Russia Invades Ukraine
The Motherland Monument in Kiev.
Russia Invades Ukraine
A couple of weeks ago, we shared Russian journalist Anatoly Karlin's prediction of a Russian invasion of Ukraine, and suggested readers hedge in light of it by using our system to scan for optimal hedges on index-tracking ETFs such as the SPDR S&P 500 Trust (SPY) or the Invesco QQQ ETF (QQQ).
Why Russia 🇷🇺 may invade Ukraine 🇺🇦 after all. @akarlin0 estimates an 85% chance of invasion.
— Portfolio Armor (@PortfolioArmor) February 16, 2022
Might be worth adding downside protection here just in case. $SPY $QQQ https://t.co/LJyWqUHMyN
Hopefully, some of you took that opportunity to hedge. As we write this, the invasion is happening, and as Anatoly Karlin predicted, Russia has decided to go big. Since Germany had already canceled the Nord Stream 2 pipeline system, which is majority owned by Russian energy company Gazprom (OGZPY), and Russia was going to be subjected to sanctions for its Ukraine incursion anyway, it had little to lose.
As of early morning Ukraine time, airports across the country had been struck.
Afaik at least four major airports are currently on fire, including very far into West Ukraine (Ivano-Frankivsk) which everyone thought would be untouchable: pic.twitter.com/DXgfQjaDEu
— JskSrs (@juliaskripkaser) February 24, 2022
The tweeter above, Julia Skripka-Serry, is a Ukrainian pharmaceutical securities analyst and investor we've corresponded with for years. Footage of the airport pictured above being struck by a Russian cruise missile is in the tweet below.
Footage of the airport bombing in Ivano-Frankivsk. #Ukraine #Russia pic.twitter.com/MLVuNyPItI
— Ω (@W4RW4ATCHER) February 24, 2022
Russia struck Ukrainian seaports too.
The Ochakov sea port of Ukraine is also destroyed by Russian ballistic missiles. pic.twitter.com/d3pAsvGT4r
— CaucasusWarReport (@Caucasuswar) February 24, 2022
As Mark Ames noted, Russia hit every port and airfield mentioned in Putin's speech Monday as having been refurbished for NATO use.
Hitting every port/airfield mentioned in the big speech which Putin said had been refurbished by the US to be used as staging grounds for NATO forces. https://t.co/g5Omu3k0KX
— Mark Ames (@MarkAmesExiled) February 24, 2022
At least one Ukrainian Air Force plane hightailed it for Romania rather than facing the Russians.
Avion militar ucrainean, interceptat și aterizat la Bacău
— MApN (@MApNRomania) February 24, 2022
2 aeronave F-16 Fighting Falcon ale ForÈ›elor Aeriene Române au decolat în jurul orei 6.15, pentru clarificarea unei situaÈ›ii aeriene referitoare la un zbor neautorizat în partea de nord a României.https://t.co/ICdS1wARQC pic.twitter.com/eKgTsFChtr
Apparently, that Ukrainian pilot wasn't the only one trying to get out of dodge.
reportedly this is chairman of the ukrainian parliament ruslan stefanchuk packing his things and driving off into the sunset pic.twitter.com/4jh32ekcAO
— Russians With Attitude (@RWApodcast) February 24, 2022
Russian allied troops from Belarus invaded Ukraine from the north.
VIDEO: @CNN shows CCTV footage of tanks crossing the border from Belarus into Ukraine. pic.twitter.com/WzESae0bQV
— Conflict News (@Conflicts) February 24, 2022
This is consistent with Putin's argument last year that Belarussians, Ukrainians, and Russians ought to be essentially one nation, as Anatoly Karlin wrote in the piece of his we shared here recently:
The capstone to the Nationalist Turn was laid by Putin in his seminal July 2021 article “On the Historical Unity of Russians and Ukrainians“, in which affirmed that the Ukrainians are a colorful and distinct, but nonetheless inseparable, part of the All-Russian nation, drew a straight line between Ukraine as a de facto colony of Germany following Russia’s exit from World War I and its relation to the West today, repeated his long-standing view that the Bolsheviks laid a time bomb by including the right of secession in the 1924 USSR Constitution, and noted the coercive nature of “Ukrainization” as an ideological project aimed against “so-called” Great Russian chauvinism, thus securing at the state level “three separate Slavic Peoples” – the Russians, Ukrainians, and Belorussians – as opposed to the “large Russian nation, a triune people comprising Great Russians, Malorossiyans, and Belorussians.”
The Fog Of War
As always in war, early information sometimes proves to have been false, so we've tried to be judicious with what we've shared here. There's still much we don't know. For example, what's the current status of the so-called "Babushka Battalion"?
Any update on the Babushka battalion? https://t.co/BsDB5y0agC
— David Pinsen (@dpinsen) February 24, 2022
What has happened to the "lethal aid" sent to Ukraine by the U.S. in recent weeks remains a mystery as well.
I’ll be surprised if Ukraine even lasts 48 hours.
— Nemets (@Peter_Nimitz) February 24, 2022
The best we can hope for at this point is that this war ends quickly, with minimal casualties, and none of the weapons we sent there end up in terrorists' or criminals' hands.
Investment Considerations
As we wrote last week, the likely implications of a Russian invasion were stocks heading down, with the possible exception of some commodity names.
From that post:
The likely market reaction to an all-out invasion of Ukraine by Russia would be probably be to the downside. For that reason, as we suggested yesterday, you might want to consider hedging by purchasing optimal put options on a broad based index ETF such as the SPDR S&P 500 Trust (SPY) or the Invesco QQQ ETF (QQQ).
One sector that may rally in the event of an invasion is oil. Our current top oil name is the Direxion Daily S&P Oil & Gas Exp. & Prod. Bull 2X Shares ETF (GUSH).
We'll see how GUSH does on Thursday. There will likely be some bargains in other sectors in the wake of the current war in Ukraine. We'll discuss that in a subsequent post.
Disclaimer: The Portfolio Armor system is a potentially useful tool but like all tools, it is not designed to replace the services of a licensed financial advisor or your own independent ...
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