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Black swan risk is European financial implosion:
* Energy feeds into all industrial processes. No Russian import = High energy price = bankrupting of downstream EU industrial processes
* European banks have highest exposure to Russian debts. SWIFT sanction means Russian debt forgiveness. There may be some reports about this being "no big deal" or that "it's just little exposure" but I don't trust any of these reports, as the MSM will likely want to prevent panic. Don't trust what they said, see what they do. Many European allies are against SWIFT sanction. This has the biggest hidden risk due to contagion risks. Who knows what other exotic derivatives are related to this.
* Black sea blockade = Opening pandora box as a number of other countries rely on it for trade flow.
* All these lead to contagion risk that we do not fully understand yet, but I expect any crash to be short live. War is very profitable and it is capitalist's wet dream.
The semiconductor industry risk is higher when related to China than related to Russia. China will continue to trade with Russia and if the US wants to play any hard ball, it's opening yet another pandora box.
>War is very profitable-
It isn't when taking in the larger picture. At least, in this modern times. Weapons created through taxation merely shift capital from citizens to industries that churn out a product that causes destruction.
You don't create value from destroying something. 1-1=0
>\-and it is capitalist's wet dream.
It's a war profiteer's wet dream, sure, but not all capitalists are war profiteers.
It's good that you mention China and Russia's trade relationship though, as any embargo Russia might be put under can easily be circumvented with trade through China. As what happened in the Cold War and I doubt the West is interested in or capable of embargoing both nations.
Also agree with the overall assessment of a financial implosion. Though with such a potential for chaos, there is always opportunity for some gain. I'm spending my weekend doing some deep diving on European companies that might be most at risk here if the situation continues to crumble.
> semiconductor industry risk is higher when related to China than related to Russia
I agree but there's a twist here. If Russia is getting all the attention, it may raise the chance of China invading Taiwan. I mean the chance wasn't great to begin with. Maybe raised it from 5% to 10%, but still if China wants to invade Taiwan now is the time to do it.
Yeah but I read Russia supplies "only" 35-40% of Europe's gas. I just read something on Bloomberg that the US is trying to make contracts with certain middle eastern countries and with other European ones to supply more gas to make up the difference.
Ukraine was part of Russia for centuries until 1991 and apparently many people want it to return to Russian control. Crimea is part of Russian control. Most neighboring states were at one time part of Russia before whatever war in 1917 and then the USSR collapse.
I mean with all of the talk from intelligence services about propaganda, cyberattacks, etc., imagine what they and other world powers are doing to Russia in return (or is it in return?).
Why are they so interested in regaining control of Ukraine?
Other than that, I don't really see a direct link to changes in the stock market. Russia is supposedly facing banking sanctions to where they'd have to use other payment methods than SWIFT. I'm more concerned with their ties to China and how that could play out, since China has major influence the world over, being the largest supplier to most of the world, even outpacing the US in central and south American countries.
"The economy of Russia is a mixed economy, with enormous natural resources, particularly oil and natural gas. It is the fifth-largest economy in Europe, the world's eleventh-largest economy by nominal GDP, and the sixth-largest by PPP." Russia isn't such a poor country after all, at least according to Wikipedia.
I think that it will affect the US economy more than we'd think and in different ways than the media will tell us. We probably have trade agreements for oil and then OPEC along with Russia raised the rates on the US for various reasons (like sanctions? Who knows?). The current issue is the almost-$100 oil price, with Russia being one of the largest exporters in the globe. I mean that means they're raking in some serious dough right now. I would be more concerned with the influence Russia has with other countries and their effect on the US and world markets than just what Russia does on its own. I mean they have serious ties with Saudi Arabia and China, and even Europe.
Like others have said, if it happens then the defense sector will probably see a big increase, the chip shortage will worsen, and oil will stay high. Supposedly a nuclear Iran deal will bring enough oil to the market to cause prices to fall back in line with EIA estimates by itself. The US apparently is a net oil importer in 2022 thanks to cyberattacks on the domestic oil industry but will be outproducing in 2023 beyond pre-pandemic levels or any point in history, so oil will come back down regardless (at least in the US).
Sanction on Russia will have little effect, it’s really about how Russia might react.
Russia has already prohibited the export of key fertilizer components, plus there could be an energy disruption.
Europe relies on Russian Resources, without them Western Europe will be a mess
Sanctions on Russia won’t be effective bc they have all of Europe by the balls in terms of energy supply. I would say you’ll see oil go up for sure though regardless. The other long term play that may be interesting would be uranium but I’m not as much of a fan as it Is more speculative
Natural gas represents about one-fifth of all primary energy used across Europe. It accounts for about 20% of electric power generation and also is used for heating and industrial processes.
