Morning Rundown | Oil, Gold, and Ukraine New Research
War Drills Means No War Drums
Housekeeping: Our Saturday Session is posted. How Gold and Silver act in geopolitical crises is out for Founders. Lost ofinterest in the Sunday companion piece on wha markets to watch as we posted it on Zerohedge as well
Market Rundown
Good Morning.
Markets are definitely thinking an ease of tensions very clearly this morning. Everything is moving opposite of Friday’s price action.
Dollar, Gold, Oil, Grains, Bonds down; Stocks, Crypto up..
Pretty straight forward stuff. Nowhere near out of the woods here yet. The first Iraqi war had one of these before the US actual operation started. But lets assume it’s waning a little because the Russians are conducting military exercises now. This is done for several reasons we are told:
War Drills Not Drums
First to keep them fresh. Second to help them blow off steam given they’vebeen on adrenalin for a few days. The last one is political. Drills covers your withdraw with seemingly saber rattle-ing. Not implying cowardice at all. It’s just how things are done to look good politically back home.
Anyway: now markets will focus on the stagflation/inflation issue more. Things werent all rosy before the Ukraine stuff. They won’t be after.
We posted this on Sunday for subscribers focused on Ukraine events
Good luck
Post
Podcast
Guidance
U.S. January PPI data and the February Empire Manufacturing number are at 8:30 a.m. December TIC flow data is published at 4:00 p.m. The World Bank publishes its annual World Development Report today. Airbnb Inc., Marriott International Inc., ViacomCBS Inc., Denny’s Corp. and Devon Energy Corp. are among the many companies reporting results.
Zen Moment
Have a good one
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Premium Excerpt
One bank on Friday called for $120 Brent oil by mid 2022. Another today called for $125 possibly. That’s their public opinion. We have no idea if they are right. Remember, another bank was bearish a week ago. All can be right and wrong
Oil and Gold:
If the oil market is forced into balancing itself by 2022 - our modeling suggests the oil price will have to hit $125/bbl to balance almost entirely through demand destruction. In the same vein, it is clear that as tension in the region increases, gold is acting as the currency of last resort. As we noted before gold tends to respond to those geopolitical risks which can directly affect the US.