can watch your stocks holdings decline by 50% without being panic-stricken, you should not be in the [stock] market.” This doesn’t mean that 50% will always be lost; money is only lost when it is sold.
Sources: US News, Associated Press, Reuters, The Mercury News, Google Finance, CBS News, and NPR
Big shoutout to Ragavan, the new columnist!