- Meet me in Kyiv: Biden’s big adventure
- American support “softens” for war effort
- A swing, swing, swing… and a miss! (Russian sanctions)
- Greg Guenthner on Bitcoin $30K
- Zach Scheidt on a potential market “short” circuit
- Postcards from the end of an empire.
Unless you’ve deliberately shunned all forms of media, you know Biden made a clandestine visit to Kyiv on Presidents’ Day… ahead of the war’s one-year mark Friday.
Is that a threat?
The hours-long Ukraine stopover was intentionally cinematic — full of photo-ops, pageantry and as much swashbuckling as tuckered Biden could marshal.
But back in the U.S., Americans appear to be less impressed by feeble political rhetoric. To demonstrate, support for Ukraine’s war effort is diminishing…
“A new AP-NORC poll finds U.S. adults are somewhat less likely to support providing weapons and direct economic assistance to Ukraine than they were in the months after Russia invaded,” says The Associated Press.
“I am sympathetic for Ukraine’s situation and I feel badly for them,” says 44-year-old Californian Joe Hernandez, “but I feel like we need to first take care of priorities here at home.” (My East Coast-based, Gen Z daughter said something very similar last night.)
As for the poll, we did notice this curiosity: “A majority of Americans, 63%, still favor imposing economic sanctions on Russia… though that too has decreased from the 71% who said that in May 2022.”
Going back, in fact, to December 2021, Biden forewarned Putin that a violation of Ukraine’s territory would warrant “economic consequences like none he’s ever seen.”
Even before Russian tanks rolled into Ukraine, the U.S. had levied a series of “measured” economic sanctions against Russia. It was an opening salvo that only increased in complexity and severity.
But… to what effect?
“A year ago, expectations of economic Armageddon were widespread,” says Dr. Nicholas Mulder, professor of European and international history at Cornell University, in a guest essay at The New York Times.
“America and its European allies followed through… with the largest-scale economic sanctions effort in recent history,” he notes.
- “Within days of the invasion, the Russian central bank saw $300 billion in foreign assets frozen. In the following weeks and months, Western governments moved to block all foreign investment; disconnected three-quarters of the Russian financial sector from the SWIFT payments network; blocked exports of high-tech components; blocked flights, shipping, maintenance and insurance services to Russia; and weaned themselves off Russian energy.
“By any metric, the Western sanctions of the last year have been impressive in their speed and sweep,” says Mulder, adding: “The slightly underwhelming results are not for lack of trying.”
Slightly?
“One year later, the Russian economy has weathered the shock much better than expected,” Dr. Mulder says.
“In March 2022, the Institute of International Finance forecast that the Russian economy would contract by 15% by year’s end,” he continues. “Yet, over the last year, the Russian economy appears to have shrunk by a considerably lower amount, slightly more than 3%…
“Both the financial crises of 1998 and 2008 and the 2020 pandemic recession caused worse contractions in real GDP growth than the sanctions imposed over the past year,” says Mulder, “measures once touted as an economic ‘nuclear option’…
“The last year has demonstrated that against a Group of 20 economy, the United States and Europe alone are no longer capable of mounting sanctions regimes with overwhelming consequences.”
Paradigm’s macro authority Jim Rickards, for one, read Dr. Mulder’s opinion piece with keen interest… Jim’s takeaway?
“Sometimes the news in Ukraine is so bad that even The New York Times has to inject a bit of honesty into its reporting,” says Jim,
“Of course, none of this comes as a surprise to our readers,” he says. “At the beginning of the war, we wrote that U.S. sanctions would fail and that Russia would weather the economic storm without much difficulty.”
Jim even spelled out the reasons for Russia’s economic resilience…
- “Sanctions have been imposed on Russia since the 2014 annexation of Crimea and have had no material impact on Russian policy,” Jim wrote in early February 2022
- “Russia has moved over 20% of its reserves into physical gold bullion stored in Moscow in anticipation of freezes on digital payments
- “It’s simply impossible to sanction Russian oil sales [and] natural gas,” said Jim. “Customers are lined up, including China.
“In a best case,” Jim forecast at the time, “higher energy prices from Russian dominance of the Western European market would feed inflation and damage the profitability of manufacturers around the world.”
Jim added: “Financial sanctions would reduce global liquidity, increase market uncertainty and possibly trigger a global financial panic.”
All of which jibes with what happened in 2022 and Dr. Mulder’s final analysis: “For all the attention lavished on sanctions,” he says, “they are a sideshow and not the main arena in which Ukraine’s future will be determined.”
[Jim Rickards forecast some of the biggest market-moving events in recent history:
- In 2006, he warned of the financial crisis before it hit
- In 2016, Jim said the U.K. would leave the EU — before “Brexit”
- In 2021, he said Putin would invade Ukraine.
- And in 2022, Jim said Biden was behind the bombing of the Nord Stream Pipeline, before the whistleblower report came out.
