Dave Lutz of Stifel Nicolaus has a round-up of what traders are chatting about before the opening bell:
Good Morning! All about the Ukraine this AM, as Russia’s latest moves spark angst and a flight to safety. Futures in the USA are marked off 1%, and just off the lows of the overnight. As VIX futures are marked up 10% This mirrors weakness overseas, with the DAX off almost 3%, and the FTSE 2%, as banks have been hit by concerns over exposure to Russian and Ukrainian banks. Volume is quite heavy in Europe, with most markets trading 50% above their recent 20day averages. Russia off over 10% as the Rouble collapses to record lows — Their Central Bank stepped in and raised 150bp, citing “risks to financial stability”. Poland’s market was initially hit for almost 4%. Ukraine itself not off all the bad, as their FX is higher as they await bailout teams, and their CDS is only up 1% overnight. In Asia, China bounced almost 1% despite their PMI hitting 7M lows, as one of the “unintended consequences” of the Yuan weakening is liquidity is spiking in their money markets. The Nikkei was hit for 1.2%, and futures are marked about 80bp lower — as the Yen is spiking on haven flows. Sectors to focus on will be the weaker banks (Ukraine/Russia exposure) — Gold Miners (up 4% as Gold is spiking) — Casinos (Macau Numbers blowing out) — and the Divvy Sectors like REITS with 10YY dropping hard.
10YY crashes under the 200dma — Now yielding 2.6%, gearing up to test October Lows near 2.47%. We have Safe haven FX jumping — including the Yen and Swiss Franc. The Euro is getting hit sharply, helping the DXY bounce despite the jumping Yen — a headwind for commodities. That said, Russia is the world’s largest energy exporter, including both oil and gas — so combined with the cold Northeast, we have both Brent and Natty up 2.5%. Gold is adding 2% on haven flows, now the highest since October. Wheat climbed the most in 17 months and corn rose to the highest since September as tensions escalated in Ukraine, a leading exporter of both grains.
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