In the past 48 hours, the Russian ruble traded between 111 and 177 against the US dollar. The moves suggest traders struggle to price Russia’s economic collapse in an illiquid fashion.

Over in Europe, things are getting pretty complicated. EU leaders are trying to build a comprehensive and sectionalized united economic response to the ripper in energy prices. Rather than step-by-step announcements, EU lawmakers look to layer it on thick and heavy one time.

It seems likely Europe is keen to eliminate Russian energy imports. So, expect a plan to offset via a fiscal package and more QE from the ECB in one great stabilizer.

Both Russia and Ukraine continue to play hardball at the negotiating table, suggesting a diplomatic solution remains a long way off.


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There are a lot of dynamics in play, with many market players involved exacerbating moves.

No one knows what to do based on my conversations with resolute energy and stock traders. I would best describe sentiment right now as very uneasy/queasy.

Although I think most of the big players de-grossed a few weeks ago, there is still plenty of pain out there amid the crazy volatility as investors are still struggling to quantify the impact of the Ukraine war on growth.

The longer commodities such as crude and wheat stay trading at such elevated levels, the probability of stagflation is rapidly increasing, especially in Europe.

It is still too hard to see any exit from the conflict, and thus it is too early to bottom fish.

Yes, it is the wild west out here where the quickest headline draw reaps the biggest pocket full of rewards


Oil is up after the UK and US banned Russian imports.

US Crude oil inventories will start drawing more attention to see if marginal buyers are shunning oil at higher prices. If so, you will hear “demand destruction “used over and over. And with so much length built into crude oil positioning, you could see some sizable down moves on above consensus inventory builds. So, I think the DOE reports could be highly tradable events.

While I think demand destruction in a stagflation context could kick in quickly, as everything seems to happen at warp speed these days.

But at least for now, it is best to acknowledge that the oil shock by nature is an accruing one, not a one-off and the potential for the market to hit $150 before returning to $100 is easier for investors to digest.

Putting in force sanctions without first developing surrogate supply contingencies risks Brent crude much higher.


Gold is soaring after a US bipartisan group of US senators introduced a bill to prevent Russia from liquidating gold reserves.

Gold traders are positioning for a long-drawn-out conflict in which hyperinflation will trigger a lengthy bout of stagflation. And gold could be a very viable hedge for when and if the market plumbing ever gets clogged.

But on a cross-asset basis, we are nowhere near levels of past crisis events, but it is challenging to fight the upward momentum.

When war drums beat, gold will prove to be a fantastic hedge until it is not, and that will occur when Russia backs down.

At the start of the week, the market was concerned about the two thousand tonnes of gold the CBR has in reserve and whether they will bring it to markets. It will be even more difficult after a bipartisan group of US senators introduced a bill to prevent Russia from liquidating gold to withstand biting sanctions. Hence the door parted on the $2000 level overnight, allowing many investors to back up the gold truck.



The most notable change is the reversal lower in AUDUSD sentiment, which is now trading in a more traditional risk-off fashion instead of on the terms-of-trade lift from higher commodities. It also coincides with the end of the dividend season.

The street is finding it tough to buy dips on stocks with any conviction so, on that view, AUDUSD could remain on offer.

However, this is a trade on which I am highly conflicted. In many regards, Australia is far removed from developments in Ukraine. The economic and trade links between Australia and Russia, and Australia and Ukraine, are small. It is worth noting that this commodity shock by nature is an accruing one, not a one-off. The Aussie could be a winner based on surging raw material prices alone, especially if the risk turns positive.

Have a momentous week folks I am heading to Hua Hin later this morning to focus on golf and running.

From Stephen Innes Managing Partner at SPI Asset Management