Posts filed under “Current Affairs”

Containing Ukraine

Containing Ukraine
David R. Kotok
April 25, 2014

 

 

The process is simple. Look at the front page of the Wall Street Journal and then the markets. Will Russia move troops across the border and seize Eastern Ukrainian territory? If so, what will be the consequences?

There are several geopolitical scenarios being discussed. Punditry on the subject is abundant in the media, and the internet is now clogged with millions of opinions as to who should do what to whom and when.

For markets, this is a big deal. If Eastern or Central Europe gets caught in a confrontation that is expansive, markets will get drudged. Markets do not like war.

If activity in Eastern Ukraine remains contained, local interests will not like the outcome, but global markets will recover and become more robust.

The key question for an investor is, “Will Ukraine be contained?” In our view, the answer is yes. We do not believe Russian military forces will invade a NATO member country. Ukraine is not a NATO member, but Estonia, Latvia, Lithuania, and others in the region are.

We believe the weakness in the markets is attributable to the geopolitical risk developing in Central and Eastern Europe. That risk presents us with an opportunity, and we are taking advantage of it.

Let’s get to the Energy sector that is the beneficiary of this trouble. In the US it has a natural growth path because of the build-out of energy-related industry. Over the next couple decades, the US Energy sector is likely to create several million additional jobs, rising wealth and assets, and a multiplier that will benefit the US economy. America is in the energy business even if our politicians take forever to approve a pipeline or extend a permit for drilling exploration. That problem is in the White House. As far as the country is concerned, energy independence and development is a promising and flourishing business in America.

We are overweight in the Energy sector. We continue to rebalance into this sector on moments of weakness or when cash flows are available in accounts. The Energy sector gets a second kick from the Ukraine activity. The turmoil in other places like Nigeria, the Persian Gulf, and Libya only exacerbates the rise of energy prices worldwide.

In sum, the Ukraine situation will be contained and not expand into major military activity in Central and Eastern Europe. It is a limited engagement. Energy is one of the places to be in the markets for a very long time. It is a big story.

~~~

David R. Kotok, Chairman and Chief Investment Officer

Category: Current Affairs, Think Tank, War/Defense

Happy Thanksgivingukkah !

~~~ 25 Little-Known Facts About Thanksgiving ~~~

Category: Current Affairs, Weekend

About Our “Spending Problem” (Revisited)

@TBPInvictus here It’s a well established fact that the Obama administration has been spending like a drunken sailor since the day he was inaugurated. I first wrote about his spendthrift ways here, toward the end of 2010 (has it already been three years?). Some time has now passed, so how’s it going? Let’s take another…Read More

Category: Bad Math, Current Affairs, Data Analysis, Economy, Really, really bad calls

Is the Market Rallying on Syria or Summers?

There is a certain school of thought — and I use that word loosely — that seemingly tries to tie each twitch of the market, every noisy jag up or down — to some broader issue. Partisan politics, economics, technology, and of course, presidential elections becomes fodder for this school of thought rationalization. Flip on…Read More

Category: Cognitive Foibles, Current Affairs, Markets, War/Defense

Business is Booming in Texas: Discuss

  Interesting war of words between Texas governor Rick Perry and SacBee’s cartoonist Jack Ohman. Perry is demanding the cartonist be fired for his insensitivity to the deaths at the fertilizer plant. Ohman responded: “When you have a politician traveling across the country selling a state with low regulatory capacity, that politician also has to…Read More

Category: Current Affairs, Humor, Regulation

Don’t Bother Reading This Blog Post

  There is nothing to say while we are all transfixed by the live real time manhunt playing out before our eyes.   Back soon . . .

Category: Current Affairs

Don't Bother Reading This Blog Post

  There is nothing to say while we are all transfixed by the live real time manhunt playing out before our eyes.   Back soon . . .

Category: Current Affairs

How Disaster Aid Recipients Voted on Sandy Relief

Source: ProPublica   • 31 Senate Republicans Opposed Sandy Relief After Supporting Disaster Aid For Home States (Think Progress) • 37 Congressional Republicans Opposed Sandy Relief After Supporting Disaster Aid For Home States (Think Progress)

Category: Current Affairs, Digital Media

United States Flu Trends

Source: Google     As you can see from above, this years flu is a big problem . . .

Category: Current Affairs, Web/Tech

Discuss: Barack Obama is a Liberal Republican

I have been having fun mocking friends and family on both sides of the political aisle.  GOP colleagues who keep telling me BHO is a Socialist, while Dems think he is the next JFK. I enjoy disabusing them of their political biases by explaining to them Barack Obama’s actual politics. Politically, he is a modern…Read More

Category: Current Affairs, Philosophy, Politics