We have reported here over the last several weeks of our view that Putin would invade Ukraine to prevent the rebel forces from being defeated by the Ukrainian military. Based on reports coming out of the Eastern region of Ukraine, it seems that Russian President Vladimir Putin has decided to go all-in on the conflict and provide more than supplies and artillery fire from across the Russian border. He has decided to commit troops, although typically unmarked in classic Putin (or KGB) fashion. The Kremlin wants to maintain a sliver of deniability, mainly to appease the domestic population and to continue to fight the information war abroad.
There are multiple reports of unmarked Russian armored columns crossing the border and openly engaging the Ukrainian army. These actions seem to have changed the tide of the war and shifted the momentum away from Kiev and onto the pro-Russian separatists. Images of shell-shocked Ukrainian troops fleeing in panic have been released to the world.
The question now is, what are the goals of the Kremlin? Is it to maintain a New Russia in East Ukraine? Is it to take further territory? Is it to save access to the Ukrainian arms industry in the East? Is it to destabilize the new government in Kiev? These questions need to be answered in order to determine what impact there will be on financial markets, trade between Russia and Europe, energy supplies, etc. But one thing is for sure, if I was in the stock market, I’d be protecting my portfolio right now.
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