Thursday 3, March 2022

Wrap

The war in Ukraine grinds on. More talks are scheduled, but no obvious resolution is in sight. The dollar strengthened, but the SPX did too, although the latter has been extremely choppy. Ark Innovation, as for many of its constituents, was extremely volatile.

Energy and commodities continued to escalate in price. Coal (Rotterdam Coal Futures, near month) was up 38%!!

The bank of Canada, and the Fed, and Biden, and just about all politicians, are panicking about inflation. It’s a serious problem, but doing a Volker is likely to make things worse (arguably, as the great man himself did).

I have no idea what the major players are doing, but my guess is that they are in risk-off mode and moving to short duration assets, even cash. Although some risk assets (commodities) seem to be doing OK at the moment, I feel that as soon as there is hint that Ukraine will be resolved a lot of prices will revert.

Turkish inflation hit 54% YoY in Feb. It’s hard to see how the Turkish Lira can avoid collapsing. The USD.TRY rate has been remarkably stable over the last month, and maybe nobody wants to take on risk right now, but with this sort of rate likely to persist because of energy prices, there are going to be riots, or at least the strong possibility of them.