[quote author=svosavvy link=topic=126073.msg2964641#msg2964641 Questions:
1. What do you think the economic fallout is for investing Americans and/or Western countries?
2. How long does this last?
3. What are the outliers (second derivatives) both extreme and less consequential?
4. Is this thread a major overreaction to reading too much into this?
5. Any insight in general?
[/quote]
1) The war in Ukraine will not likely affect S&P 500 profits, except for defense industry firms like RTX, LM, GD, NOC, and BA in the long term. I think Ukraine is the last straw for NATO to admit we have a new cold war / dictator-rolling-through-Europe situation on our hands, and the reaction from the US and Europe may be to arm up to deter an attack on the Baltic states, Poland, or other allies. Putin may pivot to take the rest of Georgia at the same time. Thanks to the current correction, no one can say these developments are "baked into" defense stocks that are lower than they were pre-pandemic. Maybe buy ITA. Obviously the moves you described would have been prescient if done a few months ago, but there is a risk tensions resolve and they flop now.
2) I think Russian forces will will conquer Ukraine and appear the border with NATO members Poland, Hungary, and Romania in 2-3 months. The larger fallout will continue for decades.
3) Western and Eastern democracies will finally start to "get" Putin's strategy. He is rebuilding the USSR by propping up a series of dictators from Venezuela to Syria, and from Belarus to Kazakhstan. Any time a dictator faces mass protests or the threat of a free election, the Wagner green men come in and snuff it out. In return, these dictators offer Russia military/intel bases and tribute. There's also the intelligence-sharing that makes opposition very difficult to organize in any of these countries. It's a very "1984" strategy. A cold war with regional proxy conflicts is inevitable. Hopefully, the concept of oil/gas as blood energy will prompt Europeans to wean off the stuff forever, but then again all the repressions in the Middle East did not elicit such a response.
4) I don't think this is a day trading theme, and I wouldn't significantly change my AA in response to Eastern European instability, except maybe to buy a small allocation of ITA. Recent history says the stock market can rally while millions of people lose their lives and freedom and disastrous wars break out.
5) Then again, Biden has been missing some pretty easy layups over the past couple of years, and is not exactly the sort of decisive, aggressive, or blunt leader to rally Europe to resist authoritarianism. A forceful resistance against Russia would fit perfectly with his domestic theme of protecting American election integrity and the American form of government, considering that corrupting elections is a key Russian tactic. Perhaps the Biden of 20 years ago could have done such a thing, but so far he's haplessly flailing with Congressional dickarounding instead of making obvious connections and rallying entire populations. Biden might seriously dawdle his way through his next 3 years just as he did his first.
If that happens, a right-wing president DeSantis or Cotton or Taylor-Greene would likely be more friendly to Russian interests than NATO's.
It is similarly unclear whether Europeans will accept what they don't want to believe: that their way of life with microscopic military budgets, massive social spending, and US protection cannot continue as it has in the past. Maybe they'll make excuses for the end of Ukraine and carry on as they always have, falling like dominos as the latest dictator exploits their piecemeal conflicts of interest. The Collective Action Problem has historically doomed Europeans to live under the specter of war, and if they leave their defense entirely in the hands of Americans, they are just waiting for the next Trump to come around and not be there for them.
