Ukrainian-Russian situation: impact to the market

[Jonathan Hewitt]

As long as the Ukraine doesn’t start to fire at the Russians, shouldn’t this eventually be possible to resolve by democratic means?

Hopefully, but I don't think Putin believes in democratic means.

 

[redevries]

This is worth reading if you want to keep up to date on the latest developments:

Ukrainian and Russian troops in standoff at Crimean military base - live updates | World news | theguardian.com

R.

 

[SwedishAdvocate]

If the unconfirmed reports about explosions in Simferopol turn out to be true, then I guess it really is bad.


Source:

Ukrainian and Russian troops in standoff at Crimean military base - live updates | World news | theguardian.com


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Kateryna_Kruk (Kateryna_Kruk) on Twitter

 

[sleepyhead]

There is no way that this will be greeted with anything but a negative reaction by the financial markets. I second the views expressed here that I pray for the Ukrainian people who will ultimately have the most negative impact from this situation.

From a solar investor's perspective, Monday/Tuesday/Wednesday are three big ER days for some of the solars. This situation may blunt any positive earnings news.

If anything this situation shows the need to move to DG solar as soon as possible. De-centralizing the grid is a matter of national security.

Higher oil prices will lead to stronger solar demand as well.

Overall, this situation is very positive for solar stocks.

That said, there could be a big risk-off trade and solar stocks go down as well; but I would not write them off just yet. The market works in mysterious ways, and I wouldn't be surprised to see solar stocks tank with the market as much as I wouldn't be surprised to see the solar stocks go up 10% while the market tanks. You never really know how the market will react.

I am just speaking hypothetically, because in the grand scheme of things this whole situation is being blown out of proportion and I am not sure that the markets are actually going to tank. Most likely we will see business as usual in the US stock market.

 

[AlMc]

If anything this situation shows the need to move to DG solar as soon as possible. De-centralizing the grid is a matter of national security.

Higher oil prices will lead to stronger solar demand as well.

Overall, this situation is very positive for solar stocks.

That said, there could be a big risk-off trade and solar stocks go down as well; but I would not write them off just yet. The market works in mysterious ways, and I wouldn't be surprised to see solar stocks tank with the market as much as I wouldn't be surprised to see the solar stocks go up 10% while the market tanks. You never really know how the market will react.

I am just speaking hypothetically, because in the grand scheme of things this whole situation is being blown out of proportion and I am not sure that the markets are actually going to tank. Most likely we will see business as usual in the US stock market.

I think medium term solars will benefit but short term (days) I think the US markets will be very jittery. The market, as a whole, does not like political instability.

 

[FluxCap]

@Flux & Mario

Is it really that bad?

Isn’t the majority of the people within Crimea of Russian ethnicity? And has Putin gone further than Crimea at this time? As long as the Ukraine doesn’t start to fire at the Russians, shouldn’t this eventually be possible to resolve by democratic means?

With regards to global security and war, it is the job of many of the people in the city I live in, the capital of the USA, to plan for the worst while hoping for the best. I would certainly love to be hopeful, but the pragmatist in me thinks the following:

1) Putin has displayed merciless tenacity in his quest for maintaining and increasing his power by any means necessary.
2) Putin no longer fears Western retaliation for his actions (see article I linked above).
3) Putin's mobilization to Crimea does not appear to be similar to prior conflicts -- this appears to be a full-scale invasion with significant military assets deployed and no signs of planning to leave anytime soon.
4) The Ukrainians are cornered. No-one knows if they will attempt to defend themselves militarily or simply roll over and accept military occupation, but I suspect the former. Neither scenario will end well.

I suspect likely outcome is that Putin will annex Crimea and possibly the Ukraine because he wants them, and feels he can have them with no international repercussions. But this is not the only possible outcome. Either way, this is a major international crisis with the potential for lasting and historic damage to international relations.

Edit: the head of the (incredibly tiny) Ukrainian navy, who was apparently on the job for 2 days, has just defected and sworn allegiance to Putin. The Ukraine is now completely without ability to project force or defend itself at sea, not that it had much to begin with.

