 Okay, it is Sunday the 27th of February hope you're doing well and of course just one real dominant theme to update you on and of course That is Russia and Ukraine situation. So I'm gonna run through that get you up to speed I've basically Amalgamated all of the major headlines that have developed over the weekend So I'm gonna talk about just generally an update of where we're at at the moment in terms of the the military engagement side of things We're then going to talk about the swift action that's taken place by the ruling on Saturday And what is it? What does it mean going further forward? We're then going to talk about OPEC and also oil prices But before we begin I guess and before we talk about the rest of the week because it is actually really busy in terms of economic data because of Course bookended with non-farm payrolls meaning that we get the lights of the ISM manufacturing non manufacturing ADP The regular jobless claims we've got factory orders coming out of the States So really another busy week ahead for for general markets, but looking at the market open I have been waiting for markets to open so I could get a much better representation of how things Have opened for electronic trade at least and as you can see here just cycling through a couple of charts Top left-hand corner. You can see euro dollar and cable have gapped Significantly lower so I'm looking at the futures market here and that indicative then of further flight to quality into the US dollar And we'll talk about how the swift movement could help accelerate that move so cable consequently also lower Irrespective of dollar strength gold also taking a bit of a pop on the upside on the recommencement of trade That's hard to see but actually it's trading here at 1921 having closed at around 1890 at the close of Friday on comics Futures on globe X so we're up about $33 there initially did ride up higher to around a $50 gain at the open In terms of the major US indices the Dow opened down about 500 points Nasdaq 400 the S&P a hundred WTI crude has popped up around six bucks Briefly touching 99 after hitting highs just over a hundred dollars Of course on the actual invasion when that happened last Thursday and then in terms of the US 10 year We've had a bit of a pop on the reopening here Just testing up at some of the highs that we saw towards the second half of last week So what exactly is happening while running you through the headlines? Here's a map of of the locations of Russian control and attacks officials from Kiev The latest has been today that they're gonna meet Russian counterparts at the Belarusian border So up here and this comes hours after Vladimir Putin had put Russia's nuclear forces on a higher alert And so this latest development comes even as fighting is Continued inside Ukraine with heavy fighting reported over the weekend the second largest city of Kharkiv Most geopolitical kind of strategists that I've been reading at the weekend We're talking about this idea that the kind of endgame of Putin is as we know There's large military and naval capability coming out of the Crimean Peninsula, which of course was annexed by Russia back in 2014 So looking to come up from the south and kind of a three-pronged effects coming east with this Russian separatists on that side given what had happened already several years ago and then coming from the north over the border south from Belarus and So here the endgame believed to be for Putin then to kind of neutralize the government in Kiev here But to take control more so of the land grab on the eastern side To expand upon what they did back in 2014 We'll talk about that a little bit more in a moment and also China's involvement And what could that mean going further forward? But in terms of things to be aware of the European Union foreign affairs ministers They met today and they approved sending joint military aid to Ukraine according to officials familiar with the matter and Russia's military has deployed now what is said to be about two-thirds of its forces Around Ukraine to the conflict so far a senior US defense official has said that Russian forces now are about 30 Kilometers, so just under 20 miles outside of the center of Kiev at this particular point in time However, of course at the time I say this it's going to be out of date So just keep that in mind Then the other thing as terms of the calendar g7 finance ministers and central bank heads They're going to hold talks tomorrow on Tuesday with humanitarian aid for Ukraine That is to be the main topic But of course we're keeping a close eye on that given all the major Central bank as well as g7 finance ministers in attendance So let's just run through Some of these these headlines as I just said Ukraine to hold talks of Russia on the border of Belarus Ukraine to meet without conditions as Putin demands neutrality Most people are probably of the belief that there's not likely to be any immediate solutions on the back of these latest talks But nonetheless they are believed to be going ahead and of course comes in the context of well of Vladimir Putin kind of up in the ante with some of the nuclear talk that he's been throwing around this weekend One of the things here is about China as well And China as we know from last week have been very uncommitted In condemning much like much of the western world