"So the universe is not quite as you thought it was. You'd better rearrange your beliefs, then. Because you certainly can't rearrange the universe" - Isaac Asimov

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Editor’s Note: Well, we’re back for the 3rd time in 2x weeks. We’re still not promising a regular schedule…

Following-up on Last Week's Note:

• The equities we highlighted w/ Russian exposure were down an avg of 12%

• Excluding IOC's, our list was off 17% on avg

• At the same time, the S&P was ~flat

Going forward, there's 2x major risks that - in our opinion - are not fully priced into the market:

• The partial removal of Russian & Ukrainian commodities (e.g. coal, oil, gas, wheat, metals) from global markets in 2022

• The impact on banks w/ exposure to these markets, and the cascade of counterparties that will have liquidity issues as a result of bank stresses

Expect wheat (and thereby corn & rice) prices to continue to rise - aside from price increases, this will cause geopolitical instability in emerging markets (e.g. the last time there was a spike in wheat prices, the Arab Spring happened).

And - unless the practice of “self-sanctioning” reverses - energy commodities should also continue their rise.

Regarding banks - there’s 2x concerns:

• Direct Russian exposure

• Exposure to Russia-linked collateral

The banks that we highlighted last week had relatively large businesses, physically in Russia.

The comparatively unknown issue of financings - with Russia-linked collateral - will play out by ~end of the month:

• Loans (like RCFs) that financed Russian collateral will face defaults or deficiencies, needing the be restructured or refinanced

• Both the banks & the borrowers will face stresses, causing counterparty issues to arise

• The worst case scenario for non-Russian firms is a full collapse of the Russian Central Bank / Banking System

Other Notes & Thoughts:

• No one seems to be preparing for a Firebird Round 2…

• #OSINT is Twitter’s opensource intelligence community - we’ve added a few of its most active accounts to our Russia | Ukraine Twitter List; within that community, @Osinttechnical is noteworthy

• An alleged letter from an FSB whistleblower (Russian version; English translation here); take it with a grain of salt, misinformation from both sides is high

• Expect a mass-exodus of Chinese / Russian money from London & Switzerland to Singapore & Dubai (recent sanctions have spooked more people than were actually targeted by those sanctions)

• Will & Robert - our friends who were in Mariupol a few days back - made it out in one piece… by the skin of their teeth -

That’s it for today - catch y’all next time -

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