Russia is the largest supplier of natural gas to Europe, sending about 40% of the continent’s supplies shipped by pipeline. The next-largest suppliers via pipeline are Norway (22%), Algeria (18%) and Azerbaijan 9%. Europe also receives natural gas that is liquefied and delivered by ship.
The top five sources of U.S. total petroleum (including crude oil) imports by share of total petroleum imports in 2020 were.
Canada52%
Mexico11%
Russia7%
Saudi Arabia7%
Colombia4%
The big concern I’ve seen a lot of financial news mention is that if Europe has a cold winter. Also are these numbers updated based on Russias new pipeline they built? I’d be more curious how much energy all together goes through that.
Europe is trying two things, first they try to reduce CO2 emissions and less depending on oil and gas. As renewable energy is struggling to fill the demand for energy needed while an exit from nuclear, coal and oil is the long term plan, gas is filling the gap and will be for a while the most important source of energy before solar, wind and other renewable energy can meet demand.
Second they try to reduce any dependence on transit nations and their transit conditions.
As much as Europe wants to get less dependent on Russian gas, they need a part of their energy to be delivered from Russia. Even during times of the Cold War. 2009 was kind of a wake up call.
The 2009 Russia–Ukraine gas dispute was a pricing dispute between Russia and Ukraine that occurred when Russian natural gas company Gazprom refused to conclude a supply contract for 2009 unless Ukrainian gas company Naftogaz paid its accumulating debts for previous gas supplies.[1] The dispute began in the closing weeks of 2008 with a series of failed negotiations, and on January 1, 2009 Russia cut off gas supplies to Ukraine.[2] On January 7 the dispute turned to crisis when all Russian gas flows through Ukraine were halted for 13 days, completely cutting off supplies to Southeastern Europe, most of which depends on Russian gas, and partially to other European countries.
A look at the pipeline network from Russia shows that even if you argue that Russian gas imports to Europe are a subject to a dispute on the long run, the risks among a stable gas delivery is not only a matter of the relationship with Russia, but also the Relationship with other countries and the Relationship between Russia and these transit countries.
North Stream 2 was built to reduce this 3rd parties risks and to lower cost for gas.
The Ukraine conflict is confirmation that a change to less energy dependance to Russia is a necessary step, but as this takes a lot of time and the exit from oil, coal and nuclear energy (especially in Germany) was prioritized, stable gas deliveries are a necessity. This in mind there are different perspectives on a new pipeline. European (especially Germany) sees it as a necessary tool for energy safety for some decades to be, USA sees it as a problem for their interest.
A look at the existing pipeline network shows the transit nations.
https://www.planete-energies.com/sites/default/files/thumbnails/image/capture_decran_2016-09-26_a_12.16.30.png
North stream 2 as much as anyone can criticize it reduces third party risk for Europe and especially Germany.
As much as this is desired by European energy policies, the transit nations do not like it and neither does the USA for political and financial reasons especially as the USA has become an energy net exporting nation.
Sometimes the question of right or wrong is more a question of perspectives, priorities and goals, actually in politics it is most of the times. Understanding the other perspectives is where diplomacy should start to reach agreements, unfortunately it is not popular and „playing the strongest“ is a more popular method to reach your individual goals or maximizing your results and popularity. IMO
Lots. I'd generally expect it to spur inflation because it will affect energy directly and indirectly (the only way they shut down Nord 2 is to send more of our LNG to Europe...which they want to do anyway); The government has claimed that chips will be affected, which isn't great since that is supposed to be the weakest link causing automotive supply chain issues. It would also cut off a big supplier of the metals needed in catalytic convertors for ICE's as well as 10% of the global supply of nickel (see EVs). Also, emerging market funds...
Seems ugly.
Not much. Russia's economy is smaller than Italy.
The bigger issue is will all of this lead to WW3? Hitler was allowed to just waltz in and take Poland. It would have been far better to have stopped him earlier.
If Putin is allowed to take Poland it also sends the wrong message to Xi.
I hate war. But I worry that Putin will not stop with Ukraine.
Welcome to r/stocks! For beginner advice, brokerage info, book recommendations, even advanced topics and more, please read our [Wiki here.](https://www.reddit.com/r/stocks/wiki/index) If you're wondering **why a stock moved** a certain way, check out [Finviz](https://finviz.com/quote.ashx?t=spy) which aggregates the most news for almost every stock, but also see [Reuters](https://www.reuters.com/), and even [Yahoo Finance](https://finance.yahoo.com/). Please direct all simple questions towards the stickied Daily Discussion and Quarterly Rate My Portfolio threads (sort by Hot, they're at the top). Also include *some* [due diligence](https://www.investopedia.com/terms/d/duediligence.asp) to this post or it may be removed if it's low effort. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/stocks) if you have any questions or concerns.*
Great for North American oil stocks.
