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Kolanovic, JPMorgan See Stormy Seas For Frothy Equity Market
Rally skeptics abound as the second half of what already counts as another extraordinary year for markets, macro and geopolitics dawns.
Among them is JPMorgan's Marko Kolanovic, who it's still fair to call the most recognizable name on the sell-side.
Kolanovic turned cautious late last summer, when it became apparent that central banks were willing to risk recessions to quash inflation. Although a handful of ardent Fed critics will insist on describing Jerome Powell as weak-willed no matter wh
If you’re commenting on the strange events in Russia between Putin and the Wagner group….The Russians need to end this war soon if Putin is to remain in power. Ergo they need some sort of major victory over the Ukrainians. Their best fighters have been shown to be the Wagner mercenaries. The Ukrainians are building a new offensive in the Donbas. What to do? Have the Belarusians attack on the Northern border. The problem? They are an unknown entity as serious fighters. The solution – Move the Wagner group into Belarus to lead their troops without tipping their hand. After this weekend problem solved. Staged angry Wagner chief and Putin dispute somehow settled amicably with little if any bloodshed or consequences. Wagner group in Belarus. Who’d a’thunk it. Did they fool anyone? I guess we’ll find out shortly.
The exact same thing crossed my mind.
1) Prigozhin isn’t a military imbecile, he had to know he’d never beat the russian war machine with just 25,000 troops.
2) The Kremlin (and more to the point, the Russian propaganda machine) made a few perfunctory noises, but were remarkably laid back about this whole thing.
3) Lukashenko doesn’t do anything without Putin’s permission.
4) The deal was negotiated with remarkable alacrity and amity.
Now Wagner heads to Belarus. What next? My (completely wild) guess is they make a show of saying they’ll redeploy to various overseas Wagner missions in Africa, maybe even make a big deal out of loading up a few transport ships, and then it’s, Surprise, so nice to see you again Ukraine!
All that said, I have a hard time imagining they can actually take anyone by surprise.
If the Russians really have a supposed five million man standing army, why have they hired Wagner? Why the aborted attempt to press gang 100,000 new (untrained) troops some time back? Old equipment and older unhappy, probably mostly unpaid, troops does not a huge dangerous army make. Now they need to throw in Belarus? Same question, why? What’s really wrong?
Well they fooled the western media who is reporting that the Wagner group will be disbanded. I doubted it (the disbanding) the moment I heard it. You’re right, it is the right pretext/cover story to embed the Wagner group to start to train the Belarusian army. That said, western (especially US) intelligence has been all over the Ukraine war since before Putin invaded. I doubt they are fooling anyone who actually matters when it comes to intelligence, military tactics and decision making.
Also, bitcoin telegraphed the event starting Tuesday, not that the majority of people knew it at the time (including me). BTC price action was anomalous in relation to all recent drivers (USD, US interest rates, global equities etc). Then 3 days later… geopolitical “event” (or charade depending on one’s take).
I really enjoy and learn from the commentary here. But i think lots of folks are assuming putin has way more smarts than he actually has. Maybe once he did. But like an aging prize fighter he used to be good. Now he is far too isolated from real events to be effective. If he did manipulate a fake uprising it was a big error. I kind of doubt it. His ship is sinking…
Back on topic 🙂
I’m thinking the Wile E Coyote moment for spending has probably happened or is happening presently, though we won’t “know” it for a bit as data usually lags. There is a large portion of those cash balances in the chart from people retiring and cashing out on their homes. Those funds are not likely to be available to maintain current consumption nor are they available to be pulled into equities. Risk averse retirees with an assumed 30+ years of life left to fund are likely to stay in cash and collect 5%.
I would caution you to not put too much faith in a hypothesis that you cannot possibly know is correct or not. I can come up with other unprovable guesses where the cash pile came and will continue to come from.
I still believe we’ll have to wait until the end of summer for a major correction or a return of the Bear, seems like the perfect confluence of bearish events: student debt payments return, “excess” savings running out, the lag effects of hikes in full swing, higher for longer a settled reality and seasonality, plus whatever surprise Putin or Xi (or Biden) might share with the world. If we don’t see real price weakness return by then the coast is likely clear for the rest of 2023.