Morning Brew February 28 2022
Senior Relationship Manager
Summary: Sanctions drive markets
The War in Ukraine, the international sanctions and their fallout have a firm hold on markets and most likely will dominate the week.
As more and more sanctions are being imposed against Russia from all around the globe, starting with the exclusion of several banks from the SWIFT system, blocking Russian Central Bank transactions and imposing flight restrictions, markets are rather nervous.
The Norwegian sovereign wealth fund announced to divest Russian assets and BOP announced it would withdraw from its stake in Rosneft.
The Russian Ruble lost up to 30% of value in choppy trading and the Central bank just announced an emergency rate hike to 20%. We are currently trading 101 against the USD.
The rise in friction sparks risk off sentiment with Indexes falling across the board, Oil and Gold rise, the EUR is under pressure. Rose app 1% to 1908, Silver is at 24.30, Oil gains 5% and Indexes lose 3% in Europe, the Nasdaq 2% and the S&P500 0.5%.
EURUSD fell to 1.1170 and GBPUSD to 1.3375.
Bitcoin gives up 2.6% to trade at 38000.
Berkershire Hathaway announces stellar results on Saturday but Warren Buffet stated a lack of investment opportunities.
Todays economic data is a flurry of international CPI Data and the Swiss KOF but will be secondary developments in Eastern Europe We can also see some month end moves.
We are continuously updating all affected clients on any impacts from sanctions, in general we have imposed restrictions to prevent clients from being trapped in illiquid assets.
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.