The backlash against Russia since its invasion of Ukraine has become so powerful and emotive that western firms are abandoning the country in droves, fearing the wrath of their shareholders and customers, regardless of the consequences for the bottom line, states Ian Murphy of MurphyTrading.com.
McDonalds (MCD) and Starbucks (SBUX) are the latest to head for the exit, and Shell (SHEL) even apologized for buying Russian oil at a knockdown price last weekend. You know things are bad when an oil major apologizes to its shareholders for making profit on an oil deal.
In the markets, once again we have witnessed a recurring theme where everything is going along nicely, and it’s suddenly upended by an unforeseen event. Three weeks ago, all eyes were on the Federal Reserve and a possible interest rate hike this month. Now, the world is grappling with a major disruption in global trade accompanied by a spike in oil prices. In addition, Russia will probably default on their dollar bonds by April 15. In the new reality, concern over a 0.25% rate increase looks almost quaint.
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A bullish divergence of Pessimism and Composite Help may be forming as prices made a lower low (point 2), but the indicators did not. I will be watching the new high and new low data closely, and may grab a quick move using Micro E-Mini futures of the S&P500 (MES).
Learn more about Ian Murphy at MurphyTrading.com.