has done about the course of action that Putin has taken with the forceful incursions into Ukraine, but One of the things here to be aware of Is the longer term relationship? It was only a couple of weeks ago that actually Russia and China signed a top level agreement on many different things Particularly to do with trade over the long term and of course this is looking at a map here What I have is the Belt and road Initiative this of course is the global infrastructure network Which China is trying to achieve with the global dominance of becoming the major superpower in the world And although this is a long term ambition, of course it does explain to a certain degree the relationship and stance that they have with Russia So if we just zoom in here a little bit you can see this is UK Western Europe and you can see Ukraine situated here And you have what is the existing railroad system that goes through large pockets of of Russia through Moscow And then going into western europe and you can see here. These are the proposed in the pink line So going through and these would be countries which you can then start to read between the lines as some of the geopolitical Relationships and how they will side on certain issues because here you've got countries like Iran As well as Russia, and then you've got Turkey as well All involved and these are kind of hotbeds of geopolitical tension between those Affirmation countries namely and that of the west and here one of the main things you can see is an economic corridor That runs from north to south linking essentially the railroad networks coming through From both east to west but from north to south and hence the reason why for china Actually, Ukraine is quite important and we know why because For many things particularly soft agricultural goods like wheat They're particularly important of course and so Looking to secure and make safe the relationships with Russia But also not looking to comment in a way that is going to jeopardize that because they know that they need to Be on side with them as much as well as not stoking and further Confrontation with the u.s over ongoing matters that they're already having as well in that ongoing trade war So yeah, just a bit about a color on the geopolitical front One of the major things over the weekend though and something that I guess needs to be talked about a lot more Because it might be something that you are not completely familiar with what exactly it is But a decision to penalize russia's central bank and exclude some russian banks from the swift Messaging system That's the society for worldwide interbank financial telecommunications otherwise known as swift And it's used for trillions of dollars worth of transactions around the world And it was announced on saturday in a joint statement by the u.s The european commission france germany italy the uk and canada The agreement includes measures to prevent the russian central bank from deploying its international reserves to undermine Sanctions so this is something which our head of trading peers was talking about if you listen to the the podcast that he put out on friday And this is super important because to give it a bit of context The russia is ranked 13th globally in all swift messages and sixth on payment messages Out of 291 russian swift members They collectively send an estimated 800 billion dollars worth of payments a year and that's equal to over 50 percent of all of russia's gdp. So this is really Upping it's escalating the intensification of the sanctions at this point in time At least 10 oil and commodity traders who spoke to reuters on condition of you know of remaining anonymous I read today said that flows of russian commodities to the west would be severely disrupted or even halted for days If not weeks until clarity is established on these exemptions So in order to be able to shift communication over to other the other forms That's going to take a bit of time and of course disruptions in the interim period And so oil's gapped up here about six dollars initially at the open But it's definitely something you've got to keep an eye on throughout the week And the biggest thing of course here is about sanctions more to do specifically with energy and the retaliatory effect that that could have from Putin and russia the move To swift move is aimed at russian banks that have already been sanctioned So it's not kind of ironclad on the exact details here in numbers as i mentioned There's 291 odd russian swift members But actually the move that's happened over the weekend is aimed at russian banks that have already been sanctioned By the international community, but could be expanded to the russian finance other financial institutions if necessary The move does include the spur bank vtb group which collectively account for about half of the country's banking assets They are the big ones. So the other is much smaller. So in a sense, this is severe of what they've done With these western powers with this later swift move To give you an idea as well russia still holds about 300 billion dollars of foreign currency offshore Enough to disrupt money markets if it is frozen by sanctions or Move suddenly to avoid them according to analysts at credit suice One official said the white house is looking at exemptions for transactions involving The energy sector which