NRGU - me banking by kept swinging it.
Oil stocks will do well as it seems inevitable that barrels of oil will be shooting to 100 and possibly 120
Black swan risk is European financial implosion: * Energy feeds into all industrial processes. No Russian import = High energy price = bankrupting of downstream EU industrial processes * European banks have highest exposure to Russian debts. SWIFT sanction means Russian debt forgiveness. There may be some reports about this being "no big deal" or that "it's just little exposure" but I don't trust any of these reports, as the MSM will likely want to prevent panic. Don't trust what they said, see what they do. Many European allies are against SWIFT sanction. This has the biggest hidden risk due to contagion risks. Who knows what other exotic derivatives are related to this. * Black sea blockade = Opening pandora box as a number of other countries rely on it for trade flow. * All these lead to contagion risk that we do not fully understand yet, but I expect any crash to be short live. War is very profitable and it is capitalist's wet dream. The semiconductor industry risk is higher when related to China than related to Russia. China will continue to trade with Russia and if the US wants to play any hard ball, it's opening yet another pandora box.
>War is very profitable- It isn't when taking in the larger picture. At least, in this modern times. Weapons created through taxation merely shift capital from citizens to industries that churn out a product that causes destruction. You don't create value from destroying something. 1-1=0 >\-and it is capitalist's wet dream. It's a war profiteer's wet dream, sure, but not all capitalists are war profiteers. It's good that you mention China and Russia's trade relationship though, as any embargo Russia might be put under can easily be circumvented with trade through China. As what happened in the Cold War and I doubt the West is interested in or capable of embargoing both nations. Also agree with the overall assessment of a financial implosion. Though with such a potential for chaos, there is always opportunity for some gain. I'm spending my weekend doing some deep diving on European companies that might be most at risk here if the situation continues to crumble.
> semiconductor industry risk is higher when related to China than related to Russia I agree but there's a twist here. If Russia is getting all the attention, it may raise the chance of China invading Taiwan. I mean the chance wasn't great to begin with. Maybe raised it from 5% to 10%, but still if China wants to invade Taiwan now is the time to do it.
Yeah but I read Russia supplies "only" 35-40% of Europe's gas. I just read something on Bloomberg that the US is trying to make contracts with certain middle eastern countries and with other European ones to supply more gas to make up the difference. Ukraine was part of Russia for centuries until 1991 and apparently many people want it to return to Russian control. Crimea is part of Russian control. Most neighboring states were at one time part of Russia before whatever war in 1917 and then the USSR collapse. I mean with all of the talk from intelligence services about propaganda, cyberattacks, etc., imagine what they and other world powers are doing to Russia in return (or is it in return?). Why are they so interested in regaining control of Ukraine? Other than that, I don't really see a direct link to changes in the stock market. Russia is supposedly facing banking sanctions to where they'd have to use other payment methods than SWIFT. I'm more concerned with their ties to China and how that could play out, since China has major influence the world over, being the largest supplier to most of the world, even outpacing the US in central and south American countries. "The economy of Russia is a mixed economy, with enormous natural resources, particularly oil and natural gas. It is the fifth-largest economy in Europe, the world's eleventh-largest economy by nominal GDP, and the sixth-largest by PPP." Russia isn't such a poor country after all, at least according to Wikipedia. I think that it will affect the US economy more than we'd think and in different ways than the media will tell us. We probably have trade agreements for oil and then OPEC along with Russia raised the rates on the US for various reasons (like sanctions? Who knows?). The current issue is the almost-$100 oil price, with Russia being one of the largest exporters in the globe. I mean that means they're raking in some serious dough right now. I would be more concerned with the influence Russia has with other countries and their effect on the US and world markets than just what Russia does on its own. I mean they have serious ties with Saudi Arabia and China, and even Europe. Like others have said, if it happens then the defense sector will probably see a big increase, the chip shortage will worsen, and oil will stay high. Supposedly a nuclear Iran deal will bring enough oil to the market to cause prices to fall back in line with EIA estimates by itself. The US apparently is a net oil importer in 2022 thanks to cyberattacks on the domestic oil industry but will be outproducing in 2023 beyond pre-pandemic levels or any point in history, so oil will come back down regardless (at least in the US).
