07.03.2022 – Stock markets dive, natural gas and oil jump up. That’s because the U.S. is now discussing an embargo on Russian energy. And Russian President Vladimir Putin has rattled his saber – fears of nuclear war are rife.
Brent shot up briefly to 130 dollars a barrel at the beginning of the week, see chart; West Texas Intermediate cost 130 dollars a barrel before profit-taking set in. The record of around 150 dollars from the summer of 2008 is no longer far away. The price of natural gas in Europe has reached new highs: On Monday, a megawatt hour was temporarily traded for 345 euros in the Netherlands – an increase of around 60 percent.
Source: Bernstein Bank GmbH
U.S. Secretary of State Antony Blinken is responsible for this. He said yesterday on NBC’s “Meet the Press” and other talk shows that the White House was consulting intensively – in an “active discussion” – with allies on whether to impose an embargo on Russian oil imports. Meanwhile, a variant emerged that the U.S. could also suspend imports from Russia on its own.
Stagflation and recession
Either way, all of this continues to fuel inflation – you see it at the gas pump. And thus we slide into stagflation – falling growth, rising prices. Wall Street great Ed Yardeni commented, “for the U.S. economy, we now see stagflation, with persistently higher inflation and less economic growth than expected before the war. (…) For stock investors, we think 2022 will continue to be one of this bull market’s toughest years.” In addition, there is the risk of a new Russian default, as in 1998, which led to the collapse of the hedge fund LTCM. Brent is not likely to bounce back to the 200-day line until there is a global recession, see above.
Shares in reverse gear
First, however, the stock market said: Risk Off. The DAX dipped almost five percent to 12,438 points before recovering. On Friday, the German benchmark index had already slipped by 4.4 percent. Meanwhile, the MSCI Asia-Pacific index has reached a bear market with a minus of about 20 percent since the high from February 2021. Investors also fled to the safe haven of U.S. government bonds. The Swiss franc also strengthened, falling below parity for the first time since January 2015. The Swiss National Bank said it was ready to intervene.
Fear of nuclear war
In addition to the energy hammer, fears of a third world war also weighed. Putin put nuclear forces on alert, sent nuclear submarines to the Barents Sea and mobile missile units on maneuvers in Siberia. We are curious to see when the first Western states will buckle, go back to business as usual and allow Moscow to slaughter Ukraine.
For the stock market, the following remains true: Any escalation in Ukraine means oil long, gold long, stocks short. Kiev’s capitulation and a new Western cuddling course turns the picture. We keep the matter for you in the eye!
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