Ad Hoc Commentary – to counter Russia’s rise, America should re-pivot to Nicaragua, and Singapore should accept a Russian military base

Putin came out with reconciliatory words just hours after we wrote:
“…now that Putin had largely secured Crimea, he will likely only stage his next major move in the fall [months]….”

Understandably, oil markets calmed down, and cooler heads seems to prevail for now:
“…On Tuesday, Russian President Vladimir Putin said the situation in Ukraine was “gradually stabilizing,” helping to cool tensions after Russian troops took control of all Ukrainian border posts on the strategic Crimean Peninsula…”

Yours truly does not expect any less from the master strategist Putin, and expect Putin to move only in October 2014 earliest. John Kerry will likely find his initiative to ease conflict in Ukraine to be met with a short term Pyrrhic victory for America. Putin is likely looking for American weakness. And since Russia’s edge is in stealth submarine technology, the navy is where we should be focusing our attention on. And as any good economist will tell you, follow the money.

For this, we refer to the recent statement by General John Kelly, United States Marine Corp Commander of the United States Southern Command before Congress on 26 Feb 2014:
“…As the lowest priority Geographic Combatant Command, U.S. Southern Command will likely receive little, if any, “trickle down” of restored funding…” Pg. 3
“…Insufficient maritime surface vessels and intelligence, surveillance, and reconnaissance platforms impair our primary mission to detect threats and defend the southern approaches to the U.S. homeland…” Pg. 2

And then we look where Russia is looking to expand:
“MOSCOW, February 26 (RIA Novosti) – Russia is planning to expand its permanent military presence outside its borders by placing military bases in a number of foreign countries, Defense Minister Sergei Shoigu said Wednesday. Shoigu said the list includes Vietnam, Cuba, Venezuela, Nicaragua, the Seychelles, Singapore and several other countries.”–Defense-Minister.html

America should heed General John Kelly, and perhaps launch a stealth re-pivot to Nicaragua:
“…While Russian counterdrug cooperation could potentially contribute to regional security, the sudden increase in its military outreach merits closer attention, as Russia’s motives are unclear,” [General] Kelly told the Armed Services Committee…”

It does not take a Kissinger to see that all these anti-drug activity could spiral out of control and it could lead into a Nicaragua-Mexico conflict. We remember that as recently as December 2013, Nicaragua repatriated eighteen Mexicans drug-traffickers posing as fake television journalists:

Any master strategist would likely use anti-drug as a cover to enter Mexico, and given the porosity of the American-Mexico border, you then have direct access to the U.S. homeland.

For Singapore, they probably should read Chapter 3 of Henry Kissinger’s book entitled On China and invite the rising ‘barbarian’ into Singapore:
“…’use barbarians against barbarians’ and avoid dominance by any one power…”
“…[Wei Yuan (1794-1856)]came up with another original idea: to invite other barbarians into China and to set up a contest between their greed and Britain’s, so that China could emerge as the balancer in effect over the division of its own substance…”
“The mechanism for achieving this objective was the Most Favored Nation principle—that any privilege granted one power should be automatically extended to all others.”
On China, Henry Kissinger

Digressing to the markets, yours truly do not find much to cheer for in the very short term. The steroids we need is Europe QE, but that does not seem forthcoming for now. Perhaps the next inflation release will help. So, have removed tactical longs in the equity markets for now, and kept core long. Perhaps we will get another dip to enter the market, else would chase again towards the end of March.

Good luck in the markets.