When You Invite a Bear to Dance
At Top Gun Options we follow what is going on in the world and across the country. Things going on in China, Russia, North Korea, Iran and the rest can have dramatic effects on the market in the USA. Politics onshore, what the Democrats are up to, what a president like Trump (who said not to worry about Covid) says and more equally drives the market. A huge concern today is that Russia has troops on the border of Ukraine. This situation has brought back memories of how Britain and France caved it at Munich and let Hitler take a slice of Czechoslovakia. This is not a one-shot deal for Mr. Putin which brings to mind the Russian proverb. When you invite a bear to dance it is not you who decides when the dance is over. It is the bear!
Newsletter: Our Less-Than-10-Minute Video Overview of Today’s Market Activity
What Does Vladimir Putin Want?
Russia is a nation run by a dictator. Vladimir Putin was a captain in the KGB when there was a Soviet Union. He believes that letting go of the USSR’s control Eastern Europe, Ukraine, and the republics to the south of Russia was a historic blunder. His entire career in power has been aimed at restoring Russian hegemony over the vast swath of Eurasian that was the domain of the USSR. In doing so he does not want to endanger what Russia has in terms of customers for the nation’s oil and natural gas as well as mineral wealth. He certainly does not want to go the same way as the last rulers of the USSR who lost power when Russian boys started coming home from Afghanistan in body bags. So, how will he seek to obtain his objectives?
What Does Putin Plan to Do, Dancing with the Bear
The Red Army prevailed on the Eastern Front in World War II because they were able to marshal more resources and put more soldiers in the field than the exhausted Wehrmacht (German army). And, they employed a strategy of only attacking when they could apply overwhelming force. We see this strategy again in fact that Russia has amassed forces on three sides of Ukraine including in Belarus on the North of Ukraine.
But, it is likely that Putin does not plan a one-time all-out assault to overrun Ukraine. Rather he will continually reach into his KGB bag of tricks to raise havoc behind enemy lines and in countries across the world. Viewed through that lens the Ukraine adventure will be leveraged for Putin’s greatest advantage. Pulling the US and the rest of NATO apart would be a victory for Putin. Social divisiveness in Germany, the UK, the USA and among their allies would also serve Putin’s purposes.
Thus, we might expect Putin to drag out the Ukrainian matter to gain the maximum benefit for Russia and himself. We can expect more interference with politics and elections in the EU, UK, USA, and anywhere else that sowing discord will benefit the bear. That is how the dance will continue and if Putin has his way the dance will have no end.
Options Trading in the Era of Vladimir Putin
The DRINCs causing trouble around the world and in the USA drives the markets. Many of the problems that emerge tend to go away either because someone resolved them or simply because they were less of an issue than people thought. Two things that will not go away at least while the instigators live are the push by China to dominate in Asia and across the world and the efforts by Russia to reassert its old USSR influence. Paying attention to the R and the C in the DRINCs will help you anticipate market changes for years to come.
