Risk and time are opposite sides of the same coin

Good morning!

It’s still super early as I type but futures are moving higher on headlines that Putin may see reasons to talk.

No, he doesn’t.

What he sees is a way to delay and escalate.

Here’s my playbook.

1 – If there’s a rally …

Putin’s a caged animal and that makes him super dangerous. His playbook is very straightforward … win at all costs or make it so painful that everybody says “stop.”

Putin has a few problems on his hands: a) he appears to have significantly miscalculated international support for Ukraine; b) the FSB appears to have made several critical failures in pre-invasion intelligence; and c) Ukraine is putting up one helluva fight so far.

The only way this ends is that Putin: a) goes all in with the full force of the Russian military; b) breaks out chemical/nuke munitions to create so much horror that the world “begs” him to stop at which point he gets whatever concessions he wants; and c) or Ukraine capitulates which has about a snowball’s chance in you know where of happening.

Putin could also give up but that’ll happen ONLY if he can somehow spin a victory inside Russia. Remember, he went to great lengths to position the invasion as a “special military operation” which means he must win.

Meanwhile and complicating matters, China wants desperately to use the crisis to its advantage and is manoeuvring to act on the global stage as a peace broker like the US used to do. Or, simply “buy” Russia by letting the situation get so bad that China is the only player willing to extend credit/liquidity and business partnerships.

Sell the rip, buy puts or place a few volatility trades.

2 – US banks in Russia: we’re outta here

US banks are bailing on Russia with all of ‘em winding down operations. That will take time, as I noted this morning during a conversation with Maria Bartiromo. (Watch)

Meanwhile, JPM will probably emerge least scathed, but my research suggests Citi is particularly at risk because it's done the most business with Russian consumers, as opposed to businesses.

I’m tempted to buy more of the former and sell more of the latter using the broad banking beatdown as an entry.

3 – “Here we go again” – Chinese execs over delisting

The SEC has named 5 Chinese stocks as problem children: BeiGene, Yum China Holdings, Zai Lab Limited, ACM Research, and HUTCHMED Limited. The decision comes on the heels of the Holding Foreign Companies Accountable Act which passed December 18, 2020 requiring foreign companies listed on US exchanges to allow US auditors to inspect the presumably cooked books.

Shame.

There are two Chinese companies that are really viable global competitors. Both make products on par with or better than their western counterparts.

I’m tempted to buy a few more shares today.

If you’re a member of the One Bar Ahead™ Family, please keep an eye on your email. I will have all the specifics out via email in a few hours. I will also have this week’s “Ask Me Anything’s” via video, too!

Which brings up an important point …

The biggest profits often come from beaten-down companies the market “hates” and investors cannot get rid of fast enough. And the deeper you can buy ‘em the better, a point I made with the fabulous Charles Payne yesterday. (Watch)

4 – Yellen: Let them eat cake!

The hubris and arrogance is simply jaw-dropping.

Treasury Secretary Janet Yellen said Americans will likely see another year of “very uncomfortably high inflation.”

Reminds me of Marie Antoinette’s famous line, “Qu’ils mangent de la brioche—Let them eat cake” which she supposedly uttered in response to food shortages plaguing Paris in 1789.

Historians say that it was really likely Marie-Thérèse in 1660 who reportedly suggested that the starving French people eat “la croûte de pâté – the crust of the pate” but that’s moot.

This makes me want to go full Denis Leary.

The inflation we are dealing with is ENTIRELY the result of asinine government decisions made by people who have evidently failed Econ 101.

Too much money chasing too few goods is a textbook definition of inflation.

Now they want to raise wages, spend more and increase taxes a la Warren on big energy??!!

Every one of our elected officials should be required to attend AND pass an economic class immediately. And get kicked off the Hill if they don’t.

Enough is enough!!

5 – Is it 5 o’clock yet?

I’ve been on a mission since Covid started … to perfect my cocktail making skills. So, each Friday I have at it.

I’ve recreated vintage martini recipes, gotten pretty dang good at mixing margaritas and a brilliantly chill corpse reviver.

This week I’m going to be working with fire.

Many know that flames bring out the best BBQ and grilling but what a lot of erstwhile mix masters don’t realize is that they also bring natural sugar to the front of your favourite flavour profile. Especially if you’re working with citrus, wood and peppers … in cocktails.

Light ‘em up … here’s the recipe I’m working with tonight. (Read)

It IS Friday, after all.

Bottom Line

Loads of people want to give up at the moment but the world’s best investors are on the hunt for stocks that’ll perform beyond the current chaos.

Reminds me of a saying from the late Peter Bernstein …

“Risk and time are opposite sides of the same coin, for if there were no tomorrow there would be no risk. Time transforms risk, and the nature of risk is shaped by the time horizon: the future is the playing field.”

Let that sink in … the future is the playing field.

You know what to do and I will be with you every step of the way.

Let’s finish the week strong!


Keith