Monday, February 28, 2022

Platts' "Commodity Tracker: 4 charts to watch this week"

From S&P Global Platts, February 28:

Russia's invasion of Ukraine sent crude prices above $100/b Feb. 24. But the impact of the conflict is also felt in other energy and commodity markets such as natural gas and agriculture.  

....2. European coal returns could offer some relief to gas market in event of Russian gas supply cut

European coal and gas power generation

What's happening? Russia's military invasion of Ukraine has put future supplies of the country's gas to Europe in jeopardy. The European power sector's ability to shift away from gas-fired power generation is limited by the high level of coal, lignite and nuclear plant closures in recent years.

What's next? As much as 17 GW of coal and lignite capacity in Western Europe has recently closed, is due to close this year or is unavailable for regular running due to being held in strategic reserves. In the event of a disruption in Russian gas supply, S&P Global Platts Analytics expects some of this capacity could return to market. In the unlikely scenario that all 17 GW returned, this would displace up to 7 GW of gas generation (equivalent to 30 mcm/d of gas demand) with a further 5 GW (22 mcm/d) being discounted by the assumed 2% drop in power demand resulting from higher energy costs and worsening macroeconomic outlook.....


Gazprom Signs A Massive Natural Gas Deal With China

From BNN Bloomberg, February 28:

Gazprom Paves Way to New China Gas Deal as Sanctions Hit Russia

Gazprom PJSC took a new step toward potentially its biggest-ever natural gas supply deal with China as nations around the world sever economic and political ties with Russia over the country’s invasion of Ukraine. 

The Russian gas giant signed a contract to design the Soyuz Vostok pipeline across Mongolia toward China, Gazprom said in a statement. If Russia reaches a new supply agreement with China, Soyuz Vostok will carry as much as 50 billion cubic meters of natural gas per year to the Asian nation. 

A new supply deal with China would also enable Gazprom to build an interconnector between its west- and eastbound pipeline systems, effectively allowing Russia to redirect gas toward China from fields that now only feed Europe. That could ease Gazprom’s reliance on the European continent, currently the single-largest buyer of Russian gas....


The just opened Power of Sibera I has a capacity of 38 billion cubic meters and China doesn't seem to be turning away any LNG being shipped from the Russian Arctic.

By comparison the pipes into Europe have a total capacity of around 200 bcm per annum, via Statista:


Canadian Troops Have Been Training Ukrainian Neo-Nazis In Crowd Control Techniques

 We've posted on the Americans training the Nazi Azov Brigade—there's another bunch of them near the Polish border in Lviv, HQ for the WWII Ukrainian National Socialist leader Stepan Bandera—those stories go back to 2014 and the U.S.; Canadian; U.K.-backed coup, and we've posted some on the Canadian stuff:

....Turning From the Dark Side of Heritage
Stepan Bandera’s ethnic nationalist party, the OUN, still exists today under another name: Svoboda, formerly the Social-National Party of Ukraine, whose ideology openly is and always was that kind of national socialism. A fairly minor party, their activists played a noticeable role in the Maidan uprising of 2014, as the only protestors openly committing violence against police forces and Party of Regions offices. Svoboda officials and leaders have deep connections with violent guerrilla groups like Azov Battalion, who have massacred ethnic minorities throughout the Russian invasion.

That Chrystia Freeland, as the Foreign Minister of one of the world’s more resilient liberal democracies, sold arms and sent Canadian soldiers to train neo-Nazi groups in the name of holding back Russian military aggression, is a serious fault. Her own identity as the child of a Catholic Ukrainian immigrant includes a weakness that made her enthusiastic support for the nationalist battalions more likely than not. Freeland’s heritage is the same as Bandera’s and his successors in Ukrainian fascism: the city of Lviv, cultural centre of the most European, least Russian-influenced, region of Ukraine....

But here's some more and after the jump, some news that may be good or bad depending on where you come down on Russians fighting neo-Nazis. 

From The Ottawa Citizen, November 8, 2021:

Allegations of Canadian troops training neo-Nazis and war criminals sparks military review

A review into how Canada approves the foreign military personnel its trains should be ready by early next year but parts of the study will need to remain secret.  

The review follows concerns raised by Jewish groups of the alleged involvement of Canadian troops in training neo-Nazis in Ukraine as well as warnings by soldiers last year that some Iraqis who have received instruction from Canada were involved in torture and rape. 

DND spokesman Dan Le Bouthillier said the review was started in late October. “This review will look holistically at all missions where the CAF conducts mentoring or capacity building functions with the armed forces of another nation,” he noted.

But Le Bouthillier indicated that some details of the review will remain secret as “the specifics of the process by which the CAF verifies the suitability of training candidates is subject to operational security restrictions.”

But critics point out the Canadian Forces does not actually conduct vetting of those foreign troops that it trains, which is at the heart of the problem. It leaves such vetting up to the nation providing the troops to be trained.

The review comes as a Jewish group in Ukraine is highlighting a new video of Ukrainian paratroopers singing a song to honour Stepan Bandera. Bandera was a anti-Semite and Nazi collaborator whose organization is linked to the murder of more than 100,000 Jews and Poles during the Second World War. He is revered in Ukrainian nationalist and far-right circles.....



Note the date. That was less than four months ago.

I may have been confusing the "torture and rape" with the Mounties beating people in the streets. My bad. And by-the-bye it was 100,000 of their Polish neighbors in Galicia and Volhynia that the Ukrainians killed. 

The number of Jews is a multiple of that and if you count the Trawniki men working at Chelmno, Belzec, Sobibor, Treblinka and Majdanek the Ukes were complicit with their new German BFF's in the murder of something like 1.7 million people in the murder factories.

Anyhoo, enough history, here's the bad news for the neo-Nazi Azov battalion, fully integrated into the Ukrainian Armed Forces since the Maidan coup in 2014.

Their home on the Sea of Azov, Mariupol, is about to be surrounded on the landward side and the Russian Navy has control of the Sea of Azov and much of the Black Sea, Which was what Crimea was all about (in Canadian: all aboot)  

Here's a poli-sci guy from the University of Ottawa:

Mariupol is north of Krasnodar across the Sea of Azov and as can be seen on the now-two-day-old map is the focus of a pincer movement. 

Zaporizhia, the site of the largest nuclear power plant in Europe is to the northwest. 

That's all I knw. It's complicated. 

NYT: "The coronavirus vaccine made by Pfizer-BioNTech is much less effective in preventing infection in children ages 5 to 11 years than in older adolescents or adults"

Shouldn't this have come out in the rigorous testing that PFE did?

From the New York Times covid beat:


Speaking of the rigorous testing, the plaintiff in the $2 billion whistleblower lawsuit against Pfizer and Pfizer contractor, Ventavia Research Group, has just begun posting some of the rigorous testing documents 

From I am Brook Jackson:

My name is Brook Jackson. In September 2020, I was hired as a Regional Director for two of the three clinical trial sites in Texas that were participating in Pfizer's pivotal, Phase III, mRNA ("vaccine") clinical trial. Although my time with this company was brief, the misconduct that I witnessed was so blatant and so widespread that I documented numerous violations of the U.S. Food and Drug Administration (FDA) Code of Federal Regulations every, single day. After repeatedly bringing these concerns to Ventavia’s management and to Pfizer directly (although anonymously), I watched in disbelief as they began their efforts to conceal the fraud.....


