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Weekly rollup | March 7-13 2022

Stocks Mentioned: Tellurian (TELL), Golden Ocean (GOGL), Zim Integrated Shipping (ZIM), Danaos (DAC) and Solar ETF (TAN)

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March 7 2022

So far, at least three oligarchs have spoken out against the war, careful not to directly criticize Putin. Those oligarchs include aluminium magnate Oleg Deripaska (a Putin ally), who has demanded “explanations” as to what will happen to the economy in the near term. He also noted that “we need real crisis managers and not fantasists with a bunch of silly presentations”. A second oligarch is Ukrainian-born Russian billionaire Mikhail Fridman, the head of Alfa Group, who has called an end to the “bloodshed”, though he has been far more cautious than Deripaska. Fridman’s Alfa Group holds the largest private bank in Russia and needs to raise money on the U.S. market. A third oligarch, Oleg Tinkov, appears to have lost $5 billion since Russia invaded Ukraine. Now, the digital banking tycoon is speaking out against the war, too.

Liquefied natural gas continues to trend at historically high levels in Europe, with February seeing the second-highest LNG inflows in history, equivalent to some 30% of the continent’s gas supply. US-based Tellurian (TELL) broke out as soaring demand for LNG in Europe, to replace Russian nat gas, increases speculation that Tellurian's LNG export terminal will be fast-tracked. The company is developing the Driftwood LNG terminal in Louisiana and will carry its own nat gas produced from the Haynesville basin through a pipeline, to be liquefied and exported out. It's a pure play on the nat gas sector, one of very few which don't carry Russia risk.

The Russia-Ukraine war catapulted prices to unsustainable levels for Egypt, increasing the price of wheat by an additional 44% and that of sunflower oil by 32% virtually overnight. Even more troublesome, the war also threatens Egypt’s physical supply itself since 85% of its wheat comes from Russia and Ukraine, as does 73% of its sunflower oil. With activity at Ukraine’s ports at a complete standstill, Egypt already needs to find alternative suppliers. A further escalation that stops all Black Sea exports could also take Russian supplies off the market with catastrophic effect.

The Arab spring was caused by food price inflation. We may just be in for a redux.

The 2021/22 global soybean outlook includes lower production, crush, exports, and stocks. Foreign soybean production is lowered 9.5 million tons on reduced crops for Brazil, Argentina, and Paraguay. Brazil’s soybean crop is lowered 5 million tons to 139 million, reflecting dry weather conditions in December and early January in southern Brazil. Argentina’s crop is reduced 3 million tons to 46.5 million on both a lower area and yield, resulting in lower crush and exports of meal and oil. Paraguay’s crop is lowered 1.5 million tons to 8.5 million leading to lower exports mainly to neighboring countries. Global soybean stocks are reduced 6.8 million tons to 95.2 million on lower stocks for Brazil and Argentina.

March 8 2022

Key point: The Chinese government in Beijing has repeatedly declared it intends to reunify with Taiwan.

Dry bulk shipper Golden Ocean (GOGL) sold 3 of its oldest Panamax class vessels for $52 million, booking a gain of $9.6 million, or 18%. Secondhand vessel values are at decade highs. This is part of its fleet renewal strategy, with the company selling seven of its oldest vessels and using the proceeds to fund seven newbuilds expected to be delivered in 2023. The company timed this well, since shipyards are now backed up and the price of newbuilds is in a steady uptrend.

The best performing sector today is solar. TAN is up 9.6%, made a bullish flag and pennant pattern, rose above the 100 week MA and is almost at the 100 day MA. RSI rising since Jan. Ostensibly, investors expect renewables to benefit from oil substitution effects. That's a flawed narrative, but as George "Satan" Soros said, as traders the object is to recognize the trend whose premise is false, ride that trend, and step off before it is discredited.

ZIM reports earnings before market open Wednesday. I expect a pop tomorrow, wouldn't be surprised to see $40 in 2021 EPS, or $15 for Q4. Dividend payout will be 30-50% of net income, so this is going to be huge.

ZIM Workings
Download XLSX • 22KB

ZIM earnings could also be the catalyst that gets DAC going again. DAC is all set to receive its dividend distribution from ZIM tax-free.

March 9 2022

ZIM reported $14.17 in Q4 EPS or $39.02 EPS for full year of 2021 and declared a $17 dividend to be paid on April 4. ZIM is up 8% and DAC is up 4% pre-market.

Wheat imports by country:

BTC correlation with Nasdaq rising. It also appears to be becoming more negatively correlated with gold

March 10 2022

"Yellen's comments statement was dated Wednesday, but posted Tuesday evening before being taken down. A department spokesperson said the statement was posted early due to a web error and reposted Wednesday morning."

Her handlers, probably sourced from the vegan soy latte loving twenty something woke liberals working under the light of hand-poured cruelty-free wax candles, just can't handle complicated numbers like date and time. Mainstream news is becoming more of a joke by the day.

Sri Lanka free floated the currency. Bank bid rate for dollars is now 250+, running neck and neck with the free market rate. There's an app "CSE" which presents market statistics and news. I'm also sharing some stats I received from a broker there. He tells me he's seeing small inflows from NY based funds. Ping me if you want to learn more about getting an account set up there. I've just started looking into investment opportunities as the peg breaking is the signal I've been waiting for. DYOR.

March 11 2022

Controlling the oligarchs is crucial for Putin, since their defection would destroy any remaining chance of salvaging what's left of the Russian economy. Watching what they say to the press is a good leading indicator of which way the wind is blowing. It's not exactly relevant to trading, but staying abreast of what's happening will be helpful later on, when we can analyze current markets with the benefit of hindsight. It goes without saying that I wouldn't invest a dime in Russian equities or buy the ruble hoping to catch a bottom.

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