A frustrated Putin decides to ban commodity exports to the West… checking in on copper with Eric Fry… an executive order from President Biden about crypto regulation

On one hand, it appears that Russian President Vladimir Putin underestimated the grit of the Ukrainian people, as well as the global response to his invasion into Ukraine.

Putin has been unable to topple Ukraine as easily as he believed. And there are questions about the robustness of his military infrastructure.

From Director of National Intelligence Avril Haines:

(Russian forces) are facing significantly more resistance from Ukrainians than they expected and encountering serious military shortcomings.

Clearly, this is preferential to Putin steamrolling Ukraine with a vast, incredibly strong Russian military infrastructure. Yet, there’s a distinct downside too.

From Politico:

Russian President Vladimir Putin is likely to “double down” in Ukraine as his forces remain frustrated nearly two weeks into their invasion, but he will find it “especially challenging” to maintain control of captured territory and install a sustainable pro-Moscow regime in Kyiv, the leaders of the top U.S. intelligence agencies told congressional lawmakers on Tuesday.

***While we wait to see what “double down” means in terms of his military aggression, we’re already seeing it in terms of economic aggression toward Western nations

From The Wall Street Journal:

Russian President Vladimir Putin is banning exports of certain commodities and raw materials, according to a decree issued Tuesday evening in Moscow.

The actual commodities that will be banned from export will be determined by the Russian cabinet, the decree said. Mr. Putin gave them two days to come up with a list of countries subject to the ban…

Russia is a major supplier of grains and metals such as aluminum, nickel and palladium. A sweeping ban on exports could upend global commodity markets. Nickel hit an all-time high (on Tuesday).

Earlier this week in the Digest, we highlighted how Russia and Ukraine also produce 40% to 50% of the world’s semiconductor-grade neon. Plus, Russia has the world’s third-largest copper reserves, only behind Chile and Peru.

If Russia bans these commodities, it will further roil global markets while impacting your ability to purchase certain goods and services.

***As just one example, take nickel and electric vehicles

A moment ago, The Wall Street Journal article referenced the spike in the price of nickel.

On Tuesday, the London Metal Exchange was forced to stop nickel trading after prices doubled to more than $100,000 per tonne. It remains closed, not opening until tomorrow.

What’s the relevance to you and your wallet?

From CNBC:

Nickel is a critical ingredient in the lithium-ion battery cells used in most electric vehicles sold in — and planned for — the U.S. market.

Its abrupt price surge has analysts and investors raising hard questions about automakers’ ambitious electric-vehicle programs.

So, on one hand, expect the final cost of an electric vehicle to rise. That’s what happens when a key input price doubles overnight.

One the other hand, keep in mind the investment implications of this cost surge and a potential Russian ban on nickel exports. A note from Morgan Stanley earlier this week suggests that investors should reduce their expectations for automakers’ earnings, as well as electric-vehicle sales penetration over the next few years.

By the way, our macro specialist, Eric Fry, has a nickel trade in his Speculator portfolio. It’s up 267% as I write.

***Speaking of Eric and commodities, earlier this week, he pointed toward another critical metal that’s been climbing in the wake of global instability

Copper.

Let’s jump straight to Eric:

Russia’s invasion of Ukraine bumped copper over $5 a pound on Monday — for the first time ever.

It wasn’t some wild spike, as copper has more than doubled since the COVID-19-induced bear market two years ago; it’s because of strong demand.

Quite simply, copper is a great conductor of electricity, and if you just look around, you can see the world is going electrical. This is fueling what I see as a battery metal “rush” that will push prices higher for copper other metals electric technologies require.

As we’ve noted in past Digests, this copper trade has long legs. You are definitely not too late, as copper will be a must-have metal for cutting-edge technologies this entire decade.

One of the easiest, diversified ways to add copper exposure to your portfolio is with COPX, the Global X Copper Miners ETF. It’s been climbing over the last six months, up 20%.

We believe it’s headed much higher over the coming years.

To follow along with Eric’s research on copper, nickel, and other commodity trades as a subscriber to his service The Speculator, click here.

***Meanwhile, yesterday brought news for crypto investors

President Joe Biden signed an executive order calling on government regulators to examine the risks and benefits of cryptocurrencies.

In short, the order calls on federal agencies to adopt a unified approach to regulation and oversight of digital assets. Click here to read a related Fact Sheet from the White House.

Here’s a top-line excerpt from the document:

The rise in digital assets creates an opportunity to reinforce American leadership in the global financial system and at the technological frontier, but also has substantial implications for consumer protection, financial stability, national security, and climate risk.

The United States must maintain technological leadership in this rapidly growing space, supporting innovation while mitigating the risks for consumers, businesses, the broader financial system, and the climate.

And, it must play a leading role in international engagement and global governance of digital assets consistent with democratic values and U.S. global competitiveness.

In short, the order focus on six areas:

• Consumer and investor protection
• Financial stability
• Illicit activity
• U.S. competitiveness on a global stage
• Financial inclusion
• Responsible innovation

The response from the crypto community so far has been largely positive. Yes, the document has left a great deal of room for interpretation, which Congress and various federal agencies will define in the future. However, at a big-picture level, the White House was able to avoid including comments/language that would roil the crypto community.

Yesterday, bitcoin climbed 8% in the wake of the news, pushing north through $42,000. We also saw gains from Ethereum, Solana, and Cardano.

By the way, InvestorPlace now provides a great, free newsletter that’s dedicated to keeping you up to date on the latest in the crypto, NFT, metaverse world.

Top analyst Ashley Cassell writes The New Digital World, currently publishing three times each week. Click here to sign up for free and don’t miss any big news impacting this explosive, fast-developing sector.

***Finally, another month, another record inflation number

This morning, we learned the consumer price index for February rose 7.9% from last year. That’s the highest level since January 1982.

Even without including food and energy, core inflation came in at 6.4%. That’s the highest reading since August of 1982.

We’ve been monitoring the odds of the U.S. economy slipping into a recession and this latest print doesn’t help. That’s because, thanks to this inflation, the buying power of worker paychecks dropped 0.8% in February.

We need the American consumer to remain healthy. After all, consumer spending makes up about 70% of our nation’s GDP.

We’ll keep you up to date on how this develops here in the Digest.

Have a good evening,

Jeff Remsburg