"China can break SWIFT sanctions but at a high cost"

David Goldman* at Asia Times, February 28:

Expert says CIPS payment system can replace SWIFT for Russia trade finance but could could trigger US sanctions on Chinese banks 

China’s Cross-Border International Payments System (CIPS) can replace SWIFT for Russian trade financing, a Chinese academic told the Shanghai-based Observer news site ( in a February 27 interview.

Over the weekend, the United States and its allies excluded a list of Russian banks from the SWIFT, or Society for Worldwide International Financial Telecommunications, network that clears interbank payments in US dollars and other Western currencies, although Russia has not yet been subject to a blanket exclusion.

Asia Times first reported on February 25 that China’s alternative payments system could help Russia bypass Western sanctions.

In the past, exclusion from SWIFT meant complete isolation from global markets and normal trade financing, as in the case of American sanctions against Iran. But the CIPS system, which China began to develop in 2015, is now fully operational.

China might be reluctant to help Russia circumvent SWIFT sanctions, said Professor Chen Xi of the Shanghai Advanced Institute of Finance at Jiaotong University in an “Observer” interview because the United States might retaliate by imposing sanctions on Chinese banks. That would have disastrous consequences, Chen added.

Risks to the financial system cut both ways, the German daily Die Welt wrote on February 27. “CIPS already handles US$50 billion of daily transactions. That is considerably less than the $400 billion of transactions that pass every day through SWIFT, but CIPS volume has increased rapidly,” the German newspaper reported....

*You know the schtick, guy can't keep a job etc:

...The author of this piece, David Goldman, is Deputy Editor (Business) at Asia Times.
Prior to taking that position he was:

  • Global head of credit strategy at Credit Suisse
  • Global Head of Fixed Income Research for Bank of America
  • Global Head of Fixed Income Research at Cantor Fitzgerald

In addition to apparently not being able to hold onto a job I think one of his requirements for moving on was a "Global Head" title. (JK, young Master. G.)

"When Will the Brutal Spike in Rents Drive Up CPI Inflation? How Much Will it Add to CPI?"

A deep dive from Wolf Richter at Wolf Street, February 15: 

The numbers are already baked in and will show up over the next 24 months.

Two rent factors account for 32% of the Consumer Price Index. Despite the massive spike in “asking rents” across the US, those two CPI rent factors have been much lower than CPI and have thereby repressed CPI so far. Unlike asking rents, these two rent factors track the average rent that tenants are actually paying across the entire stock of rental units in US cities, including in rent-controlled units.

On the other hand, “asking rents” reflect current price tags on units listed for rent that people have not yet rented, and it takes a while for people to rent these units and pay those rents in large enough numbers to where they move the needle of the average rent actually paid across the entire stock of US rental units, which then gets picked up by the CPI rent measures.

But those two CPI rent factors are bound to catch up with asking rents and they will then fuel overall CPI – which was already 7.5% in January, WHOOSH.

But when will the spike in asking rents drive up CPI? And how much will it add to CPI?

The short answer: The current spikes in asking rents that have already occurred through January 2022 will add more than 1 percentage point to overall CPI for the year 2022, and will add more than 1 percentage point to overall CPI in 2023, even if asking rents don’t rise further from here. This is already baked into the numbers. CPI is going to catch up with a painful reality spread over the next two years.

The asking-rent spikes are brutal.

Rents for single-family houses and condos on the rental market exploded by 12% year-over-year in the US, varying widely from city to city, the worst increase in the data which starts in 2004, according to CoreLogic today. Miami was on top of the list, with a 35% spike in rents. In the years between the Financial Crisis and the pandemic, rents of single-family houses in the US had been increasing in the 2.5% to 3.5% range.

Rents in apartment buildings – does not include single-family houses and condos for rent – jumped by 12% for one-bedroom apartments and by 14% for two-bedroom apartments on average across the US, according to Zumper data. In 20 of the 100 largest cities, rents spiked by 20% or more, and in 11 of them, rents spiked by 25% or more. This is based on median asking rents, which are the rents landlords advertise for their listings. They’re similar to price tags in a store.

By a different measure, the Zillow Observed Rent Index, rents in January spiked by 14.9% year-over-year across the US, varying widely among cities.

All these measures show the same thing: On average, rents across the US spiked by over 12% year-over-year, varying widely from city to city, with some cities experiencing astronomical rent increases.

Asking rents take 24 months to spread across CPI rent inflation.

Asking rents are the current price tags. They don’t show up in rent inflation until enough people signed leases for units at those rents, and are actually paying those rents in large enough numbers to move the needle for the entire stock of rental units in US cities....


More spread out than David Goldman's projection at Asia Times, but the same order of magnitude. And either way, we aren't going to get down to the Fed's 2% target for a long, long time.

"More inflation shoes to drop on NASDAQ by end-2022"
Soaring rent increases will hit the Consumer Price Index with a lag of up to eight months


What's In The Blind Spot Today: Société Générale's Albert Edwards, A Synthetic Coronavirus and MUCH MUCH MORE

From Izabella Kaminska's The Blind Spot, February 28:

....Hindsight watch:

  • Investors are apparently shocked about Russia’s attack on Ukraine roiled markets – FT. (Small plug for The Blind Spot here since my concerns about escalating geopolitical tensions didn’t get much resonance in my other life. The compartmentalisation in old school media prevents informed parties in the wrong division from being able to voice concerns or insights — however informed — as everything must go through the approved correspondent channel. If that correspondent has a different view, well… they’ll come down on you like a tonne of bricks for muddying the picture. With hindsight I think some media establishments have been on a de facto Brackenian war-footing for a long time now. Those who subscribed to my original newsletter would have read this on Feb 6 though:

    Feb 6 doesn’t seem that long ago, and in hindsight the above doesn’t seem so crazy. But I want to remind readers that even on Feb 6, the idea of starting an official WW3 Watch in any respectable newspaper would have been met with rolling eyes by senior editors.


"EU28 gas inventories no longer in danger of falling to critically low levels..."

From Reuters' John Kemp:

"China moves to stabilize commodity prices, supplies as global uncertainties rise" (and expands market for Russian wheat)

From China's outwardly directed propaganda mouthpiece i.e. they tell you what the Party wants you to know, Global Times, via Hellenic Shipping News, February 28:

China’s top economic planner said that it will further improve the market pricing mechanism for coal, following a series of measures to stabilize the prices of iron ore and other commodities that have huge weigh on China’s economic operations, amid already-surging prices and growing international uncertainties.

The National Development and Reform Commission (NDRC) issued a notice on further improving the coal market price formation mechanism, which clarified the reasonable range of coal prices and linked coal prices with coal-fired electricity prices.

The introduction of such a mechanism sent a clear signal to the industry and the market that China will further strengthen the regulation and supervision of coal market prices, according to the NDRC.

If coal prices remain within a reasonable range, electricity prices will be effectively transmitted through the market, Wan Jinsong, director of the Price Department at the NDRC, said at a press conference on Thursday.

“China’s coal self-sufficiency rate exceeds 90 percent. Our own resources can fully meet domestic demand,” Wan said.

According to the NDRC, the long-term transaction price of coal loaded on ships at Qinhuangdao Port, China’s main coal port in North China’s Hebei Province, should range from 570 yuan ($90.2) to 770 yuan per ton, including tax.

“Coal production and market supply are generally stable, with daily output of more than 12 million tons and coal storage in power plants at a historical high,” Peng Shaozong, deputy director of the NDRC’s Price Department, said during the press briefing.

