Financial Warfare and its Implications on Life and Trading

Today, we talk about financial warfare and its implications on life and trading.

Special Note: This week’s Market Slice takes a deep dive into some of the critical questions posed by the Russian invasion of Ukraine and the U.S. government response. We understand that these issues are potentially controversial, and while we respect everyone’s right to hold any opinion whatsoever, there are implications for your investing and trading future that must be addressed.

Whatever one’s point of view on the questions we raise this week, you are urged to maintain an objective, detached view insofar as your money is concerned. Blindly following the dominant narrative is a prescription for disaster.

As the 18th century French cleric/diplomat Charles Maurice de Talleyrand said, “Since the masses are always eager to believe something, for their benefit nothing is so easy to arrange as facts.”

Some like it hot
The Russian invasion of Ukraine got bogged down this week, as logistical foul-ups in the face of unexpected resistance ruined President Putin’s dream of a cakewalk takeover of his geopolitically critical neighbor.

We pointed out last week that there would be unintended consequences for both nations – and for the world – as the United States imposed economic sanctions on Russia.

On the ground in Ukraine, we have seen a heroic resistance, as people picked up whatever weapons they could get their hands on to fight the invading party. This is something any freedom-loving person would support… inviolability of borders is essential to national sovereignty.

At the same time, there is a geopolitical context, and ignoring it only serves the agendas of those who do not want people to think independently about this, or any, sensitive issue.

The geopolitical reality is that Russia has been subject to encroaching NATO encirclement for many years now. Putin drew a line in the sand around Ukrainian membership in NATO, and the West, led by the U.S., has been pushing closer and closer to that line. From CIA support for the “color revolutions” that installed a pro-Western government in Kyiv to a renewed initiative for Ukraine’s entry into NATO, the U.S. has been aggressively challenging Russia’s influence in their own sphere of influence, that is, Eastern Europe, for a long time.

Imagine if Russia or China was agitating for a governmental change in Mexico, and threatening to put nuclear weapons on the Rio Grande. How would we react?

This is not a justification for Putin’s war. Widespread killing and destruction is never justified. This is why even pro-Russian Ukrainians and Russian citizens alike are expressing opposition to the invasion. Most people really don’t like war.

On the other hand, there is a group that has been cheering loudly for open hostilities in Ukraine. And who might that be? Why, U.S. politicians and talking head pundits, of course.

But now the cold war is heating up, and these same forces are tripping over themselves calling for more weapons to Ukraine, harsher sanctions, and – unsurprisingly – a big increase in our already massive defense budget.

Considering the very checkered record of these people, from Bosnia in the 90’s to Iraq in the ‘00s and Afghanistan throughout, we must view claims to be “supporting freedom in Ukraine” with a healthy dose of skepticism.

And with the threat of nuclear weapons actually being used at the highest point since the Cuban missile crisis, isn’t it reasonable to ask if there is more than meets the eye behind our government’s provocative poking of the Russian bear?

At this crucial point in world history, it has never been more important to protect your wealth, and position your portfolio to profit from the crisis. Your FFR Trading Strategy Team is here to help you figure out what the latest developments mean for your trading and investments. Call (800) 883-0524to speak with us today.

Financial warfare in the 21st century
While everyone seems to be agreed that the United States does not want to get involved militarily in Ukraine, there is also a strong consensus that economic sanctions are an effective weapon against Russian aggression.

The policies announced this week by President Biden are designed to cut Russia off from world financial and commodity markets, isolate Putin by aggravating the super-wealthy oligarchs who own huge chunks of the Russian economy, and collapse the ruble.

So far, so good. Right?

Well, not exactly.

The problem is that for every transaction there is a counterparty, and many counterparties to Russian business activities are Western allies. While the energy markets are experiencing the most visible signs of shock as a result of sanctions, similar effects are showing up in grains and metals.

Here’s the 30-day crude oil chart:

We’ve talked about oil a lot recently, so we won’t repeat ourselves. Go here to read more on why oil is already in a major boom, now heading higher on constricted supplies as a result of sanctions.

 Here’s wheat. Notice the limit-up moves:

In addition to the supply reductions threatened by taking Ukraine’s wheat production offline, there is the threat of widespread food shortages exacerbated by skyrocketing fertilizer prices.

Fertilizer is manufactured by combining nitrates with natural gas, and sanctions on Russian gas are seriously threatening global fertilizer supplies. No fertilizer means smaller crops, which means less food, which means higher food prices across the board, to say nothing of possible mass starvation in poorer parts of the world.

And then there’s the metals, where copper, nickel, palladium and platinum have all moved sharply upward… nickel in particular has gone parabolic. Why? Because Russia controls 11.3% of the world’s nickel supply. Nickel is a critical ingredient in stainless steel and other alloys, and is absolutely essential for industrial production.

So far, gold and silver are lagging the other metals. How long that might continue will be a subject for next week’s issue.

This is what we are talking about when we speak of second- and third-order consequences to actions taken by politicians to advance agendas that have nothing to do with the well-being of their peoples.

Between the bloody and destructive harm of a shooting war — with enough responsibility to go around to all concerned — and the economic damage done by sanctions intended to punish a “bad actor” but that actually hurt everybody, we are seeing the impact of war, both kinetic and economic.

And the bad news is, unless something is done quickly to reverse course, what we’ve seen so far is only the tip of the iceberg.

Now is the time to take defensive action to protect yourself from the coming storm. A well-constructed hedging strategy, using commodity futures to protect the value of long-term investments, is vital to maintaining financial security. And if you are just starting to build wealth, there is great opportunity in today’s hyper-volatile environment. Either way, FFR Trading can help you get your feet on solid ground. Call (800) 883-0524 to speak with a Strategy Team member, or click here to schedule a strategy call.

The Blame Game
One thing politicians generally do very well is point the finger of blame at others.

With so much going wrong in America today, it isn’t too surprising to see our leaders casting about for scapegoats. Democrats blame Trump, Republicans blame Biden, and they both are very happy to blame Russia and/or China for everything they themselves have done to screw up the economy and the country.

Once up on a time, taking responsibility when things don’t go our way was considered a virtue. Today it’s the mark of a chump… why take responsibility when it’s so easy to put it all on the government, illegal aliens, domestic terrorists, COVID, or whatever. (This is sarcasm, just in case you didn’t catch it!)

It is a sad sign of our moral decay as a nation.

Now we are faced with a massive propaganda blitz aimed at convincing us that it’s all the Russians’ fault. High gas prices? There you go. In fact, the whole inflation thing is all because of Ukraine.

If we can all agree on just one thing, maybe it should be this: it’s time to hold our politicians and ourselves accountable for our decisions, and the course of events in our country and in the world.

The issues that have divided America so deeply for the past several years can be resolved. But not until we start to listen to each other, disagree respectfully, and seek common solutions despite our differences.

That change has to start with each of us individually. Let’s all do our part to help our leaders understand that this, more than what they do on the next spin cycle issue of the day, is what we expect.

This is true leadership.

Next week we will return to evaluating markets and trading opportunities, with more of our trademark humor and insight. Thanks for reading this possibly uncomfortable issue. Let us know what you think… your opinions matter. Call (800) 883-0524 and ask for the Market Slice editor, or just send us an email at [email protected]. We look forward to hearing from you!

Stay in the loop with frequent investment and trading updates to help give you the resources to keep you trading portfolio safe! Make sure to check us out on Instagram, Facebook, and Twitter! Stay safe!

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