peace out

market vibes

February 13…)

In the news

“An eye for an eye only ends up making the whole world blind.” Gandhi

Trump and Putin are forming negotiating teams to discuss peace. He posted a detailed note yesterday, saying he spoke to Putin on the phone, and the call was productive and cordial.

There is an extensive article on BBG this morning titled, “Trump’s Ukraine Plans Mean $3 Trillion Bill for European Allies.” It delves into Ukrainian rare earth, NATO 2% military contributions in arrears going to 5%, the Baltic states, and other complications. If you can find it, the situation for the Europeans is not good.

“[European officials] were stunned by Trump's call with Putin, a major diplomatic move of which key allies had gotten no notice, two officials said. Concurrently, as the call took place, the US Secretary of Defense was explaining to his European allies that they are going to have to shoulder most of the burden for any settlement.”

Bloomberg Economics calculates that protecting Ukraine and expanding their own militaries could cost the continent’s major powers an additional $3.1 trillion over the next 10 years. The dramatic developments laid bare the scale of the challenge facing the Europeans, and it’s one for which, right now, they are largely unprepared. {EU members,} meanwhile, are arguing over whether they should limit procurement to European suppliers—who won’t be ready to deliver some of the weapons they need for years.

Acording to radio free Europe , Marco Rubio, US Secretary of State said, “It is “unrealistic” to expect Ukraine to recover all the land Russia has seized since launching its full-scale invasion nearly three years ago, adding Kyiv will have to make concessions to Moscow to end the fighting. “There's no way Ukraine is also going to push these people [Russian forces] all the way back to where they were on the eve of the invasion just given the size dynamic.”

My edited take is this: Trump and Putin will work out a deal, and Europe will either accept it, or Trump will walk away, “[shutting off military and financial aid] and leaving the Europeans to cope with the problem.” A deal would preserve Ukrainian sovereignty and allow the country to start reconstruction. [But it could also] cement significant gains for Putin, with control over a swathe of Ukrainian territory and potentially a block on Kyiv joining NATO. Bloomberg opined peace would be bearish for the dollar. I agree.

In other news:

*TRUMP SAYS TODAY IS THE BIG ONE: RECIPROCAL TARIFFS

Microsoft's bond rating is stronger than the US government's, according to S&P and Moody’s

Musk said his “scary smart” upcoming xAI Grok 3 chatbot outperforms everything else released thus far and will be released in a matter of weeks

In the markets

Yesterday’s CPI rant was an exercise in misdirection. The 0.5% narrative was put in place 24 hours before the CPI print, programmed into the algos, and the curtain went up at 8:30 EST. If the endless revisions and herky-jerky data misses aren’t enough to make traders distrustful of the BLS, the sleuthing DOGE operatives outing DC grifters should be, in my opinion.

CBOT March bonds in continuous data (chart below): I think peace is bullish for bonds, lower yields are bearish for dollars, and good for America.

Stocks, gold, copper, platinum and oil up next this morning. A few ideas on peace with honor and some “good vibrations” in the vibe! here we go..