Oil, Geopolitics, and Our Global Economic Dumpster Fire

The European continent has long-relied on the affordable oil, largely transported through pipelines, of Russia. Now that the European continent has been embroiled in a newfound drama, it’s finding the shortcomings of that reliance.

After Russia began its siege of Ukraine, Germany symbolically put one of their latest infrastructure projects with Russia on hold. The Nord Stream 2 pipeline has been put on the rocks, prompting newfound worries about the future of Europe’s energy independence. Today, the U.S. went one step further and imposed sanctions on the developer of Nord Stream 2 given its relationship with state-owned energy giants. In the grand scheme of things, a conflict is bad for Europe.

However, it’s not great for the U.S. either, which has gained some high ground thanks to the shale revolution. The U.S. now produces more oil than it imports, which isn’t necessarily energy independence, but will help offset its reliance on Russian oil given the conflict. And though Russia has united its enemies, and put them in a pickle, it’s likely bad news for their oil industry if sanctions get severe.

In short: the Russia conflict is bad for business (duh.) It’s bad for the U.S., for Europe, and for Russia… and investors are positioning accordingly given the oil barons — OPEC+’s — reservations about increasing supply to arrest oil prices.

Light crude oil futures (U.S. Oil) rose today, rising back above $92. And global benchmarks are marking the price of oil even higher, which makes sense given how investors are preparing for Brent Crude to march even higher.

Ultimately, we’ve really hammered home some critical points about the geopolitical tension in Ukraine over the last few weeks. One we want to impart again is that this conflict is going nowhere, and it will greatly contribute to continued tribulation in geopolitical and macroeconomic environments. In short: “inflation” a la war is something we should continue to plan for. However, it doesn’t really matter anyway at this point. Everything is expensive and everybody is mad because they’re angry.

We’ll be continuing to report on the market ramifications from Ukraine, but it’s not exactly a secret anymore that your favorite stocks are dropping because of all these invented problems (and all the things that you need to spend money on will be rising, because… the grift is the point.)

Shares of Ralph Lauren gained today on reports that luxury goods giant LVMH has held talks to buy the outfitter.

Ralph Lauren added points intraday, before closing down 0.4% at the close. It’s up 0.58% over the last week, but up 17% over the last month.. so maybe it’s fair to say that the street has been well-acquainted with this newly reported insight.

The outfitter’s founder and namesake, Ralph Lauren, is 82. Legacy and “succession” is on the mind, which is one reason why LVMH’s prestige and status in the fashion biz might be one motivating factor for such a takeout. However, it’s also a stable pickup. LVMH has 10x the revenue of LVMH, which makes it likely to be a strong custodian of the company.

Ralph Lauren would just be the latest acquisition for the luxury fashion brand.  The company acquired Christian Dior for $13.1 billion in 2017 and Tiffany & Co in a $16 billion deal in 2019. 

$LVMH, which is worth over $377 billion in market capitalization, has fallen by -10% YTD. However, the decades-old retailer which owns Louis Vuitton, Sephora, and Hennessy (among others) might have even more subsidaries to count among its exclusive and far-reaching ranks. It was down -1.3% today.