Where finance and media intersect with reality


Spot Markets Live Transcript, 17/10/23 (Azerbaijan and Armenia, oil, meme stocks)

(Comments in bold directed to audience members)
Julian Rimmer 10:30

Good morning, aloha and greetings fellow market wizards.

This morning, we are bereft of the services, input and multitasking wherewithal of Ms Kaminska but instead have resource to The Blind Spot’s exotically-appellated geopolitical expert, Dario Garcia Giner.

So, pull up a chair and if you’re sitting comfortably with a coffee (or a slug of something more fortifying like I just did – we don’t judge here at The Blind Spot) then we can begin. Remember to speak freely and if you have any questions then please direct them to Dario because I’m not capable of spontaneous thought.

Dario Garcia Giner 10:31

Hey Julian, lovely to be back!

Julian Rimmer 10:32

So this morning’s marmalade-dropper was the weekly address I heard by Ian Bremmer from Eurasia Group who noted: ‘For the first time in 20 months, no one’s asked me a thing about Ukraine/Russia

We have delicately avoided the subject of the Israeli war against Hamas like an elephant ponderously sidestepping the tea things in a drawing room. The terrain of the immediate situation in Gaza is booby-trapped with sensitivities, though, and too fraught with controversy to explore in this forum.

(without potentially destroying the reputation of Izzy’s website when she’s not looking).

However, without diminishing the gravity of events in the Middle East in any way, it’s less emotionally charged, less liable to provoke a ding-dong, to calculate the effects on the wider world than it is to weigh in on the rights and wrongs of events on the ground/ battlefield

At this stage, it has to be said, the impact of this conflict is far more contained than that of Russia’s invasion and occupation of Ukraine. While the savagery on offer and newsflow intensity are comparable, the financial and market ramifications are not. Yet.

Dario Garcia Giner 11:35

Yes, the social media narratives on the Israeli-Palestinian conflict have been nuts…

My IG feed had become wild with vitriol and hate from both sides

And hello to all below 🙂

Julian Rimmer 10:35

With Ukraine, the price of oil, grain and fertiliser, commodities fundamental to global trade and all economies, especially in vulnerable parts of the world, was immediately susceptible to new realities, trade disruption, economic sanctions and disruption of markets. Ukraine bordered NATO and was a nexus for so much, every nation had to make difficult but important decisions, financial, military, political and ethical, very quickly.

Gaza borders Egypt and Israel only, its economy is a few billion dollars, its population barely 2 million and shrinking daily. It’s a sad fact to acknowledge that the cost to the world of this war is nugatory unless a regional conflagration is ignited and most likely, there is too much diplomacy taking place already for that to happen.

Random acts of violence by individuals/ small groups almost anywhere are possible

but while a regional escalation cannot be discounted, I’d be surprised for it to spread widely. The oil price, relatively phlegmatic thus far and only about $6 higher in the last fortnight, would appear to endorse that

If Iran were to declare itself a participant rather than merely a sponsor then oil’s at $150 and the consequences would be tectonic but I doubt this is their intention. Scuppering the embryonic Saudi/ Israeli accord was their ambition and, in the short-term at least, this has been realised.

Dario Garcia Giner 10:39

Recent de-escalatory seeming moves at the northern Israeli border certainly suggest their intention is not an out and out greater Israel war

Julian Rimmer 10:40

To establish why this happened, it’s always essential first to ask the question: Cui bono?’ I revert back to my opening line above from Ian Bremmer.  It benefits neither Hamas, the Palestinians nor Israel and even whatever fillip is provided to Iran’s regional standing is scarcely discernible.

@richardhowarth – I think Iran is more than happy to be kept out

No one has mentioned Ukraine in the news for ten days now, however, it has been sidelined completely  and, therefore, the biggest beneficiary of these developments has been Russia, a known and well-documented backer of Hamas.

