The bleak market outcome for Russia after Ukraine invasion

March 4, 2022



The writer is an investment director at GAM

The implosion of Russia’s financial markets following the country’s invasion of Ukraine is not the first crisis to befall emerging markets. Nor will it be the last.

Since emerging markets were popularised as a collective asset class in the 1980s and 90s, there have been events like the Asian financial crisis, the 1998 Russia debt crisis and Argentina’s serial defaults. The scale of such episodes are a reminder of the risks that come with returns in emerging markets. Investors are notoriously amnesiac but it will be a long time before they regain trust in Russian markets.

Those unfortunate enough to be caught with investments in Russian assets should obviously attract limited sympathy while Ukrainian civilians are being bombarded. But the combination of western sanctions on Russia in response to its aggression and Moscow’s response has severely disrupted Russian markets — including, crucially, sending the rouble spiralling.

Index provider MSCI is removing Russian stocks from its widely tracked emerging markets indices and is likely to record the last price for them as “effectively zero”. Holders of Russian rouble bonds have either left their holdings marked at stale prices or marked them down in line with the external debt. The endgame there looks to be similar.

Cutting some of Russia’s banks from the Swift financial messaging system has drawn many headlines but the most powerful international action was to freeze the foreign reserves of the Russian central bank. It is this that caused the 25 per cent drop in the rouble after the sanctions were announced, and this which prompted the effective declaration by Moscow of economic hostilities on foreign investors.

The central bank first instructed local investors not to bid for assets held by foreigners, next froze foreigners’ accounts and then dictated that dividends and coupons would not be paid to foreigners. Neither equity nor bond markets had been reopened at the time of writing.

Russia might believe it is self-sufficient in capital. After the experience of the 1998 financial crisis, the country opted for rigid fiscal discipline and has been running a sustained current account surplus. So the combination of capital controls and sanctions should in theory not require a significant adjustment at the macroeconomic level. However, that theory is reliant on sanctions not inducing big changes in behaviour. This seems optimistic.

More important is the effect on the rouble. Since the end of communism, convertibility of the rouble was crucial to restoring the domestic currency as a store of value.

At least part of the rationale for preventing foreigners from selling Russian assets was to reduce the pool of roubles looking to buy foreign currency. The situation is clearly perilous. Before sanctions were announced, a dollar was worth 83 roubles in the market. Three days later, the currency market rate touched 122, while ordinary Russians faced much higher retail rates — where there were dollars available at all. Financial uncertainty leads to capital flight — the proximate cause of the 1998 meltdown.

The Russian authorities have boasted of how little the country relies on imports. It is comfortably self-sufficient in food and energy. However, Russian industry is reliant on western machinery and parts. And Russia’s efforts to prepare for sanctions have also been heavily reliant on China.

China is unlikely to match western sanctions. It is an eager buyer of Russian resources and Moscow is also the biggest foreign holder of Chinese bonds, according to ANZ. But there would be an irony if Russia’s attack on Ukraine left it at the mercy of a richer, more populous neighbour.

The good news for international investors is that almost none of the factors that caused the 1998 debacle are in place. The default then triggered a chain reaction that ripped through highly leveraged markets, starting at hedge fund Long Term Capital Management. There is now far less leverage applied in emerging market assets and the run-up to the Russian attack was drawn out, giving some investors time to adjust.

But what this week has illustrated is how important access to international capital markets have been for Russia. It has allowed the country to import a degree of institutional certainty — vast foreign reserves in reserve currencies and the use of western courts for dispute resolution. These are not available to a country with arbitrary government. And the current crisis serves as an excellent example of what can go wrong for investors braving erratic jurisdictions in search of higher yields.

Source: Financial Times

Credit Suisse names Rawra head of clean tech banking for Canada - memo

March 3 (Reuters) - Credit Suisse has named Saad Rawra as its head of clean-energy technology banking and Canadian head of diversified industries group to help drive the Swiss bank's growing global energy tech franchise, according to a memo seen by Reuters.

Rawra will be based in Toronto and report to Credit Suisse Canada CEO Ron Lloyd and Robert Santangelo, the co-head of global energy and infrastructure banking. Rawra returns to the Swiss bank after spending the past three years with National Bank Financial as the head of cleantech, the memo said.

In his new role, Rawra will be responsible for advancing Credit Suisse's Canadian platform to help drive its "rapidly growing Global Energy Tech franchise," according to the memo.

He has worked on deals including Brookfield's $4.6 billion purchase of Westinghouse and $13.2 billion buyout of Power Solutions, as well as Bombardier's sale of its Aerostructures business for $1.2 billion.

A Credit Suisse spokesperson confirmed the content of the memo.

(Reporting by Shariq Khan in Bengaluru)

Total’s Top Financier Urged to Sever Ties Due to Russia Exposure

Alastair Marsh
Wed, March 2, 2022


(Bloomberg) -- Credit Agricole SA, which provides more financial support to TotalEnergies SE than any other institution, has become the target of an activist campaign urging it to sever ties with the French oil major due to its continued operations in Russia.Reclaim Finance, a Paris-based nonprofit focused on sustainable investing, wrote to the chief executive officers of Credit Agricole and its asset management unit, Amundi SA, to demand that they stop providing capital to Total and all other fossil-fuel companies still active in Russia. Amundi, which oversees more than $2 trillion, is Total’s biggest shareholder after BlackRock Inc., while Credit Agricole is its biggest lender.

Total’s stance has left it increasingly isolated as rivals such as BP Plc, Shell Plc, Equinor ASA and Exxon Mobil Corp. all turn their backs on Russia in response to President Vladimir Putin’s invasion of Ukraine. It’s part of a mass exodus that’s rapidly turning Russia into a political and economic pariah amid international condemnation of Putin’s war.

“If TotalEnergies refuses to burn ties with Putin's oil and gas industry, then Credit Agricole must burn ties with TotalEnergies,” Lucie Pinson director at Reclaim Finance, said in Wednesday’s letter . She also condemned the French bank’s continued role as one of the main financiers for Russian state-controlled energy giant Gazprom PJSC.In a letter addressed to Credit Agricole CEO Philippe Brassac and Amundi CEO Valérie Baudson, the nonprofit called on Credit Agricole and its subsidiaries to cease financing not only Gazprom, but all non-Russian fossil-fuel companies active in the country “until these groups have withdrawn from their operations.” Credit Agricole has paused its financing of new business related to Russia, including for projects and movements of commodities, people familiar with the matter said Tuesday. “In the context of the current crisis, any isolated initiative can only be risky and could prove unfortunate,” said a spokesperson for Credit Agricole. The bank will observe sanctions and the firm’s corporate and investment banking division now “deals only by exception with Russian counterparties and only in response to the needs for goods and services essential to Europe, as long as these remain of course authorized by the public authorities.” A spokesperson for Total didn’t immediately respond to a request for comment.The list of those cutting ties or reviewing their operations is growing by the hour as foreign governments ratchet up sanctions against Russia. The role of fossil fuels in bankrolling the Russian war machine has exposed Western oil majors still doing business in the country to intense criticism. On Wednesday, Exxon CEO Darren Woods pointed to the “ needless destruction” caused by the war in Ukraine as he mapped out plans to end a decades-long relationship with Russia.