Price mechanism reform does not involve electricity prices, which will still follow the market-based mechanism of base price plus fluctuation of no more than 20 percent.

“No matter how the coal price changes, the market price of coal-fired power generation cannot exceed the limit of a 20-percent increase, except for energy-intensive enterprises. This means electricity rates for households and agriculture will not change from the current level,” said Peng.

Apart from coal, the NDRC also said on Wednesday that it will shorten the free storage period of iron ore at ports and increase the cost of port hoarding, in a bid to prevent excessive stockpiling.

This move comes after some recent abnormal situation where the supply and demand of the iron ore market were generally stable but prices surged.

The NDRC will also urge iron ore trading enterprises to release excessive iron ore inventory at ports.

Since January 28, in view of the recent iron ore price changes, the NDRC released six notices on iron ore in less than a month in order to stabilize iron ore prices.

“China’s iron ore is more than 80 percent reliant on imports, mainly transported by sea. Stockpiling at ports creates the illusion of tight supply in the spot market, resulting in inflated prices that are unsupported by real demand,” Hu Qimu, chief research fellow at the Sinosteel Economic Research Institute, told the Global Times on Thursday....


Also from Global Times via HSN, February 28: 

China expands market for Russian wheat; move unrelated to Ukraine situation, analyst says

Putin's Schedule For Monday, February 28

 From InterFax:

MOSCOW. Feb 28 (Interfax) - Russian President Vladimir Putin will discuss the new economic reality with government members and Central Bank head Elvira Nabiullina on Monday.

"The president is working in the Kremlin; he will be dealing with economic matters today. The economic reality has, so to say, changed drastically, therefore Mishustin, Belousov, Siluanov, Nabiullina, Gref, and maybe other members of the presidential administration will be invited to the Kremlin to see the president today and discuss economic affairs," Kremlin spokesman Dmitry Peskov said.

In his words, the meeting will take place in the afternoon. Peskov could not say which part of the meeting would be public.

As for the presidential schedule for Monday, Peskov said that Putin is due to have an international phone call in the afternoon.

"Russia central bank more than doubles interest rate to 20% to boost sinking ruble"

Putin's (not so) secret weapon:

Elvira Nabiullina, Governor of the Bank of Russia. She is very, very good at this stuff.

From CNBC Africa, February 28:

Russia central bank more than doubles interest rate to 20% to boost sinking ruble

  • The bank also said it would be freeing 733 billion rubles ($8.78 billion) in local bank reserves to boost liquidity.
  • Russian Central Bank Governor Elvira Nabiullina will hold a briefing at 1 p.m. London time Monday.
  • The dramatic developments underline fears of a run on Russia’s banks.

Russia’s central bank on Monday more than doubled the country’s key interest rate from 9.5% to 20% as its currency, the ruble, hit a record low against the dollar on the back of a slew of new sanctions and penalties imposed on Russia by Europe and the U.S. for its invasion of Ukraine.

The rate hike, the central bank said, “is designed to offset increased risk of ruble depreciation and inflation.”

This follows the central bank’s order to halt foreigners’ bids to sell Russian securities in an effort to contain the market fallout. The ruble fell as far as 119.50 per dollar, down a whopping 30% from Friday’s close.

The bank also said it would be freeing 733 billion rubles ($8.78 billion) in local bank reserves to boost liquidity. Russian Central Bank Governor Elvira Nabiullina will hold a briefing at 1 p.m. London time Monday....


Last I saw, the rouble had strengthened some, to 102.41. So her next goal will be to not only stop the bank runs (that's easy, shut the banks for a couple - 5 days) but to restore confidence in the currency.

As foretold by the prophecy (sort of) on Saturday after the first, very weak moves:

Western allies agree to cut select Russian banks from global financial messaging system SWIFT
This action only hits banks that have already been sanctioned. If The EU and others really wanted to shake things up they'd go after the unsanctioned banks. name names, and watch the (attempted) bank runs on Monday....

"Russia’s FX reserves slip from its grasp"

Joseph Cotterill Rejoins FT Alphaville  to tag-team the story with Claire Jones:

Officials in Moscow will be hard pressed to halt a collapse in the rouble. Here’s why.

The Central Bank of Russia’s substantial reserves stockpile was meant to maintain the currency’s stability in the face of market panic. 

The reserves — worth $630bn, as of the end of January — are made up of assets and deposits denominated in the world’s major currencies (that is, the dollar, euro, sterling and the yuan). As well almost 2,300 tonnes of gold.

The stockpile was there so that the central bank could intervene in foreign exchange markets, shoring up the rouble in the event of volatility. There’s a Jedi mind-trick aspect to building up reserves too — if markets know you’ve got a load of them, they’re less likely to challenge you to use them. 

The sanctions imposed by the US, EU and UK against the central bank are likely to render a lot, if not quite all, of these reserves useless. To understand what the CBR is, and isn’t, likely to have at its disposal when the banks open tomorrow morning, it’s worth taking a close look at what’s known as the “Data Template for International Reserves and Foreign Currency Liquidity”.

The snapshot below was taken from the Twitter account of former Alphavillain Matthew Klein. We tried to find the official data on the central bank’s website, but it was no longer available....


Capital Markets: "Knee-Jerk Panic Pared"
Credit Suisse' Zoltan Pozsar: With SWIFT We Are Dealing With The Very Plumbing Of The Financial System

Capital Markets: "Knee-Jerk Panic Pared"

 From Marc to Market:

Overview: Bold new sanctions on Russia and more weapons for Ukraine were announced over the weekend. Russia responded by raising the readiness of its nuclear forces. As a result, the risk-on seen ahead of the weekend has been reversed. When then-US President Trump ordered the assassination of Iran's Major-General Soleimani in January 2020, it seemed to signal a year of geopolitics. Instead, it was about Covid. At the end of last year, Omicron threatened to keep the pandemic front and center. Instead, with Russia's invasion of Ukraine and the large-scale response, geopolitics has eclipsed the pandemic. Asia Pacific equities edged and traded higher except for Hong Kong and Singapore. Led by the financial and energy sectors, the Stoxx 600 is off by about 1.6%. US futures are around 1.3% lower. Bonds have caught a bid. The US 10-year yield is off four basis points to 1.92% and the 2-year is off six basis points to 1.50%. European core benchmark yields are 1-2 bp lower, while the peripheral yields in Spain and Italy are edging higher. In the foreign exchange market, the dollar is firm, while the Swiss franc and Japanese yen are the most resilient among the major currencies. The Scandis are leading the losses, off 1.0%-1.6%. A small number of Asian currencies, including the Chinese yuan are steady to firmer against the dollar, while most are heavier. The Russian rouble (~-18.5%) and central European currencies (~-2%) are hit the hardest. The JP Morgan Emerging Market Currency Index is off 2.2%, which would be the most since mid-March 2020. 

Gold and oil rallied, as one would expect, but did not take out last week's highs. Gold stalled near $1930 (last week's high ~$1975) and fell to $1893.5 in the European morning before stabilizing to straddle the $1900-level. April WTI rallied to almost $100 but has steadied around $96. US natgas prices are up around 2% to recoup the last pre-weekend loss. Europe's natgas benchmark has surged but is coming off its highs. It held below last week's highs and is up almost 15% on the day. Iron ore rallied about 4%. Copper is about 0.8% higher. The price of May wheat is up about 5.5% after falling 8% before the weekend.