Dario Garcia Giner 10:41

Maybe Russia support could explain some of the more astounding successes of Hamas’ operation

Such as this Hamas break-in to a classified Israeli intelligence facility:

“After crossing into Israel, they traveled east and veered off-road to approach an unmanned gate at a military base. Armed with a color-coded map, they located an unlocked door to the fortified building, which led them to a room filled with computers.”

Julian Rimmer 10:42

In a post on its Telegram channel, Hamas thanked Putin for “his position towards the ongoing Zionist aggression towards our people” and his “opposition to the siege of Gaza.”

Putin flew to China yesterday, where there is still a warm welcome for mass murderers and war criminals, for talks with President Xi tomorrow. Yesterday he spoke with leaders of Syria, Egypt, the Palestinians and Iran urging them to smoke the peace pipe – although perhaps he should give us his crack pipe first.

That is one conversation on which I would have loved to eavesdrop

Dario Garcia Giner 10:43

Same here !

Julian Rimmer 10:44

And the faces of the recipients of those phone calls…

to anyone else in the room. raised eyebrow? belly-laugh? corpsing?

The USA now has another major claim on its military and financial resources, and a huge drain on its diplomatic bandwidth, just as the fighting season in Ukraine is drawing to a close and MAGA Republicans are impeding support for Zelensky.

Dario Garcia Giner 10:45

A more sceptical take could argue this is the perfect excuse for Ukraine backers who have lost patience with the slow advance of Ukraine’s much awaited, but quite disappointing and brutal, counter-offensive – to stop backing

In the US*

Julian Rimmer 11:46

Do you mean Ukraine backers in Congress?

Dario Garcia Giner 11:46


Julian Rimmer 11:47

It’s important to acknowledge, at this juncture there’s no evidence to tie Russia directly to the outbreak of violence (see Mark Galeotti’s excellent podcast for a detailed and always finely-nuanced discussion of this

Dario Garcia Giner 10:47

I like looking at Marks’ stuff from time to time, always interesting

Julian Rimmer 10:48

You may not know this but I’m obsessed with onomastics – the study of names.

and Galeotti’s forebears were galley-slaves at some point

Dario Garcia Giner 10:49


Julian Rimmer 10:49

Most people say ‘anyway’ and buff their fingernails

but I’d be surprised in time if this (tangible evidence of Russian backing) didn’t materialise. For Russia, congenital malefaction, with its inevitable corollary – plausible (or implausible) deniability – is the default operational mode.

no one had evidence of Novichok or polonium 210k or a BUK missile system immediately

But it didn’t take long.

Dario Garcia Giner 10:51

But the chickens may be coming home to roost…

Julian Rimmer 10:51

are they chickens or pigeons?

Dario Garcia Giner 10:51

Another Russia-related announcement – that is to ruffle Russian feathers (whether chicken or pigeon) – was related to Blinken’s announcements that Azerbaijan may invade Armenia soon

As you likely know, Azerbaijan recently deleted the Armenian enclave of Nagorno Karabakh this month.

And – you may not know – this is a victory for Turkish nationalists, who have wanted this since the early 19th century

Are they gonna stop there?


Here’s a relevant map that can shed light on future moves

This 2002 proposal would have given both Armenia and Azerbaijan land corridors to their respective isolated enclaves.

But with the rise of Azeri power – the proposals will have moved sharply towards an Azeri position – with the “Zangezur corridor.”

Now, this corridor is ostensibly the same as the aforementioned 2002 “Meghri” corridor. But there are much darker overtones

President Aliyev has openly stated that this latest corridor will be opened whether Armenia likes it or not

Julian Rimmer 10:54

I’d say Armenia definitely not

Dario Garcia Giner 10:54

d-e-f-i-n-i-t-e-l-y not

But it gets deeper than a simple land swap or land invasion

There are 2 points to note here

The first is that Syunik – the Armenian province that separates the two Azeri enclaves – is an extraordinarily tasty morsel of land

Julian Rimmer 11:55

what’s tasty about it?

