Sanctions on Russia are causing ripple effects everywhere

Historic short squeeze in Nickel futures

Sanctions on Russia have also created massive ripple effects in commodity markets and Europe’s banking industry. With Russian assets worth little these days many European banks are no longer having the collateral that they thought for loans provided to Russian oligarchs causing significant margin calls on the Russian elite. The sanctions on Russia have also made it difficult for commodity markets to operate normally and prices are surging across commodities such as natural gas, thermal coal, oil, wheat, and yesterday nickel. The LME benchmark contract on nickel has spiked 250% over trading session with trades briefly touching above $100,000 a ton. LME has suspended trading today and also erased trades executed on or after 00:00 UK time on 8 March 2022; following these erased trades the high yesterday was $55,000 a ton instead of over $100,000 (see chart).

It turns out that a Chinese tycoon had a massive short position in nickel and suddenly faced billions of dollars of losses. While the nickel market will overcome this systemic shock it underscores the unpredictability and unintended consequences of the sanctions against Russia. These price signals should be taken seriously by everyone including equity investors which have still not put the MSCI World Index into a bear market. The fallout in nickel and soaring prices on lithium carbonate are putting enormous pressure on electric vehicles makers including Tesla which shares are down 36% from the peak.

International Women’s Day and women in leadership

Today is the International Women’s Day which is an annual event to commemorate the cultural, political, and socioeconomic achievements of women. This year’s theme is called “BreakTheBias” and focus on women’s equality and a world free of bias, stereotypes and discrimination. We are using today’s event as stepping stone for highlighting our Women in Leadership theme basket (see constituents below in the table) which we introduced back in late January. As we described in our introductory note on the Women in Leadership basket women are massively underrepresented among the 2,600 largest companies in the developed world with women only being 14.3% of the daily executives teams (not board of directors) globally. This is shockingly low representation and shows why women have a lot to fight for still in 2022.