Mr. Sensitive

March 13, 2014

There Must Be Two Ukraines

Filed under: Uncategorized — lbej @ 17:02

Big stock market selloff today (Dow down 230, NASDAQ -1.5%) despite decent economic data…what gives?  This kind of extreme reaction could be hard to explain, but fortunately the financial press is a bottomless well of insight.  Here’s a sample (with proper attribution, of course):

“Stocks down on Ukraine fears.”


Is this a different Ukraine?  Because I thought there was only one, and the situation is the same there today as it’s been since last Tuesday.  You remember last Tuesday?  That’s when the market rocketed to all-time highs because Putin said he wasn’t planning to invade the rest of Ukraine.  Russia controls the Crimean peninsula and is planning to stage a referendum there to formalize that control; Ukraine and every other country says nuts to that.  But today the stock bulls are worried about the same geopolitical situation that they were elated about last Tuesday?  Bullshit (no pun intended).  Bulls are worried because they know stocks are trading at unsustainable multiples on unsustainable earnings and the sea of liquidity that has lifted all boats for five years is finally receding.  What the bulls don‘t know is why we haven’t had a meaningful correction, and that’s why they’re worried.


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