Raise your hand if you think the Ukraine crisis is over?
No one? Good. I’m glad to see how seasoned you have all become in such a short time… Oh, wait, Mr. Market put your hand down. No. Mr. Market. Don’t! You put that hand down right now!
Well Mr. Market won’t put his hand down as evidence. Eventually Putin may come and do it for him but until that day happens Mr. Market will keep his hand held high. None of this should be a surprise at this point in the game. Mr. Market no longer knows how to price in risk. He hasn’t for a while. It’s not his fault. Record low volatility plus record low interest rates breeds this false sense of confidence, which is fine and dandy until a real crisis appears, which is exactly what I think we have in Ukraine.
The conflict of the Ukraine is a physical manifestation of a financial war between the US and Russia that has been waged for some years now. We’ve seen it flare up in Syria as Russia defends Assad and the US supplies the rebels. Both sides have been posturing for years trying to gain the advantage. Russia has been taking steps to reduce its dependency on the US hegemony just as the US has been searching for additional ways to free Europe from Russia’s energy hegemony. It should be noted how important a step it is that Putin has finally decided enough is enough and decided to taken physical and forceful action.
The US and its EU lackeys have responded with sanctions, and Russia has retaliated with its own sanctions. This back and forth has played havoc on the Russian economy as the Russian Ruble has fallen over 17% against the dollar this year alone and the Russian government is now forced to pay the highest dividend on newly issued debt in over five years. I expect sanctions to only be escalated to the point where Russia will shut off gas exports to Europe. Obviously this is terrible for all economies involved which is why I am very bearish on Russia and have bought puts on the ETF, RSX, which tracks Russian based companies.
The Klendathu Capitalist 
