Hey Traders,

Frank here.

What’s better than 1 escalation move against a dictator like Putin?

TWO!

On Monday, President Biden lifted a restriction on Ukrainian forces using the U.S. Army’s Tactical Missile System (ATACMS) in the Kursk region.

ATACMS are long-range missiles that can reach targets up to 190 miles away.

They are much more accurate and lethal than the long-range drones that Ukraine has used to target deep into Russia.

Ukraine wasted no time in taking the President up on his offer and launched a strike with the ATACMS.

Today, in an attempt to put a cherry atop that escalation cake, the administration announced that the U.S. will begin sending anti-personnel land mines to Ukraine.

The mines will allegedly become inert after a set amount of time, but the policy is controversial given the experience of Vietnam era mines.

Tens of thousands of people have been killed or severely injured by unexploded ordinance in Vietnam, Laos, and Cambodia since the end of the war.

Naturally, Putin is not happy with this turn of events.

He previously stated that such moves would “change the very nature of the conflict.”

He warned that any nuclear-armed nation approving the use of ATACMS like missiles in Russia would be declaring war with his country.

Yesterday, the Kremlin wasted no time in accusing Biden of adding “fuel to the fire” in Ukraine.

The Biden administration dismissed the escalation talk.

Umm, OK!

Russia’s response to this escalation is likely to include a mixture of heightened rhetoric, direct retaliatory threats, and potential military action. Russia could respond with:

1. Military Escalation: Russia may intensify attacks on Ukrainian infrastructure, possibly targeting regions or allies near Ukraine to send a message of disapproval to NATO countries.
2. Cyberattacks: Russia could increase cyber offensives against U.S. or NATO targets, aiming to disrupt key infrastructure and signal its discontent without direct military confrontation.
3. Diplomatic Actions and Alliances: Russia may strengthen its diplomatic and military ties with nations such as China, Iran, or North Korea, or seek to leverage influence with energy exports to apply pressure on Western allies during the winter months.

The move will raise political rhetoric both here and abroad.

The move led Putin to revise Russia’s nuclear doctrine, lowering the threshold for nuclear weapon use.

We’ve already seen Poland mobilize units to a higher threat level.

Financial markets will also be impacted.

We anticipate greater volatility in global financial markets, particularly in defense, energy, and commodities sectors.

One commodity that is underpriced given world events is oil.

Longer term price impacts will depend on the conflict's progression and any resulting sanctions or supply chain disruptions.

We can expect short-term volatility.

The missile strikes spurned oil prices to experience volatility, with crude oil futures temporarily rising 3%.

When Russia first invaded Ukraine in February 2022, oil prices experienced a sharp and immediate spike due to fears of major supply disruptions and heightened geopolitical risk.

In the days following the invasion, the price of Brent crude, the global oil benchmark, quickly rose above $100 per barrel for the first time since 2014.

By early March, Brent hit highs around $130 per barrel, while West Texas Intermediate (WTI), the U.S. benchmark, climbed close to $123 per barrel.

At the same time, many in the industry believe that Trump will make domestic oil production favorable again.

That bodes well for the commodity.

When Russia first invaded Ukraine in February 2022, oil prices experienced a sharp and immediate spike due to fears of major supply disruptions and heightened geopolitical risk.

In the days following the invasion, the price of Brent crude, the global oil benchmark, quickly rose above $100 per barrel for the first time since 2014.

By early March, Brent hit highs around $130 per barrel, while West Texas Intermediate (WTI) the US benchmark, climbed close to $123 per barrel.

This is why Andrew and I put on a Zero-Theta trade just yesterday that takes the high conviction trade opportunity we see with oil to pay us - and put that money into a high upside trade on a drone company we’ve traded several times before.

This trade is still good -

But it won’t be for long.

Meet us at 1pm for a private meeting here about Zero-Theta Trades. 

 

Talk Soon,

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