Who’s going to regret their decision the most? Countries implementing sanctions, Russia beginning their “invasion” or investors buying the dip…

Russia-Ukraine tensions has officially sent the S&P 500 into a correction — falling 10% from Jan. 3 — the first correction COVID.

Well that escalated quickly…

Yesterday, Biden called Russia’s deployment of troops into two separatist held regions the “beginning of an invasion” — and countries are taking action against Russia.

• Germany put the Nord Stream 2 project on hold — a gas pipeline that would have doubled the gas moving from Russia to Germany.
• The US sanctioned two Russian financial institutions — cutting Russia off from Western financing.
• The UK sanctioned five Russian banks and three high-net-worth individuals by freezing assets.

These moves are still short of severe — which could come if the situation escalates. It’s Putin’s move now.

His likely move: Analysts believe Putin could try to take the country in a single blow — leading to the most violent battle in European territory since 1945 (via NYT).

Russia is a big gas station — Jason Furman

While Russia is a small player in the global economy, here’s where we could see the most damage:

• “Russia is incredibly unimportant in the global economy except for oil and gas” — Jason Furman, a Harvard economist (via NYT).
• Rising oil prices could worsen inflation and slow down global growth.

In the worst-case scenario, Capital Economics expects oil prices to reach $120-140 per barrel (via FT) — up from the current ~$97.

Head of European equity strategy at Barclays (via FT) thinks the markets could fall more in the near-term but sees downturns from military conflicts to be short-lived — presenting a buying opportunity.

Investors: The Fed’s tough decision

The Fed has many tough decisions ahead on raising interest rates.

• JPMorgan’s chief economist thinks the Fed will still raise interest rates in March — though what happens afterwards is more uncertain…
• The question is what happens next: Continue raising rates and risk slowing growth even further or let inflation run out of control.

The pain is unlikely to be over for investors and the US believes Russia could eventually hit Ukraine’s capital. So far, everything is still on the table.