There are huge potential macro-economic implications of the Ukraine invasion

The US and others warned this would happen yet it’s still completely shocking.

We’re witnessing an war in Europe for the first time in generations and it’s involving two enormous military powers. There are 250,000 soldiers in Ukraine’s armed forces. This will be awful and bloody in every sense.

Even right now you can sense that the appetite to sanction Russia will be incredible. We’ve heard European leaders rule out kicking Russia out of SWIFT or sanctioning oil and gas. Yet at this point, both those things seem entirely possible. There will be an appetite to completely cut off Russia.

However European leaders have also considered what that would do to their own economies. They don’t want to sanction Russian oil and gas because they desperately need it. The hit from $150 oil and European gas prices doubling (tripling?) would be devastating for Europe, if not the global economy. It could be a stagflationary shock and that doesn’t even consider fertilizer, grain and metals exports from Russia.

There are very few ways to counter those shocks because there just isn’t excess supply of anything. All those markets are already tight.