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Will stock markets drop soon? August 13, 2014

Posted by hslu in Cold War, Economics, Energy, Global Affair, Gold, Military, Obama, Oil, Politics, Putin, stocks.
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Are stock markets in denial? Will conflicts between Russia and Ukraine, or more fittingly Russia and the US or Putin and Obama, bring the five-year old bull market down?

The reason for the bear case is simple: Russia may engage Ukraine army or Kiev hard-right defenders militarily UNEXPECTEDLY.

Donetsk is an important city in Ukraine and the state where Donetsk is the capital is an industrial center of Ukraine. It is historically connected to Russia not Europe. Donetsk is an important industrial city with a million people. 750,000 have fled to Russia (an hour or so away from Russian border) and 150,000 have fled to somewhere else. The city is heavily damaged from Ukraine’s continuous bombing and it is essentially a ghost town now. Yet we don’t see any picture on American TV but the situation is widely reported in Europe and Russia.

I am sure you know why the killing and shelling are not front and center in Americans’ living room.

But that is not what the stock market cares about and we need to find out what’s going happen to the stock market if something does go wrong. We need to know what is going to happen when Russian’s 280 humanitarian trucks carrying relief material to Donetsk where pro-Russian fighters are still holding up against the hard right fighters (not Ukraine army.) There is no water. There is no electricity. There is no food. There is no essential supply. There are killings and dead people but Kiev doesn’t want the west to find out.

Russia wanted to send in supplies for people who are still in the city and those 1,500 pro-Russia fighters. Government in Kiev don’t want them in Ukraine territory.

Now, we have a problem in a day or two especially when Putin goes to Crimea tomorrow (Thursday.)

These are what the stock market is worrying about:

What does Petro of Ukraine want to do? What message he gets from the US/Obama? Is Obama using Ukraine as a pawn to send a message to Putin? Is Obama’s recent insults to Russia/Russian male/Putin a prelude of war? Does Obama believe Putin will eventually back down in the face of all powerful American military might? Is Biden, who is said to have been given the job to handle the Ukraine crisis by Obama, mad? What is the exit plan for Obama/America? What outcome will America accept in the end? How far Obama will support Kiev?

We don’t know.

What will Putin do? Why is Putin going to Crimea? What if the trucks are stopped by Kiev/Ukraine at the boarder manned by the Red Cross? What if the pro-Ukraine force (not Ukraine army) starts shooting at the trucks? Why doesn’t Kiev want the trucks in? Are they afraid that the real picture of great destruction of Donetsk is revealed by the west? Will Putin send in fighter jets? Will Putin engage Russian military with Kiev? Will Putin shut in gas to Ukraine and Europe? Will Russia shut in oil supply to Ukraine and Europe? What if Kiev blocks the transportation of nat gas and oil to some European ciuntries some of which have to go through Ukraine?

The key question is: Will Putin announce this Thursday that Russia will send in Russian army if Kiev and Obama do not back down?

What’s important for us low life investors do?

Do we wait for the announcement from Putin? Do we believe that Obama has had enough of Putin’s humiliation in the past and he has drawn a red line on Ukraine. As such, will Obama not back down this time even risking a fight with Putin’s Russian army?

No wonder the stock market is in a holding pattern this last couple of days. EU will sink into recession if this conflict escalates. Russia’s economy will shrink. Oil will soar. Stock will tank.

So, what is the end game llike?

Cold war between Russia and US has now officially entered into a new chapter.

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