Dario Garcia Giner 10:55

Where do I start? It’s all about the mining, basically

Of 36 Armenian mining projects – 13 are in Syunik

It also hosts several of the largest mining facilities in Armenia.

Julian Rimmer 10:56

mining for?

Dario Garcia Giner 10:56

The primary deposits are of copper and molybdenum: Molybdenum is a fun little component that helps produce extremely hard steel alloys

Currently, the mines are all Russian-owned

There are also significant gold – and URANIUM – deposits in the region!

Julian Rimmer 10:57

funny that

we like uranium – see last Friday’s transcript for a very convincing argument as to why it could treble

Dario Garcia Giner 10:57

And the uranium resources are currently unexploited – with a rising price, who knows if these could become strategically relevant?

Julian Rimmer 10:58

well, if we go from $70 now to $150 or higher as many observers think possible, then they are definitely strategically relevant

Dario Garcia Giner 10:59

Most critically of all – if Azerbaijan DOES end up invading – as is seeming increasingly likely – this could open the door to a pan-Turkish union in the region

Julian Rimmer 11:00

last question on this subject: who is the driving force behind pan-Turkic nationalism? Erdogan?

Dario Garcia Giner 11:00

Erdogan and Aliyev are certainly key in driving this force.

But, surprisingly, they are receiving great backing from Israel and the United States

But it becomes less surprising when you realise what would come of a pan Turkic alliance

Essentially, a gigantic thorn in the side of Russia AND Iran

Julian Rimmer 11:01

well, that would learn’em

Dario Garcia Giner 11:01

And moving straight back to Israel Palestine, Julian

The events there overshadow the region’s murkiest asset in development – the American embassy in Beirut

Julian Rimmer 11:01

hang on, has Donal Trump, the endlessly eponymous American real-estate mogul got anything to do with this?

Dario Garcia Giner 11:00

Well, if Trump built an embassy, it would look like this

Julian Rimmer 11:02

like the trump taj mahal casino in New Jersey

Dario Garcia Giner 11:02

What’s weird about it?

Well, the embassy is twice as expensive as the next-most expensive American embassy ; the $750mn, 104 acre Iraqi embassy – while being the second-largest American embassy in terms of project size at 42 acres.

And locals are simply flummoxed about it. Why all this money?

The Americans have Israel 30 minutes helicopter ride south, Incirclick an hour north, and Cyprus 30 minutes west

Julian Rimmer 11:03

feels like overkill

Dario Garcia Giner 11:04

It certainly does

The recent conflict gives us a teeny clue, maybe!

You see, the embassy was announced in late 2015

And just after this, in early 2016, Saudis stopped sending Lebanon money on account of Hezbollah’s almost total handle on the country by then (which has since only become worse)

If there’s anything we’ve learned from the recent fight, it’s that Hezbollah poses a genuine military threat to Israel from the north

Couldn’t it simply be an investment in acknowledging Hezbollah’s long-term hold on the country?

Why else build a fort, right?

Julian Rimmer 11:05

is it an embassy or a military installation in disguise?

Dario Garcia Giner 11:05

Well, it seems to be both

One last point to add would be that some local Lebanese believe it is about the recent gas field discoveries in the country (which aren’t that recent)

All in all, the most secretive construction project continues to plod along quietly.

Julian Rimmer 11:07

That’s one’s fill of geopolitics, I imagine… back to markets…

Since the Hamas attack, oil has not reacted as violently as one might have expected. Granted, Brent was already in an uptrend since the summer but even with relatively tight supply, the move from antebellum levels in the mid $80s to $90 now is more subdued than one might have expected


Julian Rimmer 11:09

One conclusion drawn from the renewed conflict, if it’s not the start of WW3, is that the oil price for the many geopolitical risks looks very much underpinned. So if that is the case what sectors best correlate to a rising oil price? It’s not a trick question……the oil sector of course.

