Last night on the news Russia recognized two breakaway republics in The Ukraine NASDAQ futs plunged over 300. There was blood in the streets, as Wall Street prepared for a long day of torment and torture.
But then they got over it — bid everything up, and pretended nothing ever happened. Classic Wall Street.
Here’s why.
A JPM note said with this geopolitical news, the Fed is less likely to hike so many fucking times. Also, the Germans stopped NORDSTREAM 2 (for now) and UK sanctioned 3 Russian billionaires, seized their assets and really showed them. Also, Biden sanctioned the two new breakaway republics and all of NATO is celebrating one another, propositioning to send troops to places like Romania and Latvia. There is a general consensus that Russia is done with Ukraine, satiated with just a small piece of clay and will go no further.
All of a sudden, we believe them!
As such, futures are barnstorming higher. But the real risk appetite is in the bond market. The 10yr had been lower by 8bps and now it’s up nearly 2bps, suggestive that MOAR inflation is around the bend because the Fed is going back down due to Russian fears.
Who fucking knows what any of this means or if any of it sticks. This is what markets do. Look at the Russian MOEX, down not even 2% for the session on what was supposed to be “crippling sanctions.” No one gives a flying fuck about Ukraine or Russia, as they both represent less than 3% of global GDP. What we do care about is being annoyed by tanks speeding through Europe en route for conquest. Markets do not like that at all.
Now if you watched the Putin speech last night and didn’t read the news today, you’d definitely think Russia was going to swallow all of Ukraine. It’s still a possibility and all you need is a few errant shells to start a conflict that can quickly boil over and burn everyone and everything. However, for now, markets seems to trust Putin and believe the Eastern part of Ukraine is meaningless trash and needn’t be concerned with it, at this present time.
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Russia is a FORMER superpower.
Now it is a nuisance and a massive troll farm.
Its economy will be smaller than Florida’s in a few years.
Russia never was a superpower and they still aren’t.
Their economy never was big.
They were and are a convenient boogie man.
An excuse for us to continue spending billions on jets that don’t fly and $10,000 toilet seats.