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Monday, August 15, 2022

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Wimpy Wednesday – Weak Sanctions Won’t Stop Putin

Sanctions! 

That's how the US and NATO are responding to Putin's entry into the Ukraine and note there is only one red box in the area we're paying attention to but many, many red boxes now surrounding the country.  We tried scantions in 2014, when Russia invaded Crimea and, guess what?  They are still there!  

So, since sanctions had zero effect last time and this time Putin has had 8 years to prepare for more sanctions – it's kind of a useless, futile effort on the part of the Allied forces.  Literally the LEAST we could possibly do to pretend we are responding.  According to a White House Press Release:

"Treasury is targeting Russia’s ability to finance aggression against its neighbors by sanctioning the Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank (VEB) and Promsvyazbank Public Joint Stock Company (PSB), along with 42 of their subsidiaries. VEB is crucial to Russia’s ability to raise funds, and PSB is critical to Russia's defense sector. These sanctions ensure VEB and PSB can no longer do business in the United States and are cut off from the U.S. financial system. All assets under U.S. jurisdiction will be immediately frozen and U.S. individuals and entities are prohibited from doing business with these institutions unless authorized by OFAC. This will immediately impair the ability of VEB and PSB to perform basic functions in the international financial system. Today’s action constrains Russia’s ability to finance defense-related contracts and raise new funds to finance its campaign against Ukraine. Treasury is also designating influential Russians and their family members in Putin’s inner circle believed to be participating in the Russian regime’s kleptocracy, including the Chairman and CEO of PSB."

Stock market matchup: Yellen vs. PutinYes, that's it.  That is how we are responding to Russia invading a neighboring country – we send Janet Yellen out to attack Putin.  Fortunately for Yellen, Putin is only 5 foot 7 but he's still got 4 inches on Yellen at 5 foot 3 and yes, US foreign policy is now so stupid that we may as well compare height and age (Putin is 6 years younger at 69) but, of course, Putin is a trained assassin while Janet Yellen is from pre-gentrified Brooklyn – so he doesn't stand a chance….  

There's actually a lot of Russians in Brighton Beach, which is called Little Odessa, so Yellen is used to dealing with them – maybe she is Biden's best choice against the Russian Oilgarch?  Of course, the US has no desire to get into a war, proxy or otherwise with Russia but the lack of strong response here is only going to lead to China taking Taiwan down the road.  We should have learned from WWII that sanctions and strongly worded letters and appeasment is not the way to stop expansionist aggression – yet we go to that playbook every time.

As we were discussing on Bloomberg last week, the market doesn't care if Russia invades Ukraine, it only cares about what kind of disruption it causes and, with these half-assed sanctions, the answer is not much so we have a bit of a relief rally this morning and the Nasdaq is already back over 14,000 – after bottoming out at 13,700 yesterday.  Still it's a dire situation and, as long as the Russell is under 2,000 (it's right on the line), we can expect more market pain ahead as there are way worse things out there than Vladimir Putin.

So far, the Bounce Chart this morning is the same as it was yesterday morning:

  • Dow 36,000 to 28,800 would be a 7,200-point drop with 1,440 bounces to 30,240 (weak) and 31,680 (strong).   
  • S&P 4,800 is 20% above 4,000 and that makes it an 800-point drop with 160-point bounces so 4,160 (weak) and 4,320 (strong) is where we are this morning (again).
  • Nasdaq is using 13,500 as the base and we bottomed yesterday at 13,580.  14,100 is the weak bounce and 14,700 is strong.  
  • Russell 1,600, would be about an 800-point drop with 160-point bounces to 1,780 (weak) and 1,960 (strong).
   

I know you look at these charts and you WANT to believe we're making a bottom at 14,000 but 14,000 is SUPPOSED to be bouncy and 14,100 is the real number anyway so failing to get over that is BAD.  That's what the Bounce Charts do – they stop us from engaging in wishful thinking and stick to the facts. 

At the moment, we are remaining cautious – especially until we see this chart back to green.

 

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Phil, I agree with you 100%. Even worse Germany stops a gas pipline which never delivered gas in the first place. More than that, Europe depends more on gas and oil deliveries, than Russia needs to be paid for it. The western still has not learned the games of kings, chest.

Good Morning!

Nukes Baby, Nukes…..

Yellen negotiates with Putin in the same room, naturally he falls asleep listening to her, then she whacks him in the head.

Trained assassin – I like it!  šŸ˜‰

putin would relish war games with the US in the Ukraine….

 

Winner takes all.

BDX – This is annoying. We have BDX in our butterfly portfolio. Spin off to give 1 share of embecta (their diabetes business) for every 5 BDX shares. 

https://investors.bd.com/news-releases/news-release-details/bd-board-directors-approves-embecta-spinoff-and-declares

Putin Is Making a Historic Mistake

EPR significantly beat expectations yesterday. 2022 guidance is 4.3-4.5. Trading at just under 50, and pays out a monthly dividend. Increased payout by 10% yesterday, so now $3.3 annually. They own amusement parks and ski resorts (including Camelback in the Poconos for us New Jerseyites). 

Is IBM just caught up in the general sell-off?  Don't  see any news or catalysts.

Camelback was packed over Thanksgiving… easily spent $1000 / night

Phil / LRCX –  This is hitting an interesting level…..    They should have 2 to 3 years of growth ahead of them….  they are a big supplier to MU and other RAM and other high end component co.   They are launching a new handling process with better / new vertical movements that significantly improves efficiency for their customers.   I have them at a 650 to 700 price target…..  

"but, of course, Putin is a trained assassin while Janet Yellen is from pre-gentrified Brooklyn – so he doesn't stand a chance…."

Phil:  Thanks for the above line. It is very funny.

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