I spoke with Roger Lee, market strategist at Investec

There should also be a strong correlation between the oil price and rising yield. Global growth on the one hand and inflationary pressure on the other should favour value sectors more rather than growth…. And that is exactly what you see for the five years up to the end of last year. But the correlations this year are completely different and other than Energy being most correlated I don’t think shows very much in terms of style at all

He sent two charts:

The big difference YTD is that oil price inflation is much more damaging to consumer demand than it was as the pent-up demand built up in Covid rolls off

Another commodity provoking huge amounts of commentary at present is Bitcoin. I once referred to it in a quote for Bloomberg as “…the perfect vehicle for exploiting mankind’s infinite stupidity,” says Julian Rimmer, a sales trader at Investec Plc. “A small percentage of one’s portfolio must be held in this ‘asset’ because gullibility never goes out of fashion” which kept me near the top of the Bitcoin news aggregator for several weeks while encountering very little by way of pushback.

My mother was very proud although she had no idea what I was talking about.

Which made two of us.

Dario Garcia Giner 11:12


Julian Rimmer 11:12

Very zoomer response

Dario Garcia Giner 11:13

Thanks, boomer.

Julian Rimmer 11:13

I have never lolled once in this life

In any case, XBT, the death of which has been prophesied many times, has rallied ~75% YTD

A chart that would have Roubini grinding his teeth

Its role in funding Hamas is widely acknowledged to the extent that going back to the spring Hamas was forced to warn donors that it could no longer accept contributions to its e-wallet given recurrent freezes imposed by Israel among other actors. If Bitcoin is no longer useful as a source of anonymous and nefarious funding then one wonders whether this may remove one of its primary attractions.

@richardhowarth – Roger Lee clearly has the ability to see into the future which is why he’s such a good strategist, I suppose

Nonetheless, XBT is holding up well and obviously, the longer it hovers just below $30,000 the more the emotional momentum of all those zoomer investors seeks to push it over.

This chart is also instructive:

What do you think, Dario? you might actually know what Bitcoin is which puts you at a distinct advantage over me

Dario Garcia Giner 11:15

Don’t be so sure!

Bitcoin’s transparency has certainly been a critical issue for darknet users for a while now

I looked into a few missing Bitcoin cases – usually in the tens or hundreds of mn of $.

And Bitcoin was usually easy to follow.

This has led to the widespread use of crypto “mixers”

Here, the followable trails of illicit Bitcoin are mixed with other “fresh” Bitcoins to conceal the origin and destination of these funds

But it’s not good enough!!!

Julian Rimmer 11:17

a crypto-mixer? fascinating

Dario Garcia Giner 11:17

(Because what investigators do is then file legal injunctions against these mixers, no matter where they were jurisdictionally, and usually have enough legal leverage to get these “mixers” to spill some account details after a while)

Julian Rimmer 11:18

I may add that to my LinkedIn profile

Dario Garcia Giner 11:18

This has led to dark markets adopting privacy coins like ZCash and Monero – which are almost literally impossible to trace.

If we saw a Monero transaction, I was told to say “Shit.”

And it’s why I heard rumours at Kroll that Putin has a couple of billion in Monero.

Julian Rimmer 11:19

I’ll join you: ‘sshit’

Dario Garcia Giner 11:18

So essentially these coins are now the gold standard of darknet markets

Which includes jihadist financing.

However, I still think Bitcoin has a significant role in these markets. It will simply specialise away from its weak point

Ultimately, these privacy coins are a pain and a half to cash in or out of – almost no regulated exchange allows transactions in them.

I remember once – when I tried to buy Monero – it was structured like a drug deal. I was supposed to meet a guy on the street and purchase a hard disk drive with cash – which I obviously ended up not doing.

So what we may ultimately see is Bitcoin specialising in its on/off ramp niche for dark markets

But – more crucially – an increasing number of relevant transactions inside these markets will become totally inscrutable as dark organisations increasingly switch to privacy coins.