Verde to expand potash output in Brazil to counter supply disruption

Roberto Samora
Thu, March 3, 2022

By Roberto Samora

SAO PAULO, March 3 (Reuters) - Verde Agritech PLC has decided to expand its potash production in Brazil as the global fertilizer supply chain faces a major bottleneck owing to the Russia-Ukraine conflict and Western sanctions on Belarus, an important producer.

The company said its board has approved accelerated investment so it can boost output capacity and become Brazil's largest potash producer.

Verde expects to double capacity of its second production facility in the state of Minas Gerais, currently under construction, and reach 3 million tonnes of output capacity in 2022. Plant 2 - as the venture is called - is on track to start production in the third quarter of 2022 with initial capacity of 1.2 million tonnes a year, Verde said, while the expanded production capacity is expected to be set by early fourth quarter.

"Given the latest sanctions applied to Belarus and Russia, we are acutely aware of the collateral impact on Brazil's agriculture in the case of a potash supply disruption," Verde President and Chief Executive Cristiano Veloso said. "We are equally worried about a global food shortage, which might be unavoidable if there is a breakdown in fertilizer supply."

Brazil imports about 85% of its fertilizer consumption, including potash.

Brazil Agriculture Minister Tereza Cristina Dias on Wednesday said the country has fertilizer stocks that should last until October and would soon launch a national plan to stimulate investments in potash and phosphorus mines.

Verde said its board approved an expenditure of 51 million reais ($10.04 million) to fund the expansion plan, up from the 22 million reais previously approved for the construction of Plant 2.

The company also expects to start building its Plant 3 unit in 2023, but such a move still requires permits. ($1 = 5.0794 reais) (Reporting by Roberto Samora; Writing by Gabriel Araujo; Editing by David Goodman and Mark Porter)

Canada Rail-Strike Threat Latest Upset to Fertilizer Supply



Jen Skerritt
Wed, March 2, 2022, 

(Bloomberg) -- A labor dispute at one of Canada’s largest railways is threatening to further disrupt global supplies of fertilizer just as farmers need key nutrients to plant spring crops.

About 3,000 workers at Canadian Pacific Railway Ltd. have voted for a plan to strike March 16, if necessary, according to their union. Canada, along with Russia and Belarus, is one of the main sources for the world’s potash, a commonly used fertilizer that contains potassium. A potential work stoppage comes amid concerns of shortfalls in supplies amid Russia’s invasion of Ukraine and sanctions on Belarus.

“The disruption at CP in the middle of spring has a potential devastating impact on the ability to supply the American farmer,” said Jeff Blair, chief executive officer of GreenPoint Ag, an agriculture supply company in the southern U.S.

CP has offered wage increases for a two-year collective pact and has agreed to 20 union demands, spokeswoman Salem Woodrow said in an email. The union leadership “appears poised to force a shutdown of the essential rail supply chain” in mid-March by making unreasonable demands, she said.

“A work stoppage of any duration at CP will impact virtually all commodities within the Canadian supply chain, thereby crippling the performance of Canada’s trade-dependent economy,” Woodrow said.

Shipping woes have also been driving lumber prices higher and the threat of a CP strike will just “exacerbate an already tough situation,” said Kevin Mason, managing director of ERA Forest Products Research. Lumber futures in Chicago rose by the exchange limit Wednesday to $1,268.70 for 1,000 board feet, a two-week high.

War Abroad and Politics at Home Push U.S. Climate Action Aside

Somini Sengupta and Lisa Friedman
Thu, March 3, 2022

Supporters of Ukraine outside the White House on the day of President Joe Biden's State of the Union address in Washington, March 1, 2022. (Valerie Plesch/The New York Times)

War and politics are complicating the efforts of the two biggest polluters in history — the United States and Europe — to slow down global warming, just as scientists warn of intensifying hazards.

In his State of the Union speech Tuesday evening, President Joe Biden barely mentioned his climate goals, despite promises to make climate an issue that drives his presidency. European politicians have their own problem: They are struggling to get out from under one of the Kremlin’s most powerful economic weapons — its fossil fuel exports, which Europe relies on for heat and electricity.

Oil and gas prices are soaring globally. That is a boon to those who extract and sell the very products that drive fatal heat waves, wildfires and sea level rise. And it is leading to new demands for increased drilling in the United States, already one of the world’s biggest producers of oil and gas.

The developments come just days after an exhaustive report from the United Nations that implored world leaders to sharply reduce emissions of carbon dioxide, methane and other greenhouse gases that are dangerously heating the planet. To fail, they said, is to face a harrowing future where the rate of global warming outpaces humanity’s ability to adapt.

In Washington, Biden’s ambitious climate legislation has been blocked by unanimous Republican opposition as well as a senator from his own party, Joe Manchin, who represents the coal-producing state of West Virginia and has strong backing from the fossil fuel industry. The Supreme Court could further limit Biden’s ambitions in a case that began this week that could restrict the federal government’s ability to regulate greenhouse gas emissions.

In his State of the Union address — traditionally considered a president’s best opportunity to rally the nation around an agenda — Biden cited climate in the context of his proposals to create jobs by repairing roads, airports and other crucial infrastructure. “We’ll do it all to withstand the devastating effects of the climate crisis,” he said.

But high gas prices pose a risk to Democrats before midterm elections, and his remarks were intended to blunt that, too. He said he would release oil reserves — 30 million barrels worth — to keep prices down for Americans. “We are going to be OK,” he said.

Energy experts said Biden missed an opportunity to connect the war in Ukraine to the need to more swiftly sever an economic reliance on fossil fuels. “The president did not articulate the long-term opportunity for the U.S. to lead the world in breaking free of the geopolitical nightmare that is oil dependency,” said Paul Bledsoe, a strategic adviser to the Progressive Policy Institute, a Washington-based think tank.

Vedant Patel, a spokesperson for the White House, said Biden has shown “unwavering support” for climate solutions.

The Russian invasion in Ukraine has brought world leaders to a new, difficult crossroad. The European Union is feeling its effects most acutely.

Russia supplies nearly 40% of the gas that Europeans use for heat and electricity. In exposing the enormous leverage that Russia has enjoyed with its energy exports, the Ukraine conflict is forcing European leaders to make some urgent choices: Should it build new fossil fuel infrastructure so that it can replace Russian fuel with liquefied natural gas from elsewhere, chiefly the United States? Or should it shift away from fossil fuels faster?

Next week the world will get an early glimpse of Europe’s leanings, because officials in Brussels are due to announce a new energy strategy aimed at weaning the continent off Russian gas.

A draft of the report, reviewed by The New York Times, suggests that the new strategy will propose speeding up energy efficiency measures and renewable energy installations. It views imports of liquefied natural gas, or LNG, from the United States and elsewhere as a short-term measure to offset Russian piped gas.

“This war will have deep repercussions one way or another on our own energy system,” Kadri Simson, the European Union energy commissioner, told reporters this week after an emergency meeting with energy ministers from the 27-member bloc.