Asia Pacific
China is taking a more nuanced position vis a vis Russia than may meet the eye.
Although it tends not to receive much attention in the US press, Chinese banks typically follow OFAC (US Office of Foreign Asset Control) rules and sanctions. They adhere to them for the same reason many others do: fear of being excluded from the dollar market. Four of the largest Chinese banks complied with US sanctions against Iran, North Korea, and even top officials in Hong Kong. Reports suggest Chinese refiners have stopped taking fresh seaborne oil from Russia. Two large banks also have restricted funding for the purchases of Russian commodities. Other international lenders are imposing restrictions on trade finance linked to Russia. One report told of a state-owned Chinese coal importer unable to get a credit line from banks in Singapore for shipments to Russia. China may dislike NATO, which did not appear to play the proclaimed defensive role in Afghanistan but fears its banks would be sanctioned for transgressions....


Sunday, February 27, 2022

Credit Suisse' Zoltan Pozsar: With SWIFT We Are Dealing With The Very Plumbing Of The Financial System

From Credit Suisse, February 27:

Global Money Dispatch
I’ll never forget the late-night briefing on Friday before Lehman’s bankruptcy where according to one line of argument Lehman’s problems were so widely understood that the system had enough time to hedge itself so that the actual default would be manageable. It didn’t turn out like that... If a bank closes a $200 billion balance sheet on Friday and doesn’t open on Monday, someone’s $200 billion wasn’t hedged by definition. The same with exclusions from SWIFT – the payments messaging system banks use to send and receive payments.

Exclusions from SWIFT will lead to missed payments and giant overdrafts similar to the missed payments and giant overdrafts that we saw in March 2020.

Back then we warned that “supply chains are payment chains in reverse” and that lockdowns would lead to missed payments everywhere. Today we’ll say that all global payments go through SWIFT (including payments for commodities) and so exclusions from SWIFT will lead to missed payments everywhere again: the virus froze the flow of goods and services that led to missed payments, and war has led to exclusions from SWIFT that will lead to missed payments again. But by design, and not without a risk of retaliation: if a freeze in activity can lead to missed payments, an inability to receive payments through SWIFT can freeze the flow of goods, services, and commodities like gas or neon in kind.

We are dealing with pipelines here – financial and real. In the present context, they are two sides of the same coin. Inability to receive may mean unwillingness to send. Commodity flows aside, one would assume that central banks would re-activate daily swap line operations now that the SWIFT option got invoked.

Central banks should stand ready to make markets on Monday again...

Sanctioning central bank reserves can turn a surplus agent into a deficit agent overnight as discussed here. The Bank of Russia (BoR) has neither Treasuries to repo with the new FIMA repo facility, nor dollar swap lines with the Fed, and if its assets are frozen, it can’t raise dollars to provide for its domestic banks.

Central bank deposits, bank deposits, and securities are all “inside money” – that is, money and money-like claims that are someone else’s liability – and it’s situations like this when “outside money” – money claims like gold bullion that are no one’s liability – is king, especially if stored in vaults domestically. Unlike balances at the Deutsche Bundesbank, western G-SIBs, or Euroclear, you control what you have. Gold is a sovereign’s money under the mattress, and the BoR has more of it than deposits at foreign central banks (see chart)!....

....MUCH MORE (4 page PDF)

HT: Jim Bianco

British betting shops have the DJIA opening down 525, probably right for direction, no idea about magnitude. 

"Longevity FAQ: A beginner's guide to longevity research"

 From Laura Deming:

As you get older, the chance that you will die goes up.


My Ideas - 2-2.png


Her blog is interesting as well, beginning with her comments on Aubrey de Grey, who I always thought of as more a promoter/borderline crank than as a scientist.

For folks who are new to this stuff the SENS Foundation ( "strategies for engineered negligible senescence") located in Mountain View (nice 'hood) recently fired de Grey.

Pfizer: "If Fraud Is Proven The Liability Waivers Go 'Poof'" (PFE)

From naked capitalism, February 24: 

“Bankruptcy For Moderna, Definitely Pfizer”

Yves here. I’m in no position to verify the underlying data, but the fact that both Moderna and Pfizer stocks are markedly down says investors regard these concerns about vaccine liability as serious.

A lawyer buddy thinks that even if this take on the frequency of bad side effect is spot on, Pfizer and Moderna still might get off the hook on product liability in the US. However, shareholders would have them dead to rights on securities fraud, for not disclosing to investors the information they had about serious vaccine side effects and the impact that could have on willingness to get boosted. In addition, foreign countries that also gave liability waivers are not as likely to be forgiving as the US. We could see a Boeing 737 Max replay, of foreign regulators lowering the boom and the US position eventually becoming untenable.

The plural of anecdote is not data, but consider this from IM Doc:

I will report what I am hearing as recently as yesterday.

An ex-Covid-vaccine company executive.

There are lots of detonations getting ready to happen. The life insurance companies and many Wall Street firms who feel they have been defrauded are the ones getting the cannons ready to fire.

My understanding is the liability is actually not the adverse events as such. They have liability waivers for that. It is for fraud. Once fraud is proven, the liability wavers go poof. Apparently, there are people lining up with hands open willing to sell all kinds of damning documents.

We were apparently not alone with the “something is wrong” take from the earliest paper. The incident with the testing centers being accused of fraud by employees, the subsequent bmj paper about that, the two vaccinologists resigning from FDA, and now the latest CDC admissions and presenting papers for FOIA with everything redacted – all are taking a toll.

apparently, the play here is the insurance companies and hedge funds screwed by disastrous Moderna and biontech share prices are taking the lead for the fraud to be shown. Then they will sue these companies for damages.

I asked the guy if he thought it would work. His response “Pfizer certainly does.”

In the meantime, as alluded to above, this sort of thing does not inspire confidence:....


If interested see also:
Pfizer continues its majestic descent 

$47.99 last after getting down to $47.49.
(however, be aware of a possible gap-fill and reversal going back to those early November prints)
And going the other direction the last few days, the largest funeral company in the country, Service Corp. International....

Nota Bene: the stock did indeed fill the gap and reverse, up $1.76 (+3.83%) to $47.72 on Friday after getting as low as $45.40 on Thursday. Tight stops if short until we see some hints of news a'comin'

"...The First Casualty Of War Is The Truth"

Izabella Kaminska at The Blind Spot, February 27:

Too much to say, not enough bandwidth.

So here’s Russell Brand who pretty much sums it up I think....
The comments are worth a gander too.

Obviously I’m hugely sympathetic for the Ukrainian people who are just pawns in the whole mess. But I’m equally concerned about what the media messaging is doing to people’s minds at home right now. And how people are losing sight of the bigger picture, the historical complexities, not to mention the West’s own part in the escalation of the war.

Banning Russia from Swift might yet backfire on us more than on Russia. That some people think saying this out loud is traitorous speaks of the in-group bias going on, the loss of objectivity and collapse of critical thinking.

People seem to be operating in purely reactionary ways — often without due consideration for the consequences of their words or actions. Nor are they respecting their own knowledge gaps.

Armchair epidemiologists have been replaced by armchair Ukrainian and military tactician experts. Every single person online seems to know someone who is Ukrainian.

I was confronted yesterday by a somewhat hysterical guy arguing that we must impose a gas-shortage related lockdown on people to help defend Ukraine. “We have to make sacrifices to show Putin what’s what” was the semtiment....


Say what? That's loony.

But maybe no crazier than the American neocons who say we must declare a no-fly zone over Ukraine.

The problem with those types of declarations is you have to enforce them.

