Whipsaw Wednesday – Biden Calls for Unity, Markets Mildly React

Nothing has changed.

Russia is still advancing on Kyiv, so talking about it is not going to make it go away but, as I keep saying, Russia is just the market’s excuse for a correction – not the reason for it.  It kind of worries me that NOW the Government is distributing anti-viral Covid pills to pharmacies – with the plan being you get a pill if you test positive/.  Is this too little, too late for our 952,509 dead or just too little for the next variant?  

Worldwide, 438M people got Covid, about 5% of the population.  In the US, 79M people got Covid 25% of our population – yet they will tell you how we didn’t need to wear masks because they didn’t work – except in the rest of the World,, of course.  If we can’t learn from our mistakes, how are we going to avoid making them again?  

Of course, “Making the Same Mistakes Again” is the Republican Party’s entire platform.  Putin may be a madman but Russia only had 4.5M cases of Covid and 20M deaths because they do believe in science over there.  Sure they only have half as many people as we do but still – WAY better results (1/10th as many cases) than we had in the US.  

Still Biden and his maskless audience seemed pretty comfortable hanging out and shaking hands and breathing on each other yesterday.  That must piss off Boris Johnson, who just got in huge trobule for having a maskless Christmas party just two months ago.  Covid all gone, I guess – only 59,209 dead in February – but it was a short month.  There were 3.7M new infections in February as well but everyone has decided to pretend it’s over, so enjoy!

Anyway, we have bigger fish to fry now, so much so that Biden barely mentioned Global Warming, which I guess we’ll put on the back burner.  On the front burner is Oil (/CL) hitting $112.50 per barrel early this morning – and the war has barely started!  That should give inflation a real boost to get March rolling and that’s why Fed Chairman Powell, who testifies to Congress this morning, will still be on a path to raise rates at the March meeting.  

“We expect it will be appropriate to raise the target range for the federal funds rate at our meeting later this month,” Mr. Powell said in testimony prepared for delivery to the House Committee on Financial Services. He noted that the Fed will move toward a “predictable” shrinking of its big bond holdings after raising rates, a move that will take additional steam out of the economy.

“The near-term effects on the U.S. economy of the invasion of Ukraine, the ongoing war, the sanctions and of events to come, remain highly uncertain,” he said. “We will need to be nimble in responding to incoming data and the evolving outlook.”

So clearly Powell is going to be saying that the $4+/gallon you spend filling your tank up next week will be “transitory“ which means, as we now know, that there’s nothing the Fed can do about it so they’ll just pretend it’s not there and hope it goes away by the next meeting. 

Speaking of meetings – OPEC (including Russia – boo, hiss) is meeting late today and the US and most of the World are BEGGING them to raise output but they too think the war is transitory (Russia certainly thought it would be over by now) and they don’t want to end up over-supplying the market – especially when Vlad needs money to bomb Ukrainian civilians into submission.  By the way, what kind of BS are sanctions when you keep buying Oil from companies Putin owns?

Overall, commodities are up across the board (and /NG is at $4.80 this morning, up over $2,000 per contract – you’re welcome!) as the Bloomberg Commodity Spot Index, which tracks 23 futures contracts, climbed 4.1% yesterday.  This is what I mean by reading the news and paying attention – these obvious trades pop up once in a while.  Overall, the index is up 100% since March, 2020 – driving our underlying inflation as much as rising wages.  

The sweeping sanctions on Russia from the U.S., Europe and Asia, as well as surging costs to send ships into the war zone, are bringing trade deals with the country to a virtual standstill. Russia is a major supplier of crude, natural gas, grains, fertilizers and metals such as aluminum.  The war is worsening a global cost-of-living crisis that has sent inflation rates in the U.S. to the highest since 1982 and has created a dilemma for central bankers worldwide as they weigh the need to increase borrowing costs against the risk of stunting economic growth.   

Russia and Ukraine also supply more than a quarter of world wheat exports, a fifth of corn sales and a similar share of barley shipments, plus about 80% of sunflower oil cargoes.  Europe depends on Russia for about a quarter of its crude oil and a third of its natural gas. Russian aluminum typically accounts for about 10% of U.S. imports. 

This stuff will not get better just because we clap for it at a State of the Union Address!  

• Growth Angst Shakes Markets Already Obsessed With Inflation Risk
• Most Asian Stocks Fall as Oil’s Surge Dims Outlook: Markets Wrap
• A Lesson in Energy Masochism. Here’s how Europe made itself vulnerable to Putin’s gas blackmail.
• “We May Have To Supply Europe”: Lawmakers Pressure Biden To Halt Russian Oil Imports, Boost Production
• Tanker Rates On Russian Crude Route Soars Nine-fold In Three Days
• U.K. Consumers Told to Brace for Further Price Increases
• U.S. Beef Prices Are Set to Rise Further as Ranchers’ Costs Soar
• Russia Targets Ukrainian Civilian Areas in Tactical Shift
• MLB cancels Opening Day and some regular-season games after owners fail to reach deal with players
• With inflation and Ukraine, Powell must thread a needle on Capitol Hill this week to calm markets
• Mastercard says about 4% of its revenue was related to Russia in 2021
• Exxon Mobil to exit major Russian venture, will not invest in new developments
• Apple, Ford Lead Latest Round Of US Companies Cutting Russia Ties
• “Game Over?” – Russia To Be In Technical Default Within Hours. 
• “No One Is Going to Break Us. We’re Strong. We’re Ukrainians” – Ukrainian President Zelensky Receives Standing Ovation After Addressing the European Union from Kiev (VIDEO)
• These Are The Global Banks With The Largest Exposures To Russian Sanctions

Provided courtesy of Phil’s Stock World.