Analysts have said European countries can quickly reduce gas dependence with energy efficiency measures and ramping up renewable energy investments, which are already in line with Europe’s ambition to stop pumping additional greenhouse gases into the atmosphere by midcentury. The conflict in Ukraine could fast-track some of that. It could also lead to what Lisa Fischer, who follows energy policy at E3G, a research group, called “a tectonic shift” — using renewables, rather than ample gas storage, to achieve energy security.

In an interview this week, John Kerry, Biden’s special envoy for climate change, emphasized that, saying Putin has “weaponized” fossil fuels, particularly gas.

“It’s related, and people need to see it that way. Energy is a huge part of the geopolitics of what the options are,” Kerry said. “Energy is a key weapon within this fight, and if there were far less dependency on gas there would be a different set of plays.”

The United States, for its part, has ramped up exports of LNG to Europe to counter the decline in Russian piped gas. By the end of this year, the United States is poised to have the world’s largest LNG export capacity.

Current sanctions that nations have imposed on Russia do not directly target its oil and gas sector, but the Ukraine invasion is expected to disrupt supply routes and has stoked fears that Russia could curtail shipments.

In the United States, Republicans have said the Russian invasion of Ukraine underscores the need to aggressively drill for more oil and gas in the United States to provide Europe with an alternative. Sen. Kevin Cramer, R-N. D., on Tuesday called Biden’s opening of the strategic reserve “a thimble in the ocean.”

White House officials said Biden wove climate change and clean energy throughout his speech. He noted that Ford and GM are investing billions of dollars to build electric vehicles, creating millions of manufacturing jobs in the United States. He also noted that funding from the infrastructure package will build a national network of 500,000 electric vehicle charging stations.

But climate change policy is at a critical juncture in the Biden administration. The president’s centerpiece legislative agenda, which he had called the Build Back Better act, is dead. Democrats still hope to pass approximately $500 billion of clean energy tax incentives that had been part of the package, but opportunities to do so are waning. If that investment does not come through and the Supreme Court also restricts the administration’s ability to regulate emission, Biden’s goal of cutting U.S. emissions roughly in half compared with 2005 levels could be essentially unattainable.

Even if climate wasn’t the stated focus of Biden’s address Tuesday, administration officials said Russia’s war against Ukraine has not pushed climate change off the agenda. They noted that Biden has made climate change an emphasis in virtually every federal agency, and has moved ahead with major clean energy deployments including a record-breaking offshore wind auction last week that brought in more than $4 billion.

© 2022 The New York Times Company

MYOB 

KEEP YOUR HANDS OFF OUR BODIES

Advanced Tennessee bill seeks to ban abortion medication at colleges, through mail

Melissa Brown, Nashville Tennessean
Wed, March 2, 2022

Francie Hunt, executive director of Tennessee Advocates for Planned Parenthood, speaks during a demonstration at state Capitol in Nashville, Tenn., Monday, April 19, 2021.

Tennessee legislators on Tuesday advanced a bill to ban abortion medication distribution through the mail and on college campuses, the latest in a round of similar legislation in the U.S. prompted by federal approval of delivery and telehealth dispensation of the pills.

The legislation, which passed the Senate Judiciary Committee, seeks to ban mail delivery of abortion medication, an increasingly common method to terminate early-term pregnancies up to 10 weeks.

More than 75% of Tennessee abortions occurred within the first 10 weeks of pregnancy in 2018, according to the most recent available state data. The American College of Obstetricians and Gynecologists has endorsed medical or chemical abortion as a safe procedure.


Rep. Robin Smith, R-Hixson, first introduced the bill, which would require physicians dispense the two-pill medication in person, blocking patients from receiving it through a qualified nurse or filling a doctor-written prescription at a pharmacy.

The bill would prohibit the medication at postsecondary schools as well, which Tennessee code defines as institutions in the state university and community college system.

“In this state, we have an opportunity to put safety measures around chemical abortion which currently allows the use of telemedicine and courier delivery, as opposed to a qualified examination and direct distribution of powerful medicines," Smith said.

Opponents of the legislation say it is a disingenuous attempt to further restrict access to safe abortion procedures in Tennessee, as abortion medication is taken over a 48-hour period and the bill simply requires in-person dispensation.

Sen. Raumesh Akbari, D-Memphis, voted against the legislation, calling it "arbitrary and unnecessary" when the bill doesn't require doctors to monitor women through the procedure. Akbari also criticized the postsecondary schools component, saying there is "no rationale" for placing additional restrictions on college students who are legal adults.

"The doctor is not going to monitor the woman as she takes the medication, she does not even have to start taking the medication at the office," Akbari said.

"You have women and families who are making a very difficult decision, and all this does is to make it more difficult to make this decision. I think women deserve the same freedom as men when it comes to accessing safe and legal medications," Akbari said, calling for a greater focus on comprehensive sexual education and expanding health coverage to address unplanned pregnancies. "There is evidence to suggest that these pills are less dangerous and have less incidents than Tylenol or Viagra."

Medical abortion Q&A: Are abortion pills safe? Can I get out-of-state prescription? Your questions answered

More: FDA makes abortion pills permanently available through mail and telehealth by removing in-person restriction

Bill calls for penalties

The legislation initially required physicians to keep detailed reports on patients who seek medical care for abortion complications and called for possible jail time for physicians who failed to follow the proposed statute, which one Nashville doctor said could have a dangerous chilling effect on women seeking care after miscarriages and abortions.

A Senate amendment to the bill struck the reporting requirements and jail time penalties, though the legislation maintains violation of the proposed law would be classified as a felony and liable for up to $50,000. Patients who receive the prescription medication are protected under the proposed bill.

Nashville emergency medicine physician Dr. Katrina Green this week spoke against the legislation, particularly any reporting requirements that could intimidate women seeking medical care for chemical abortions and miscarriages, medically referred to as spontaneous abortions. The two are often indistinguishable, Green said.

"I'm a firm believer in my patient's rights to decide what's best for them," Green said. "Part of that is having the ability to decide what happens with their pregnancies."

The FDA won't allow you to get the abortion pill from a pharmacy with a prescription. The coronavirus pandemic has made it even harder to access.

When asked about physician concern over the possible chilling effect of this legislation for women seeking medical care after an abortion or miscarriage, Smith said the legislation is "advocating for patient safety."

"What this bill simply does is it to establish protections for patients who, according to Planned Parenthood, could pass blood clots the size of a lemon as part of this chemical abortion," Smith said.

The Tennessee legislation mirrors a raft of similar anti-abortion measures brought across the U.S. in recent months after the Food and Drug Administration last year approved delivery and telehealth dispensation of the medication. Georgia legislators this week advanced a similar ban on women receiving the abortion bill through the mail or at universities that receiving state funds, according to the Atlanta Journal-Constitution.

Reach Melissa Brown at mabrown@tennessean.com.

This article originally appeared on Nashville Tennessean: Tennessee abortion legislation would ban abortion pills at college, in mail

UN rights forum picks ex-ICC prosecutor to lead Ethiopia abuses investigation


 An Eritrean refugee poses for a portrait behind a curtain in Addis Ababa, Ethiopia

Wed, March 2, 2022

ADDIS ABABA (Reuters) - The U.N. Human Rights Council has picked the former chief prosecutor of the International Criminal Court to lead a panel investigating violations of human rights in the conflict in northern Ethiopia, the council said on Wednesday.

