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HEALTH, WEALTH, AND HAPPINESS

March 14, 2022

"The best thing money can buy is financial freedom."

- Rob Berger

To be honest, I thought that the pandemic was over, and that the little concern people still had about the virus that causes COVID-19 went out the window with the Russian invasion.

Using Google Trends data, we can see that interest in the search term "coronavirus" has been falling quite steadily ever since the outbreak went global exactly two years ago.

As we understand, the new omicron variant is remarkably more contagious, but also less harmful, than previous strains.

However, China has a zero tolerance policy when it comes to coronavirus, so now that the number of cases is spiking, authorities are compelled to take drastic measures to contain it.

At this point, after widespread protests around the vaccine, it's tough to imagine any Western authorities imposing lockdown measures on their citizens, but in places where there is no concept of free speech or peaceful protests against the government, it seems like anything is possible.

'Every inch'

Similarly, but with much larger stakes, NATO allies have a very strict policy against attacks on their soil. Since the incursion began, President Joe Biden has reiterated that the U.S. stands ready to defend "every inch of NATO territory."

As a result, it was a bit alarming to see an attack yesterday on a Ukrainian military base just 25 kilometers (15 miles) from Poland.

It's not difficult to imagine that in a war zone, missiles will often miss their mark. Where I live in Israel, we occasionally hear explosions rumored to be from surface-to-air missiles fired from Syria that missed their Israeli air force marks nearly 200 km away. 

Obviously, Russia isn't really using any SAMs in Ukraine, since Ukraine doesn't have any planes, and any Ukrainian SAMs would probably be facing the other way. My sense is that other type of munitions are less likely to miss by that much.

Still, even though it is unlikely, the implications of a missile landing in Poland are basically what all policy makers have been trying to avoid since the start of the conflict, a direct clash between Russia and NATO. 

More disjunction

Since this newsletter is supposed to be about markets, let's bring it back to how the developments outlined above are affecting prices.

Our cover story about China is certainly relevant to anyone holding Chinese stocks, which just had their worst single-day plunge since the great financial crisis. Other markets, however, seem to be quite sheltered for now, and the U.S. market is even seeing a bit of green on the board.

Russia's proximity to NATO may be the cause of a few shot nerves, but overall, it doesn't seem to affect the global markets.  

In fact, 2 and 1/2 weeks into the conflict, we can see how the war is affecting varying assets differently. For your convenience, I've drawn a chart showing some of the more prominent movements.

Not pictured above are wheat and nickel, which have risen approximately 30% and 150%, respectively. For our bitcoin buffs, it may be interesting to note that bitcoin and the U.S. stock market are moving in opposite directions, thereby loosening the correlation between the two.

Further, seeing bitcoin on pace with the U.S. dollar is kind of comforting, given that the currency is acting as a safe haven for investors trying to exit Russian assets.

The main difference is that a 3% move in 18 days is significant for the buck. For bitcoin, that's what we call flat.

Of course, this is just a snapshot of an arbitrary time period, but it does help one understand the impact the war is having on the markets.

Further, this is perhaps the only chance to do it, since it's all subject to change on Wednesday when the U.S. Federal Reserve is widely expected to increase its benchmark interest rate for the first time since 2018.

It's quite literally the least the central bank can do to fight inflation. Let's hope it has some impact.

Have an awesome week ahead!

Mati Greenspan

Analysis, Advisory, Money Management

There is far less than one unit of bitcoin for every person on Earth. It will be interesting to see the cryptocurrency moon as the financial system transforms.

Bitcoin Market Journal is a daily newsletter that makes you a better crypto investor. It is created by Evamarie Augustine, Charles Bovaird, Mati Greenspan, John Hargrave, and Alexandre Lores.

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