Which means that you have to shoot down planes that violate your no-fly zone.

Which means, as Ms. Kaminska says in the first part of her headline: "WW3 Watch..."

Saturday, February 26, 2022

Russian Troops Are Approaching The Largest Nuclear Power Plant In Europe

In this morning's post on the modular nukes that will be providing power to develop the largest copper deposit in Europe (Poland) I mentioned in passing "for reference, a 1000 MWe plant is pretty good size no matter what the fuel powering it is"

This one, the Zaporizhzhia is among the ten largest nukes in the world at 5,700 MWe.

The city is directly north of Crimea and is also home to a 1,548 MWe hydroelectric power plant on the Dnieper and a 3,650 MW gas powered plant. That's a lot of power.

And if I didn't know better—seriously, who would be that revanchist—I'd say the Russians are trying to recreate the Novorossiya (New Russia) of Catherine the Great:

We didn't have all those posts on Crimea for nothing you know.

From The Hill:

Russian military threatens Ukraine nuclear power plant

The Russian military is threatening a nuclear power plant in Ukraine amid the ongoing invasion in the country.

Russia’s military presence has increased near the Zaporizhzhia nuclear power plant, which resides in a town in the Zaporizhzhia region, Ukraine’s ministry of internal affairs has reported. 

Russian forces have aimed one of their deadliest weapons, a multiple rocket launcher called "Grad," at the nuclear power plant, according to the ministry.

Ukraine has reached out to the international community about the danger while the ministry of internal affairs says the Ukrainian military is heading to the region to defend the plant....


Western allies agree to cut select Russian banks from global financial messaging system SWIFT

This action only hits banks that have already been sanctioned.

If The EU and others really wanted to shake things up they'd go after the unsanctioned banks. name names, and watch the (attempted) bank runs on Monday.

From Sky News:

Saturday 26 February 2022 23:22, UK

Western allies have agreed to remove selected Russian banks from the SWIFT global financial messaging system.

In a joint statement, leaders of Europe, UK, US, and Canada, said the move was in response to Vladimir Putin's decision to invade Ukraine late last week.

The group said: "We stand with the Ukrainian government and the Ukrainian people in their heroic efforts to resist Russia's invasion.

"Russia's war represents an assault on fundamental international rules and norms that have prevailed since the Second World War, which we are committed to defending....



Electronic Nose Can Identify Style, Region and Brand of Whiskey With Up To 95% Accuracy

From IEEE Spectrum, February 17:

A whiskey connoisseur can take a whiff of a dram and know exactly the brand, region, and style of whiskey in hand. But how do our human noses compare to electronic noses in distinguishing the qualities of a whiskey?

A study published 1 February in IEEE Sensors Journal describes a new e-nose that is surprisingly accurate at analyzing whiskies—and can identify the brand of whiskey with more than 95 percent accuracy after just one “whiff.”

E-noses have been gaining in popularity over recent years thanks to their range of valuable applications, from sensing when crops are ready for harvest to identifying food products on the cusp of expiring. It is perhaps unsurprising that many e-noses have also been developed to analyze alcoholic beverages, including whiskey, which had an estimated international market worth US $58 billion in 2018 alone.

“This lucrative industry has the potential to be a target of fraudulent activities such as mislabeling and adulteration,” explains Steven Su, an associate professor at the Faculty of Engineering and IT, University of Technology Sydney. “Trained experts and experienced aficionados can easily tell the difference between whiskies from their scents. But it is quite difficult for most consumers, especially amateurs.”....


"In 'Devastating' Move, US Weighs Sanctions On Russia's Central Bank As Germany Backs 'Targeted' Removal Of Russia From SWIFT"

From ZeroHedge:

Following a full-court press by western nations, the handful of European holdouts - those most reliant on Russian energy supplies and continued Russian capital flows, such as Germany, Hungary, Italy and Cyprus - who have been adverse to expelling Russia from the SWIFT electronic payment-messaging system, are one by one folding on their objections.

Overnight, Italy joined the growing consensus seeking to kick Russia out of the Society for Worldwide Interbank Financial Telecommunication global banking system to punish it for the invasion of Ukraine as the European Union weighs up the impact of such an action. Also on Saturday, Poland's prime minister said he had spoken again with his Hungarian counterpart, Viktor Orban, who had assured him of Budapest's support for far-reaching sanctions against Russia.

"I talked today again with Prime Minister of Hungary V. (Victor – PAP) Orban. Once again he assured me of support for far-reaching sanctions directed towards Russia. Also including blocking the SWIFT system," Mateusz Morawiecki wrote on Twitter.....
.... “After the shameless attack by Russia, Ukraine must be able to defend itself,” German Foreign Minister Annalena Baerbock and Vice Chancellor Robert Habecksaid in the emailed statement. “It has an inalienable right to self-defense.”

At the same time, the government “is working flat out on how to limit the collateral damage of decoupling from SWIFT in such a way that it affects the right people,” they said. “What we need is a targeted and functional restriction of SWIFT."

The German statement indicates that Europe's most important nation, and top importer of Russian gas...

... is still not on the same page as most of its other European peers realizing that an overnight cutoff of Russian gas (something which a SWIFT expulsion would spark) would lead to a crippling hit to the German economy, and instead is seeking a targeted SWIFT cutoff, which course is impossible for the "all or nothing" system. As for the well-known reasons behind Germany's opposition Erik Meyersson, an economist at Svenska Handelsbanken, put it best: “The EU isn’t on board with removing Russia from SWIFT for one thing because the EU isn’t on board with letting go of Russian energy."

In effect, the latest German statement is hardly surprising in light of what Germany's finance minister said on Friday afternoon when he shocked more than a few marketwatchers by saying that 'we are open to cutting Russia off SWIFT' with a German government advisor telling RND that "banning Russia from SWIFT is manageable."

And yet, despite the jawboning Germany is still unwilling (and unable) to pull the plug.....


Embedded Water

From Aeon:

The power of water
Far more potent than oil or gold, water is a stream of geopolitical force that runs deep, feeding crops and building nations

A great river encircles the world. It rises in the heartland of the United States and carries more water than the Mississippi and Yangtze rivers combined. One branch, its oldest, streams over the Atlantic, heading for Europe and the Middle East. Another crosses the Pacific, flowing towards China. Countless tributaries join along the way, draining the plains and forests of Latin America, Europe and Asia.

You probably have never heard of such a river, even though almost all of us draw from it. You cannot fish in it, float on it, drink from it. If you were to look, you would not find it: it is invisible. Yet there is no doubt that it flows.

The river starts anywhere water feeds agriculture. But from there, physical water vanishes, replaced by a flow of crops that carry only the memory of the water used to produce them. Crops then travel along the shipping lanes of the global trade system, eventually displacing the water that would have otherwise been used to grow them locally. Thus, water flows from source to destination ‘embedded’ in its products. It is a flow of ‘virtual water’, an idea first developed in the 1980s by the late geographer Tony Allan.

This great virtual river helps explain how nations exercise power over each other. It is far from a coincidence that its dominant source today is the waters of the Mississippi. Its current path was established when Franklin Roosevelt’s US replaced Britain as the world’s hegemon. The US began feeding an imploding, war-torn Europe with crops nourished by the rich waters of Old Man River, and the rest is history.

In 1947, Thomas Hart Benton painted a celebrated allegory of this transition, Achelous and Hercules: a youthful US Army Corp of Engineers, cast in the role of Hercules, fights the Missouri River – Achelous, the river god, in the shape of a bull – while the Midwestern farmland fills a proleptic Cornucopia with food headed east. The US had become the postwar granary of the world.

