Investors scarcely needed another reason to worry amid escalating Fed concerns and a lingering suspicion that January’s equity selloff presaged something far more sinister, but on Friday afternoon, National Security Adviser Jake Sullivan told a press conference that Vladimir Putin may not wait until the Olympics are over to invade Ukraine.
“We continue to see signs of Russian escalation including new forces arriving at the Ukrainian border,” he said. “It could begin during the Olympics despite a lot of speculation that it could only happen after” he added.
In itself, that warning wasn’t new. But the cadence felt urgent.
Regular readers will doubtlessly recall that I suggested Putin would put off any incursion until the Games were closed, not because he’s keen on decorum for decorum’s sake, but because he’s keen on Xi. But the two have had ample opportunity to speak between then and now, and the rhetoric from western officials admits of immediacy.
Sullivan advised any Americans still in Ukraine to get out “in the next 24 to 48 hours.” An invasion could come “any day now,” and Biden won’t risk US troops to evacuate anyone who decides not to leave, Sullivan warned.
Although he said the US still doesn’t think Putin has made a final decision, Americans in the country should nevertheless “leave as soon as possible.”
That’s pretty specific. And equities weren’t enamored. The yen rose to a session high, the euro fell and Brent jumped to $95 for the first time since 2014 (figure below).
Earlier, a PBS reporter tweeted that US intelligence believes Putin has decided to act and has “communicated that decision to the Russian military.”
The reporter cited a half-dozen US and western intelligence officials in saying the US anticipates “a horrific, bloody campaign.” Other outlets, including CNN, appeared to confirm some version of the same story, albeit in less graphic terms.
Needless to say, an invasion wouldn’t help Biden’s approval rating. It would mark the second severe geopolitical escalation in six months. Meanwhile, triple-digit crude would mean higher energy prices and planned economic sanctions on the Kremlin would hurt some investors, not to mention the generalized risk-off sentiment that would surely accompany the first headlines announcing the onset of a Russian military campaign.
Biden, Sullivan said Friday, is expected to speak to Putin by phone. He provided no additional details.
Was just about to post this on the previous post. A Russian invasion of Ukraine is not going to help the inflation picture. Energy, European imports and interest rates, international travel (to name a few) — all will become more expensive.
Does anyone here remember the economic of the first OPEC oil embargo? Or subsequent energy shocks? Old line central banks (read Bundesbank) seemed to feel that the best response was to raise interest rates. Really smart given that higher energy prices act as a TAX and diverts spending away from other goods and services.
That was when the global economy actually faced stagflation.
I remember the first OPEC oil embargo and I remember paying 16% interest on my mortgage in 1980. The far right always implements the “make the economy scream” playbook when progressives are in power and then austerity for the poor when they regain control. Nothing new or unexpected here.
I remember the embargo. I was only allowed to buy gas on M, W, F. My family’s business was making inputs to the RV and Manufactured Housing industry. There was actually a distinct day when our customers all stopped paying us. That drought lasted a year and forced the sale of our firm. Then came Nixon’s price controls. That didn’t work. I changed careers. Actually great for me and my wife.
hopefully NATO is unified as Putin must be forcefully confronted and stopped … thoughts and well wishes to the poor people of Ukraine who deserve better…here the financial and political costs of two unwinnable wars in Afghanistan and Iraq come into play…
It feels like we’re sliding into WW3. What this world really needs at this point.
I see bad results no matter what happens. If Putin invades he is gambling his control over Russia……and the net effect will be to make Nato more relevant and aggressive. I can see Putin in danger of being assasinated down the road if he invades.
H-Man, the market needs a light at the end of the tunnel . . . . . and for the time being there is nothing but darkness.
This is going to be more like traveling through the Gotthard Base Tunnel in a high speed train.
I’m not sure I see the logic of a Putin invasion damaging Biden’s popularity.
Any military confrontation is still extremely unlikely, this is not the way that Putin operates. The US government is over reacting post its Afghanistan foreign policy failure and the Boris Johnson in the UK is exaggerating the possibility in order to ensure his political survival.
UK is a significant beneficiary of Russian oligarchs wealth moving to UK – especially UK real estate- so they could “freeze” funds (but won’t). Macron is “appalled” at Putin’s actions but since France gets 70% of its energy from nuclear- probably won’t go to bat for the Ukrainians. The Germans like heat in their homes- and are dependent on natural gas- so when it comes down to staying warm vs. defending the Ukrainians- I guess we will see- but I have my suspicions. Americans don’t want another Afghanistan.
I seem to remember that Putin annexed part of the Crimea while the Socci Olympics were going on almost literally down the block I also saw this AM that the Russians are pulling their diplomats out just like we are.