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25 Mar 2022 - Hedge Clippings |25 March 2022



Hedge Clippings | Friday, 25 March 2022

Exactly one month ago, Vladimir Putin announced that he had made the decision to launch a "special military operation" in eastern Ukraine, with no plans to occupy Ukrainian territory, and that he supported the right of the peoples of Ukraine to self determination. Both of these claims were of course rubbish. As it turns out, it looks as if the Ukrainian resistance is likely to ensure Russia's occupation will fail, and the country's self determination will prevail - both of which have surprised everyone outside Ukraine, Putin included. Exact details are difficult to confirm, but as of 4 hours ago Reuters were reporting "at least 20,000 deaths" including 5 generals - 5,000 more than Russia lost in nearly 10 years in Afghanistan.

In a previous edition of Hedge Clippings, we referred to it as the most dangerous situation since WWII, which depending on one's point of view, becomes potentially more dangerous the more unsuccessful that Russia becomes. Unlikely to back down or withdraw, at what stage does Putin escalate by using ever more powerful weapons? If he does so, at what stage will NATO respond, rather than the current strategy of providing arms instead of armies?

Meanwhile, after just one month, news of the war (to call it what it really is) has been pushed off the front pages. Page 1 of today's Sydney Morning Herald has nothing other than a pointer to an article on page 13. The conflict doesn't rate a mention on P1 of today's AFR, possibly understandable as it is a financial newspaper, albeit the war's impact on trade, inflation (oil, gas, cereals), etc prevailing. The UK's Telegraph is not much different, more interested in a 5p. reduction of fuel tax.

Maybe all this is caused by the incessant 24 hour news cycle, and the inability for the headlines or the latest news bulletin to "carry" a story - or retain readers' and viewers' interest for any length of time. It used to be said that last week's news was tomorrow's fish and chip wrapper, so maybe nothing has changed, except they don't put the news on the Macca's or Hungry Jacks' carton.

And it seems that after an initial "risk-off" shakeout, equity markets have moved back to a "risk-on" stance with the ASX200 up 400 points since the first Russian tank rumbled over the border on 24 February, and the S&P500 up a similar amount since mid March. Meanwhile, other risks, such as energy prices, supply chain shortages, a looming election campaign, higher interest rates, inflation, stagflation, and talks of a US recession (induced in part by the war) remain, or have increased.

Luckily there was one "good news" story - or at least an uplifting one, in Ash Barty's retirement, literally at the top of her game, aged just 25. We would consider that she has the world at her feet, with suggestions she might even enter politics. Surely she's too sensible (and honest) for that - although teaching some of them to retire while they're ahead would be a welcome move.

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