24.01.2022 – Sleepy Joe has given Russia a free hand in Ukraine: In a disastrous press conference, the U.S. president said he saw no reason to intervene in a minor incursion. JPMorgan immediately studied the potential consequences of a Russian attack.
Walk in
Last Wednesday, Joe Biden indicated the U.S., would not help Ukraine in the event of a Russian attack if it was a “minor incursion.” What a “minor incursion” should be, he did not explain. Only in the case of a large-scale invasion would the United States intervene. Biden predicted that Russia would invade the neighboring country and could also colonize it – but not without significant losses; moreover, Moscow would have to answer for it. Later, Biden backtracked and explained that there would be a U.S. reaction in the event of a “minor incursion,” but that it would not be as strong as in the event of a large-scale invasion. Ukrainian President Volodimir Selensky responded on Twitter that there would be no “minor incursions.”
Separation of the Donbass
The way things could play out has been mapped out by the Russian Duma. Deputy Alexander Borodai said separatists in Ukraine should declare independence for the Donbass region. Then Russia should recognize the mini-state and invade. Kremlin spokesman Dmitry Peskov confirmed that this plan was indeed being discussed. Ergo: a separation of the region, which is predominantly inhabited by ethnic Russians, along the lines of Crimea. We had already predicted this in our annual outlook. Just like the fact that the U.S., the U.K. and the Baltic states are supplying weapons to Ukraine and that Germany is holding back on appeasement – natural gas and so on, you have to differentiate.
Oil shock and global recession
On Friday, JPMorgan immediately turned its attention to the consequences of a new source of war. The U.S., along with its allies, would impose sanctions on Russia, which would worsen global financial conditions. JPM also sees a shortfall of 2.3 million barrels of oil per day on the world market, which should quickly catapult prices to $150 per barrel. This would reduce the gain in global GDP in the first half of the year from 4.1 to 0.9 percent. Inflation would rise from an assumed 4 percent per year to 7.2 percent.
We add: Many Wall Street brokers believe a local conflict could trigger a third world war. After all, U.S. trainers are in Ukraine; Poland, Estonia, Latvia, Lithuania, and Britain could rush to Ukraine’s aid with troops, arguably attacking them themselves. Which raises the question of a NATO mission. You can imagine the panic on Wall Street.
Government of failures
Besides, when if not now should Russia strike? The weakest president since Jimmy Carter rules Washington. Despite penetrating pro-Democrats sound bites in the leftist media, Biden is down to -10.8 in the “Real Clear Politics” poll generator. Donald Trump is at -9.9, with incompetent Vice President Kamala Harris scoring a whopping -15.4. And Nancy Pelosy, the Democratic Speaker of the House of Representatives who likes to use insider knowledge to make stock deals and was the first to retreat to a safe panic room a year ago when Congress was in turmoil, leaving colleagues on the floor alone, manages a negative score of 24.6.
So, keep your eye on the real-time news and your powder dry. Because when the guns are thundering, you should buy. Especially since the world’s central banks are likely to launch new aid programs again soon in the event of a global oil and economic shock. The Bernstein Bank wishes successful trades and investments!
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