Russian Banks Disconnected From SWIFT

MARKET MOVERS

• Russian banks to be removed from SWIFT. The U.S., European allies, and Canada agreed to disconnect specific Russian banks from the Society for Worldwide Interbank Financial Telecommunication. A country’s removal from SWIFT means that key banks will be severed from much of the global financial system. This will ensure to harm their ability to operate globally.

• Consumer spending rose 2.1% in January, even as inflation continued to accelerate throughout the month to reach another four-decade high, according to new data from the Bureau of Economic Analysis. Core inflation rose 5.2% (excludes food and energy) on a yearly basis, above consensus forecasts of a 5.1% increase. Energy prices alone rose 25.9% while food increased 6.7%.
  
  
• Biden blocks Russia's banks and tech imports. A sanction he claims to exceed a SWIFT ban. Every asset Russia's largest banks have in America will be frozen. The U.S. now has sanctioned Russian banks that together hold around $1 trillion in assets. They will also prohibit Russia’s state-owned enterprises from raising money from U.S. or European investors. Furthermore, the U.S. will cut off more than half of Russia’s high-tech imports. Read more here.
  
  
• $4.1 million in cryptocurrency funneled to the Ukrainian military since Russia invaded. Research shows that $4.1 million in crypto has been raised for the military since the invasion began, including a single $3 million donation early Friday. Activists have deployed the crypto for a variety of purposes like funding the development of a facial recognition app that identifies if someone is a Russian mercenary or spy.
  
  
• Investment firms target vacation homes. Saluda Grade, a New York investment firm, has teamed up with AvantStay, a short-term rental operator, to buy about $500 million of homes. Saluda Grade is buying homes within driving distance of major population centers, and AvantStay will manage them for a fee. Meanwhile, The startup reAlpha Tech Corp. is reportedly pooling money from small-time investors to buy short-term rental homes as well. Read more here.
  
  
• U.S. new-home sales decreased 4.5% to an annual rate of 801,000 in January. Compared to a year earlier, sales were down more than 9.3%. Notably, the number of new homes sold in December was revised upward to 839,000, suggesting that January’s dip may be an aberration. As Pantheon Macroeconomics chief economist Ian Shepherdson notes, bad weather and the omicron variant likely depressed new-home sales last month.
  
  
• Emerging markets are looking good. Any emerging market economy that is exporting things like fertilizers, agricultural products, nickel which Russia's a big exporter for, and any energy-related commodity, these are all places you're gonna be able to play some of the volatility that is coming to the next couple of weeks and they look good on a macro level going forward, says Jacob Shapiro of Perch Perspectives. Source(18:05)

• Stocks rallying hard with Russia's invasion is not as weird as one might think, says Josh Brown. This type of scenario does tend to happen where there's a lot of fear in the market of an event, and then the event happens, and all of a sudden everyone that wanted to sell already sold so you get this big comeback in stocks. Source(15:50)
  

WHAT TO WATCH

• Fed may dial back pace of rate hikes over Ukraine uncertainty. Bond markets hold steady and oil prices retreat as the U.S. and its Western allies hold off sanctions targeting Russian oil and gas exports. The economic fallout could eventually put additional upward pressure on mortgage rates and lead to higher energy costs that stoke inflation. This is a nightmare scenario and complicates the calculus on rate hikes by the Fed.
  
  
• Oil could spike above $130 amid the Russia-Ukraine invasion. Oil topped $100 per barrel for the first time since 2014, while European natural gas futures spiked more than 50%. Analysts say prices are likely to keep climbing — at least for the time being. Prices could approach $130 per barrel by June if the Ukrainian conflict disrupts Russian crude flows, but that estimate could soar higher if additional disruptions materialize.
  
  
• Permissioned DeFi is poised to take off in 2022, much earlier than it would have without regulatory pressure. If it continues to gain traction, it can bring institutional-scale capital into the DeFi market in a meaningful way, says The Pomp. It's a layer built on top of existing DeFi applications designed to meet standard regulatory burdens by only allowing a subset of whitelisted users to participate.
  
• Putin is betting on China and India long term, says Jacob Shapiro of Perch Perspectives. He thinks Russia's future is about being an energy supplier for China and India and that he thinks Russia's future is no longer to be in Europe. This means using that energy dependency lever and building with those countries rather than continuing to deal with Europe. Source(9:09)

• VW to offer only non-voting shares to the public in €20bn Porsche listing. A move that threatens to cast a pall over what could become one of Germany’s largest listings. The German carmaker confirmed it had concluded a framework agreement that creates two share classes and mirrors the company’s own much-criticized corporate governance structure. The partial initial public offering could take place as early as October. Read more here.