— Keenan PWM Blog Post —
The way I see it now, the market is being influenced by highly suspicious, yet unlikely, circumstances. Putin and Moscow are flexing their muscles in the areas surrounding the Ukraine. Will history repeat itself again with Putin taking over more of the Ukraine, like he did in Crimea? Or is it a hoax that Putin created?
There are of course some valid reasons as to why this is happening and how it could affect your money. The market has been acting jittery about it; inflation has been rising and interest rates have been moving up. And since inflation is a major concern, it is certainly possible that Russia, one of the largest producers of oil and natural gas, will increase energy prices. We are already seeing the effects of this in the markets.
The bottom line is that China, Russia’s new, close friend, has a different view of the consequences of war. Although they want to keep NATO at bay, they also do not want to put themselves on Russia’s side when comes down to their (China’s) export markets.
China is much more concerned about international relations and healthy markets in the West; they would be shooting themselves in the foot if they ended up hampering Western economies. Russia may be a recent ally of China, but Western international exports would only disrupt the oil and gas markets, meaning higher prices. It could also possibly disrupt gas delivery through Ukraine.
So, why does everyone consider this to be a serious threat? Well, in a way, Putin is a loose cannon. Russia marched in and took over Ukraine before, so why not do it again?
China is the trump card in this situation. Russia needs them more than they need Russa. But if Russia, the Macho Man of Europe who felt entitled to Crimea, too feels entitled to reign over Ukraine, then there is not much stopping them and their invasion. Will the more reasonable prevail? Or will Putin jump as he did before without concern for the consequences?