The Mood in Kyiv: What Time's the Invasion?

On the ground in Ukraine's capital... The mood in Kyiv: What time's the invasion?... How to know if Russia is going to invade Ukraine... More complex than meets the eye... The time P.J. O'Rourke played hooky... 'It was heaven'...

You might have heard a lot about a potential war between Russia and Ukraine lately...

The story has been all over the news...

From our view, government officials in Russia, Ukraine, Europe, and the U.S., all with a large but unclear interest in this geopolitical hotspot, seem to be posturing and talking through the media... about something.

The thing is, the real motivations of any of the countries involved, significant details on the source of the tensions, and what the fallout could mean for you and me should bullets fly have been sparse in any of the reporting we've seen or heard...

There has been a lot of talk, but we sense most people aren't sure about what to make of the headlines... and the reports of tanks advancing and retreating from the Russia-Ukraine border... the U.S. evacuating its embassy in Kyiv, Ukraine's capital and most populous city, and urging Americans to leave the country.

We caught up with someone who can speak to what's really going on...

He lives in Ukraine and has worked in the country on and off for more than 15 years... He's a lawyer by trade and training.

He also took law-school classes in Russia, so he's familiar with the political and financial motivations (there are many) and historical concerns of real people on both sides of the Ukraine-Russia border... a line that suddenly everyone and their spouse is paying attention to.

He's Bill McGilton, a senior analyst at Stansberry Research...

Bill contributes to our flagship Stansberry's Investment Advisory, is an expert at analyzing legal documents, and helps research our bond recommendations in Stansberry's Credit Opportunities... He has worked for our company since 2014... And perhaps you recall seeing his byline in a recent issue of the Digest.

I (Corey McLaughlin) spoke with Bill by phone today from Kyiv, where he lives with his family. We spoke for more than an hour, covered a lot of ground, and, simply put, were blown away by what we learned...

First off, Bill told us reality is not as it may appear on television...

Surprise, surprise...

In the capital city, he says nobody is expecting bombs to start landing in the next few days... And he's not planning on leaving... or at least not yet. The Italian embassy is right near his home and is still staffed. Same with the German embassy. As Bill told us...

It's very calm here. You would never know anything was going on...

I'm hopeful the situation will find a solution. But no matter what happens, it won't be today – it's a very complex problem that the media doesn't go into the details about. It won't be solved anytime soon.

We talked about what has led to this point given the history between Ukraine and Russia... how the Nord Stream 2 gas pipeline – designed to run from Russia to Germany – plays a central role in the conflict... why world powers care to be involved... and what could happen next.

The long and the short of it is this... Russian President Vladimir Putin wants to recreate the Soviet Union. Most of the people in Ukraine aren't in support of that, but still many do want to have more of a business relationship with Russia than most outsiders think...

Given our daily deadline, I can't share all the nuances and strands to this story that Bill and I talked about right now... but given that images were circulating today of schoolrooms being shelled in eastern Ukraine, we wanted to share a first-hand account of someone in the country and his take on what he's expecting in the short term.

We'll then get into more detail about the financial interests in play – like the gas pipeline, which has been built, but is not yet active – in the Digest over the next week or so... or beyond – because one of the things Bill told us is he wouldn't be surprised if the public back-and-forth about this conflict drags on for months...

In many ways, nothing is new, Bill says...

One important point we can cover easily today... all the tanks and additional equipment that have been reported moving near the Russia-Ukraine border... Well, just know much of that equipment has been in place since last April, Bill says.

It's a similar story with the shelling reported in eastern Ukraine today. Incidents like it have occurred recently in the region, Bill says...

Back in April, when the Russian military first moved equipment near the Ukraine border, Bill was really worried an invasion was imminent. Now, he thinks an invasion is still possible, but it will need a specific triggering event...

At this point, there's a lot of politics and posturing happening mostly in the media... each country trying to use whatever leverage it has for a gain. It's spilling over into Mr. Market, too...

Today, for example, fears of a war intensified again. "Imminent" or "in the next few days" were in the headlines and mainstream stories...

The benchmark S&P 500 Index sold off around 2%, the tech-heavy Nasdaq Composite Index finished off almost 3% lower... and the VanEck Vectors Russia Fund (RSX), which tracks shares of companies tied to the country, fell more than 5%...

But, as a practical matter, Bill says you'll know something significant is about to happen if Russian officials shut down air space in the Crimea peninsula or other hot spots along the border of Russia and Ukraine.

And, in any case, even if an invasion does happen, it might not last long...