Achelous and Hercules (1947), by Thomas Hart Benton. Courtesy the Smithsonian American Art Museum

Benton’s geopolitical reference in Ovid’s myth might seem obscure today. But he could be confident that, when the average customer of Harzfeld’s store in Kansas City glanced at that mural above the elevators, near the perfumery section – the location of the original commission – she would have recognised the elemental nature of water, the struggle that shaped the rural landscape of the 1940s, and the power that water control gave to the nation.

Streams of power and identity run deep in the waters of the great virtual river.

All through the 20th century, trading the products of a country’s water resources was an act of power. When the US became the granary of the world, flooding food eastward, it also provoked a countercurrent of hard currency streaming back to pay for it, setting the stage for the Bretton Woods settlement.

Lenin and Stalin paid for Soviet industrialisation with cereal production of Ukrainian, Russian and Central Asian fields, irrigated by canals built by thousands of Gulag prisoners. In China, Mao may well have measured the targets of the Great Leap Forward in tons of steel, but planned to fund their pursuit by irrigating the plains of the Yangtze and Yellow rivers.....


And on a specific type of embedded water, Virtual water:
"Water is the hidden imbalance in U.S./China trade..."
Water is interesting stuff.
We'll have a few posts on it over the next week or so, starting off with something easy: virtual water....

We've looked at virtual water a few times: 
October 2012
January 2013  
One of the few Limits to Growth that actually is a limit rather than some sort of scarcity meme.
However even this should be beatable if some smart people can do the deep dive into the wonder and magic (okay, chemistry and physics) that is H2O.
We'll be hearing about virtual water with increasing frequency, right now there are only 298,000 hits in a Google search....[now up to 459,00]
February 2014 
California Drought: Why Farmers Are 'Exporting Water' to China

March 2016
Shipping U.S. Water To Saudi Arabia
As we've noted elsewhere this is an example of what the hydrology pros call 'virtual water'.

Nukes: Polish Copper Miner To Power Developments With Small Modular Reactors

Although, as in this case, if you string enough SMR's together you are no longer talking small.
(for reference, a 1000 MWe plant is pretty good size no matter what the fuel powering it is) 

From Power Magazine:

Poland Secures NuScale SMR as Urgency for Nuclear Energy Ramps Up Across Central, Eastern Europe

NuScale Power has signed a definitive commercial agreement with mining and processing firm KGHM Polska Miedź S.A. to deploy a VOYGR power plant of up to 924 MWe as early as 2029 to support KGHM’s copper and silver production in Poland.

Under an “early works agreement” signed in a ceremony on Feb. 14 in the presence of U.S. and Polish government officials, Portland, Oregon—based NuScale and KGHM will kick off preparation of “the whole investment project,” including site selection, said Marcin Chludziński, president of the KGHM Polska Miedź S.A Management Board, during the ceremony. The agreement “is not just a declaration anymore, but an actual agreement,” Chludziński said.

The deal adds another major prospect to NuScale’s development pipeline of small modular reactors (SMRs) in Central and Eastern Europe, regions that have quickly emerged as a hotspot for advanced nuclear projects owing to a combination of factors. But it is also especially notable because it represents a deal with a large user of industrial energy, a key decentralized power market that could benefit from smaller installations of baseload, flexible power. KGHM is the second-largest industrial energy consumer in Poland, as Chludziński noted on Monday.

The Allure of SMRs for Large Industry

The commercial agreement follows a memorandum of understanding (MOU) the two companies and Poland-based business engineering consultant Piela Business Engineering signed in September 2021 to collaborate on the development, licensing, and construction of a NuScale VOYGR plant in Poland. Under that MOU, the companies have worked to examine deploying NuScale’s SMR technology as a coal repowering/repurposing solution for existing coal-fired power plants, as well as for “energy in support of industrial operations in Poland.” The companies in September said their examination would include “an analysis of technical, economic, legal, regulatory, financial, and organizational factors.”

NuScale’s VOYGR SMR technology, first introduced in 2000 as an Oregon State University concept, has evolved into a modular light water reactor (LWR) design that can supply energy for power generation, district heating, desalination, hydrogen production, and other process heat applications. With flexibility as a core attribute, NuScale currently offers VOYGR power plants in scalable sizes, including as twelve 77-MWe modules, and as four- and six-module facilities. The company in an October 2021 white paper argued that the modular plants are well-suited to coal repowering because of their design simplicity, modular construction, load-following capabilities, and competitive leveled cost of electricity (LCOE). A 12-module, 924-MWe plant design may have an LCOE of $64/MWh, the company has said....


If interested see also: 

FT Copper: Miners place next bets on Russia with $15bn.


"Fake Meat Is Bleeding Money"

 From AgWeb, February 23:

There’s no animal blood on the floor in plant-based protein maker Beyond Meat’s processing facilities, but for three years the company has been bleeding cash. In fact, investors in the once trendy fake meat company have seen losses mounting.

Beyond Meat will release its fourth-quarter earnings on Thursday (Feb. 24), but caution flags were out to investors ahead of the report. Analysts project the quarter's loss per share will more than double. In the third quarter, Beyond Meat's revenue rose 13% year over year to $106.4 million, but net loss was $54.8 million. Shares that traded over $234 in July of 2019 were trading under $48 on Wednesday.

J.P. Morgan stock analyst Ken Goldman called Beyond Meat “the worst performer in our universe in the last year.” That’s because Beyond’s stock price fell 67% in a market that saw a median gain of 13%. Additionally, Goldman said, Beyond fell 15% over the past month, and 10% over the past week....


As one of the smartest analysts I've ever known once said to me: "A trend is emerging." 
A couple prior posts that may be of interest:
Chartology: Remember The Chart Pattern That Preceded The Drop In Beyond Meat? (IWM; BYND)
ICYMI: Beyond Meat Collapses (BYND) 

Friday, February 25, 2022

"A settler forgot where he buried $100,000 in gold around the Bay Area. It might still be out there"

In the early 2000's I was asked to answer the question of gold's performance during depressions, whether it was an asset to hold during monetary deflation and I got to sort out the differences in performance between gold backed money (or any money) and gold mining equities. The most common example used by gold boosters is the action in Homestake mining stock (HM NYSE) after the stock market crash in 1929:

So after Barrick bought Homestake, I procured an Indiana Jones hat and ventured out to South Dakota to visit HM H.Q. in Lead (long 'e'), get to know the librarians at the Deadwood Public Library and tramp around the Black Hills. I was probably the last person to look at HM's records from the 1930's, I was there as the archivists were boxing the stuff up.
The short version of the stock action—and the dividends, look at that bottom panel in the chart, $56 in 1935, basically what the stock sold for a decade earlier, is:

There were three contributors to the move in the share price.
1) A high-grading mining strategy proposed by a young engineer, Don McLaughlin in the late '20's began bearing fruit in the form of higher recoveries. Mr. McLaughlin went on to the presidency of the company.

2) A flight to safety after the October 1929 stock market crash.

3) The Gold Reserve Act of January 30, 1934 raised the price of gold 69%, from $20.67 to $35.00 (conversely devaluing the dollar by 41%).

3a) Homestake was thus paying salaries and other expenses in devalued dollars.

