What the War in Ukraine Means for the Markets
A special update for all Stansberry Research subscribers... What the war in Ukraine means for the markets... The Russian economy craters... Bill McGilton's harrowing journey out of Ukraine... Watch our free 'Town Hall' event right now...
This is stuff not seen since World War II...
I (Corey McLaughlin), of course, am talking about Russia's invasion of neighboring Ukraine, which intensified over the weekend. Videos of missiles flying, fires on the streets, broken-down Russian tanks, and Ukrainians fleeing the country are all in the news...
There's a lot we could say about the largest armed conflict in Eastern Europe in decades, but maybe what is most spine-tingling the last few days is that in a meeting broadcast on state television on Sunday, Russian President Vladimir Putin said he was putting the country's nuclear forces on "high alert."
At the very least, this is a dangerous and anxiety-provoking bluff as part of Russia's negotiations with Ukraine and the "Western bloc," as Putin called the U.S. and its NATO allies last week... At the worst, it's a preamble to World War III...
In either case, it's unsettling...
And we also know there's a lot of confusing and misleading information out there...
So, with the geopolitical events going on overseas today – and with the S&P 500 Index already down 10% in the last several months, the tech-heavy Nasdaq Composite Index down even more, and some growth stocks down even more – we felt it important to share a special update from our Stansberry Research editors...
A special 'all hands' Town Hall event...
Today, our Director of Research Matt Weinschenk hosted nearly a dozen of our top editors and analysts in an unedited "Town Hall" event in which they shared their opinions about what the war in Ukraine might mean for your wealth over the next few months...
You can watch it now at this link. This is a free bonus for every subscriber... and I can tell you we're not selling a single thing at any point during the roughly 90-minute event. You won't hear a sales message, just information and market analysis from our editors...
The panel includes Retirement Millionaire editor Dr. David "Doc" Eifrig... Extreme Value editor Dan Ferris... Ten Stock Trader editor Greg Diamond... as well as Stansberry Research analyst Bill McGilton, who has lived on and off in Kyiv, Ukraine's capital, for the past 15 years.
We're happy to report Bill made it out of Kyiv on Friday with his family, and got out of Ukraine over the weekend... He joined our editors for the Town Hall from Moldova, a small country that borders Ukraine on the south... and described his last several days and what he has seen on the ground.
I'll have more on Bill's nerve-wracking journey in today's Digest, but frankly, I want to point you to our Town Hall to hear directly from him (as someone with a firsthand account of the invasion)... and the rest of our editors on what they feel is the most important information you should know right now for your portfolio.
Our colleague Kim Iskyan, who was running a Russia-focused hedge fund another time the country invaded a neighbor, the Republic of Georgia in 2008, is part of the discussion too, along with Stansberry NewsWire editor C. Scott Garliss and senior analysts Brett Eversole and Matt McCall.
This is only the second time in our firm's history we've hosted an "all hands" event like this...
The first was in March 2020... when most of the world first learned about COVID-19. Many of our editors got together to talk about what the virus might mean for our health and wealth. We wanted to provide some clarity... and that's what we intend to do again.
As Matt Weinschenk puts it at the start of the event, this is designed as an unscripted conversation...
We don't have a time limit, and we've got a great team here... We're going to talk through this the way we would talk about it in the office and take our readers along for the ride.
Make some time to watch this free Town Hall. In the meantime, here's some of the story...
The 'West' is making life more difficult in the Russian economy...
We won't re-hash all the sanctions that the U.S. and other nations have put on Russian banks and other businesses over the last several days... but the biggest is probably cutting Russian banks from the Society for Worldwide Interbank Financial Telecommunication, or "SWIFT."
SWIFT is an international money-transfer system used by more than 11,000 financial institutions in more than 200 countries worldwide... Without access to it, it's hard to move money across borders.
Basically, any country that wants to hurt the Russian economy right now is taking steps to do so... and it's making a real difference.
In last Thursday's Digest, we highlighted the devastating losses Russian stocks suffered as the invasion (and reactions to it) became real, with the country's major index falling 33% in a day. Well, today, the Russian stock market didn't even open...
But Russian stocks that trade elsewhere, like on the New York Stock Exchange and which could serve as a proxy for the Russian market, cratered... The VanEck Vectors Russia Fund (RSX) was off 30% to a level not seen since early 2009.
What's more, the Russian central bank hiked interest rates today to 20%, up from 9.5%, to attempt to prevent runaway inflation... and its currency, the ruble, fell 29% in value over the last three days.
Russian banks have been preparing for some bad stuff to happen for months...
According to the Russian ratings agency ARCA, the country's banks imported an estimated $5 billion worth of foreign currency in December, nearly double the amount from the year before, in what looked like a preemptive move to protect themselves...
But actions like this apparently weren't strong enough... or they underestimated how Western nations would react...