Today, he’s uncovered a new war that’s being waged against 144 million Americans. The perpetrators? A group of powerful billionaires, politicians and trillion-dollar asset managers.
And their goal is to make it next to impossible for you to make money in the stock market from here on out.
Clearly, that’s a bold statement, but you’ll be convinced once you see what these corrupt power trippers have been up to… Which is why Jim wants to help YOU to game the system for once.]
The Fed minutes are a major preoccupation this afternoon — more on that tomorrow — as the stock market claws its way back from its worst day of 2023.
Per the major U.S. indexes, the Dow has recovered 0.25% to 33,210 while the S&P 500 is up 0.30% to 4,010. The tech-heavy Nasdaq’s regrouped the best, gaining 0.50% to 11,350.
Turning to the commodities complex, a barrel of West Texas Intermediate is priced at $74.22, down 2.8%. Precious metals, meanwhile, are taking a breather; gold is resting at $1,841.20 per ounce and silver’s below $22.
“Bitcoin is still grinding away below $25K,” notes market analyst Greg Guenthner at The Morning Reckoning… and, at the time of writing, Bitcoin’s in the red at $23,750.
“The price action is coiled tight following the Feb.15 surge back above $24K — that’s bullish,” Greg says. “The sheer speed of the move since Jan. 1 shows conviction from these early buyers. It’s starting to feel like this breakout could lead to a quick move toward $30K…
“Crypto-adjacent stocks are also worth watching this week,” says Greg. “MicroStrategy Inc. (MSTR), Riot Blockchain Inc. (RIOT) and Marathon Digital Holdings (MARA) are handy crypto- trading vehicles on the equity side.
“The usual caveats apply,” he cautions. “These stocks can move big — higher and lower! They’re probably not great long-term investments. Instead, use them as directional bets once this Bitcoin rally begins to heat up.”
“The market (and especially speculative stocks) have more risk than usual,” says our retirement-and-income expert Zach Scheidt, following up on his alert last week at The 5.
On Valentine’s Day, no less, Zach outlined five of his most-hated stocks. “Make sure to review my list,” he adds, because they’ve grown even more dangerous in today’s market environment.
He explains: “Short sellers — investors who make bearish bets on stocks — fill an important role in the stock market. Here’s how it works…
“Short sellers borrow shares from a broker and then sell them in the open market. Eventually, they have to buy the shares back and give them to the lending broker,” Zach says.
“When the market trades lower and traditional investors are afraid to buy, short sellers are among the first buyers to step in and support stock prices.”
In essence, short sellers function as a sort of market circuit breaker: “The more shares are held short, the more natural buying power there is to help stop a falling market.
“Short selling is near a multiyear low,” says Zach. “With fewer short sellers in the market, there’s less of a buffer in case stocks trade lower.
“This chart shows the level of short selling in the market…
Source: Twitter
“In other words, this circuit breaker that usually helps keep stocks from falling isn’t set up,” Zach says. “So it’s critical to focus on protecting your wealth, which also means you should avoid the riskiest stocks that have a long way to fall.
“In today’s market, it’s more important than ever to invest in quality companies that generate real profits… pay attractive dividends… and trade at reasonable prices.
“If you focus on these stocks,” he says, “you’ll be able to protect your wealth even if the market circuit breakers fail and stocks slide lower.”
While vacationing in Spain, two amateur free divers uncovered a cache of gold coins, dating between A.D. 364 and 408, “when the Western Roman Empire was in decline,” says an article at Live Science.
“The coins were so well preserved, archaeologists could easily read their inscriptions and identify the Roman emperors depicted on them” — including Valentinian I, Valentinian II, Theodosius I, Arcadius and Honorius.
Courtesy: University of Alicante
“Perhaps these [53] coins were purposefully hidden during the violent power struggles that ensued during the Western Roman Empire’s final stretch,” the article says.
“The find speaks to us of a context of fear, of a world that is ending — that of the Roman Empire,” says Jaime Molina Vida, a professor at University of Alicante.
Hmm… We have no more to say about that.
“Rouleau is a lifelong, die-hard Liberal handpicked by Trudeau for the commission,” says a Canadian reader about our one-year follow-up on Ottawa’s trucker convoy.
“Trudeau also made the rules for the commission. In other words, the Liberal government investigated itself and found no wrongdoing. We, the taxpayers, footed the bill: $19 million, and counting, for a foregone conclusion.”
“Many Canadians, myself included, could have written [Rouleau’s] report the day he was appointed,” says a second Canadian contributor.
“His report is just another nail in the coffin of Canadians’ trust in their federal government and its institutions.”
It seems as if the “final stretch” of empires is, well, contagious.
You all take care! We’ll catch up tomorrow with another episode of The 5…
Best regards,
Emily Clancy
The 5 Min. Forecast