Ethiopian federal troops went to war with rebellious Tigrayan forces in November 2020. Since the war erupted, Reuters has reported atrocities by all sides, which the parties to the fighting have denied.

The council voted in December to establish an independent investigative commission, to look into alleged violations by all sides and to identify perpetrators with a view to accountability.

Fatou Bensouda, a Gambian national who was chief prosecutor at the ICC between 2012 and 2021, will lead the panel of three, the council said in a statement.

The panel will "establish the facts and circumstances surrounding the alleged violations and abuses, collect and preserve evidence, to identify those responsible, where possible," the council said.

It will also "make such information accessible and usable in support of ongoing and future accountability efforts."

The team will brief the council during its mid-year session and present a written report towards the end of the year.

Gedion Timothewos, the Ethiopia's minister of justice, said they will cooperate with any investigation "focused on the genuine promotion and protection of human rights."

"There is light at the end of the tunnel and the Ethiopian people in their collective wisdom will opt for peace and reconciliation," he told the council in Geneva.

Thousands of civilians have died and millions have fled in the conflict between the federal government and rebellious forces including fighters loyal to the Tigray People's Liberation Front (TPLF), which dominated Ethiopia's ruling coalition for nearly 30 years.

The TPLF welcomed the council's move to investigate atrocities in December, when the body passed a resolution to create it.

(Reporting by Stephanie Nebehay in Geneva; Writing by Duncan Miriri, Editing by William Maclean)

WHO IS WINNING THE WAR
Defense Stocks Soar $69 Billion On Russia's War

MATT KRANTZ
03/03/2022

Russia's attack on the Ukraine sparked a global humanitarian and political crisis. But S&P 500 investors are still finding ways to engage in defense companies helping nations defend themselves in a world torn by war.

Investors have already posted $69 billion in stock gains on the 33 major defense and aerospace stocks in the largest ETF of its kind, the iShares U.S. Aerospace & Defense ETF (ITA), says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.

The ETF itself is up nearly 10% from Russia's initial Feb. 24 attack on Ukraine. That's more than twice the 4% rise in the S&P 500 in that time. Analysts, too, see more upside in a year's time in more than three-quarters of the stocks in the top defense ETF. And not just a little rise — they're calling for an average double-digit gain.

And yet, the top defense ETF doesn't show the magnitude of gains seen in the defense and aerospace industry in the wake of Russia's attack. The 33 stocks in the ETF, on average, are up nearly 13% from the attack and more than 5.3% this year so far. The S&P 500 itself, measured by the SPDR S&P 500 ETF Trust (SPY), is down nearly 8% this year.

"Russia's invasion of Ukraine, representing Europe's worst security crisis since World War II, has sparked global outrage," said Jack Ablin, strategist at Cresset Capital. "The court of public opinion clearly supports the Ukrainian people and their president, Volodymyr Zelenskyy."

Many of the ETFs and defense stocks have run up. But analysts still see upside for many remaining.

Targeting The S&P 500 Defense ETFs

With assets of more than $3 billion, iShares U.S. Aerospace & Defense is twice the size of its next biggest rival, the SPDR S&P Aerospace & Defense ETF (XAR).

But defense is not a massive area for ETFs. There are now only three major ETFs to choose from for investors looking to buy into the sector. The third is the relatively small Invesco Aerospace & Defensive (PPA), with $780 million in assets. And in what's perhaps the worst timing ever for an ETF, the VictoryShares Protect America ETF shut down late last year. And it's easy to see why: Shares of defense companies largely lagged the S&P 500 over the past five years.

The iShares U.S. Aerospace & Defense ETF, for instance, is up just 46.2% over the past five years. That chokes on the exhaust of the 84.2% gain by the S&P 500 during that time. Part of the underperformance is due to its No. 1 holding, a 23% position in Raytheon Technologies (RTX). Shares of Raytheon are down more than 10% in five years. That's all but tried the patience of defense and aerospace investors.

But S&P 500 analysts are starting to warm up to the sector — just not in the obvious places. They see the 32 stocks in the iShares U.S. Aerospace & Defense ETF, with current price targets, gaining an average of 14.3% over the next 12 months.

Analysts Like These Defense Stocks Best

Investors made no secret of the defense stocks they like best amid this new type of warfare. Eleven of the stocks in the iShares U.S. Aerospace & Defense ETF are up 15% or more from the time war erupted in Ukraine. And of those, analysts still see upside in more than half the stocks.

Take Maxar Technologies (MAXR). The company provides space imagery of the kind useful in monitoring military events in Europe. Shares are up more than 46% from the time war broke out to 35.80 a share. That gain alone added $882 million in market value for investors. But even so, analysts think this stock still has more than 13% upside until hitting its 12-month price target of 40.75. Additionally, the company is seen making 54 cents a share (or more than $41 million in profit) in 2022, snapping many years of losing money.

Looking At The S&P 500 Defense Giants

Analysts, though, are less bullish on the obvious defense giants that already ran up. Northrop Grumman (NOC) already pulled 9% past analysts' 12-month price target on the stock. Shares are up a powerful 18% since the war began, putting $10.9 billion into investors' portfolios. It's a similar story with Lockheed Martin (LMT). Following a 27% run-up just this year, and 16% since the war, shares blasted past analysts' price target by some 7%.

But opportunity still abounds. Nations will need to take serious looks at their defenses. Analysts think Defense Department contractor Kratos Defense & Security Solutions (KTOS) will be worth nearly 21% more than it is now in twelve months. And that's following a nearly 30% jump since the war.

Sources: IBD, S&P Global Market Intelligence based on holdings in iShares U.S. Aerospace & Defense ETF

SEE https://plawiuk.blogspot.com/search?q=PERMANENT+ARMS+ECONOMY

Ukraine to Plan Second War-Bond Auction to Fund Military


Priscila Azevedo Rocha
Thu, March 3, 2022

(Bloomberg) -- Ukraine plans to auction another war bond next week to raise funding for its military and its resistance to Russia’s invasion, according to a person familiar with the matter.

The government will use its regular Tuesday slot for what it calls “military bonds,” the person said, declining to be identified before the official announcement. The finance ministry confirmed the plans, issuing a market announcement that includes a one-year bond auction.

Ukraine raised 8.1 billion hryvnia ($277 million) in the first such sale earlier this week. That event drew global attention as people other than professional investors sought to buy the debt to show support for the country.

The proceeds from the auctions will go to “priority humanitarian aid needs,” which include clothes and footwear, blankets, and hospital beds, according to a document seen by Bloomberg. They’ll also fund protective gear such as helmets and bulletproof vests, as well as communication equipment and laptops.

Ukraine’s war bonds have similar characteristics to the debt it sells regularly in peacetime, and are one of a number of funding measures the country has put in place to raise money for both its armed forces and civilians.

Yuriy Butsa, Ukraine’s debt chief, told Bloomberg Television Tuesday that the government is also looking at options including foreign-currency issuance.

Officials at the debt management office are working on ways to help new investors access next week’s auction after technical issues on Tuesday.

