Our Hot Take on Russia’s Attack on Ukraine

Events in Ukraine have moved further and faster than we anticipated. But it remains the fact that Europe, the US and NATO have no vital interest in the matter. Europe’s vital interest is in maintaining Russian energy imports. Boycotting Russian energy would induce a recession for no purpose. Russia has a vital interest in maintaining energy exports to Europe. The equilibrium outcome is that the energy flows will be maintained. Europe is in control of the outcome – which is the part of this matter that markets care about. In the meantime, Brent crude is trading above $100. This will play into statistical inflation, but the Fed can look through that. If anything, the uncertainties set in motion here put March lift-off at risk.