Julian Rimmer 11:20

@richardhowarth as the pent-up demand is largely exhausted, along with excess liquidity, any move up in oil price from here might not be inflationary, but deflationary, as it is supply driven, and could lead to demand destruction. ie, spike ain’t going to last

The fallout from last week’s CPI print continues to percolate through the market with several big houses demonstrating concern about the underlying trends in the data and the Fed’s apparent reluctance now to add one more hike especially, as BNP points out, this is the median forecast in the SEP dots.

From BNP: “However, the synchronous chorus of recent Fedspeak re-focusing on financial conditions – and in particular, the notion that there is less urgency to raise short-term rates against a backdrop of rising longer term rates – has shifted the market’s reaction function. Accordingly, after receiving the front-end of the curve shortly after the September FOMC meeting, we took profits on the trade last Friday and have pivoted into curve steepeners, where we now see better risk/reward

It’s clear both data and geopolitics threaten to disrupt the Fed’s soft landing.

JPM begs to differ… believe that we are currently in a transition phase, rising bond yields at these levels are problematic for investor sentiment and for the economy, and are therefore ultimately not sustainable. Bond RSIs are becoming oversold, and could start pricing in a policy mistake, where bond yields are likely to start to move lower.

We think the recent move up in bond yields is a bit of a capitulation trade, and during Q4 the levels would be very attractive to lock in higher yields. The move up in bond yields might not be sustainable, our fixed income team is looking for yields to fall from current levels in most places.

JPM’s position is straightforward: “Time is coming to position for the long duration trade.”

At the other end other end of the market… anything going on in your chosen specialised subject of meme stocks?

anathema to boomers like me

Dario Garcia Giner 11:26

Well, both yes and no

Julian Rimmer 11:26

let’s go with yes

Dario Garcia Giner 11:27

It’s not been the most interesting year for meme stocks since the madness of 2021, and 2022. A few have struck out – Tupperware, Yellow Corp, Carvana, Rite Aid (and American superconductor.)

Julian Rimmer 11:27


Dario Garcia Giner 11:27

Yes! They’re still around

Julian Rimmer 11:27

Good lord. My mum used to host parties for it in the 1970s

Dario Garcia Giner 11:28

Their biggest sin – making a product too good to ever need replacing

Julian Rimmer 11:28

They make a product for which lids and containers never match, that’s why they need replacing…

Dario Garcia Giner 11:29

Ah – interesting you mention this @John (Novo Nordisk)

Because there is a new trend with these new so-called meme stocks

All of these have similar characteristics to the GME, AMC, Blackberry, and BBBY pumps

They are heavily shorted stocks and are then purchased in large quantities by retail investors


And it is a big but

The political overtones of the meme stocks have gone silent

This is a big deal – and differentiates traditional ‘pump and dumps’ from the meme stock classics of GME and AMC

Just see the difference in scale:

So for all these recent so-called ‘meme stocks’ – you barely have a reaction on wallstreetbets. Retail investors have plunged into Novo Nordisk – but this has barely made waves on Reddit.

So what we’re seeing now – instead of true ‘meme stocks’ – are more traditional pump and dumps

Julian Rimmer 11:30

The asset class is being diluted

Dario Garcia Giner 11:30

Which, if you followed our coverage of the GME stock pump’s mysterious origins, is perhaps what was behind the meme stock phenomenon all along.


Julian Rimmer 11:30

@johnDC77 – I actually have a single stuffed mushroom looking for a home as we speak. I’m online already – it’s been in my pocket for weeks

Dario Garcia Giner 11:31

Do you have anything to say about sam bankman fried, Julian?

Julian Rimmer 11:32

Just that the images despatched daily by the courtroom sketch artist are so unattractive it’s enough to dissuade anyone from a life of crime

Dario Garcia Giner 11:32

Sam Bankman-Fried trial: Why are the courtroom sketches so utterly demented?

Julian Rimmer 11:32

I look bad enough in real life. I’d ask for the death sentence if they did that to me

And on that bombshell – it’s adios from me!

Dario Garcia Giner 11:32

Adios, amigos!

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