With the Israel-Hamas situation somewhat loosely contained to the Gaza Strip for now, notwithstanding Houthi drones and attacks on U.S. military bases in the region, along with Israel and Hezbollah exchanging rocket fire, such actions have not moved either stocks or bonds of late. Neither has the stalemate in Ukraine. That all can change with the coming Russian presidential election in mid-March.
The war in Ukraine began two years ago this weekend, but the war has its roots going back at least 15 years, a fact which has not been reported in the media. I am not taking sides, but the Tucker Carlson interview with Vladimir Putin covered some facts that, if openly debated, would make the war spin very different than what we hear. I am discussing this for the simple reason that the frontlines are no longer a stalemate: The Russian army just took Avdiivka, a key city that they have been encircling for months.
Ukraine has an ammunition shortage, which is being used as a political lever in the U.S. Congress which, legitimately, wants more security near the disastrous U.S.-Mexico border in exchange for voting for more money for Ukraine. But, as is the key principle of warfare, one party presses harder when they have the advantage, and the Russians appear to be using this ammunition shortage to press their gains. They have drawn a red line on “no NATO membership for Ukraine” and are surely acting to enforce it, as it is not hard to understand why they are bothered by seeing an expanding large military alliance on their borders.
Since there is a coming presidential election in Russia (March 15-17), I would not be surprised if they have a plan for more military gains before March 15. Big Russian gains would be stock market bearish, as they expose the inability of the West to stop Putin, and people extrapolate what icy relations with Russia mean for the broader European economy. I don’t think anything good will come of long-term bad relations with the Russians, as they are a supermarket for commodities and cheap energy, which the world needs.
In the history of warfare, even if a negotiated settlement is the objective, it is always better to negotiate from a position of strength, which is why I think there is a plan of attack in Ukraine.
The great Carthaginian general Hannibal Barca, who killed an estimated 225,000 enemy soldiers in his 16-year campaign in Italy, wore down the Romans so much that at one point Rome was running out of men to form new legions. Hannibal thought he had the advantage and tried to end the war by negotiating in front of the gates of Rome, but the Romans refused to negotiate, despite being terrified of Hannibal.
I think Hannibal Barca’s objective in the Second Punic War was to regain the territories lost in the First Punic War (started by Rome), in which his father, Hasdrubal Barca, was one of the main Carthaginian generals. Those former Carthaginian territories were Corsica, Sardinia and Sicily (see map, above).
I also think that if Hannibal had any idea that Rome would destroy Carthage in the Third Punic War, he would have figured out a plan to storm the city of Rome. Lucky for Rome, he didn’t. For years after the war the Romans would scare their children with “Hannibal ad portas!” (“Hannibal at the gates!”).
You can almost hear some Western Europeans mumbling, “Putin ad portas!” Vladimir Putin is not a nice guy, but I don’t think he foolishly imagines that he can take Europe – or all of Ukraine, for that matter.
I think Vladimir Putin’s objective is to legitimize his takeover of Crimea with a peace treaty, since it has been Russian territory for centuries (wrestled from the Ottoman Empire), but it was transferred to Ukraine in reforms within the Soviet Union by Khrushchev in 1953. I seriously doubt that Khrushchev would have done that had he any idea that the Soviet Union would fall apart later on. Putin’s other objectives are to keep the gains he has won so far (on the map, above), as well as “no NATO for Ukraine”, which suggests to me that the war won’t stop unless “no NATO” is somehow enshrined in the Ukrainian constitution.
If Vladimir Putin is channeling Hannibal Barca, I don’t believe that he will turn around and go back to Moscow without those concessions, which has implications for stocks and bonds in 2024. An ultimate end to this war would be stock market bullish, but before the war ends it seems that the Russian army will try to solidify some further gains, which, if large, would be stock market bearish.