the u.s administration has sought to exclude to prevent oil prices from surging Remember, no one wants surging oil prices here The point being is is the fact that from a u.s perspective They're suffering from multi decade high inflationary conditions at the moment as a killer for biden at the moment going into the midterms Consumers are really feeling that at the moment state side. And so another massive flush and push in Energy prices is only going to accelerate north for the direction of travel of inflation in the u.s and likelihood to fed Action which could then subsequently tip the u.s economy into recession That probability could tick up certainly under those those conditions. So this is the the careful kind of thing that the western powers now need to Tentatively kind of navigate this week And of course the retaliatory effects coming out of russia is going to be one of the key things to look at If russia russia does do anything with the supply of their gas or their oil You're going to see big moves in crude oil futures going further forward A couple of other things to to mention One is here i'm going to talk about oil prices for a second and i'm going to start with this one This is the uk And actually the business secretary in the uk Quarteng is considering using oil from the uk strategic reserve in an effort to Stabilize energy prices according to people familiar with the government's thinking came out just a few hours ago today on sunday um, apparently Quarteng has spoken to counterparts in the u.s. Germany, france and canada about a coordinated move The uk ministers will hold a video conference call with the energy commissioner Cadre simpson on monday. So looking out for that in a few hours time As a guide, eu states e member states are required to hold oil stocks at the higher of 90 days Of average net daily imports or 61 days of average daily inland consumption In order to mitigate any supply crises now They did coordinate if you remember back when covet was happening An intervention on behalf of the americans who Definitely tapped for a much larger size of think it was 50 million at the time That was in coordination with the uk and others and of course last week We heard that the u.s. Is thinking about the same thing as again So this doesn't come as a massive surprise and again It's trying to front run in what in the uk could be hugely problematic inflation issues Given the predominant fact that we still got probably another two or three percentage points to run until we hit the peak of what's forecasted at the moment for uk cpi and the fact that we've got Those energy price caps coming in in i think april which is going to substantially add to that upside And so further now disruption to oil is only going to further heat that up And so could they intervene in the time being and release some oil? I think britain released 1.5 million barrels last time In context the us did 50 So much smaller A few other things though to be aware of The u.s. What have they said they have said they're keeping energy sanctions against russia quote on the table Though any measures would have to avoid disrupting markets and pain for us consumers So somewhat contradictory i'd say i don't think you can do one without doing the other so Them saying that energy sanctions are on the table, but they don't want to hurt the consumer Well, it's going to hurt the consumer. So either consumer feels the pain or you don't put on any energy sanctions That's the kind of final big bullet in the chamber to look out for this week as i've mentioned a few times Um some other things to be aware of we do have an opec meeting This week, of course beginning of the month going into march now if you can believe it As that means they then set the policy for the following month And what can we expect given all the oil volatility that we've seen? Well Opec will probably according to analysts at bloomberg have written over the weekend stick to their plan of only Gradually increasing oil production when it meets The anticipated then is to continue on with the increase of supply of some 400 000 barrels per day according to several delegates that were sorted Cited excuse me Even after the invasion of ukraine has sent prices surging One thing i would bear in mind is the meeting is happening on wednesday It's sunday and so as we saw last week the world can change in a matter of days So although that's the general expectation that's fine for now But just just keep your your finger on the pulse i guess and and see and re-evaluate when that meeting comes around Saudi Arabia, they're likely to decide on a unilateral raising production beyond its quota according to delegates such a move would Could create a rift of russia and possibly cause the opec alliance to unravel So yeah, it's interesting. I think the Saudi Arabia I think q8 as well still have a degree of some spare capacity to increase production a little bit more So they could offset the price a touch and particularly Saudi Arabia are conscious of keeping Strong relationships with the likes of the u.s. Particularly with rising tensions in nearby regions and so forth Given the lack of military presence that Saudi have and hence the relationship with america But do they jeopardize then the Fragile relationship with russia because without then russia being involved in any type of