Full-Blown Financial Warfare

Full-Blown Financial Warfare

Since Western citizens are growing tired of sending tens of billions of dollars to the most corrupt country in Europe, the G7 came up with a novel way of "lending" the Ukraine another $50 billion. Since everyone knows the Ukraine would never pay this money back, the plan is for the money to be repaid from interest on frozen Russian assets held by the West.

This is obviously a preliminary step toward confiscating those frozen Russian assets outright, which those of us who read and contribute to ZeroHedge understand would be disastrous for the West. But as Dimitry Simes, Jr. points out in the short video embedded in the X post below, it could be even more disastrous than we thought. 

I encourage you to watch the video, but here's the gist of it: 

• We already know one obvious consequence of confiscating Russia's dollar- and euro-assets: other countries will be less willing to hold dollar and euro assets. 
• And we already know one obvious form of Russian retaliation: confiscating Western assets in Russia (including the tens of thousands of shares of Sberbank this writer acquired for $0.17 per share in late February, 2022). 
• Dimitry Simes, Jr. details a less obvious form of Russian retaliation: they can sue Euroclear for Western assets in return. At this point you're probably thinking, "Lots of luck winning that lawsuit in Europe, Russia!", but as Simes, Jr. points out, Euroclear--which custodies tens of trillions of dollars worth of assets--also has offices in Dubai, Beijing and Hong Kong, and Russia may find friendlier courts there, for obvious reasons. 
• If a court in China rules in Russia's favor, than Russia could go after Western assets custodied by Euroclear around the globe. Imagine the effect that would have on Western financial markets. 

Dimitry's brief video is clear enough that even a younger version of Biden might have understood the danger here. Today's Biden, unfortunately, probably doesn't even know what year it is (that's the late George Floyd's brother standing to Biden's left, btw. Maybe he'll invite Biden to celebrate Juneteenth with him.). 

Before This Blows Up

We'll probably have some time before this situation blows up (and if we're lucky, new management in Washington will steer us away from disaster). In the meantime, let's try to make some money. 

In a post last weekend (Top Names Performance Update), I mentioned that our automated security selection system has been crushing the market since the end of 2022:

So far, we have 6-month returns for 50 weekly top names cohorts since we started this Substack at the end of December, 2022 [You can see them all here]... our top names have averaged returns of 23.31% over the next six months, versus SPY’s average of 12.72%.

In that post, I mentioned I was going to use our top names list in more options trades. I have an options trade teed up today for our #2 name from last night's top ten. This trade will give us a max gain of about 200% over the next six weeks if we get it right (if we get it wrong, our max loss would be 100%). 

If you want a heads up when that trade fills, feel free to subscribe to our trading Substack/occasional email list below. 

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