All of the things necessary for a sharp rally are present.
Harsh decline in CS reversed and went higher.
Large drop in US futs turned up and rallied.
Oil ripping
Bond yield collapsing
Dollar finally weak
Natural gas plummets
Over the weekend Ukraine went on another offensive and made gains in Kherson. It appears Russia is having a difficult time coping with US weapons and a motivated Ukrainian army. The market, for whatever reason, is more or less pricing in an end to hostilities. I don’t see it that way. The more success Ukraine has on the battlefield the more Russia will escalate in order to negate it. We are at least 1 year away from this war ending, since both sides won’t quit and both sides have plenty of men and equipment left to wage war. Therefore, pricing in a collapse in gas seems pre-mature, especially since there is no gas for Europe and 21% of their energy needs are from gas.
Or is the market pricing in the end of gas altogether? If there is no demand for gas, since the pipeline is broken, perhaps Wall Street views gas as the “persona non grata” for the energy markets now. We have bids in oil, uranium and coal — but not gas.
At the open of trade, I was drugged up on some cough pill Mrs Fly attempted to kill me with last night — so I just sold everything. Good thing since I was heavily short, but ended up 50bps thanks to a quick morning drop and I had 10% in GUSH.
The Quant for September is out and it’s off to a fast start, +300bps.
My opinion on stocks is simple: news aside this looks good. The mechanics of the market are working in favor of a continued rally. I just don’t like the willful ignorance of natural gas being down, or perhaps I am missing something here.
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…or maybe, with dollar and pms’
recent behavior, market is looking at pause in tightening ..not of war.
I can’t imagine the market pricing in either the end of hostilities in Eastern Europe or the return of supply, so that leaves the near total collapse and mothballing of Europe’s industrial sectors.
The Russians are *done* (for now) as a conventional military power. Their newly mobilized troops are being supplied with ill-fitting uniforms & boots, rusty old AKs, and no body armor. Their fancy fighter jets are being shot down like ducks over a blind because they have no more smart bombs. Their missiles are becoming less effective due to increasingly sophisticated air defense systems. Their Black Sea fleet dare not venture too close to Ukraine lest they be sunk by anti-ship missiles. They’ve abandoned a bunch of their armor, which is now being used against them. That being said, I still expect this war to drag on for months at least.
Slight correction – Ukraine – Russian controlled Crimea = landlocked. The fleet dare not sail over dry land. I’m sure your other intel is spot on.
From financial markets collapsing in Europe to buy buy buy… Can’t say Fly isn’t nimble.
The UN is asking countries to stop raising interest rates? Is this the reason the US market is up almost 3%?