It seems reality is settling back into the narrative of the market this morning regarding what the commodity markets will look like sans Russia. The rhetoric is increasing on both sides at an exponential pace and it won’t be long now until all Russian exports are withdrawn from the market.
Here are today’s noteworthy headlines:
KREMLIN SAYS: THE UNITED STATES HAS LONG BOMBED CIVILIANS AND USED NUCLEAR WEAPONS IN JAPAN AT THE END OF WW2 – SO THE U.S. PRESIDENT HAS NO RIGHT TO LECTURE RUSSIA
Kremlin spokesman says reports that Russia and Ukraine have made progress on a possible peace deal are, on the whole, ‘incorrect’.
CHINA’S FOREIGN MINISTRY SPOKESMAN ZHAO: NATO HAS ESCALATED THE UKRAINE SITUATION WITH SUPPLY OF WEAPONS.
CHINA WILL CONTINUE NORMAL ECONOMIC RELATIONS WITH RUSSIA AND UKRAINE.
RUSSIA’S MEDVEDEV SAYS: RUSSIA HAS THE CAPACITY TO PUT ALL ITS ENEMIES IN THEIR PLACE *
RUSSIAN FOREIGN MINISTRY: RUSSIA-CHINA PARTNERSHIP AND COOPERATION RELATIONS ARE NOT SUBJECT TO SHORT-TERM INTERNATIONAL CONDITIONS
Stocks look a little soft post monster melt up but more importantly — commodities are clown-shoeing the fuck higher with oil and aluminum up more than 5%. It would seem markets are beginning to sober up and price in the specter of global world war again.
Russia is isolated and alone, so good thing our policy makers are pushing China into their corner to establish a Pacific theatre.
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The markets, particularly equities, are not driven directly by the news, only indirectly through the associated options markets. And those are driven more by pure speculation that completely takes over close to Op Ex days like tomorrow. Wouldn’t be surprised if the last two days had NOTHING to do with the Fed or Russia.
Let me modify this a little bit … of course one can see the effect of events (e.g., FOMC report, a quick escalation in Russia, etc.) in market reactions, but I believe, these days, these events are ‘second-order’, or in other words ripples on top of a derivatives-based wave.