Since the war started last week, Ukraine’s finance ministry cut off access to its website from abroad to avoid cyber attacks, making it difficult for investors to get access to information. The ministry plans to communicate with investors via its Twitter and LinkedIn accounts.

The government wants to make access easier as it taps the global swell of support for the country in its war with Russia. Crypto wallets it set up last week have already received donations totaling more than $40 million. Including an NGO that funds the military, and the figure tops $50 million.

And around the world, private citizens have rallied to the country’s side. Many in neighboring countries have offered rooms and shelter to Ukrainians fleeing the war. Meanwhile, Russia has become a commercial pariah, hit by sweeping sanctions that have crippled its markets.

SEE https://plawiuk.blogspot.com/search?q=PERMANENT+ARMS+ECONOMY

U.S. Treasury warns crypto firms on Russia cybersecurity threat - source

Thu, March 3, 2022,
By Hannah Lang

March 3 (Reuters) - The U.S. Treasury Department has reached out to cryptocurrency companies about their cybersecurity controls amid concerns that Russia could wage retaliatory cyber attacks in response to Western sanctions, according to a person familiar with the situation.

The United States and its allies have unleashed a slew of sanctions targeting Russia's banks, state-owned entities, and elites, among others, following the country's invasion of Ukraine

Governments have warned for weeks that Russia or its allies could carry out cyber attacks in retribution for sanctions, leading banks to increase monitoring, scenario-planning and line up extra staff in case hostile activity surges.

In a sign U.S. regulators see the ballooning cryptocurrency industry as a growing source of systemic risk, U.S. Treasury officials have also been in discussions with cryptocurrency exchanges and trade groups to ensure U.S. digital assets are safe, said the person familiar with the matter.

Officials are also sharing indicators that IT systems have been compromised, such as a network infiltration or a data breach, with crypto and other financial firms, the person said.

The value of all cryptocurrencies surged past $3 trillion last year, with approximately 13% to 14% of Americans invested in digital assets as of 2021, according to research by the University of Chicago.

As the digital asset has become more popular, crypto hacks have grown. Last year, for example, an anonymous hacker stole roughly $600 million in cryptocurrencies from Poly Network, a decentralized finance network, before giving it back. Hackers also stole at least $150 million from crypto exchange BitMart.

Regulators have warned that crypto routs or runs on crypto currencies could pose a risk to the broader financial system.

Some U.S. lawmakers have expressed concern that digital assets could be used to evade Western sanctions, although Biden administration officials have played down that risk.

 (Reporting by Hannah Lang in Washington; editing by Jonathan Oatis)

Lukoil, a Russian Oil Company, Calls for an End to the Ukraine War

March 3, 2022


Lukoil, Russia’s second-largest oil company, appeared to distance itself from President Vladimir V. Putin on Thursday by calling for a “fast resolution” to Russia’s invasion of Ukraine.

The statement most likely reflects the company’s desire to protect its extensive overseas operations, which include a network of more than 200 franchised gas stations in states like New York and New Jersey. Lukoil is one of the most recognizable Russian brands in the United States.

Many lawmakers in Washington are pressing the Biden administration to ban the purchase of Russian oil by U.S. companies and to impose sanctions on Russian energy companies. Shares of Lukoil on the London Stock Exchange have fallen more than 40 percent since mid-February.

Lukoil has long projected a more independent image than Rosneft, the state-controlled company that dominates the Russian oil industry. Lukoil was founded in 1991 as a state-owned enterprise as the Soviet Union was falling apart. The company went private in 1993, and seven years later it acquired Getty Oil, an American company, which gave Lukoil a network of U.S. filling stations.

“We stand for the immediate cessation of the armed conflict and duly support its resolution through the negotiation process and through diplomatic means,” Lukoil said in a letter to shareholders on Thursday.

It was not clear whether the move was a sign that executives of Russia’s largest private enterprise were breaking with Mr. Putin, or mainly an effort to persuade Western leaders, business partners and customers to keep doing business with the company.

“It says they realize it’s going to be difficult for them to engage in international commerce, let alone retail sales in the U.S.,” said Tom Kloza, global head of energy analysis at the Oil Price Information Service. “I’d call a Russian brand for gasoline the 21st-century equivalent of the scarlet letter.”

While petroleum products are the biggest Russian import in the United States and Europe, Russian products and sports teams have become pariahs. Several states have banned the sale of Russian vodka, and restaurants, stores and bars across the United States have taken Russian spirits off their shelves.

The Newark City Council voted on Wednesday to suspend the business licenses of local Lukoil gas stations.

Lukoil stations in the United States sell fuel produced in many countries, including the United States. They are operated as independent franchises, and make up a small fraction of Lukoil’s operations. The company has subsidiaries in roughly 30 countries, including those involved in exploring and producing oil and gas in Azerbaijan, Egypt, Colombia and Iraq. The company’s biggest reserves are in Russia, particularly western Siberia.

In its letter to shareholders, Lukoil said it “makes every effort to continue stable operations in all countries and regions of its presence, fulfilling the main mission — to provide reliable energy supplies to consumers around the world.”

Source: NY Times

The hydrogen market’s growing credibility

When journalists write about other journalists, it often smacks of navel gazing — and is thus best avoided. However, this week I am breaking this rule since I have been struck by the intensifying debate inside the media about how to cover the climate crisis.

To cite one example: on Tuesday the World Editors Forum is holding its first virtual global climate conference to discuss “the gaps between what audiences need and want on climate change and what newsrooms are delivering right now.” This will discuss issues such as the role of storytelling and how to communicate technical data. Another debating point will be the decision by Canada’s Globe and Mail to release more than 180 files of its raw sources from an investigation into last summer’s extreme heat, reflecting a wider #ReadTheSources campaign from Unesco and the French group Outlet to make climate reporting more credible.

Can tactics such as these offset the crumbling levels of public trust in the media? What else can journalists (like us) do to communicate climate issues effectively? We would love to hear your views, given that Moral Money was established three years ago to illuminate green finance issues and ESG.

Meanwhile in today’s newsletter, we cover a striking data initiative in the fast-expanding world of hydrogen, a pandemic-era twist in philanthropy at Fidelity, new data about impact investing and alarming news about how rising sea levels threaten the US east coast. And if you want another sign of how sustainability issues are getting more media focus, check out the breaking story about how Carl Icahn, the corporate raider, has teamed up with animal welfare activists (which we will return to later this week.) Read on. 

Gillian Tett

Hydrogen is hot

The hydrogen market is red hot today, or so many opportunistic investors would say. However, like many nascent areas of finance, it has hitherto operated with considerable opacity. Last autumn, one of the first efforts to create more price transparency and consistency emerged: Deutsche Börse’s power and gas exchange EEX announced plans to launch a new price index in 2022.

Now another initiative is under way to help the market become more credible: S&P Global Platts, a provider for benchmark prices in the commodities and energy markets, is joining forces with other industry players to create a so-called Open Hydrogen Initiative (OHI) — a platform to let investors and companies track carbon emissions from hydrogen.

It is easy to see why this is needed. Hydrogen has recently sparked great excitement in the renewable energy world since the fuel is light, storable, energy-dense, and appears to produce no direct emissions of pollutants or greenhouse gases, a key attracter for green investors, as a recent report from the International Energy Agency explains.

