Comment of the Day
Video commentary for February 22nd 2022
A link to today's video commentary is posted in the Subscriber's Area.
Some of the topics discussed include: Russia/NATO brinksmanship intensifies, havens pause, stocks begin to find support amid short-term oversold conditions, oil eases from psychological $100, gold steady.
Stocks Plunge, Oil Prices Surge After Putin Orders Troops Into Eastern Ukraine
This article from Bloomberg may be of interest. Here is a section:
Stocks tanked amid rising tensions between Russia and Ukraine: The Dow Jones Industrial Average was down 1.3%, over 400 points, while the S&P 500 lost 1% and the tech-heavy Nasdaq Composite 1.4%.
Global stock markets took a hit after Russian President Vladimir Putin decided to recognize the separatist states of Donetsk and Luhansk in eastern Ukraine, ordering Russian troops to move into the region in order to “maintain peace.”
The move was widely condemned by the West, with the European Union and United Kingdom both unveiling economic sanctions against Russia on Tuesday, while the United States will reportedly release a new round of sanctions later in the day.
Many western officials continued to warn that Russian troops moving into eastern Ukraine to keep the “peace” could be a not so subtle pretext for a full invasion, with U.K. Health Minister Sajid Javid saying on Tuesday that “the invasion of Ukraine has begun.”
Oil prices surged on the news, with Brent crude rising to more than $94 per barrel amid concerns that Russia’s energy exports could be disrupted.
My view - Granting official recognition to, and moving troops into a region that has been ruled independently of Ukraine since 2014 is an escalation of tensions. However, it still falls into the brinksmanship category regardless of claims to the contrary. Russia appears to be serious about their demands that Ukraine not join NATO. They are also adamant that missile batteries not be placed within its neighborhood.
Currency Speculators Shun Usual Havens Despite Ukraine Tensions
This article from Bloomberg may be of interest to subscribers. Here is a section:
Leveraged funds’ net short positioning in the yen has increased in seven out of the last nine weeks and sits at its most bearish since November, according to Commodity Futures Trading Commission data released Friday. Net positioning in the Swiss franc, another preferred haven asset for currency traders, has been short since September, though it did grow less bearish in last week’s CFTC data.
The pullback from havens was evident in the spot market on Tuesday, when the Japanese and Swiss currencies retreated while other major counterparts gained against the U.S. dollar. The moves signal that the market is comfortable with where the Russia situation is going, Brad Bechtel, a strategist at Jefferies LLC in New York, said in a Tuesday note.
“No real downside momentum in the JPY crosses on any of these recent Russia headlines the past few weeks,” he wrote.
“Even now, as we are on the brink of the conflict, we still do not see JPY perform. Same with the USD and CHF,” he wrote, referring to the Swiss franc.
My view - The news flow from Ukraine is exciting but the trajectory of interest rates is much more important for markets. The defining characteristic of this earnings season was companies reporting better than expected figures for Q4 but disappointing on guidance. Home Depot was the latest example today. Markets are looking at slower growth and higher rates first and the wider geopolitical tension is a secondary concern.
Deadly Nigerian Oil-Blast Ship Has Peers All Over the World
This article from Bloomberg may be of interest to subscribers. Here is a section:
The American Bureau of Shipping, which classifies vessels for their operating safety, last year raised the need to address safety issues such as structural integrity and maintenance challenges around the global fleet of FPSOs, with over 50 of them reaching the end of their design life in the next five years. More than half are over 30 years old and a quarter over 40 years old.
My view - Aging infrastructure is rarely the top priority for producers. The oil sector is reluctant to commit capital at present because there is a lot of uncertainty about how those investments will be viewed by both investors and the media.
The Chart Seminar 2022
With global vaccination rates rising, the prospect of anti-COVID pills on the horizon and the promise of travel restrictions being dropped, it is time to start thinking about venues for The Chart Seminar in 2022.
Please drop sarah@fullertreacymoney.com a line if you would be interested in attending an event next year, as well as your preferred location.
At present I am looking at a late May date for a London seminar and I am open to other times and locations subject to demand.
Eoin's personal portfolio: short reopened February 2nd 2022
One of the questions subscribers as most often is how to find details of my open trades. To make it easier I will simply repost the latest summary daily until there is a change.