Weekly Market Update: War and stagflation fears keep market sentiment downbeat
2022-03-11T16:05:56.583
Trading this week commenced with the Russia’s Ukraine invasion holding a firm grip on markets. Oil prices spiked, to perhaps a crescendo, around the Biden announcement that the US would ban all Russian energy from US markets. Crude broke out to levels not seen since 2014, but prices did roll over in the wake of the Administration’s unilateral announcement and news of additional coordinated SPR releases. As oil prices attempted to stabilize, investors risk appetite improved, putting a floor under global equity markets. Gold prices backed off, the dollar softened and US Treasury yields moved up amid some unwinding or recent safe haven bets. Russian attacks continued across eastern Ukraine while the rhetoric and propaganda remained intense, but sentiment seemed to marginally improve leading into Thursday’s meeting between the Russian and Ukrainian foreign ministers. That meeting offered little in terms of concrete progress towards a ceasefire, but both sides did acknowledge they broached the subject of a future Putin-Zelenskiy meeting. Uncertainty remained extremely high heading into the weekend despite a somewhat softer tone from President Putin who noted there had been certain “positive shifts” in the Ukraine talks. Western officials remained under no illusions though, emphasizing Putin has shown no signs of engaging in serious diplomacy, while planning for additional sanctions against Russia.
Thursday’s trade also saw EU yields rise after the ECB indicated it will halt asset purchases in Q3 despite the ongoing uncertainty around Ukraine, while also affirming it will hike the key rate sometime after that. The ECB also raised its CPI outlook while cutting GDP forecasts in the latest staff projections. US February CPI data largely met market expectations, but some noted the composition was less than encouraging citing rent pressures, in particular. Friday’s March preliminary University of Michigan sentiment reading plumbed to more than a decade low while the 1-year inflation expectation, at 5.4%, touched the highest reading since 1981. This week’s developments seemed to only fan fears around a growing narrative that the global economy is careening towards a difficult period of stagflation. For the week, the S&P lost 2.9%, the DJIA was off 2%, and the Nasdaq fell 3.5%.
In corporate news this week, Amazon announced a 20-for-1 stock split in a move that could pave the way for the tech giant to enter the Dow Jones Industrial Average. Oracle earnings came in below expectations, though the company reported progress on its shift to the cloud software market, despite still lagging sector leaders Amazon and Microsoft. Uber gave some upbeat guidance this week, noting its mobility businesses is bouncing back from the effects of Omicron much faster than it had anticipated. DocuSign shares plunged to erase any COVID-era gains after forecasting below consensus for 2023 amid decelerating subscription revenue growth. Didi Global’s ADR sunk 15% after reports late in the week that its planned Hong Kong stock listing had been halted.
Major US companies such as McDonald’s, Starbucks, Pepsi, Coca-Cola, and American Express joined the throng of firms pausing their operations within Russia. Goldman Sachs said it would be the first Wall Street firm to do the same, and JPMorgan followed suit later in the week. Google announced it would acquire cybersecurity firm Mandiant (formerly FireEye) for $5B and would incorporate the company into its Cloud division. Rival North Dakota shale drillers Whiting Petroleum and Oasis Petroleum said they would merge in a cash-and-stock transaction creating a $6B entity.
SUN 3/6
(RU) Banks in Russia are rapidly trying to move to Chinese UnionPay card operator's system and its own Mir network, after Visa and MasterCard suspended operations - press
(US) US said to be in talks with Venezuela on possible easing of oil sanctions, the two countries are said to not be close to any deal - press
(RU) Russia President Putin issued decree to allow companies to use Rubles (RUB) to pay foreign creditors [relates to debt payments to creditors in countries that engage in hostile activities against Russia]; Russia Central Bank to also ease reporting requirements for domestic lenders, commercial banks will no longer have to publish their monthly accounts on their websites - US financial press
*(CN) CHINA JAN-FEB TRADE BALANCE: $115.9B V $95.0BE
*(US) US SAID TO BE CONSIDERING ACTING WITHOUT ALLIES ON BAN OF OIL IMPORTS FROM RUSSIA, no decision has been made as of yet - US financial press
