E70: EMERGENCY POD! Russia invades Ukraine: Reactions, Putin's ambition, Biden's response and more

Throughout the Russia‑Ukraine conflict that began with the February 24, 2022 invasion, the United States will not directly intervene militarily in Ukraine (i.e., no deployment of U.S. combat forces into Ukraine to fight Russian forces).

“the United States of America would not intervene militarily in Ukraine. We should all understand that... we are not going to intervene militarily in that conflict, nor should we” View on YouTube

As of late February 2022, U.S. public opinion will remain strongly opposed to direct U.S. battlefield (kinetic) entry into the Russia‑Ukraine war, and instead the United States will confront Russia primarily via cyber operations, with U.S.–Russia cyberattacks beginning immediately (around February 24, 2022) and intensifying in the ensuing days and weeks, rather than through deployment of U.S. combat troops into Ukraine.

“My prediction is, as of right now, it would be very unpopular to go to war, or for the US to enter the war in a on the battlefield, I do think, and I don't know if we're going to hear more about this today, but I do think that the cyber war is beginning today... And so we may see the US kind of confront Russia, uh, on another battle stage, not on the, uh, you know, on the field, on the physical field.” View on YouTube

In the immediate aftermath of Russia’s February 24, 2022 invasion of Ukraine, President Biden and Western allies will announce and implement severe economic sanctions on Russia that are described as or effectively function as “crippling,” including broad, punitive financial measures from multiple Western countries.

“I hope everybody in Ukraine is safe. Um, but I think that Biden's going to announce some pretty crippling sanctions, and I think the West is going to be very punitive financially.” View on YouTube

If the Russia‑Ukraine war does not escalate into a larger war involving other great powers, Vladimir Putin will not seek to occupy all of Ukraine indefinitely; instead, the likely scenario is that Russian forces will remain in Ukraine for on the order of about one year, during which Russia will install a puppet or strongly pro‑Russian government in Kyiv and then withdraw most of its forces, similar to Russia’s behavior in Georgia in 2008.

“I don't think he wants this problem long term. It's probably going to be more like the situation we had in Georgia in 2008. He goes in for a year. He institutes perhaps some sort of puppet government or some government that's more favorable to him, and then he gets out. Probably this is if there's no escalation.” View on YouTube

Due to a 6–7 year under‑investment cycle, new large‑scale investment in U.S. domestic natural gas (including shale and offshore) starting in 2022 will not materially increase supply or generate attractive returns for roughly 6–7 years (i.e., before ~2028–2029), and major U.S. natural‑gas producers will, as of 2022, refrain from committing significant new capital to expand U.S. nat‑gas, shale, or offshore production.

“Energy independence is it takes too long. And we went through a massive capital under-investment cycle over the last 6 or 7 years. And so, you know, in order to start this up, you need to have started actually putting money in the ground 6 or 7 years ago. And the problem today is if we put money into the ground now, that's not going to yield any sort of return on invested capital for another 6 or 7 years. And so when you look at these nat gas companies, every single one to a name has basically said, we are not going to put any incremental capital into US, domestic nat gas or shale or even offshore.” View on YouTube

China will proceed with its plan over roughly the next 30 years to build about 140 new nuclear power stations (around $3B per plant), increasing its total power‑generation capacity by roughly 15–20% and enabling it to retire a significant portion of coal‑fired generation. As a result, over approximately the next decade, China’s industrial electricity prices will fall from roughly $0.07–0.08 per kWh to approximately $0.04–0.05 per kWh, widening China’s energy‑cost advantage over the United States for industrial users.

“China, as I've mentioned in the past, is over the next 30 years committed to building. Check this number out. I think we talked about this 140 nuclear power stations. Um, their estimated cost, I believe, is on the $3 billion per station range. They are, um, going to increase their total, uh, energy production capacity with these nuclear power stations. Um, on the order of 15 to 20%. So they will take coal offline as they bring those online. Um, or they will kind of start to have a cleaner mix of energy rather than building a next gen infrastructure. So, um, you know, if we, as the United States intend to be an economic challenge to China this century. If we intend to compete effectively with them, we are going to have a really hard time with energy prices being what they are here in this country. China is already 30 to 40% cheaper than us on an industrial scale basis with their current energy infrastructure, and when their nuclear comes online over the next decade, their prices are going to drop even further. Nuclear should be in the 4 to $0.05 per kilowatt hour range. Today, China's in the kind of, you know, 7 to $0.08 per kilowatt hour range.” View on YouTube

The United States will not successfully scale up nuclear power in a major way (i.e., will not deploy a large new fleet of nuclear fission plants that materially changes the national energy mix) in the foreseeable future; instead, U.S. growth in non‑fossil electricity generation will primarily come from solar rather than from nuclear.

“I think it's never going to happen. Um, I'm not I love... You think what's not going... Nuclear I think America America's America's ability to scale nuclear I think is a very difficult proposition. And I think our real solution is solar.” View on YouTube

The S&P 500 will experience one more significant downward move of roughly 400 index points, reaching a bottom level around 3,800, with this final decline primarily affecting large-cap companies, after which the market will have effectively bottomed (absent a world war).

“the smart folks that I talked to who I really, you know, uh, look up to and respect, think that the bottom in the S&P is around 3800 and that what we still need to do is this one last flush. And that last flush will really touch the big cap, um, companies.” View on YouTube

At the March 2022 FOMC meeting, the Federal Reserve will not raise the federal funds rate by 0.5 percentage points; instead, it will either raise by only 0.25 percentage points or defer a rate hike altogether.

“as of today, my guess is that the probability of that is below 5%. And you're probably assuming, you know, um, a quarter point rate hike or maybe even a deferral, uh, at this point... And so this is not a great time to do a half point rate hike. And so it's almost certain at this point that they're not going to do a half point rate hike.” View on YouTube