There’s a lot going on these days. Crimea, a region of Ukraine, will hold a referendum this weekend on whether or not to join Russia. A secondary concern is bad data from China. Gold is rocketing, stocks are swooning and bonds are rising on jitters. But let’s take a deep and breath and take another look at all that’s going on.

Taking a step back

Here’s my take on what’s going on in the world.

  1. It has been quite some time since I made my call to short China. See China super cycle is over and my other writings. Since then, slowly but surely a majority of analysts have come to the same view. The economic issues of China are now well known, well understood and for the most part are already discounted in the markets.
  2. The referendum will go in Russia’s favor.
  3. Russia will come up with some face-saving avenues for the West.
  4. The West will come up with some face-saving avenues for Russia.
  5. After much saber rattling, it will be business as usual.
  6. There is no appetite in the U. S. to take on Russia militarily..
  7. Ukraine is known as the bread basket of Europe. Conflict will not materially impact grain exports from Ukraine.
  8. Russian stock market is the cheapest market among the 23 countries that we closely follow at The Arora Report. It now trades at a P/E of less than 5 compared to a P/E of 17-18 for the U.S. market.
  9. There will be a push to export more natural gas from the U.S. to reduce the stranglehold Russia has on Europe because of Europe’s dependency on Russian gas…Read more at MarketWatch