It’s been a tough week to follow the news — so I can’t imagine what it’s been like for the people in the news. Should we even be talking about markets? It feels unimportant, but this war is inextricably tangled up with currencies, commodities, stocks and even crypto. And it’s not just the war impacting markets — the markets are impacting the war, too. So we should at least know what’s going on. Let’s look at some charts to find out.
For the first time, what’s going on in crypto is geopolitically relevant.
Trading in the bitcoin/ruble pair has surged as Russians seeking refuge from the West’s economic sanctions switch to crypto. Those seeking actual refuge sought to protect their assets as well: BTC denominated in Ukrainian Hryvnia traded at about a 6% premium this week. I can’t think who was taking the other side of those trades, but it goes to show, there’s a market for everything.
Russians were also emptying ATMs:
That money likely went to buy imported goods — because soon there won’t be any.
There will be plenty of wheat in Russia, and not enough anywhere else.
Wheat futures (purple line) have been notably correlated to the ruble/USD rate (orange line). I’m kind of surprised the ruble isn’t down more, given the severity of the sanctions. But let’s hope it stabilizes because wheat prices are more important. Planting season in Ukraine starts in 30 days and if wheat doesn’t get planted, there will be food shortages in a lot of places that can’t afford to have food shortages.
UN data shows that the likely agriculture shock comes at a time when world food prices are already at a 50-year high.
There is no shortage of oil. It’s just not where we want it to be.
Urals crude is trading at an unprecedented $20+ discount to Brent. That means Europe is paying a crazy premium for its oil, China is getting a deal and Russia is still making a lot of money.
Here’s something that should be diverging, but isn’t (yet):
Markets are not yet pricing in the decoupling of monetary policy between the Fed and ECB that is surely imminent. Long USD, short EUR seems like the easiest trade?
There is always a bull market in something, and right now it's commodities. How long can it last? For the sake of the world, let’s hope not very.
Regime change II:
Berkshire is now outperforming ARKK on a two-year view, which means the pandemic-driven market is officially over. That was meant to be something to look forward to.
In a week full of dramatic charts, let’s finish with a memorable one:
Net asset value for the Russia ETF RSX is down to just $0.89 this morning.
As per Nikolai Gogol, be sure to keep some good company this weekend.
Kevin O'Leary says US policymakers are working on a policy to open crypto markets to institutional investors — Blockworks
Which web3 sectors are the most investable? Ranking from low to high in terms of reward/risk rate: (Thread) — Tascha
~$1.3 billion was invested in crypto companies and funds this week — Blockworks
Today in 2014, Buffet dismisses Bitcoin at $600. Up 6,000% since (video) — Pete Rizzo
So I understand @opensea blocked the accounts and deleted the minted collections of Iranian users due to US sanctions law. It is understandable, they have no other choice. The minimal learning here for artists is mint on your own contract. — Punk6529
Ukraine has raised +$54m in Bitcoin and crypto donations. — Bitcoin Archive