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Two Years Later

Friday feeling, what's happened in the last two years of the Russia-Ukraine conflict, and more hawkish views from the Fed.

Friday Feeling

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Tomorrow will mark two years since Russia invaded Ukraine. In that time we’ve seen more than 30,000 civilian casualties – 10,000 dead and 20,000 injured – displacement of millions of people within Ukraine and more than eight million Ukrainians registered as refugees across Europe. Across both Russian and Ukrainian militaries, more than half a million lives have been lost.
Ukrainian infrastructure has been the target of relentless bombardment, with 59 medical facilities destroyed and a further 400 damaged, whilst 236 schools have been destroyed and another 836 damaged. In September it was estimated that the replacement cost of damaged infrastructure across the country had exceeded $150bn and that number will have continued to rise as Russia continues its efforts.
To date, allies of Ukraine have made a total of $278 billion dollars in financial, humanitarian and military aid commitments, with another $65bn due to make its way through the final stages of the US political machine in the coming weeks.
The Russian cost of the war is legion, with direct military costs thought to be around $132 billion but potentially much more far-reaching financial consequences; such as the capital destruction within the country (stock market value decline, depreciation of the currency, emigration of upwardly mobile Russian population) and, possibly at some point the West deciding that the $300bn or so in frozen Russian central ban assets could be seized – or at least any profits generated for them could be taxed at 100 percent, or they could be used as collateral for Ukrainian development loans.

The GDP of the parts of Ukraine that Russia occupies (including Crimea) can be measured in the tens of billions of dollars.

However, with the Russian economy on a war footing and the abundance of Russian drilled oil and gas on international markets, there is at least the cash to be able to continue with an expensive stalemate for years to come – whether there’s appetite amongst Russia’s population, their military or political elite is ultimately irrelevant, as it is all going to be decided by one man.

In prelude to tomorrow’s anniversary, the US is set to announce new sanctions targeted at over 500 people and entities linked to the Russian regime.

Biden said they’re designed to punish Putin for Navalny’s death earlier this week.


The US and China are in talks to implement new measures designed to prevent a wave of emerging market sovereign defaults, the most significant attempt at economic cooperation between the rival superpowers since the beginning of the trade tariffs implemented under the Trump administration.

The Federal Reserve

Yesterday marks more hawkish views from the Fed, as Governor Christopher Waller said January’s jump in CPI warrants caution in deciding when to start cutting rates, and requires more evidence that inflation is cooling. Stating he will need, “At least another couple more months” worth of data that inflation is falling for him to consider rate cuts.
This hawkish overtone is thematic of general fed policy makers, with Patrick Harker also warning against easing prematurely, while Lisa Cook and Neel Kashkari said more still needs to be done to bring down inflation.

In spite of the Fed flexing their economic muscles the SNP 500 and Nasdaq 100 continues to make gains, pushed by AI juggernaut Nvidia. Though, warnings are abound as the SNP 500 trades at a multiple of 20 vs their 12-month earnings – a level only reached in the late 1990s and during the pandemic.

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