As a result, the sector is growing fast: in 2020, the space was estimated to be worth more than $187bn, but it is projected to reach $286bn by 2027, according to MarketWatch. Meanwhile, annual government funding for hydrogen has reached $16bn a year globally, up 40 per cent from July 2021, according to research group Bloomberg NEF.

However, thus far there have been relatively few ways for investors, companies or governments to track indirect emissions from the fuel in a consistent way. This matters given the pressure on companies (and asset managers) to measure all aspects of emissions emanating from corporate supply chains, under scope one, two and three reporting systems.

To tackle this, S&P Platts is working with GTI (the research education group) and the National Energy Technology Laboratory to build tools to track hydrogen greenhouse gas emissions at the production facility level. These will be free for investors and companies to use, and aim to establish benchmarks for the market. “What we know is that we need hydrogen. It is very versatile. But what we have not yet had is precise and consistent technical tools for measuring hydrogen’s carbon intensity,” said Paula Gant, senior vice-president of strategy and innovation at GTI. “And, we’re at a place where the market needs that to enable hydrogen’s rollout.”

The group hopes this will promote wider adoption of hydrogen. “We see hydrogen being a key part of the future of the energy market in the decades to come” Jonty Rushforth, S&P Global Platts senior director, told Moral Money.

However, technical challenges remain. Previous research from S&P Global Platts suggests the cost of producing hydrogen from renewables will need to fall by more than 50 per cent to be a viable alternative to traditional energy. Hydrogen faces big production challenges and is difficult to store and transport. (The Saudis, however, seem to have set their bet on the growing market.)

Establishing price and emissions indices could spark more research and development to tackle these issues; or so the group hopes. And the initiative incorporates another interesting twist that investors should watch: the group intends to include metrics that indicate how much confidence investors should have in the emissions data.

This reflects a growing recognition that “green” measurements can sometimes be more art than science. This should not stop investors or companies from trying to measure emissions; but a more realistic debate is needed about the limits of current tools. Call this, if you like, another sign that the green market is growing up.

 (Kristen Talman and Gillian Tett)

Sustainability schism raises questions for the ISSB

People rarely log on to LinkedIn for a fight, but that’s what broke out on Friday when Bob Eccles, a visiting professor at Oxford university’s Saïd Business School, used the site to promote what he thought was “an innocuous little piece” in the Harvard Business Review.

In it, he and with Bhakti Mirchandani, managing director of responsible investing at Trinity Church Wall Street, argued that investors need uniform accounting standards for ESG, and that the new International Sustainability Standards Board (ISSB) could provide the global baseline from which companies and regulators could build.

Eccles’ post set some heads nodding and others spinning. “WTF Bob?!?” wrote Bill Baue, co-founder of the Sustainability Context Group, saying he was dangerously conflating ESG with sustainability and pushing incremental solutions that could not produce real change. Mark McElroy, director of the Center for Sustainable Organizations, accused Eccles of “appeasement”.

We won’t rehash the whole debate about single, double, dynamic and contextual materiality here, but it’s worth reading to understand a question hanging over the ISSB: is it an imperfect but necessary first step towards greater clarity and rigour, or a fudge that will perpetuate flaws in ESG while satisfying nobody?

Eccles has asked his “cantankerous critics” not to let the perfect be the enemy of the good. Meanwhile, Emmanuel Faber, the former Danone chief executive, has only just been named as the ISSB’s first chair. The intensity of feeling it has sparked suggests that his will not be an easy job.

 (Andrew Edgecliffe-Johnson)

A look at pandemic-era philanthropy

Did the experience of Covid-19 make people feel more or less generous? The former — judging from the 2022 report from Fidelity Charitable, the philanthropic foundation that provides donor-advised fund (DAF) options for asset managers’ clients. Last year investors made a record $10.3bn in these DAF grants, 41 per cent more than in 2019, ie before the pandemic.

This is striking. What is also notable is that there was a sharp increase in the assets allocated to impact investments (that is, those made with ESG factors in mind), which jumped to $3bn in 2021, up 67 per cent on the previous year. Another thought-provoking twist is that two-thirds of these donations were made not in dollars, but non-cash assets (which are converted into cash when Fidelity Charity ultimately gives these to charities.) This included real estate. But another, newish, component, was cryptocurrencies. As I wrote this week, donations in digital assets (mostly bitcoin) rose twelvefold last year.

The pandemic-era philanthropy boom has happened alongside a wider trend of impact investment growth over the past decade. The number of impact investments annually has grown fivefold since 2011, according to research from PitchBook and BCG.

As private equity companies crowd into climate-focused deals, BCG research has found an increasing number of investors see the sector not only for its positive impact on society, but also for its financial returns.

Investors would benefit from approaching social investments with the same drive as green ventures, the report says, calling investment in the diversity, equity and inclusion space the next “impact frontier”.

“The need for social impact investing has never been greater . . . institutional investors have the opportunity and the imperative to step up their funding and catalyse growth,” the report states. 

(Gillian Tett and Kristen Talman)

Smart read
If you have ever been tempted to buy your dream house on the coast of Florida, Maine or the Hamptons, you should first read this striking piece in The Conversation by Jianjun Yin, an associate professor at the University of Arizona. Drawing on data issued last week by the National Oceanic and Atmospheric Administration, he suggests that the US will see 10-12 inches of sea level rise in the next 30 years, on average. Has the mortgage market or insurance priced this in? Yin does not comment. But this is the question Moral Money readers need to ask; never mind the realtors selling those beach homes.


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Source: Financial Times

Visit our Moral Money hub for all the latest ESG news, opinion and analysis from around the FT

February 21, 2022

If Currency Reserves Aren’t Really Money, the World Is in for a Shock

March 3, 2022
in Markets


“What is money?” is a question that economists have pondered for centuries, but the blocking of Russia’s central-bank reserves has revived its relevance for the world’s biggest nations—particularly China. In a world in which accumulating foreign assets is seen as risky, military and economic blocs are set to drift farther apart.

After Moscow attacked Ukraine last week, the U.S. and its allies shut off the Russian central bank’s access to most of its $630 billion of foreign reserves. Weaponizing the monetary system against a Group-of-20 country will have lasting repercussions.

The 1997 Asian Financial Crisis scared developing countries into accumulating more funds to shield their currencies from crashes, pushing official reserves from less than $2 trillion to a record $14.9 trillion in 2021, according to the International Monetary Fund. While central banks have lately sought to buy and repatriate gold, it only makes up 13% of their assets. Foreign currencies are 78%. The rest is positions at the IMF and Special Drawing Rights, or SDR—an IMF-created claim on hard currencies.

Many economists have long equated this money to savings in a piggy bank, which in turn correspond to investments made abroad in the real economy.

Recent events highlight the error in this thinking: Barring gold, these assets are someone else’s liability—someone who can just decide they are worth nothing. Last year, the IMF suspended Taliban-controlled Afghanistan’s access to funds and SDR. Sanctions on Iran have confirmed that holding reserves offshore doesn’t stop the U.S. Treasury from taking action. As New England Law Professor Christine Abely points out, the 2017 settlement with Singapore’s CSE TransTel shows that the mere use of the dollar abroad can violate sanctions on the premise that some payment clearing ultimately happens on U.S. soil.