MON 3/7
(RU) Russia Military to hold cease fire and open humanitarian corridors in several Ukraine cities [Kyiv, Mariupol, Kharkiv, Sumy] at 10:00 Moscow time - Russian press
(CN) China Foreign Min Wang Yi: Taiwan to eventually return to embrace of motherland; Russia-China cooperation is good for world peace and stability
TTF European benchmark Dutch front-month gas futures move above €310/MWh (record high) amid gas supply concerns and oil price rise
(CN) China FX regulator reportedly surveyed banks about their ties with Russia - financial press
(RU) Reportedly Russia is recruiting Syrians skilled in urban combat to fight in Ukrainian cities - US financial press
(EU) Daily 3-month Euribor Fixing: -0.498% v -0.520% prior (above ECB deposit rate and highest since Sept 2020)
BA Said to have suspended purchasing Russian titanium; Reportedly has sufficient supply for airplane production due to supplier diversity and inventory - US financial press
(RU) Russia govt spokesperson Peskov: Reiterates stance to finish demilitarization of Ukraine, and secure two breakaway regions*; Military action will stop once conditions are met
UBER Raises Q1 Adj EBITDA $130-150M (prior $100-130M); Mobility business is bouncing back from Omicron "much faster than we expected"
(RU) Russian Ministry of Digital Development refutes rumors about plans to disconnect Russia from the global internet - Russian press
WLL Confirms to be acquired by Oasis Petroleum in cash and stock transaction, combined Co valued at EV ~$6.0B
(RU) Russia Foreign Min Lavrov said to meet Ukraine Foreign Min Kuleba on Thursday, Mar 10th in Turkey - press
AXP Suspends operations in Russia and Belarus
(RU) Ernst & Young said to announce plans to leave Russia as soon as today (to follow KPMG and PwC) - UK press
(UR) Ukraine spokesperson Podolyak: Third round of talks with Russia has finished, There are small positive developments in improving the logistics of humanitarian corridors
(RU) Russia Dep PM Novak: Europe is pushing us towards an embargo on gas deliveries through Nord Stream 1 but we are not taking this decision yet; No one would benefit from that embargo
*(US) JAN CONSUMER CREDIT: $6.8B V $24.5BE
(UR) Ukraine reportedly received 5,000 AT4* anti-tank weapons, 5,000 helmets and 5,000 bullet-proof vests from Sweden - press
TUES 3/8
ORA.FR Orange and MASMOVIL confirm exclusive discussions to combine their operations in Spain; Potential deal valued at up to €19.6B
(EU) EU said to consider joint bond issuance to help fund energy and defense to cope with the fallout from Russia’s invasion of Ukraine - financial press
Goldman Sachs analysts raise forecast for 2022 Brent spot price from $98/bbl to $135/bbl
(UK) London Metal Exchange said to have suspended trading in nickel after price for three-month contract rose about 100% in less than 48 hours - press
(IT) Italy Energy Transition Min: Italy aims to become independent from Russian gas imports within 24-30 months
SHEL.UK To withdraw from Russian oil and gas; Will stop all spot purchases of Russian crude oil, effective immediately; Will shut its service stations, aviation fuels and lubricants operations in Russia, effective as fast as possible
(CN) China President Xi: Sanctions over Russia to hurt global economy; Ukraine situation is "worrying"; China willing to coordinate with Europe on Ukraine
(EU) Reportedly Russian gas flows through Ukraine to Slovakia decreased sharply - press
VOW3.DE Said to temporarily halt orders for hybrid models citing chip shortage and Ukraine war
- German press
MNDT Confirms to be acquired by Google for $23.00/shr in $5.4B all-cash deal
DKS Reports Q4 $3.64 v $3.54e, Rev $3.35B v $3.30Be; Raises Quarterly dividend 11.4% to $0.4875 from $0.4375 (indicated yield 1.96%)
*(US) US PRESIDENT BIDEN SET TO BAN RUSSIAN OIL, LNG AND COAL AS SOON AS TODAY, MAR 8TH - PRESS
VOW3.DE CEO said to warn that economic damage from war risks being worse than pandemic; Europe faced threat of higher inflation from prolonged conflict in Ukraine - press
(UK) UK reportedly will move toward ban on Russian oil with phased-in approach over months to let markets adjust - UK Politico
(US) President Biden: Confirms ban on imports of Russian Oil, Gas and Energy, understands many allies may not be able to join US
(UK) BBC spokesperson: Will resume English-language reporting from within Russia beginning this evening
(UR) Ukraine President Zelenskiy said to have 'cooled down' regarding question of Ukraine joining NATO - financial press
(US) Atlanta Fed GDPNow: raises Q1 GDP forecast to 0.5% from 0.0%
MCD To temporarily close all of its 847 stores in Russia due to Ukraine invasion
