On Ukrainian Drones Hitting the Kremlin: Real? Pretext?

https://trendmacro.com/system/files/reports/20230503trendmacroluskin-b-c2.pdf
Donald L. Luskin
Wednesday, May 3, 2023
Just stay alert. This could be a pretext for game-changing Russian escalation.
US Macro
Europe Macro
Oil
The Russian government claims it downed Ukrainian drones that struck The Kremlin. This is the kind of thing that could serve as a pretext for escalation in Ukraine. If it were sufficiently brutal, and certainly if it were nuclear, the West would have to respond. Short of multilateral military involvement, the response would like be economic, and the only course left would be to force China and India to stop buying Russian fossil fuels. Doing so might require trade sanctions that would disrupt supply chains finally healed after the pandemic. But even if China and India were to volunteer without Western coercion, that would effectively take Russian oil and gas off the market, leaving a huge global production shortfall and moving prices to all-time highs. As of this writing markets aren’t concerned – indeed, oil markets are the opposite of concerned. Just stay alert.