Stocks remain persistently volatile, commodity craziness, nickel’s historic move, bitcoin higher

Trading US stocks has become massively complicated as the impact from the war in Ukraine continues to drive persistent volatility with commodity prices, which is wreaking havoc on inflation expectations and driving recession fears.  US stocks pared losses as some investors still remain confident with the economic outlook for the rest of the year, but that rebound did not last.  Geopolitical risks and surging commodity prices are crippling everyone’s short-term US stock market outlook and that will keep stocks heavy over the short-term.

Commodity Craziness

Commodity price volatility appears poised to remain elevated as sanctions against Russian energy intensifies, illiquid conditions are discouraging some traders, and supply fears seem poised to worsen.  Commodity prices have been mostly rising as all the headline sensitivity to the evolving situation between Ukraine and Russia continues to drive the argument that most markets that have ties with Russia will remain extremely tight.

Nickel prices skyrockets

The nickel market doubled to over USD 100,000 per metric ton after a major Chinese player that controls the largest nickel producer had a massive short that went horribly bad.  Xiang Guangda closed out a portion of the short position, which means we could still see elevated volatility.

Nickel is a key part used in making electric-vehicle batteries and this short-squeeze will reverberate across the semiconductor chip space.  Too many metals and gases come from Russia, which means it might take a lot longer for supply chains in the semiconductor space to normalize.

Given the heightened volatility, the LME has decided it is not appropriate to announce a trading resumption date for Nickel prices before March 11th.

Bitcoin

Bitcoin is higher on the day as risk appetite showed signs of life after US stocks had the worst rout in a few years.  Bitcoin’s fundamentals are still sound, but many active traders are putting the crypto trade on hold and focusing on a handful of commodity supercycle trades.  Bitcoin is forming a trading range and over the next few weeks it could trade between the USD 35,000 and USD 45,000 trading range.

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