(RU) President Putin signs decree on 'special economic measures' restricting imports and exports 'to protect Russia's security'; To include 'a ban on the export of products and raw materials' the list of which to be determined by Russian govt by Dec 31st - Russia press
(PL) Poland Foreign Min: Prepared to transfer all MiG-29 warplanes to US air base at Ramstein. Germany
(UK) London Metal Exchange: Does not consider it appropriate to announce trading resumption date for nickel given continued uncertainties in the market; Doesn't see restarting nickel trading before Mar 11th
PEP Reportedly exploring options for Russian assets, including writing off business in Russia entirely - press
SBUX To pause all business activity in Russia
KO Suspends its business in Russia; To continue to monitor and assess the situation as circumstances evolve
(US) Commerce Sec Raimondo: Any Chinese companies that aid Russia could be shut down; US could essentially shut down semiconductor -manufacturing international corp or any Chinese companies that defy US sanctions - NYT
XPO To create two standalone, publicly traded companies in LTL and tech-enabled brokered transportation; To divest European operations; affirms all guidance
(RU) Russia Central Bank to limit foreign exchange cash withdrawals from individuals FX accounts until Sept 2022 - press
(RU) US President Biden tweets: This much is already clear: Ukraine will never be a victory for Putin. Putin may be able to take a city, but he will never be able to hold the country
WED 3/9
ADS.DE Reports FY21 €1.05 v €0.77 y/y, Op €66M v €105Me, Rev €5.14B v €5.24Be; Raises FY21 dividend 10% to €3.30/shr
(UR) Ukraine govt bans exports of rye, barley, buckwheat, millet, sugar, salt and meat - financial press
*IEA TO RELEASE 62.7M BARRELS (45.7M OF CRUDE OIL AND 16.9MBBL OF OIL PRODUCTS) - PRESS
TM Exec: To lower production plan for Apr-Jun quarter
(RU) Russia Foreign Ministry: Ukraine operation going strictly in line with plan; It is better for Russian goals in Ukraine to be achieved through talks
(EU) EU Presidency office (held by France): Member States have agreed to new sanctions against Russian leaders and oligarchs
(RU) Russia Gov Spokesperson Peskov: Reiterates govt interested in continuing talks with Ukraine; US has declared economic war on Russia; Country may rethink its energy commitments after sanctions
(RU) Russia PM Mishustin: Russia to approve trade ban details in near future; Russian govt will shortly define list of goods subject to import and export bans, no details yet
ZIM Reports Q4 $14.17 v $3.49 y/y, Rev $3.47B v $3.44Be; Declares FY21 dividend $17.00/shr
AMZN Reportedly House Judiciary Committee asking DOJ to commence criminal probe of Amazon over Amazon's use of seller data and illegal obstruction of Congress - US financial press
(UR) Kyiv mayor Klichko: If Russians encircle Kyiv, we have resources for a week
PM Suspends investment and activates plans to scale down manufacturing ops in Russia (~10% of total cigarette and heated tobacco unit shipment volume and ~6% of total net revenues)
*(US) JAN JOLTS JOB OPENINGS: 11.263M V 10.950ME
(US) Atlanta Fed's Wu-Xia Shadow Federal Funds Rate at +0.21 v -0.20 in Jan (first positive reading since Oct 2020)
(RU) Russia Defense Ministry: Admits participation of conscript soldiers in Ukraine operation; Exhaustive measures are being taken to prevent conscript soldiers from being sent to combat areas
(RU) Russia Feb CPI M/M: 1.2% v 1.2%e; Y/Y: 9.2% v 9.2%e
(US) Association of American Railroads weekly rail traffic report for week ending Mar 5th: 505K total units, -1.9% y/y
(KR) Conservative candidate Yoon Suk-yeol projected to win South Korea presidential election - Korean press
(RU) Russia negotiator Slutsky: Delegation at peace talks with Ukraine will Not concede anything, not a single negotiating point
AMZN Approves a 20-for-1 split of the Company’s common stock, effective June 6th; Authorizes $10B buyback (1% of market cap) - filing
UAE Energy Minister: UAE is committed to the OPEC+ agreement and its existing monthly production adjustment mechanism
THURS 3/10
(UK) Conservative MP Heappey: NATO could intervene in Ukraine if Russia uses chemical weapons - press
*(RU) RUSSIA GOV SPOKESPERSON PESKOV: MEETING OF FOREIGN MINS IN TURKEY MAY OPEN WAY FOR TALKS BETWEEN PUTIN AND ZELENSKIY; awaiting outcome of talks between Lavrov and Kuleba
(CN) China said to have widened the trading band between the CNY currency (Yuan) and RUB currency (Ruble) from 5% to 10% - press
(UK) UK adds Russian oligarch and former Chelsea FC owner Roman Abramovich to sanction list and asset freeze list - press