This combination of more gold produced, higher price per ounce and lowered expenses (in real terms) was what moved the stock, not some inherent magic in gold. 
(that's me quoting myself)

Which left me a lot of time to think about the hundreds of mines in the neighborhood, the lack of secure storage facilities, the dangerous nature of working in an area of steep gradients, heavy drinking and gunplay.
(see Wild Bill Hickock in Deadwood's Saloon #10, August 2, 1876.)
and I realized "Holy crap, there must be a lot of gold buried here by miners who went to town and never came back or fell down a shaft or just forgot where they buried it."

Apparently this was also true in the earlier California Gold Rush (and for that matter every other rush.)

From the San Francisco Chronicle, June 9, 2019:
Granville P. Swift was known for many things, but he was not known for his memory.

The Kentuckian had come to California as a 19-year-old, nine years before the Gold Rush would change the state forever. Young Swift, whose great-uncle was the legendary explorer Daniel Boone, hoped he would make his fortune in fur trapping — but he soon made his name as an insurrectionist. In 1846, Swift was one of 33 Americans who captured Sonoma during the Bear Flag Revolt. He stayed on in Sonoma for another year, commanding a company and earning the rank of captain, before the lure of wealth called to him again.

Upon the announcement of gold being discovered at Sutter's Fort, Swift set off for Bidwell's Bar with a small party. He struck it rich almost immediately.

"Swift was one of the best miners I ever knew," a fellow prospector said. "It seems as if he could almost smell the gold. He made an immense amount of gold. When these three men had worked all winter and fall, I believe they must have made $100,000 apiece and maybe more."

According to an 1875 story in the Sonoma Democrat, Swift left Bidwell's Bar with over half a million dollars in gold. He brought it to San Francisco and had it minted into octagonal slugs, $50 each, with a special mark designating them as Swift's.

Loaded down with gold — and without a banking system to receive it — Swift decided to start burying his haul around the Bay Area, primarily in the Sonoma area. The only problem was, he was very bad at remembering where he'd hidden it all. Although Swift died in 1875, the secret died long before then, forgotten by the scatter-brained settler.

Over time, some of the gold was found. In 1903, a worker on a ranch in Sonoma County dug up $7,000 in Swift's $50 slugs. A year later, $30,000 in gold was pulled from a chimney hiding place on Swift's old ranch near present-day Sears Point.

"While repairing a chimney on the second floor of the place, workmen came across a secret receptacle containing $26,000 in gold coin," the Healdsburg Enterprise reported. "In other places more money was found, the total sum aggregating more than $30,000."

The biggest discovery came in 1914.....MORE

First posted June 16, 2019.

De-Dollarization Incoming: "India Exploring Rupee Payment Mechanism For Trade With Russia"

Via ZeroHedge, Feb 25, 2022 - 08:20 PM:

While China is still trying not to fully alienate the US while effectively siding with Putin in Ukraine (see "China Calls US 'Culprit' For Ukraine Tensions" yet "China State Banks Restrict Purchases Of Russian Commodities, Pause Buying Russian Seaborne Crude"), Asia's other superpower, India, has no such qualms and according to Nikkei Asia, India is exploring ways to set up a rupee payment mechanism for trade with Russia to soften the blow on New Delhi of Western sanctions imposed on Russia - including a potential expulsion from SWIFT - after its invasion of Ukraine, government and banking sources said.

Putting its own national interest first, Indian officials are concerned that vital supplies of fertilizer from Russia could be disrupted as sanctions intensify, threatening India's vast farm sector.  Russia and Belarus usually account for nearly a third of India's total potash imports. It would not be feasible to replace them amid a rally in fertilizer prices to a record high, a senior industry official told Reuters.

Russia's President Vladimir Putin with India's Prime Minister Narendra Modi ahead of their meeting at Hyderabad House in New Delhi on Dec. 6, 2021

Officials said the plan was to get Russian banks and companies to open accounts with a few state-run banks in India for trade settlement, a banking source involved in the discussions said.

"This is a proactive move assuming that the conflict escalates and there could be a slew of sanctions in place," the Nikkei  source said. "In this case we would not be able to settle the transaction in dollars and so an arrangement has been proposed to set up a rupee account, which is being considered."

Funds in such accounts act as a guarantee of payment for trade exchanged between two countries, while the parties barter commodities from each other to offset the sum, the source said.

A similar arrangement, in which part of the settlement with Russia is in foreign currency and rest is through local rupee accounts, was also being explored, said the banking and the government source....


The Alphaville Long Read On SWIFT and Russia (and reserve currency status)

Reminder: "One thing and one thing alone enables global dominance...." 

And related:

"Pfizer drops India vaccine application after regulator seeks local trial"

This story is a few weeks old but in light of some other news that has come out this month may mean something. If nothing else it shows Pfizer is rich enough to pass on a 1.4 billion population market.

From Reuters via Yahoo Finance, February 4:

Pfizer Inc said on Friday it had withdrawn an application for emergency-use authorisation of its COVID-19 vaccine in India, after failing to meet the drug regulator's demand for a local safety and immunogenicity study.

The decision means the vaccine will not be available for sale in the world's two most populous countries, India and China, in the near future. Both countries are running their immunisation campaigns using other products.

Unlike other companies conducting small studies in India for foreign-developed vaccines, Pfizer had sought an exception citing approvals it had received elsewhere based on trials done in countries such as the United States and Germany.

Indian health officials say they generally ask for so-called bridging trials to determine if a vaccine is safe and generates an immune response in its citizens. There are, however, provisions under India's rules to waive such trials in certain conditions.

The U.S. company, which was the first drugmaker to seek emergency approval in India for its vaccine developed with Germany's BioNTech, made the withdrawal decision after a meeting with India's Central Drugs Standard Control Organisation (CDSCO) on Wednesday.

The drug regulator said on its website its experts did not recommend the vaccine because of side effects reported abroad were still being investigated. It also said Pfizer had not proposed any plan to generate safety and immunogenicity data in India....


Good Night Europe

From Michael Shellenberger:


ICYMI: Wheat and Soybeans

 Wheat was limit down

Limit (75.00) down 8.02% to 859.75.

Soybeans not quite as brutal

Down 4.28% at 1583.25. 

There's an outside shot beans could see $25.00 this year, depending on whether the farmers plant soybeans or corn. The supercomputers are whirring away, inputting variables and spitting out profitability estimates as I type. Not kidding.

Ag Commodities: Wheat Hits Life-of-Contract Highs (Limit up)
The all time high was in March 2008 at 13.2825. The futures opened that year at 9.36 and ended that year at 6.30 down 31%. Just a heads up that planning to fade the run may be safer than chasing. Unless of course you have bread that's gotta be baked now. And next week.'s the last three month's action via FinViz:
Soybeans, which have had a more stately ascent...

have a better chance of holding recent gains and even trading considerably higher as we get into the end-of-March intentions report.

"Russia To "Partially Restrict" Access To Facebook For "Violating Fundamental Human Rights & Freedoms"


There's also a story at ZeroHedge, but not as insightful.

Reminder: "One thing and one thing alone enables global dominance...."

Following up on "The Alphaville Long Read On SWIFT and Russia (and reserve currency status)", the reason I threw the "reserve currency" bit into the headline is: any attempt to exclude Russia from SWIFT effectively de-dollarizes their external transactions and leads to the implementation of alternative payment messaging systems.

Although the U.S. currently has reserve currency hegemony, both the EU and China want to be the next currency hegemon and some very bright people understand that beyond the headlines are some profound effects on world power.