 

[warfo09]

And warfo09 I do resent the attitude a bit. You've probably not lived through an occupation. I have even though I'm only 32, but even I remember tanks in Tallinn and the tension that luckily was resolved through politics even though decade later when more details emerged showed how close we were to full scale bloodshed.

That's very touching, but I was referring that Lithuania is not being considered seriously when it comes to foreign policy. Let's agree, the Baltics will always remain welcome mats when it comes to geopolitics in the region, and this whole situation is nothing more than a standoff between Russia and the US.

It is very clear that the US wants a pro-US Ukrainian government from this leaked conversation Марионетки Майдана - YouTube (thanks KGB), hence the Russian tanks in Crimea :smile:

Hopefully this will be resolved diplomatically ...

 

[Lump]

S & P 500 futures open -17 http://www.investing.com/indices/us-spx-500-futures

 

[pz1975]

Does anyone try to hedge their bullish portfolio by buying a volatility index like VXX when issues like this arise? I haven't done it before but think it may be worthwhile insurance for this next week+.

 

[Mario Kadastik]

Contemplating UVXY options. I played them during the January "correction", but exited too early mostly due to the 4:1 reverse split that left me with broken options (didn't have a multiple of 4) and while I broke even I missed out on 100%+ gains. If this might be a bigger correction I might buy those again... Will check when market opens, the crap is that I'm giving a lecture right around the time the market opens.

 

[AudubonB]

I am not a fan of Mr Putin's in any way, shape or form; I do however believe he is one of the few world-class leaders around in this era. Not in any good sense - but one who is truly capable.

So I've been casting about trying to create analogies that those of us who are Americans might be able to empathize with. The closest two I've come up with are not very good, but here goes:

What if Puerto Rico decided to ally itself closely - joined-at-the-hip close - with Cuba? How might D.C. react? What if Hawaii - you know, where the US Navy has the headquarters of the Pacific Fleet? - decides to ally itself with, say, China? How might D.C. react? How ought it react in those two situations?


Three questions for Mario: for how much of the past 3-4 centuries has what we call "Ukraine" not been an integral part of what is today's Russia (whether USSR or Imperial Russia)? Is there really any long-term hope that Ukraine can remain an independent entity? And why did the dissolving USSR empire permit that navally critical Crimean peninsula, and indeed much of ethnic-Russian eastern Ukraine, to slip away from the fold?

 

[Mitthrawnuruodo]

Ive made some incredibly great, maybe lucky, calls in VXX. Unfortunately never bet in big, but tomorrow Ill be buying significant weeklies and monthlies, maybe with strike 15 - 20% out. During the last google hangout, some of the guys mentioned bringing in a Macro/Overall econcomic market thread. I was anxiously looking for this as a way to contribute. Hope to see one of the major contributors start that in the near future

The great thing about VXX/UVXY is it takes a while to get going. It might open 2 - 4 % up on a day like tomorrow (war) or the debt ceiling debacle. You just cant be afraid to buy if it opens 4% up because it can tend to go much higher after a couple hours. Im not sure if this is due to its inherent technical nature - a derivative of a derivative that takes a while to spool up - or is a reflection of market naivete/reluctance to start selling in this crazy bull market.

 

[pz1975]

UXVY a leveraged version of VXX, right? My understanding is that you can gain more if you are right but these leveraged versions lose value daily because of day-to-day balancing so they aren't good for holding for more than a few days. I was thinking about buying some VXX and some HVU (Canadian version of UXVY) and seeing how each react - using it as a learning experience while also hedging for my portfolio.

 

[SwedishAdvocate]

.../ And why did the dissolving USSR empire permit that navally critical Crimean peninsula, and indeed much of ethnic-Russian eastern Ukraine, to slip away from the fold?

There is some kind of agreement between Russia and the Ukraine regarding the Russian naval base at the Crimean peninsula, which lets the Russians keep that base (don’t know for how long though…)

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I’m guessing it’s similar to the many agreements the U.S. has regarding U.S. naval bases like the ones in Bahrain, Cuba, Greece, Japan, South Korea etc.

