As Far as Markets Go: Russia is a MacGuffin

MacGuffin : In fiction, a MacGuffin is an object, device, or event that is necessary to the plot and the motivation of the characters, but insignificant, unimportant, or irrelevant in itself.

About a week ago I locked in my short on Treasuries (a bet on higher rates) as I surmised with Members that bonds could easily stage a bit of a relief rally.

My working thesis ever since has been that TLT could bounce up to the $140-$142 zone, as seen below on the daily chart, before I would look to re-short. 

Fast-forward to this morning, and with the Russia/Ukraine headlines we have a knee-jerk rush back into Treasuries. However, it is not as pronounced as you may think. Indeed, I would have expected TLT to actually gap above $140 or even $142 today, but as you can see the bounce appears to be rather pedestrian.

My view here is that the real issue for the market for most of 2022 will be inflation--It has been heretofore and that likely continues. Yes, Russia possibly overreaching in Eastern Europe and starting World War III is of course a risk. However, the more likely scenario is Putin continues to play the long game as he has been doing for quite some time, and that he does not overreach within the parameters NATO has set forth. 

And once that dust settles, from a market perspective we are still left with a terrible inflation problem in which our Fed is falling behind the curve on a daily basis. Just today, we have commodities popping again with oil, wheat, corn, and palladium leading the way. The very idea, as some are suggesting, that Russia gives The Fed leeway to not catch up to inflation is patently absurd given the further surges in commodities which will exacerbate inflation. 

At any rate (no pun intended), I am eyeing another bond short sooner than later. To me, that is the play emerging from the initial Ukrainian invasion rather than trying to bottom-fish equities.