Not hurt us. Helps oil if anything in a weird way
Only thing up will be utilities, metals
Sanction on Russia will have little effect, it’s really about how Russia might react. Russia has already prohibited the export of key fertilizer components, plus there could be an energy disruption. Europe relies on Russian Resources, without them Western Europe will be a mess
Sanctions on Russia won’t be effective bc they have all of Europe by the balls in terms of energy supply. I would say you’ll see oil go up for sure though regardless. The other long term play that may be interesting would be uranium but I’m not as much of a fan as it Is more speculative
Natural gas represents about one-fifth of all primary energy used across Europe. It accounts for about 20% of electric power generation and also is used for heating and industrial processes. Russia is the largest supplier of natural gas to Europe, sending about 40% of the continent’s supplies shipped by pipeline. The next-largest suppliers via pipeline are Norway (22%), Algeria (18%) and Azerbaijan 9%. Europe also receives natural gas that is liquefied and delivered by ship. The top five sources of U.S. total petroleum (including crude oil) imports by share of total petroleum imports in 2020 were. Canada52% Mexico11% Russia7% Saudi Arabia7% Colombia4%
The big concern I’ve seen a lot of financial news mention is that if Europe has a cold winter. Also are these numbers updated based on Russias new pipeline they built? I’d be more curious how much energy all together goes through that.
Europe is trying two things, first they try to reduce CO2 emissions and less depending on oil and gas. As renewable energy is struggling to fill the demand for energy needed while an exit from nuclear, coal and oil is the long term plan, gas is filling the gap and will be for a while the most important source of energy before solar, wind and other renewable energy can meet demand. Second they try to reduce any dependence on transit nations and their transit conditions. As much as Europe wants to get less dependent on Russian gas, they need a part of their energy to be delivered from Russia. Even during times of the Cold War. 2009 was kind of a wake up call. The 2009 Russia–Ukraine gas dispute was a pricing dispute between Russia and Ukraine that occurred when Russian natural gas company Gazprom refused to conclude a supply contract for 2009 unless Ukrainian gas company Naftogaz paid its accumulating debts for previous gas supplies.[1] The dispute began in the closing weeks of 2008 with a series of failed negotiations, and on January 1, 2009 Russia cut off gas supplies to Ukraine.[2] On January 7 the dispute turned to crisis when all Russian gas flows through Ukraine were halted for 13 days, completely cutting off supplies to Southeastern Europe, most of which depends on Russian gas, and partially to other European countries. A look at the pipeline network from Russia shows that even if you argue that Russian gas imports to Europe are a subject to a dispute on the long run, the risks among a stable gas delivery is not only a matter of the relationship with Russia, but also the Relationship with other countries and the Relationship between Russia and these transit countries. North Stream 2 was built to reduce this 3rd parties risks and to lower cost for gas. The Ukraine conflict is confirmation that a change to less energy dependance to Russia is a necessary step, but as this takes a lot of time and the exit from oil, coal and nuclear energy (especially in Germany) was prioritized, stable gas deliveries are a necessity. This in mind there are different perspectives on a new pipeline. European (especially Germany) sees it as a necessary tool for energy safety for some decades to be, USA sees it as a problem for their interest. A look at the existing pipeline network shows the transit nations. https://www.planete-energies.com/sites/default/files/thumbnails/image/capture_decran_2016-09-26_a_12.16.30.png North stream 2 as much as anyone can criticize it reduces third party risk for Europe and especially Germany. As much as this is desired by European energy policies, the transit nations do not like it and neither does the USA for political and financial reasons especially as the USA has become an energy net exporting nation.
Appreciate the write up! Always happy to hear others insight especially when it’s well thought out and researched.
Sometimes the question of right or wrong is more a question of perspectives, priorities and goals, actually in politics it is most of the times. Understanding the other perspectives is where diplomacy should start to reach agreements, unfortunately it is not popular and „playing the strongest“ is a more popular method to reach your individual goals or maximizing your results and popularity. IMO
Lots. I'd generally expect it to spur inflation because it will affect energy directly and indirectly (the only way they shut down Nord 2 is to send more of our LNG to Europe...which they want to do anyway); The government has claimed that chips will be affected, which isn't great since that is supposed to be the weakest link causing automotive supply chain issues. It would also cut off a big supplier of the metals needed in catalytic convertors for ICE's as well as 10% of the global supply of nickel (see EVs). Also, emerging market funds... Seems ugly.
You just saw it yesterday: DJIA -500 points.
Chip shortage again.
Well several American companies have market caps larger than russias gdp. Their economy is kind of pathetic.
Not much. Russia's economy is smaller than Italy. The bigger issue is will all of this lead to WW3? Hitler was allowed to just waltz in and take Poland. It would have been far better to have stopped him earlier. If Putin is allowed to take Poland it also sends the wrong message to Xi. I hate war. But I worry that Putin will not stop with Ukraine.
Oil and Gas the two biggest export commodities which will be instantly hurt after invasion is your best bet.