Yesterday President Obama announced more sanctions against Russia except this time they had teeth. Forget the Kaubuki theater going on in Ukraine. This was really retaliation for the Russian assault against the hegemony of the US dollar as the reserve currency of the world. Russia was the leader in the recently formed BRICs bank and is actively seeking to de-dollarize the world.
In addition the Obama administration has done a bang up job of fomenting open dissent by our partners against the dollar. For example, recent actions against French banks for supposed infractions has French officials actually calling for an end to the dollar’s rule. The powers that be should be very careful when it comes to the dollar. Should we loose our reserve currency status then the standard of living in this country would plummet.
Make no mistake about it but we are unofficially at war with Russia now. The prior sanctions were a joke but these actually affect the flow of capital. I think it is only a matter of time until tanks roll into the Ukraine now that we have upped the ante.
Stock futures are down due to the sanctions and we are still contemplating what the newly hawkish Janet Yellen said as well. The market is beyond stretched and these two things may be all the excuse that we need to head lower as we are technically set up for a correction. However, the bull is strong and we will have to wait and see how this unfolds and perhaps earnings will save save us. It is just starting to get interesting. I think many stock fund managers are going to have sleepless nights while on vacation this summer.Comments »