First Up Rabobank via ZeroHedge:
Rabobank: War May Delay, But Should Not Derail Central Banks' Plans
A common enemy
Nothing unites people like a common enemy. Putin is learning that lesson the hard way. His plans to turn Ukraine into a Belarus-style puppet state and avoid NATO expanding east so far seems to have achieved the polar opposite. The West stands united, and Putin’s actions are driving countries that have been neutral to date into the arms of the Western alliance....*****....Back to markets and the impact of recent sanctions, Bloomberg finds that amidst all this, Russia ETFs have seen inflows last week. Like Bloomberg’s Cameron Crise, I can’t help but wonder who can stomach that risk now. Sure, an entire generation of investors has now been conditioned to believe that monetary policy will always come to the rescue during a dip, but it’s hard to see how the Central Bank of Russia can save equity investors from sanctions and boycotts. For the same reasons, Russian equities don’t seem to be the next ‘Gamestonk’ that can be propped back up purely by willpower and memes. Moreover, I highly doubt that Russian assets can expect the same sympathy as some of the Main Street names a year or so ago. In fact, that sympathy may be reserved for Ukraine, which sold USD 277 million in war bonds yesterday. Redditors are looking to buy [warning – strong language] while meme-ishly suggesting that they might be able to “name some tanks” as if this were a crowdfunding campaign.Meanwhile, the rest of the market is more concerned with the economic fallout of the war, resulting in a sharp selloff of equities, as investors flocked back into fixed income. 10y Bund yields dropped more than 20bps between the open and close. The growing prospects of a more protracted war and increasingly brutal tactics employed by the Russian military are casting doubts over the economic outlook. Over the past few weeks we have written extensively about the potentially stagflationary combination of higher inflation and lower growth as a result of the conflict – piling on to the headache that central banks were already facing. For several central banks this may come down to choosing the lesser of two evils.
Crucially, though, the war has not fundamentally changed the choice between fighting inflation or supporting growth; it only exacerbates the potential extremes of the two outcomes. Of course, uncertainty weighs in as well, and central banks may be wary of potential liquidity stress – even if that seems less likely than in previous crises. On the other hand, prospects of less hawkish central bankers may also reignite investors’ concerns about the high inflation rates. Despite the sharp rise in consumer price indices around the globe, they haven’t even nearly kept up with the increased costs faced by producers. Should demand slow more sharply in the face of war-related uncertainty, this could also weigh on the prospects for corporate margins and thus force a more cautious stance from investors.
So we believe that the war may delay, but should not derail central banks’ plans. After some dovish remarks from the ECB’s Rehn, markets pared back their rate hike expectations for 2022 completely. And the fact that not only Bunds, but also peripheral yields dropped sharply indicates that traders may also have reassessed the prospect of more protracted asset purchases – or at the very least that they have priced out the possibility that Lagarde will announce that the ECB will end its net purchases more quickly.....
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And from Wolf Street, March 1:
By Wolf Richter. This is the transcript of my podcast of last Sunday, THE WOLF STREET REPORT.
This stock market – meaning the stock jockeys, the trading algos, the hedge funds, and what is generally called Wall Street – was just brutal about how it pushed one stock after another to ridiculous highs after the Fed’s money-printing scheme flooded the land with liquidity, and the over-liquified crowd swooped in on any and every meme, no matter how ridiculous, and caused these stocks to spike by 200%, 300%, 1,000% and more, in the shortest amount of time.
And then in February 2021, one after the other, each on its own particular schedule, these stocks were abandoned and came unglued in bits and pieces, and by now their prices have collapsed by 60%, 70%, 80% and over 90%, from their respective spikes. These are well-known names.
What we’re looking at is how the greatest stock market bubble ever is coming unglued stock by stock, rather than all at once.
All these stocks that spiked by 200% or 500% or 1,000% were hyped out the wazoo, often in the social media, and their prices spiked in the shortest time, often multiplying in days. This craze started in March 2020, and peaked in February 2021, and then came unglued....
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And all this while the Fed is still purchasing assets:
