What to watch for Ukraine V Russia Tension: Commodities, Travel Stocks, Semi-Conductors!

Let’s look at how Russia invading Ukraine will effect the stock market and where you should be putting your money for potential plays. Not Financial Advice

“Any such invasion would be mostly felt in Europe, there would likely be wider implications such as disruptions in global supply chain and further boost to Oil & Gas prices on lessened supply”.

US and NATO allies have reassured they will not be joining the war, if Russia invades Ukraine despite US and NATO allies sending more troops to Ukraine bordering countries. There’s been many talks of Sanctions being placed against Russia, if Putin sends his nation to invade Ukraine. Biden has been putting pressure on Germany to put sanctions on the Nordstream 2 pipeline if Russia refuse to cooperate, Putin wants Germany to approve his pipeline. If Germany approves this pipeline it would allow Russia to bypass Ukrainian pipelines and not have to pay them transit fees. Ukraine currently stands to lose around $2-3 Billion annually in transit fees with the opening of the Nordstream 2 pipeline this year.

Germany does not consider itself to be under threat from Russia. Nordstream 2 was built to ensure Russian gas gets to Germany, without the added complication of passing through many political different countries. If Germany fails to approval the pipeline this would just lead to Russia limiting supply of Nat Gas to Europe, causing a spike in price. With increase demand and less supply.

The impact of US and NATO placing sanctions against Russia for invading Ukraine.

  • Price Increase of Commodities.

Russia is widely known for being a huge exporter of a variety of commodities that are critical to the global economy, this is why Commodities is soaring on price right now, with potential supply disruption with increasing demand.

Natural Gas. Russia has the largest natural gas reserves in the world, Russia is also the largest natural gas exporter in the world with Europe being more than 40% dependent on Russia for gas. While Germany gets 40% of its gas from Russia, the UK imports 35% from Norway. Europe's second largest supplier is Norwary, but is currently delivering natural gas at maximum capacity and cannot replace any missing supplies from Russia.

Many smaller Eastern European countries rely exclusively on Russian gas, like North Macedonia, Bosnia and Herzegovina, Serbia with dependency above 90%.

Palladium. Russia is the leading global producer of palladium, with their export as a percentage of the global palladium production is pretty close to 50%. Leaving metal industry extremely exposed to any temporary reduced supply from Russia. According to Techcet estimates, over 90% of US semiconductor-grade neon supplies come from Ukraine, while 35% of US palladium is sourced from Russia which is used in automotive sector, electronics and medicine.

Crude Oil. Russia is the world’s third largest oil producer, and if a conflict in Ukraine leads to a substantial decrease in the flow of Russian barrels to market, it would be perilous for the tight balance between supply and demand. Which could result to seeing Crude Oil at $120, if Russia invades Ukraine.

  • Decline in Travel

Travel stocks will be hit the hardest if there’s a war, prepare to see many travel stocks especially European get dragged down by the Russia v Ukraine tension. Many airlines and countries will be regarded not safe, resulting to major cancellation and many destinations…

  • Disruption in Semi-conductors

Palladium is one of the main materials used for semi-conductor chips, the world is already facing a major global shortage problem on semi-conductors, a war happening would just make thing x10 worst. Resulting a major disruption across the technology sector as gaming consoles, smartphones, laptops & PC and electric vehicles need semi-conductors chips.

TL:DR. If a Russia V Ukraine war happens then commodities will continue to rise, Natural Gas prices will sky rocket and Crude Oil could potentially hit $120. Palladium to hit over $3,000. Russia is the worlds leading palladium producers, this is one of the main material needed for semi-conductors. Semi-conductors stocks will be hit hard, since there would be a limited supply. I’ll be loading puts on semi-conductors stocks. Travel stocks will take a massive hit, European travel stocks and Cruise line will drop significantly in price.

My Potential plays:

Put 30% of my portfolio into Oil & Energy.
BOIL 30c
/CL 100c
/NG 4.2
Puts On AMD and NVDA.
Puts on European Travel Stocks and Cruise lines.


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