(UR) Ukraine Foreign Min Kuleba: No progress on ceasefire; Russia conveyed impression to continue its attack until demands met - comments after meeting Russian Foreign Min Lavrov
(RU) Russia Foreign Min Lavrov: Possible Putin-Zelenskiy summit was discussed; Mainly spoke about humanitarian corridors with Ukraine; Want serious talks with Ukraine in Belarus
RUALR.RU Rio Tinto said to halt shipments to Rusal's Alumina refinery in Ireland; Looking to stop bauxite shipments to key Rusal plant - press
DBK.DE Targets FY25 Post-tax ROTE >10%, Rev +3.5-4.5% CAGR through FY25 reaching €30B by FY25
(RU) Russia Economy Ministry to ban some forestry exports to 'unfriendly' States until end-2022- Russian press
*(EU) ECB LEAVES 7-DAY MAIN REFINANCING RATE UNCHANGED AT 0.00%; AS EXPECTED
*(EU) ECB AMENDS ITS BOND BUYING PLAN; Brings forward planned conclusion of APP bond buying program (Conventional QE) to Q3 if the incoming data support the expectation that the medium-term inflation outlook will not weaken
*(US) INITIAL JOBLESS CLAIMS: 227K V 217KE; CONTINUING CLAIMS: 1.494M V 1.45ME
*(US) FEB CPI M/M: 0.8% V 0.8%E; Y/Y: 7.9% V 7.9%E
(EU) ECB chief Lagarde: Had very intense discussion on economic situation; Had different views on issues - Q&A
GS Plans to close ops in Russia, the first Wall Street bank to do so - press
V Reports Feb US Spending Momentum Index at 109.33, +6.8% m/m
(EU) Reportedly only a few ECB policymakers favored keeping APP open-ended at today's meeting; Agreed that 1.9% inflation expected in 2024 is at target - press
(UK) London Metal Exchange reportedly to keep nickel market shut until at least next week - press
(RU) Russia Fin Min Siluanov: If FX reserves frozen, Russia to repay debt in Rubles
*(US) TREASURY $20B 30-YEAR BOND REOPENING DRAWS 2.375% V 2.075% PRIOR; BID TO COVER 2.46 V 2.35 PRIOR AND 2.33 OVER LAST 8 REOPENINGS
(RU) Russia Pres Putin endorses proposal to allow govt to request court order to impose external management on facilities and factories that departing companies leave behind - press
London Metal Exchange confirms nickel market will not reopen tomorrow
JPM To actively unwind Russia business; Has not been pursuing any new business in Russia - press
ORCL Reports Q3 $1.13 v $1.17e, Rev $10.5B v $10.5Be
DOCU Reports Q4 $0.48 v $0.48e, Rev $580.8M v $561Me; Guides FY23 Rev light; Authorizes $200M stock buyback (1% of market cap)
OPFI Reports Q4 $0.13 v $0.13e, Adj Rev $96.0M v $98.4Me
(CN) China regulator says confident can resolve audit issues related to US-listed Chinese cos. - financial press
(CN) China reports 1.1K coronavirus cases, highest amount in ~2-years
(CN) China Premier Li: Hitting 5.5% GDP target will not be easy; Low rate of inflation in China shows right policies are being used; China lowered the deficit rate and macro leveraging ratio in 2021
(RU) Russia said to be looking into ways to resume stock trading next week - Press
FRI 3/11
*(DE) GERMANY FEB FINAL CPI M/M: 0.9% V 0.9%E; Y/Y: 5.1% V 5.1%E
(RU) Russian Defense Min Shoigu said to have told Russian Pres Putin about 16,000 'volunteers' from the Middle East who want to fight in Ukraine; Putin ordered to help them get into the war zone - Russian press
(IR) EU's Foreign Policy Chief Borrell: A pause in Vienna nuclear talks is needed due to external factors
(CN) China President Xi reportedly considers to tap He Lifeng as China's next Vice Premier to have broad control over economic, financial and industrial policy - US financial press
*(RU) RUSSIAN PRES PUTIN: THERE ARE CERTAIN POSITIVE SHIFTS IN TALKS WITH UKRAINE WHICH TAKE PLACE ALMOST DAILY - COMMENTS FROM MEETING BELARUS PRES LUKASHENKO
BLK Said to be hit by $17B of losses on Russian exposure - FT
(UR) Ukraine President Zelenskiy: Have reached a strategic turning point in war; Time and patience is still needed to achieve victory
(CN) China said to stick to current exiting 'zero tolerance' policy to COVID - press
(UR) Ukraine presidential adviser: No new Russian advances during last 24 hours
*(CA) CANADA FEB NET CHANGE IN EMPLOYMENT: +336.6K V +127.5KE; UNEMPLOYMENT RATE: 5.5% V 6.2%E
(US) MAR PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 59.7 V 61.0E (lowest since 2011)
(US) Pres Biden: Confirms US and allies will revoke Russia's Most Favored Nation trade status
(RU) EU Commission President Von der Leyen: will present 4th package of measures against Russia tomorrow, on Mar 12th
(UR) Ukraine Foreign Min Kuleba: Repeats no progress was made during yesterday's talks with Lavrov
(US) Pres Biden: Ending normal trade is a 'crushing blow' to Russia
(US) Weekly Baker Hughes Rig Count: 663 v 650 w/w (+2% w/w)