 

[Mitthrawnuruodo]

I am attaching a screenshot of a spreadsheet generated from my broker which shows the movement of VXX on Jan 24th. The formula with color-coded conditional formatting is my own column and I left it open so you can read it. This was on data from after the close of trading on Friday, Jan 24th. The closing price on the 23rd was 41.30 and you can see it was 44.69 on Friday, which is a significant movement for this ticker. Ive done this trade 3x now, the first was the market reacting to the debt ceiling , the second was a temporary reaction to a possible war in Syra, and the last was the Jan correction as reflected here. The good thing with these events is if you pick a good strike price, the potential reward is so great the risk is offset, at least in my opinion.


The formula effectively shows the option increase from EOD Thursday 23rd, to EOD Friday, so its not a mathematical mean, minimum, or maximum. 2 of my 3 trades led to 400% - 500% gain in 2 trading days and the Syrian war reaction was a bit slower; i only made 100%. I used UVXY before the last correction, in which the stock split really messed up my trades. I wasn't able to get good, discernible data for UVXY last time, so I think I am sticking with VXX for this Ukraine ordeal.

Deleted my original post and picture as I left some PII in there haha. whoops.

 

[anticitizen13.7]

I suspect likely outcome is that Putin will annex Crimea and possibly the Ukraine because he wants them, and feels he can have them with no international repercussions. But this is not the only possible outcome. Either way, this is a major international crisis with the potential for lasting and historic damage to international relations.

My hunch is that Putin will annex Crimea and any majority ethnic-Russian areas nearby, but stop short of conquering the entire Ukraine.

This will consolidate Putin's power in Russia by "solving" an issue of national pride, while avoiding a costly occupation of hostile areas. If Putin were to occupy all of Ukraine, he would almost certainly trigger the most severe international sanctions. Worse, I think the Ukrainians would engage in full scale insurgency: IEDs, bombings, assassinations, and the like.

Russia does not need or want another Chechnya on its doorstep. I think that will likely contain further action beyond Crimea.

 

[Mario Kadastik]

Trading opened in Asia and Nikkei is already down 2%. This is going to be a bad red day...

 

[RobStark]

My hunch is that Putin will annex Crimea and any majority ethnic-Russian areas nearby, but stop short of conquering the entire Ukraine.

Yeah, just let Hitler annex the Sudetenland and he will leave the rest of Czechoslovakia alone. Let him annex Austria, Saarland, and Memel-Klaipeda and he will leave the rest of Europe alone.

This will consolidate Putin's power in Russia by "solving" an issue of national pride, while avoiding a costly occupation of hostile areas.

What happens when pro Russian oligarchs in Donetsk start pushing for reunification with Mother Russia? Other Eastern Provinces that are minority Russian ethnicity but have governments that want to join Russia? How about Russian majority areas is Belarus and Kazakhstan? How about all Belarus?

If Putin were to occupy all of Ukraine, he would almost certainly trigger the most severe international sanctions.

This hurts ordinary Russians not the ones making the decisions. Will be about as useful in changing policy as sanction on Iran or Syria.

Worse, I think the Ukrainians would engage in full scale insurgency: IEDs, bombings, assassinations, and the like.

Russia does not need or want another Chechnya on its doorstep. I think that will likely contain further action beyond Crimea.

I don't think Putin believes Orthodox,Greek Catholic and Secular Slavs will fight Russia the way Islamic Jihadist fight Russia.

 

[sleepyhead]

Trading opened in Asia and Nikkei is already down 2%. This is going to be a bad red day...

I don't think it is going to be that bad.

 

[anticitizen13.7]

Yeah, just let Hitler annex the Sudetenland and he will leave the rest of Czechoslovakia alone. Let him annex Austria, Saarland, and Memel-Klaipeda and he will leave the rest of Europe alone.

I don't think Putin believes Orthodox,Greek Catholic and Secular Slavs will fight Russia the way Islamic Jihadist fight Russia.

What would you recommend? World War III?

Putin might not think the others won't fight, but I think he would be wrong. The Jihadis have shown that it's possible to fight a large and technologically advanced occupier to a standstill. The know how for this kind of warfare is readily available on the Internet, and I have no doubt that people pushed into insurgency would use any means to exact a murderous toll on the Russians.

I think markets will tank in the short run because of uncertainty.