supply pact the whole opec plus group Breaks and the whole control over oil prices is broken. So Saudi Arabia will be very conscious of that The other thing that has happened from an oil perspective is this BP and the uk british petroleum they've moved to dump it shares an oil giant ross neft Taking a financial hit as much as 25 billion dollars By joining the campaign to obviously isolate russian companies and assets and their economy BP didn't say whether it's planning to sell its roughly 20 stake in ross neft or simply walk away Any potential buyer one caveat would have to navigate a tightening web of economic sanctions that would Make any transaction obviously incredibly difficult But what they've said is I think it's in the third quarter the BP would realize this hit So keeping our BP shares as well at the footsie cash open on the on the lse later on monday morning They could be definitely one to watch And then on the back of to kind of wrap up the What we've been talking about with with russia is gold prices Gold has has gapped up about 30 bucks here at the open. We're well over 1900 again in gold futures and The latest here is that the bank of russia has said it will start purchasing gold again after a two-year hiatus They were adding gold reserves Very sharply While they were decreasing their treasury holdings looking to Stay away from holding us based assets and they were pivoting into the yellow metal They kind of stopped during the period of covet and they've recommenced To give you an idea russia had more than 2000 tons of gold at the end of december Of 21 a corner data from the imf accounting for just over 20 percent of its reserves So being holding gold It's the fifth biggest sovereign gold owner on a global basis to give you some context Okay, other than that It is a super busy week russia ukraine aside Which of course will be the dominating factor for sentiment And and direction But a few things to contemplate just to run through them briefly Monday, you've got the chicago pmi number coming out And then you've got us is and manufacturing pmi coming on tuesday Which is likely to rebound according to most analysts. You can see here looking for an uptick on the headline figure Because of the fact that now we're over the omarcon wave that we saw really in january and early february That impacted the united states so expecting those numbers to to go up We do also have from a from a fed Communication point of view which ultimately is super key at the moment because we're still trying to determine what it is Not only into what they're going to do in march about this 50 basis point or not But also the subsequent hikes thereafter And we get the dot plot Coming out with the latest summary of economic projections On the the meeting in mid march, which is going to be key, of course But fed chair drone pow appears both before the house on wednesday and a senate on thursday banking panels He's addressing a might sound You could argue more cautious than usual given the hawkish pivot that they've made Just in the context of the latest geopolitical developments would would make sense and if that does happen Do you then get at that point in the week? We're talking midweek a little bit of a relief rally this idea of not excessive tightening The idea here though is really what happens to energy prices because it might then mean that the fed doesn't really have a choice Um to tackle just rampant inflation if oil prices on the worst case really rock it higher energy prices in general Other things took out for this week. Um, you've got us adp national employment figure We're looking at a bounce back to a positive 500 reading after the shock drop of 301,000 Again, the spread of the omicron Coronavirus variant hurt the jobs market that particular month. So we're expecting the spring back now given the sharp Drop and decline that we've seen in covid cases in the u.s. And and the big pickup We're looking for a predominant bounce back in services Hospitality these types of leisure industry jobs in the u.s And this will probably mimic as well in the case of the labor report that we'll get on friday The bank of canada also has a rate decision analyst here at i ng and others are expecting a 25 basis point rate hike After they put that off at the beginning of the of the year the economy now is suggesting that that Looks pretty much a assured thing And would probably then trigger then multiple rate hikes to come in a similar fashion to what Markets are expecting from the fed Thursday, you've got your weekly jobless claims. You've also got factory orders and our ism non manufacturing and the beige book all coming out the states and then bookended with non farm payrolls Set to show another decent increase in employment the unemployment rate expected to fall back to 3.9 percent with average hourly earnings rising at 5.7 percent on an annual basis. So Yeah, really busy stacked calendar from economic data points of view drone pal front of the house and the senate as well But most importantly, of course, it's going to be monitoring these developments Pertaining to russia and ukraine. Where does it go from here? So that's it. Good luck for the week I'll put out any breaking videos through the week should something substantial happen on the ukrainian front Otherwise take care of yourself And have a good week ahead