Investor Macroeconomic Information and Opportunities in March of 2022
Mike Dunn | Author | Thought Leader
2/27/22 | [email protected]
First of all, my heart is out to the Ukrainian people and all of the people affected by the horrors of this war. But, unfortunately, it will get far worse before it gets better—especially for the children and the elderly.
To reiterate, the voice of this blog is for non-political economic news and analysis from an investor’s point of view.
- Others can do political analysis better than me. I say in my lane.
- My knack is assimilating various fragments of economic details into a better macroeconomic forward-thinking possible picture or outcome based on logic.
- The good news, or bad news, is I’m usually correct.
The Russian and Ukraine Status and Global Microeconomic Tea Leaves and the Resulting Effects
My disclaimer is this is a fast-evolving situation, so my data is as of 2/27/22. If the material data changes, I reserve the right to update this post.
As I’m writing this post, the Ukrainian President is still alive, and the Ukrainian people are putting up a brave fight. After making the utterly historic statement, “I need bullets, not a ride.” I’m “assuming” the Ukrainian President will be a martyr.
- I have every expectation that the Ukrainian people left in the country will put a substantial resistance after Ukraine officially falls the Russian army. Due to the size of the country and the resolve of the Ukrainian resistance, the Russian army may be facing resistance as hard as Afghanistan.
- The resolve of all of NATO seems more robust than ever, and the support of China seems weak based on recent comments.
- Plus, protest against the Invasion are popping up within the Russian borders.
- The collapse of the banking system and inflation will not help the Russian leadership with internal politics.
The US and EU have blocked Russian banks from the Swift financial transfer system. In a much more impactful step with much bigger teeth, the US and EU are blocking and sanctioning the Russian Federal Reserve Central Bank.
- This step should cause a run on Russian banks next week.
- There is not much the Russians do to fix this step other than a military or cyber-attack on NATO, which may happen.
What Raw Materials are in Play that Investors need to be aware of for Opportunities.
Since the US is no longer a net exporter of oil and natural gas due to the stoppage of fracking, Russia is now the 3rd largest exporter of oil and natural gas.
- As the price per barrel of crude nears $100, that would mean massive profits for Russia.
- However, due to the US and EU blocking payments of oil sales, this my all but stop next week.
- Change-is-opportunity for investors, so investors need to find your niche to invest in to exploit this change.
Here is a list of Other Raw Materials in play for Investors in the Russian Ukraine War
- Grain – Ukraine is called the breadbasket of Europe. Who controls the grain controls the food.
- Platinum – mined in Ukraine – used in catalytic converters for cars and jewelry
- Palladium – Used in batteries (including electric cars) and autos
- Nickel – Used in batteries (including electric cars) and car trim (auto manufacturers are looking at other alternatives to nickel due to the rising commodity costs.
- Titanium – is used in aircraft, military products, submarines, golf clubs, and tennis racquets.
- Iron Ore – Ukraine uses its iron ore to make steel. China is starved for iron ore since they tried to cut off Australia due to China retaliating for Australia discussing the origins of COVID.
- Vodka and other Russian Exports – May liquor stores and bars are now threatening to stop selling Russian Vodka. Some municipal governments are planning to boycott any Russian products.
How the Invasion affects China
- The world’s macro-economic situation will fall by some amount with inflation and war changes. China’s economy, China’s municipalities, China’s manufacturing are on the brink. A further economic downturn will not help.
- Will China gain or lose access to oil and natural gas from Russia? If you know this answer, you win. China will be a big winner or a big loser in this situation. If Russia can sell more oil to China at a lower price, this will be an unforeseen solution to China’s cold winter and rolling blackout from the lack of coal. On the other hand, if the Russians cannot be paid electronically, then this will be less oil for the CCP, making cold winter even worse. Based on the official comments from China’s CCP, it is 50/50 on where this stands. The people who know this answer will win big.
- The Russian Invasion has seemed to bring NATO together. A unified NATO is not good news for China and its expansion goals.
- Will the Russian/Ukraine war give the CCP an opportunity to invade Taiwan with US military resources moving to Eastern Europe?
How the Invasion affects Turkey
In January, before the Invasion, Turkey’s inflation rate was over 45%. The Invasion will affect natural gas and oil.
- Since Turkey is a net importer of most products including oil and gas, this will make Turkey’s macro-economic situation worse.
- The cash flow of Turkey’s shipping tolls in and out of the Black Sea. If Russia cannot be paid or pay for products, this will further hurt the Turkish economy.
- Turkey announced last week it cannot refuse Russian military ships access passage to and from the Mediterranean Sea and the Black Sea.
Where does this leave investors?
There will be MANY macro-economic and micro-economic needs to be filled by the changes from sanctions, blockage, blockades, and war developments.
- The next few weeks and months will result in thousands of opportunities that need to be fulfilled.
- For investors, the risk is high, the information is changing daily, but there is opportunity. Good luck.