US Semiconductor Ban on Russia is a Sanction with No Teeth
President Biden made it clear this week that Russia would pay a heavy price for its invasion of Ukraine. US sanctions include fundraising bans on Gazprom (GAZP) and Sberbank (SBER), restrictions on doing business with Russian and Belarusian Banks, and personal sanctions on “corrupt billionaires” and their families who support the Kremlin’s war efforts.
Biden also announced a ban on semiconductor exports to Russia. That one’s a headscratcher since most of the semiconductors in the United States are manufactured in Asia. Taiwan, which is the largest semiconductor producer in the world, has pledged their support, but they won’t specifically say how far they will go. Russia might still have an open pipeline there.
It’s a sanction with no teeth, and by the looks of things this morning, so are the rest of the “strong economic measures” taken by Western nations. Gazprom is up 10% today. Sberbank took a big hit this week, but their stock is flat this morning. No losses. No gain. Meanwhile, oil and wheat prices are soaring. The S&P has been climbing since 2:00 PM yesterday
Russian President is Ready for “Negotiations” with Ukraine
Vladimir Putin’s forces rolled through Ukraine faster than the 82nd Airborne in Grenada forty years ago. They’re already knocking on the door of the presidential palace in Kiev. By all accounts, the city could fall before we even publish this article. Putin announced this morning that he now wants to “negotiate” with Ukraine. That means “unconditional surrender.”
Sanctions or not, Ukraine has no leverage in the upcoming negotiations. Russia has what it wants, military control of a European country that ranks number one in recoverable uranium ores and first in Europe in terms of arable land area. Don’t think nuclear weapons. Imagine unlimited renewable energy for massive tracts of the best farmland in the world.
Ukraine is the breadbasket of Eastern Europe. They’re in the top ten for wheat, corn, barley, chicken eggs, and sunflower oil. They’re also fifth in the world in bee production. According to recent studies, Ukraine by itself can meet the food needs of 600 million people. This conflict involves much more than NATO expansion and recognizing independent republics.
Wall Street Surges as Tech Stocks Climb Out of Oversold Zone
The rumblings about a potential settlement in Ukraine eased the minds of investors today as Wall Street trading picked up. The Fed is rumored to be easing their stance on an interest rate hike, now talking a quarter point in March rather than a half point. Meanwhile, tech stocks, which have been in the oversold zone for some time, are surging.
Apple (AAPL) is still down for the week, but they’re up 1.16% today. Amazon (AMZN) is up 1.30% and looks like they might finish the month with a thirty-day gain of over 10%. Google (GOOG) has felt almost no impact from the Ukraine crisis. They’re trading at $2683 this morning, up over 6% from this time last month. Microsoft (MSFT) is up 1% for the week.
As for crypto, there have been rumors that Russia may rely more heavily on DeFi assets if their fiat currency takes a big hit from the sanctions. The concern seems to be premature. The Russian Ruble (RUB) is up 2.55% today. Bitcoin (BTC) is also up and has shown some resilience during the conflict. With a few short dips, they’ve held steady at just under $39K.