Creating this thread to house brainstorms and analysis of potential plays related to the ongoing crisis in Ukraine.
We’ve been primarily playing XOM and LMT, but I don’t want to leave other profitable options of the table should they exist. XOM today has had a massive “sell the news event” potentially banking on Russia’s invasion stopping at Donetsk and the resulting sanctions not materially affecting the oil they produce.
LMT is dive bombing, likely from the same.
So now we need to monitor the current plays and look for others that may be reacting well enough to play reliably.
Just to piggyback off this with a comment I made in trading floor:
It’s hard to tell who could benefit from security spending with Ukraine news since you’ll likely be looking at infrastructure, VPN companies, Malware program companies, etc. it’s also really hard to say whether or not the government builds these in-house (which is incredibly likely). I would look for infrastructure and security consulting companies first as those would be most fruitful imho.
As far as Oil goes, it still seems to be reacting bullishly to Ukraine escalation news. The reversal in USO & XOM was likely triggered by the following article:
So with that in mind, if we’re thinking that Russia intends to further escalate, its reasonable to assume that Oil still has some life in it despite this “profit taking” sell off.
I’ve looked through the other news and catalysts surrounding oil and I’ve not really found anything else that would’ve caused the selloff among the companies that we’d seen (MRO for instance sold off just as hard as XOM) which leads me to believe that we’ve been seeing profit taking.
Watching the Biden speech atm, we’ll see how they react.
I wonder what others here think about UNG, a fund that tracks natural gas futures. I played it profitably about a week ago while it was ramping up on Ukraine fears but have not yet re-entered.
It’s up today, though the rally seems to have mostly petered out. For me the rationale was very similar to that of playing oil futures: Ukraine is a major thoroughfare for Russian gas into the EU, and war between the two could disrupt the supply. I think there are also fears that a Russian cyberattack could bring some pipelines down.
I feel natural gas sector will be largely affected, Especially with the halt on the Nord Stream 2 deal. Russia is a huge natural gas supplier for many countries in Europe.
“According to Statista, the countries in Europe that receive the highest percentage of their natural gas from Russia include, North Macedonia (100 percent), Finland (94 percent), Bulgaria (74 percent), Slovakia (70 percent), Germany (49 percent), Italy (46 percent), Poland (40 percent), and France (24 percent).”
Also there has already been one major gasline explosion in Ukraine in the last week, further limiting the gas supply. Im sure there will be more as well. Just an extra thought.
Prior to this occuring there were already worldwide shortages of natural gas to Europe specifcally, and the Russia Ukraine will likely not help the shortage.
I bought a BTU call this morning on the dip. I’m still only breakeven on it but might hold onto it a little longer to see if the pipeline news spikes it.
I have to look at tickers for LNG (light natural gas) companies that would benefit from a crisis but natural gas might be the play if sanctions continue. The situation is already tense, it really looks like the price of natural gas is destined to go up if the war escalates. For example:
With regards to energy, XOM, CVX, COP are the big boys. HAL, DVN for hydrocarbon plays, especially once we are over 100/b and drilling/mining ops that halted at the beginning of the pandemic because of declining profitability come back online (watch rig count to confirm, specifically in Permian Basin).
I would like to hear from somebody who knows more about semiconductor production regarding how Russo-Ukraine will impact that market.
Another result of the increasing oil prices is usually the thinning margin of shipping companies, as fuel is a significant portion of their cost. At the moment the scenario is unique compared to the past, as the freight rates are extremely high and swallow the oil price increase, but if oil sustains a higher price level, it`s worth keeping an eye on shipping companies declining over time, especially as some of them would become fairly inflated if freight costs trend down anyway
It’s worth noting that, from a cyber security perspective, Ukraine is quite advanced and sources quite a bit of highly skilled technical resources to major US companies (example: EPAM).
Still think gld is bullish here, obviously war=scary gold=safe haven. But also now this war threatens that the fed will become dovish on interest rates because the sharp oil price increase could damage growth. If the fed becomes dovish again this is not only a catalyst bullish for gold it also will push inflation much higher which also is a catalyst for gold.
So my theory on today’s price action in oil, defense, and so on after Biden’s speech is that the worst is probably over for now. The market most likely has priced in the initial Russia threat and this may explain the sell off in oil. Unless Russia does a major escalation, we can probably expect the pop to stop or even reverse in all of these stocks in the coming days imo. I’ve also noticed that since the Biden speech, there’s been significantly less news about the situation in Ukraine. The sanctions that were imposed on Russia also don’t seem too extreme in my opinion, which could also explain the sell off in the stocks for oil.
I don’t know if this would be an immediate play, I was reading Russia currently produces most if not all of the industrial neon for semiconductor fabs. A korean steel company Posco (PKX) apparently does or eventually will also produce it, they could be a potentially good target for growth if the sanctioning get worse or becomes a long term thing.
RSX puts printing for me 2 days in a row. Think even if a further war is averted fear of further russian action and added sanctions could still make this a profitable play. Already taken profits yesterday and will be taking profits today. Will continue to hold a part of my position with the bet russia will continue to invade.
