My prediction that Putin would stage an incursion into East Ukraine was incorrect. The recommendation to buy UNG the natural gas ETF has worked out well.
But the predictions about the stock market, noting the major indexes which have topped since early November was spot on.
News of the invasion shot WTIC up $7 to near $100. Friday it was trading just over $90.
Team Biden has been playing into Putin’s hand since the day they took office. Cancelling the XL pipeline, approving the Nordstrom pipeline to Germany and generally doing everything to strangle fossil fuel production has boosted oil to the century mark making the Ukraine Invasion far more affordable for Mr. Putin.
That has come at some cost to Mr. Putin. The Russian stock market has lost 50% of its value in three days. RTSI Russian Trading System has dropped from 1,400 to 743 this week.
Team Biden never passed its signature Build Back Better multi-trillion dollar spending spree. He was worried about child care credits, not expanding the military, and as noted, casting off any notion of US Energy Independence.
The total Russian economy is about the size of South Korea, and smaller than Texas. Half of the economy is literally oil and gas. There is no consumer sector.
Joe Biden will deliver his State of the Union message next Tuesday. Will he do what is necessary to make Mr. Putin back down? That would be approving Keystone XL, opening Federal lands to drilling, and fast tracking drilling and production permits. It is necessary for the US to be energy independent and lower prices in the process. That takes money away from Mr. Putin. It would also make a dent in the number one worry of Americans, inflation. Oddly Team Biden has yet to deny Russian the Swift Banking Global privilege. And Russian debt still trades in world markets, why?
Or will the Bernie Sanders and AOC progressive wing win t he day? Critical observers will be counting the words on either side of that speech.
The DJIA peaked just shy of 37,000 in early January. It now trades at 33,821, a drop of 8.5%. The tech heavy NASD 100 topped at 16,750 and now has bounced off 13,250 to 14,150. That is a drop of 15% in less than two months. And most of that drop occurred before the Ukraine invasion.
Consider a proxy stock like Applied Materials AMAT. It topped along with the DJIA at 167 in January. Now it has dropped 19% to 135. The holy Grail of social media is Facebook whoops make that Meta. Since early February it is down form 330 to 210, a drop of 33%. All of this has precedent back to January 1973 when the markets began their eventual two year 50% drop. We had an unpopular President, expensive gasoline, and lots of inflation then as well.
Autocrats rarely get their due. The Castro Brothers in Cuba have never missed a good meal despite the US Sanctions. Let’s make this personal. Mr. Putin’s $100M, 270 foot yacht Olga (Graceful) sailed from Germany to avoid being sanctioned, taken. Let’s put our nuclear sub fleet to good use. While in the Baltic Ocean, how about a couple of plain old WW II torpedoes to put the Olga out of commission, preferably in very deep water. That might be just the message the out-gunned Ukrainians need right now.