To be sure, the West has frozen Russia’s stock of foreign exchange, but hasn’t blocked the inflow of new dollars and euros. The country’s current-account surplus is estimated at $20 billion a month due to exports of oil and gas, which the U.S. and the European Union want to keep buying. While these balances go to the private sector, officials have mobilized them. Stopping major banks like

Sberbank

from using dollars and excluding others from the Swift messaging system still plunges the economy into chaos, especially if foreign businesses are afraid to buy Russian energy despite the sector’s explicit exclusion from sanctions. But hard currency will probably keep gushing in through energy-focused lenders like Gazprombank, and can theoretically be used to pay for imports and buy the ruble.

Yet the entire artifice of “money“ as a universal store of value risks being eroded by the banning of key exports to Russia and boycotts of the kind corporations like Apple and
Nike announced this week. If currency balances were to become worthless computer entries and didn’t guarantee buying essential stuff, Moscow would be rational to stop accumulating them and stockpile physical wealth in oil barrels, rather than sell them to the West. At the very least, more of Russia’s money will likely shift into gold and Chinese assets.

Indeed, the case levied against China’s attempts to internationalize the renminbi has been that, unlike the dollar, access to it is always at risk of being revoked by political considerations. It is now apparent that, to a point, this is true of all currencies.

The risk to King Dollar’s status is still limited due to most nations’ alignment with the West and Beijing’s capital controls. But financial and economic linkages between China and sanctioned countries that are only allowed to accumulate reserves—and, crucially, spend them—there will necessarily strengthen. Even nations that aren’t sanctioned may want to diversify their geopolitical risk. It seems set to further the deglobalization trend and entrench two separate spheres of technological, monetary and military power.

China itself owns $3.3 trillion in currency reserves. Unlike Russia, it cannot usefully hold them in renminbi, a currency it prints. Stockpiling commodities is an alternative. The conundrum creates another incentive for Beijing to reduce its trade surplus by reorienting its economy toward domestic consumption, though it has proven challenging.

What can investors do? For once, the old trope may not be ill advised: buy gold. Many of the world’s central banks will surely be doing it.

GREEN CAPITALI$M

Stopping Sewage in London’s River Thames Draws Green Bond Demand

Ronan Martin
Thu, March 3, 2022, 

(Bloomberg) -- The green bond market just got one of its biggest challenges yet -- cleaning up London’s River Thames.

A sale of the notes aims to help to fund upgrades to the city’s Victorian-era sewers, as population growth in London heaps increasing pressure on them. Designed to serve about 4 million people, the sewers instead handle waste from more than double that number, leading to multiple sewage overflows every year.

Bazalgette Finance Plc sold 300 million pounds ($400 million) of green bonds to fund construction of a 25-kilometer tunnel to prevent millions of tonnes of sewage overflowing into the river. The 12-year notes were priced at 130 basis points above U.K. gilts, drawing investor orders of more than four times the amount on offer, according to a person with knowledge of the sale, who asked not to be named.

A spokesman for Thames Tideway didn’t immediately respond to a Bloomberg News request for comment.

The bond proceeds will be given to Bazalgette Tunnel Ltd for the ongoing construction of the Thames Tideway Tunnel, which is expected to be completed in 2023, according to the Tideway website. The 66 meter-deep tunnel is more than seven meters wide and will cost an estimated 4.2 billion pounds ($5.6 billion) at completion, according to an investor presentation seen by Bloomberg News.

Thames Water Fined GBP4m for ‘Utterly Disgusting’ Sewage Blunder

The sale is Europe’s first green bond deal since Feb. 16 and one of the the first non-financial offerings since Feb. 23, according to data compiled by Bloomberg. Marketwide sales of publicly-syndicated debt have stalled in recent days amid widespread global volatility triggered by Russia’s invasion of Ukraine.

All of the revenues financing the construction of the tunnel are from green assets, according to the investor presentation. Lloyds Banking Group Plc, Royal Bank of Canada and SMBC Nikko Securities Inc. are arranging Bazalgette Finance’s sale.

Drought-Riven Chile Makes World First in Environmental Bonds



Caleb Mutua, Augusta Saraiva and Christopher DeReza
Wed, March 2, 2022, 3:22 PM·3 min read

(Bloomberg) -- Chile issued bonds tied to sustainability goals, the first nation in the world to do so, as the country wracked by a decade-long drought looks to cut greenhouse gas emissions, and obtain cheap financing.

The government sold $2 billion in dollar-denominated, sustainability-linked bonds maturing in 20 years, according to a person with knowledge of the matter. The offering yields 2 percentage points above Treasuries after initial discussions in the area of 2.4 percentage points, said the person, who asked not to be identified as the details are private.

Chile’s government is already the biggest issuer of environmental, social and governance bonds in Latin America, with $31 billion in sales, and is now looking to boost its green credentials still further. The sustainability-linked bonds pay a set penalty to investors if the seller fails to meet certain targets -- in this case tied on greenhouse gas emissions and renewable energy generation.

The interest rate payable on the notes will be increased by either 12.50 or 25 basis points unless Chile meets its ESG goals, the person said.

The SLB offering completed the sale of $2 billion in ESG bonds the country had planned to issue last month, adding to the $4 billion raised in that format already this year. That would conclude this year’s $6 billion external markets issuance target, Cristobal Gamboni, head of the Finance Ministry’s newly created Green Finance Office, said in a February interview.

The deal is already getting strong investor demand, Gamboni said in a written response to questions Wednesday. Chile might end up issuing less debt than projected this year as the nation has raised $5 billion more than expected in revenue, he added.

Booming Market

Sustainability-linked debt is one of the fastest-growing subsets of ESG debt. Global sales of the so-called SLBs hit a record $110 billion last year, compared with $11 billion issued in 2020, according to data compiled by Bloomberg. Moody’s ESG Solutions is forecasting issuance of the debt to reach $200 billion this year.

SLBs are growing in global popularity because they can be used by a wider pool of borrowers, including those without big environmental projects, allowing them to tap a growing ethical fund industry and get cheaper borrowing costs.

Yet sovereigns have been slow to enter the market, partly due to problems setting trackable ESG goals known as key performance indicators, given the governance processes required, according to Nathalie Larrouse, climate and ESG capital markets Director at NatWest Markets. Chile’s SLBs are the first from a nation, according to data compiled by Bloomberg.

“With the improvement of data and experiences drawn from the corporate sector, we see an interesting future for SLBs in the sovereign space, particularly in the emerging markets,” said Larrouse.

Chile has been suffering from a drought for more than a decade as the northern desert expands ever further south in a move linked by many to global warming, adding to pressure on the government to take action over greenhouse gas emissions. In the last decade, there has been an explosion in the use of solar panels and wind farms as the government sets new emission targets.

BNP Paribas SA, Credit Agricole CIB, and Societe Generale managed the bond sale, the person said.

©2022 Bloomberg L.P.