All in all, it's a volatile situation, but it hasn't fundamentally upset institutional investors in the U.S. – so far.
As Scott, who spent two decades working on Wall Street before joining our team, wrote today in the NewsWire though, that could change...
Wall Street speculation is increasing that the Federal Reserve and other global central banks will be forced to provide additional liquidity to the financial markets given Russia's major banks have been cut off from the [SWIFT] system.
Today, the major U.S. indexes were mixed... with the S&P 500 and Dow Jones Industrial Average each down less than 1% and the Nasdaq and small-cap Russell 2000 up less than 1%.
We'll keep an eye out to see what, if any, damage the conflict has on the "plumbing" of the financial system, but for now, the biggest loser is clear – the Russian economy.
And we'll explore more details about the conflict this week, including Kim's take on what Putin might be thinking, Greg's view on where stock prices could go from here, and Dan's portfolio protection plan for anyone who is interested...
But we'll close today's edition with a part of the story that is personal for all of us...
Over the weekend, Bill kept us updated on his harrowing journey out of Ukraine...
As we wrote Friday, Bill – who works on our Stansberry's Credit Opportunities and Stansberry's Investment Advisory newsletters – decided to leave Ukraine's capital city of Kyiv, where he lived and worked.
Russian troops were getting closer to the city from three sides, and he told us he was headed west toward Poland by car ‒ with some gold coins among the items he brought... As I wrote earlier, Bill has since crossed the Ukrainian border into Moldova.
It was a long and not exactly smooth journey...
After a slow day of travel on bumpy backroads – because the Ukrainian military was purposely destroying main roads and bridges to slow Russian tanks – Bill reached a village in western Ukraine on Saturday morning.
He described that leg of the trip as mostly uneventful, but he did also report images of war... Along the drive, he and his family went through about 15 Ukrainian military checkpoints designed to root out undercover Russian actors. As Bill told us...
Russians are dressing up in Ukrainian uniforms and performing saboteur operations. I saw four guys at one checkpoint stripped to their T-shirts and underwear, turned facing sandbags with AKs pointed at the back of their heads.
I'm not sure what they did but my guess is they were suspected of being saboteurs. I thought they would kill them right then with all the screaming. We were stopped there for 20 minutes to cross the small bridge as they were interrogated.
After resting at the village in Western Ukraine, he ultimately decided to go to Moldova next to meet a friend. On Sunday night, Bill reported he was there – rattled, but safe – and grateful he left Kyiv when he did. He said...
This war is rapidly escalating. I'm worried it can spread and spiral out of control.
It seems like that's what most people watching – and experiencing – this conflict unfold are concerned about, too.
The other day, Ukrainians were lining up at ATMs to take out cash and stock up on groceries. Today, Russian citizens – on the wrong end of sanctions against the Russian government – are doing the same thing, worried about what they'll have access to.
To what end?
Nobody can say for sure, exactly. But we're here to guide and talk you through it. To that point, watch our special Town Hall event... I think you'll find it well worth the time... and we'll be back with more tomorrow.
What's Next for Gold, Oil, and Stocks
Dennis Gartman, editor and publisher of the Gartman Letter, tells our editor-at-large Daniela Cambone in a new interview that "we've entered a bear market" in stocks and investors need to be prepared to survive it...
Oil and gas will keep going up, he says... inflation will stay high for the next two to three years... and the Federal Reserve could make a mistake that sinks stocks 30% or more... Those are all reasons he's bullish on gold.
Click here to watch this video right now. For more free video content, subscribe to our Stansberry Research YouTube channel... and don't forget to follow us on Facebook, Instagram, LinkedIn, and Twitter.
New 52-week highs (as of 2/25/22): AbbVie (ABBV), Altius Minerals (ALS.TO), Altius Renewable Royalties (ARR.TO), Bunge (BG), Enstar (ESGR), Freeport-McMoRan (FCX), Coca-Cola (KO), Lockheed Martin (LMT), Cheniere Energy (LNG), Mosaic (MOS), Northrop Grumman (NOC), Nucor (NUE), Palo Alto Networks (PANW), Raytheon Technologies (RTX), Travelers (TRV), and Zeta Global (ZETA).
In today's mailbag, feedback on Dan Ferris' Friday Digest... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.
"Dan, After decades in the produce industry, a cash industry, I've learned to describe demand and supply (think: markets) like traffic on the highway...
"Wide highway with few cars (think: product) the cars go 100 mph, prices soar. Choke the highway with cars (think: too much product) and the speeds slow to a crawl (think: low prices).
"Here's what I know about traffic: Put a wreck on the other side of the highway, and all the looky-loos will slow down to see it. As they slow, others behind them hit the brakes. Soon the highway is choked with cars.
"I can't control traffic; I can't control prices. But I do know quality will always sell. It's that simple." – Paid-up subscriber N.B.
All the best,
Corey McLaughlin
Baltimore, Maryland
February 28, 2022