Patrick L Young
4 min readSep 13, 2022


Ukraine: Is Everything Now Mispriced?

Whichever way you look, the Russian invasion of Ukraine appears to be on a fascinating knife edge. While it is fair to gird loins and prepare for another round of atrocious behaviour as the Bear bites back, the macro looks to now be changing enormously and at a light speed…

Russian military bloggers are complaining and the remarkable pincer movement by Ukraine in recent days has left Russia with little to show for its “mostly peaceful protest” or however Moscow media term the invasion these days. Open complaint is being voiced on Russian tv. Yes, the lead apologists are still there and true, some complaint looks to be from the FSB ultras who want a win in the war but any form of dissent in the public (Red) Square is a sign that Putin hold on the narrative of Ukraine annexation success (sic) is failing.

Right now is the Ukrainian tales of breakthrough are even remotely accurate, a full scale Russian defeat looks plausible, perhaps all the way back to the Ukrainian borders of a decade ago. The Russo-warm water port gambit is failing and with it, the entire Putin regime looks shaky. Then again Russia still occupies up to the better a hefty chunk of Ukraine so there’s a way to go…

However, the Russian campaign is a failure and it’s clear to all the world with even remotely free media. Putin cannot mobilize troops without changing the ‘special military operation’ into a war which would raise a lot of eyebrows. True there may be 130K newly trained Russian troops on the battlefield by early next year but if Ukraine can even remotely keep up the current pace then the current Russian morale will have dwindled to nothing.

True, Ukraine was a relative basket case of an economy even before Russia invaded which means their defence remains reliant on overseas support. As John C. Hulsman noted the other day, 70% of all war aid to Ukraine is ex-USA). Clearly there needs to be a means to keep the spineless European political classes from shivering out of defending Ukraine during a gas-shortage winter.

However, this is where I see something different happening. Hence my belief the macro is changing. Say the Ukrainian Blitzkrieg can continue even for a week or two and splits the Russian forces. From there, we can see dissent to Putin rising (from a low base). Of course the worry is Vlad gets the boot and we get some of his mad 2nd tier cadre instead but…

…If Russia sustains a defeat or at least it feels sufficiently defeated that a coup means Vlad gets the boot then we know sanctions are biting to the point where it will be something like 2030 before Russia is back where it was in January 2022. Whoever enters the Kremlin, it’s highly likely the new leader is at least touch more pragmatic…ending the Ukraine invasion will lead to opening the window for hard currency sales of gas to Europe.

At this point suddenly the world is upended, every single presumption on inflation, the economy, the energy crisis is wrong.

Besides, the new leader of Russia probably has to be pragmatic to avoid a dizzying fall in living standards. Russia might have gas but the economy has been hollowed out. Suddenly the territorial integrity of Russia may be under threat, not from the outside but from separatists within the vast nation. Suddenly it’s a case of export as much gas as possible to build hard currency which can be spent on rebuilding the military against possible separatist threats, all the while spreading cash rapidly across the regions to reduce possible opposition to government writ.

That’s not to say a possible hardline Moscow regime might not cause a fair few market ripples but there’s a window here where the crowd is wrong and the future is a lot different, and a lot more optimistic than the prevailing media narrative.

Of course we could see a horrible Russian reaction which drives markets into a temporary flight but in reality, if this war can be curtailed, even early next year, then the maths of everything is priced wrong. Inflation will be falling. Gas will be flowing to Europe (although the Europeans would be even greater idiots if they don’t still plan for a more equal energy balance in future). The economy would see itself in a whole different outlook and that means while central banks will probably keep rates high due to their failure to spot inflation after the QE binge, that we get a whole new realm of things to worry about economically but the core of the west could look rather more stable, to put it mildly.


A version of this article was originally published in Exchange Invest, the daily bulletin of the bourse business, on Tuesday September 13th.



Patrick L Young

Entrepreneur, Investor, Author. #Exchanges #Fintech #Startups #Motorsport Emerging Markets. CoFounder @Exchange_Invest @HanzaTrade @MissionToRun @YMarkets