Also, there was an unusual options activity where someone bought puts on EWT(the Taiwanese ETF). Could it be possible that after Russia completes their invasion of Ukraine, that it could embolden China to invade Taiwan in the same manner? This is a large trade(could just be a hedge hoping for a sympathy play with Russia-Ukraine and hoping China-Taiwan situation is the same). Perhaps someone with inflows access could confirm this, the trade was opened on 2/23/22(or somewhere near there)
To be specific, someone bought the 55p for April 14 2022 expiry, spending about 1 million dollars.
I took a look. I set the filter to February 14 to February 24, with 100K minimum size. All of the trades of this size were made today and yesterday. Check it out. A lot of OTM puts…
Uranium seems to be gaining some momentum right now. DNN is right up against its 200 DMA. Next week should be interesting to see if it gets rejected or breaks through into a new leg up. CCJ broke above its 200 DMA today.
As the fighting escalates in Ukraine the United States and our NATO partners will continue to supply weapons and materials to Ukraine. Several aid packages were issued late last year and negotiations are underway to send an even larger aid package to Ukraine and eastern European NATO partners.
The dollar amount is still being haggled over but it’s clear that the standard players in defense contracting stand to make a significant profit from this conflict. Several of the companies I am going to list here already saw an increase in their stock price Thursday morning, Feb. 24th and into today. Depending on how this all unfolds there are still potentially profits to be made here although probably not as much as in commodities.
Lockheed Martin – $LMT
Valhalla is already playing this one. From the F-35 Joint Strike Fight to the Javelin shoulder-fired anti-armor system Lockheed Martin is supporting the warfighter by providing a wide variety of highly effective and reliable weapons systems. Lockheed is the largest contractor in terms of defense revenue.
Raytheon - $RTX
They don’t have a massive signature program like the F-35 but they do make systems for missile warning and surveillance, fighter jet weapons platforms, hypersonic technology, and air dominance and cybersecurity technologies. They currently have the contract to provide support to the V-22 Osprey and they are also the manufacturer of the Patriot missile battery which is designed to intercept ballistic missiles.
I am a little hesitant to include Boeing on this list because of the recent lawsuit over the 737 MAX. But they are a leading defense contractor, and their planes and weapons systems will undoubtably play a role in any conflict that occurs in the proximity of planet earth. Take a look at this line-up:
Northrup Grumman – $NOC
Maker of the original Stealth bomber and the forthcoming B-21. They are also the lead contractor on the planned overhaul of the United States aging Intercontinental Ballistic Missile (ICBM) arsenal. More related to the current conflict, they are the contractor responsible for the RQ-4 Global Hawk program.
General Dynamics - $GD
General Dynamics has an impressive portfolio of defense products. It serves as the U.S. government’s primary supplier of tanks and heavy land vehicles including the Stryker family of vehicles and the Abrams main battle tank.
L3Harris Technologies - $LHX
L3Harris is an American technology company, defense contractor, and information technology services provider that produces C6ISR systems and products, wireless equipment, tactical radios, avionics and electronic systems, night vision equipment, and both terrestrial and spaceborne antennas for use in the government, defense, and commercial sectors. They specialize in surveillance solutions, microwave weaponry, and electronic warfare.
3M - $MMM
They make everything from the little hook your towel hangs on in the bathroom to the heat absorbing material on the outside of intercontinental ballistic missiles. Their materials are more on the supply side of the manufacturing phase of weapons systems but their stock did see some movement with the news of the invasion, so I included it. These motherfuckers make everything.
Sensors, components, and personal protective equipment for Defense.
Leidos - $LDOS
Logistics, software, and cyber security geared towards defense industry. The stock ran along with the rest of cyber security stocks on Friday, Feb. 25th.
BAE Systems – $BAESY
Largest defense contractor in Europe. Trades OTC, no options. Gapped up Thursday.
Just throwing this in here for $DIS and $AAPL for Russia. While not the same, if sentiment builds could impact both companies with interests in Russia.
From what I can find, that leaves Germany as the lone dissenter in Europe. However, pressure is building and I don’t see them standing alone in opposing this move.
While the US has not formally announced their support for banning Russia, Biden’s comments Thursday imply that he’s looking for Europe to lead the push.
Banning Russia from SWIFT would have significant impact on banking and fuel prices, among others. Given how much resistance the international community has had to this move, I don’t see the market has having priced this in (at least not to any significant amount).
