Morning Brew February 22 2022
Senior Relationship Manager
Summary: Ukraine Escalation Drives Risk Off Sentiment
Vladimir Putin on Monday formally recognized two regions in eastern Ukraine and ordered troops to enter them, Reuters reports tanks moving into Donezk. The US said to be imposing sanctions on Russia for” this clear violation of international law and Ukraine sovereignty and territorial integrity," Linda Thomas-Greenfield, U.S. ambassador to the United Nations, stated.
Risk off sentiment is the key sentiment with Indexes falling severely. Dax drops to 14450, the Nasdaq below 14k at 13700 , the US500 4280 and the Dow to 33600.
Gold and Silver gain to 1911 and 24.20, EURCHF falls to 1.0350 and the yen also gains.
Ruble falls to 80 and Russian stocks drop on the expectation of sanctions if not war, Oil gains app. 2%, the Dutch TTF Gas contract adds more than 10%.
EURUSD drops to 1.1290, GBPUSD to 1.3580. Bitcoin falls to 36600
Besides the Ukraine, the key piece of news yesterday was the German producer price at 214.2%, the highest since the inception of the D-Mark
Be extremely cautious today the market is likely to move fast on any news either direction. We can also soon expect comments out oaf central banks on any measures to calm markets or price reactions on the back of the Ukraine conflict.
Physically Settled Futures:
RCH2 will expire 22nd February at 10:00 GMT
CLH2 will expire 22nd February at 16:00 GMT
CGBH2 will expire 24th February at 16:00 GMT
NATGASUSMAR22 will expire 22nd February at 16:00 GMT
SUGARNYMAR22 will expire 24th February at 16:00 GMT
Key Events this Week:
Tuesday: German IFO, US PMI
Wednesday: EU HICP
Thursday: US GDP New Home Sales
Friday: German GDP, EU Consumer Confidence, Durable Goods Orders
Tuesday: HSBC, Home Depot
Wednesday: Rio Tinto, Iberdrola, Stellantis
Thursday: Safran, Anheuser Bush Inbev, Axa, Deutsche Telekom, Royal Bank oc Canada. Alibaba, Moderna, Newmont Mining
Saturday: Berkershire Hathaway.
Latest Market Insights
Outrageous Predictions 2023: The War Economy
- The constantly growing global need for energy drives the world's richest to huddle up and launch a R&D project in a size the world hasn't seen since the Manhattan Project gave the US the first atomic bomb.
French President Macron resignsThe political stalemate in France and the rise of Marie Le Pen following the 2022 elections corners President Macron, forcing him to give up on politics and resign from his position. At least for now.
Gold rockets to USD 3,000 as central banks fail on inflation mandateAs markets and central banks realise that the idea that inflation is transitory is wrong, and that prices will remain higher for longer, gold is sent through the roof, hitting a price tag of USD 3,000
EU Army forces EU down path to full unionWith continued challenges in the region and a US military that isn't aggressively enacting its former role as global policeman, the European Union agrees to create its own armed forces, bringing the whole region closer.
A country agrees to ban all meat production by 2030In an effort to become one of the global leaders on the path to net-zero emissions, one country decides to not only put a heavy tax on meat, but to ban domestic production entirely.
UK holds UnBrexit referendumFollowing a recession and domestic pressure, the United Kingdom is thrown into political turmoil that will end with a vote to wind back Brexit.
Widespread price controls are introduced to cap official inflationHistory tells us that with the war economy comes rationing and price controls. And this time is no different, as policymakers introduce strict price controls that lead to a range of unintended consequences.
OPEC+ & Chindia walk out of the IMF, agree to trade with new reserve assetSanctions against Russia have caused widespread turmoil due to US Dollar moves in countries across the globe that don't consider the US an ally. To relieve themselves from this, they leave the IMF and create a new reserve asset.
USDJPY fixed to the USD at 200 as Japan overhauls financial systemFollowing the challenges that faced the Japanese Yen in 2022, the Bank of Japan attempts to keep the currency from sliding. Unsuccessful on the long-term, Japan will launch a reset of its entire financial system.
Tax haven ban kills private equityWith the war economy comes an increased focus on national interests and sovereign nations' ability to assert themselves. In that regard, the OECD countries turn their attention on tax havens and pull the big guns out, banning them altogether.