Against the tide

By 08/03/2022News
Trading chart

Trading chart

08.03.2022 – We venture an outlook on the Ukraine war and upcoming stock market events. Contrary to prevailing opinion, we believe: Kiev can win. We advise all traders to keep powder dry.

Continuing agony

At the moment, the world still assumes that the conflict will drag on for an agonizingly long time. And that Ukraine will be out as a major wheat supplier for a while yet. You can see that in the wheat chart. An escalation of the crisis is also likely to push the prices of commodities such as oil, aluminum, nickel or palladium further north.

 

Source: Bernstein-Bank GmbH

Russian victory – slow normalization

Most stockbrokers also assume a Russian victory. Then commodity prices would normalize and, as in the case of wheat above, gradually return to the 200-day line. Already, major Wall Street banks are preparing for a return of Russian assets. JPMorgan, for example, published an analysis last Friday with this title: “Russian Corps: If Ifs-And-Buts-Were-Candy-And-Nuts Recovery Analysis; Move LUKOIL, NLMK, MMK to OW.” In it, the bank upgraded corporate bonds of Lukoil, Novolipetsk Steel and Magnitogorsk Iron & Steel to Overweight. Goldman Sachs is also said to have bought bombed-out Russian bonds.

A broken army

But: the Russian army has apparently become a victim of its own ailing system. The evidence we have found in the meantime indicates that corruption is rampant in the procurement system. While high-ranking generals afford ostentatious mansions, field rations for soldiers have sometimes been in disrepair for years. Russian soldiers in Ukraine loot stores because they are hungry. Tires are brittle. Tanks stop because there is no gasoline. Supplies are poorly organized – and right on their own doorstep. Communication does not work because the invaders have cleverly destroyed radio towers. The morale of the troops is said to be lousy – why are the Russians attacking their brother nation? Moreover, no one in the inner circle dares to bring such news to Putin. Now we wonder if the Russians are running out of ammunition.

Ukraine’s victory – mega stock market reaction

Time is playing for Ukraine. If arms shipments from the West arrive, if tightened sanctions drain Russia, this war will be hard for Moscow to win. Watch the real-time news for reports of advancing fresh, highly motivated Ukrainian reservists – if they exist – and a victorious foreign legion: reportedly 16,000 free-armed Westerners want to fight for Ukraine. At the latest, if you see pictures of Russian units surrendering in droves, it’s time for calls on Wall Street and the DAX. And for puts on the above commodities. We wish you good luck – Bernstein Bank keeps an eye on the matter for you!

 


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The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice. CFDs are complex instruments and are associated with the high risk of losing money quickly because of the leverage effect. 81% of retail investor accounts lose money trading CFD with this provider. You should consider whether you understand how CFD work and whether you can afford to take the high risk of losing your money.7

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 81% of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.