As a side note on effects behind the headlines, if the reader is curious as to why Justin Trudeau reversed his decision to use the Emergency Act, even though he had just won a (party-line) vote ratifying his initial action, my guess is someone very high up in the ultimate corridors of power, meaning Toronto rather than Ottawa, explained what capital flight meant, both in theory and in practice.

Anyway, I digress. Here is Charles Hugh Smith at his Of Two Minds blog taking a different angle of attack to get to the essence of the reserve currency issue. January 19, 2022:

Choose One, But Only One: Defend the Billionaire's Bubble or the U.S. Dollar and Empire

The Empire is striking back, protecting what really counts, and the Billionaire Bubble sideshow is folding its tents.

One of the most enduring conceits of the modern era is that the Federal Reserve acts to goose growth and therefore employment while keeping inflation moderate (whatever that means--the definition is adjustable). This conceit is extremely handy as PR cover: the Fed really, really cares about little old us and expanding our ballooning wealth.

Nice, except it doesn't. The Fed's one real job is defending the U.S. dollar, which is the foundation of America's global hegemony a.k.a. The Empire.
One thing and one thing alone enables global dominance: being able to create "money" out of thin air and use that "money" to buy real stuff in the real world. The nations that can create "money" out of thin air and trade it for magnesium, oil, semiconductors, etc. have an unbeatable advantage over nations that must actually mine gold or make something of equal value to trade for essentials.
The trick is to maintain global confidence in one's currency. There is no one way to manage this, as confidence in a herd animal such as human beings is always contingent. Once the herd gets skittish, all bets are off....


For our purposes that's really all there is to it. For at least the last 500 and more likely the last 5000 years the reserve currency was as much a source of power as it was a reflection of it.

Or as Valéry Giscard d'Estaing said when he was de Gaulle’s finance minister, it's an "Exorbitant Privilege".

And no one likes giving up their privileges.

"Moscow Exchange launches trading in Russian Government Bond Index futures"

The past tense is inaccurate.

From the MOEX:

22.02.2022 16:10

On 28 February 2022, the Moscow Exchange Derivatives Market will start trading a cash-settled futures contract on the Russian Government Bond Index (RGBI).

The new instrument provides Russian and foreign investors with additional opportunities to diversify and hedge their securities portfolios, including by opening a position on the entire government bond segment in one transaction, without the need to purchase individual securities....


Future tense may be inaccurate as well.

In other Russian exchange news, from Trading Economics: 

The ruble-backed MOEX Russia Index gained as much as 22% to above 2500 before setting around 2300 on Friday, partially recovering from a 33.3% plunge in the previous session. Traders continue to follow the crisis in Ukraine and digest new harsh sanctions on Russia following the attack on Ukraine. US sanctions include banking, technology and aerospace sectors and the EU will freeze Russian assets in the bloc and halt its banks' access to European financial markets....

....MORE, including chart and quotes on the components

The Alphaville Long Read On SWIFT and Russia (and reserve currency status)

From FT Alphaville:

The impact of throwing Russia out of Swift
The messaging network has become the embodiment of the “weaponisation of finance”

Vladimir Putin’s declaration of war on Ukraine has revived calls to kick Russia out of Swift. The measure is seen as among the most severe that the US, EU and UK could take. 

Denying Russian banks access to Swift is far from a given. It would, for instance, undermine Europe’s capacity to pay for Russian oil and gas, perhaps raising energy prices in the process. Imposing a ban would also require strong consensus. At present, it’s only the UK that really wants it and some EU members remain set against it. 

As we’re not geopolitical experts, we really can’t tell you what the final call will be. But we do know a little about the plumbing that lies behind international payments. And given the pace of change seen over the past week, we thought it worth trying to explain now why getting booted out would be so painful to Moscow.....


....To get a better grip on why this is so important to Putin (and Western leaders), it’s worth reading this piece from Bloomberg’s Javier Blas (hat-tip to Adam Tooze): 

In the 24 hours after Vladimir Putin signed a decree recognizing two breakaway Ukrainian territories, the European Union, the U.K., and the U.S. bought a combined 3.5 million barrels of Russian oil and refined products, worth more than $350 million at current prices. On top of that, the West probably bought another $250 million worth of Russian natural gas, plus tens of millions dollars of aluminum, coal, nickel, titanium, gold and other commodities. In total, the bill likely topped $700 million.....


Capital Markets: "The Fog of War"

From Marc to Market:

Overview: When Russia did what the US has been warning about since February 11, the markets seem to have an exaggerated response. The recovery in the S&P 500 and NASDAQ, the $90 pullback in gold from its highs, a $7 retreat in the price of April WTI, set the tone for today's action. In Asia Pacific, Hong Kong was the only market that failed to trade higher today. Europe's Stoxx 600 has rebounded almost 2% after plummeting nearly 3.3% yesterday. Utilities, real estate, and information technology are leading. After an amazing upside reversal yesterday, US futures are around 0.5% lower. The US 10-year yield is hovering near 1.95%, which is around the middle of this week's range. European yields are softer to extend this week's decline of between four (Germany) and 12 basis points (Italy). Higher than expected Tokyo CPI may have helped lift Japan's 10-year yield back above 0.20%, potentially setting up a test on the upper end of the approved band (0.25%) under Yield Curve Control. The dollar-bloc currencies and yen are pushing higher in the foreign exchange market, while the Scandis and euro are nursing small losses. Among emerging market currencies, the Russian rouble is the strongest, up 2.5% to cut yesterday's loss in half. Central European currencies are weaker, while Mexico, India, South Africa, and China are the strongest in the EM space after Russia. The JP Morgan Emerging Market Currency Index has stabilized after falling 2% of the past two sessions. 

Gold is firmer after yesterday's wild session. It is poised to close higher for the fourth consecutive week. Recall it settled last month a little below $1800 and has held above $1900 today. April WTI is struggling to advance after gaining for the past four sessions. It is near $92.75 after finishing last week a little above $90. It has risen every week except last week since mid-December. US natgas is falling for the second session and is near $4.50, up 1.5% this week after a nearly 12.5% advance last week. Europe's natural gas benchmark gained more than 30% yesterday and is giving around a fifth of that today. Iron ore pared this week's gains to settle up about 2.5% after falling 11% last week. Dr. Copper is threatening to snap five-day drop.

Asia Pacific
Japan is not among the high-income countries struggling with inflation.
Do not be misled by the 1% year-over-year rise in Tokyo's February CPI, though it was above expectations (0.7% median forecast in Bloomberg's survey). Economists had underestimated the rise in energy and fresh food prices. Excluding fresh food prices, the headline gain was halved. If fresh food and energy were excluded, consumer prices in Tokyo are 0.6% lower than they were a year ago. Next week, Japan reports January retail sales and industrial output figures, which coupled with final February PMI readings, will show the world's third largest economy is off to a very weak start of the year. Social restrictions will be lifted next month and a recovery in Q2 is expected. 

Many are watching Beijing response to Russia's invasion of Ukraine. It appears to be more critical of NATO than supportive of Russia. The creation of a separatist movement and then using that movement as a pretense for invasion strikes too close to home for Beijing to be comfortable. Russia does not have much support globally and China could use it as an opportunity to bolster its image on the world stage. Press reports suggest oil importers from China, the largest buyers of Russian oil are hesitating and pausing new seaborne purchases. Chinese refiners and traders in the Far East ports seek more clarify on cargo financing and payments. Note that Russia's energy exports were exempt from sanctions, but some banks have begun imposing restrictions on commodity-trade finance....