Why the stock market refuses to plunge on Russia-Ukraine crisis

Brian Sozzi

·Anchor, Editor-at-Large

Wed, March 2, 2022

All in all, the stock market is hanging tough in what has been a turbulent two weeks for humanity.

The Dow Jones Industrial Average is up more than 600 points on Wednesday as of this writing. Both the S&P 500 and Nasdaq Composite are nearing gains of 2%. All three major indexes are nicely off the lows hit by the close of trading on Feb. 23, a mere hours before Russia invaded Ukraine.

Every member of the FAANG [Facebook/Meta, Apple, Amazon, Netflix, Google/Alphabet] cohort has gained in the last five trading days as luck would have it, paced by a nearly 7% increase in Alphabet.

And believe us, there are many things trying very hard to bring the major stock indexes to their collective knees.

Oil prices ripped through $110 a barrel on Wednesday as the war between Russia and Ukraine intensified. Western company after Western company are saying see you later to Russia in light of its action. One of the latest names is credit card giant American Express.

These actions by the West has some Wall Street strategists telling Yahoo Finance Live the Russian economy is poised to nosedive into a deep, protracted recession.

Meanwhile top emerging market investors such as Mark Mobius tell us Russia may be uninvestable for more than a year, and putting money to work in other emerging markets like China and Brazil are not without heightened risk.

And as oil prices spike — and it can be considered a spike (leading to a potential super-spike as Goldman Sachs chief commodities strategist Jeff Currie explained to us) — gas prices in America keep on rising, rising and rising further. The average price of petrol in California is approaching $5 a gallon, the highest in the country.

The extra money gas inflation will siphon out of the pockets of consumers is real. That's money that could be spent at Macy's for a new pair of jeans. That's extra money it will cost a FedEx to ship a package due to higher fuel expenditures. And what is FedEx likely to do about it? Jack up prices further on the beat-up wallets of consumers.

Despite the litany of issues — which naturally could hammer corporate profits in 2022 — there is the good ole' stock market hanging tough. Why is that the case you ask? I am glad you did ask.

Market pros say that investors are looking beyond all the headline chaos and remain fixated on the king daddy of factors that tend to upset stock price valuations.

Higher interest rates from the Federal Reserve. Weird stuff, right?

"One of the reasons why the stock market has held up so well is belief that the Fed will not be as aggressive in their new tightening policy as some were thinking they would be before the crisis in eastern Europe erupted. So if we get some positive reinforcement on this subject, the stock market could hold up (or even bounce) for a while," said Miller Tabak chief markets strategist Matt Maley.

Maley is on the mark here, judging by the positive reaction in stock prices to fresh commentary from Fed chief Jerome Powell in his testimony to lawmakers today.

“The bottom line is we will proceed but we will proceed carefully as we learn more about the implications of the Ukraine war,” Powell told the House Financial Services Committee.

Yahoo Finance Fed correspondent Brian Cheung points out Powell said he supports increasing short-term interest rates by 0.25% in the next policy-setting meeting on March 15 and 16.

Coming into March, most market experts were bracing for a 50-basis rate hike at the March meeting followed by eight to 10 more increases in rates into year-end. But Powell has officially reset the narrative, and investors love it.

So there you have it, folks.

Inflation is running rampant. Profit margins are under attack. Vladimir Putin is playing terror to the world. And yet, there are markets fixated on rate hike comments from one of the most powerful people in the financial industry in Powell.

No one said investing made sense. It doesn't make sense now, and it will unlikely make sense tomorrow. Rest assured, however, that at some point soon markets will move beyond rate hike fears and refocus on geopolitical and macroeconomic risks.

When that happens, those aforementioned Feb. 23 lows for stocks could be in play. You have been warned.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

BUY CANADIAN 😈 
Exclusive - U.S. utilities push White House not to sanction Russian uranium


 Uranium pellets are seen on a production line at Ulba Metallurgical Plant in Ust-Kamenogorsk

Tue, March 1, 2022

By Ernest Scheyder and Trevor Hunnicutt

(Reuters) - The U.S. nuclear power industry is lobbying the White House to allow uranium imports from Russia to continue despite the escalating conflict in Ukraine, with cheap supplies of the fuel seen as key to keeping American electricity prices low, according to two sources familiar with the matter.

The United States relies on Russia and its allies Kazakhstan and Uzbekistan for roughly half of the uranium powering its nuclear plants - about 22.8 million pounds (10.3 million kg) in 2020 - which in turn produce about 20% of U.S. electricity, according to the U.S. Energy Information Administration and the World Nuclear Association.

Washington and its allies have imposed a series of sanctions on Moscow in the past week as Russian forces pushed deeper into neighboring Ukraine, though the sanctions exempt uranium sales and related financial transactions.

The National Energy Institute (NEI), a trade group of U.S. nuclear power generation companies including Duke Energy Corp and Exelon Corp, is lobbying the White House to keep the exemption on uranium imports from Russia, the sources said.

The NEI lobbying aims to ensure that uranium is not caught up in any future energy-related sanctions, especially as calls intensify to sanction Russian crude oil sales, the sources said.

"The (U.S. nuclear power) industry is just addicted to cheap Russian uranium," said one of the sources, who declined to be named, citing the sensitivity of the situation.

Duke and Exelon, two of the largest U.S. utilities, could not immediately be reached for comment.

Washington-based NEI said that it supports a diversity of uranium supply, including the development of U.S. facilities to produce and process the fuel.

"While Russia is a significant global supplier of commercial nuclear fuel, U.S. utilities contract with a worldwide network of companies and countries for their fuel requirements to mitigate the risks of potential disruption," said Nima Ashkeboussi, NEI's senior director of fuel and radiation safety.

The Biden administration has said it is working to keep American energy costs low.

"We are listening to all inquiries from industry and will continue to do so as we take measures to hold Russia accountable," a White House official said when asked about the uranium lobbying.

Uranium is used as a fuel inside reactors to achieve nuclear fission to boil water and generate steam that spins turbines to generate electricity.

There is no uranium production or processing in the United States currently, though several companies have said they would like to resume domestic production if they can sign long-term supply contracts with nuclear power producers. Texas and Wyoming have large uranium reserves.

Australia and Canada also have large reserves of uranium and there is ample processing capability there and in Europe. But Russia and its satellites are the cheapest producers.

The U.S. nuclear power industry's use of Russian uranium is likely to spark further questions about where and how the United States procures the materials needed to supply high-tech and renewable-energy products, a dependency that President Joe Biden singled out last week as a national security threat.

Russia's uranium production is controlled by Rosatom, a state-run company formed by Russian President Vladimir Putin in 2007. The company is an important source of revenue for the country.

Former U.S. President Donald Trump in 2020 proposed spending $150 million to create a strategic uranium reserve, and Biden administration officials have expressed support for the idea.

Other utilities around the globe have already begun looking beyond Russia for supply. Swedish power company Vattenfall AB said last week it would stop buying Russian uranium for its nuclear reactors until further notice, citing the Ukrainian conflict.

(Reporting by Ernest Scheyder and Trevor Hunnicutt)

Home - Cameco

https://www.cameco.com

Cameco is one of the largest global providers of the fuel needed to energize a clean-air world. Our tier-one operations have the licensed capacity to produce more than 53 million pounds (100%