There was an article late last night that I can’t find anymore that stated Germany was now more “open” to banning Russia from SWIFT. It was a definite change in stance from the before mention “hard no”
More news came in:
European and western airlines are cutting ties with Russian airlines AFLT. Also, the European airspace is now restricted to Russian airlines. This is bearish for RSX because it’s a holding in there.
One of the reasons they had not cut Russia off of SWIFT earlier was the danger of the damage to the world economy, but also to the current geo-political order. The Economist has this take:
There are three reasons to think not. Start with the impact on Russia. The Kremlin has been bracing itself for the possibility of being cut off from SWIFT since 2014, when America floated the idea as punishment for the invasion of Crimea. Exclusion would trigger capital flight and a run on firms and banks reliant on foreign funding, but coping mechanisms would soon kick in. Russian banks and their foreign partners would use other means of communication. And transactions would migrate en masse to SPFS, a Russian alternative to SWIFT that is not nearly as ubiquitous and sophisticated, but still usable. That would cause some disruption—but not disaster. Over time, investment in spfs would make the system speedier.
Meanwhile the West would bear costs. Russia is far bigger than other economies America has embargoed. Disruption would spill over to the countries that have business dealings with it. Russia is the eu’s fifth-largest trading partner, for instance. There could also be indirect damage through retaliation. Russia is the source of 35% of Europe’s gas supply and is home to €310bn ($350bn) of eu assets.
And cutting off Russian banks could hurt American interests. America holds sway over international finance thanks to the dollar’s dominance and its pre-eminent role in global settlement systems. Politicising swift would give China an incentive to bolster cips, its rival to swift for cross-border payments in yuan. It would also help China court any country with uneasy relations with America looking for alternatives. It already counts some big foreign banks as members. And by late 2021 it had a daily average volume of transactions of 310bn yuan ($50bn)—well behind swift’s estimated $400bn but nearly double its volume a year before.
Good find boss, posted this article earlier in TF but they have what appears to be a broken system MIR, in anticipation of that, but not close to the market share of other payment systems.
Quite insightful piece that lays out the ramifications of locking Russia out of the international financial order:
Extracts of key points:
The exclusion of a bank of Sberbank’s importance from the dollar financial system is a dramatic step. This will have a disruptive effect on the ability of Sberbank to offer its clients any international service. As of today, February 26, VISA cards issued by Sberbank were no longer working outside Russia. Sberbank’s stock value has crashed and will likely continue to plummet. The bank may be exposed to runs by Russian depositors anxious to get their hands on their cash and to switch it into foreign currency as quickly as possible.
This is Sberbank - went from $15 to $2.26, though recovered to $4.43. Will probably plummet again.
As many people have pointed out, SWIFT is not the be all and end all. Eliminating access to SWIFT will further complicate any international transactions by Russian banks, but what will really cut them off is severing their relationships with correspondent banks. As Biden emphasized, the measures taken against Sberbank were more severe than cutting them out of SWIFT.
SWIFT is a bulk messaging system, handling over 40 million communications per day to a total value of $5 trillion. Its appeal lies in its combination of efficiency and security. Neither efficiency nor security are of any immediate concern in paying for Europe’s energy. What is stake are daily payments to the tune of perhaps $600 million for oil and gas deliveries. The number of individual transactions is modest and can, if necessary, be handled in more direct and old-fashioned ways. For the purposes of paying Gazprom for gas deliveries, SWIFT is convenient but hardly essential.
Cutting Russia’s national bank out of the euro and dollar-based financial systems, would be a truly dramatic step that would strike at Russia’s national economy as a whole and one of Russia’s strongest cards, its foreign exchange reserves.
Russia has somewhere between $469 and $630 billion in foreign exchange reserves, depending on what you count. … Russia has made sure not to hold a large fraction of its reserves in dollars or in the American financial system. … A more forensic investigation strongly suggests that a large amount may be stashed in Eurozone system, particularly with the Bundesbank.
The main ticker that I’m looking at is $MOS (Mosaic Co.). The stock jumped 9.22% on Friday on fears of shortages of fertilizer. Possibly a play, but I’m not sure if it’s too late to hop into this one. The stock is trading at a 5 year high, but I believe as the shortages continue due to the conflict, the stock could trade even higher. Will be watching this one for entry starting Monday assuming there isn’t a big jump up following this weekend.