Bill says that realistically the Russian military will probably take out the undermanned and underequipped Ukrainian military quickly.

He said people in Kyiv are even posting funny messages on social media sites, joking and asking things like what time the Russians are planning to invade so they can avoid the traffic jams that may occur... It's a form of stress relief.

Another important indicator to watch...

Global oil futures have seemed to swing wildly on any bit of "news" or speculation about what's happening along the Russia-Ukraine border...

In the last few weeks, futures prices of Brent crude, the international benchmark, and West Texas Intermediate, the U.S. standard, cracked $90 per barrel... a more than four-fold gain from their two-year lows.

Earlier this week, prices hit $95 per barrel before news of a Russian "retreat" a day later brought them down some...

But the hryvnia, Ukraine's currency, hasn't budged significantly lately... It is trading at 28-to-1 to the U.S. dollar, not materially different than it has over the last two years.

Back in 2013 and into 2014, when there were protests in the streets in Kyiv resulting from the country's former president rejecting a partnership with the European Union, Russia ultimately annexed Crimea from Ukraine... At that time, the hryvnia spiked more than three times relative the dollar...

Short of a coup or a "false flag" event this time around that could trigger combat, Bill said he thinks a Russian invasion is unlikely.

The waiting game...

Putin is already getting what he wants, a platform to discuss security guarantees in Eastern Europe, and increased political power in Ukraine... simply by moving some tanks around and waiting.

Bill also says the current government in Ukraine has a very low approval rating, and as he explained to us, the country is less democratic than it is perceived... especially after a decade of a bad economy and pandemic lockdowns that its people could not afford.

As Bill said...

Around half the country gravitates toward Russia and half leans to the West. It's about a 50-50 split. Even so, most Ukrainians that gravitate toward Russia still don't want to be part of Russia.

But, as Bill said, the issue is more complex and has layers beneath this fact... We want to explore and present the story to you as best we can... and time is running short today.

We'll get into more detail – including the significance of the Nord Stream 2 gas pipeline and of course what this conflict could mean for your investments – next week... following our colleague Dan Ferris' regular Friday essay and the long holiday weekend here in the U.S.

For now, we wanted to provide something we haven't heard or seen anywhere else. A real report on the mood in Ukraine from someone who is there right now.

Moving on, to another remembrance of P.J. O'Rourke...

Former Digest contributor, American Consequences editor-in-chief, and noted American essayist P.J. O'Rourke passed away Tuesday at the age of 74 from complications of lung cancer...

Yesterday, we shared a tribute to P.J., and his final Digest essay for us from back in 2017. This morning, American Consequences publisher Trish Regan released her favorite P.J. essay, written in October, just a few months before his death...

It tells the story of P.J. and his wife deciding to play "hooky" from life after attending the funeral of his longtime friend Winston Groom, who wrote the novel Forrest Gump... "and a lot of other wonderful stuff," P.J. said. Here's an excerpt...

Winston died of a heart attack in September 2020, but the memorial service was delayed because of COVID-19. Maybe this was for the best... Winston's sudden death had gone from blinding shock to clearly perceived grief for the loss of the man.

The crying wasn't over, but many of the tears were for the wonderful times we had with Winston. Not tears of joy, certainly, but tears from joy at least.

The toasts and testimonials were good, plentiful, and heartfelt. And there was something I noticed as I listened and raised my glass. Winston led a hardworking life, with 23 books and a career as a reporter for the old Washington Star before that.

But none of the stories being told were about Winston's thousands of hours hunched over a typewriter sipping cold coffee and shrouded in stale cigarette smoke. The stories were all about fun – rugby matches, sails on the Chesapeake Bay, quail hunts, staying up late, and telling tall tales. The stories were all about playing hooky.

And it was playing hooky with Winston that I missed most, too. I missed going AWOL up to my place in New England to shoot ducks, or fly the coop out to Winston's beach shack in the Hamptons before the place was overrun by Bezosillionaires. I missed taking French leave at Elaine's literary watering trough in New York where, at the 4 a.m. closing time, Elaine would pull the window shades and serve the drinks herself.

Winston and I would emerge into the bright of day, a bit "over refreshed" perhaps, knowing – even back then... It's fine to leave behind a body of good work, but it's the good fun they'll be talking about over your body.

P.J. went on to describe that "for the first time in almost a quarter century, the kids didn't need to be driven anywhere... picked up from anywhere... or otherwise provided with immediate parenting."

So P.J. and his wife played 'hooky' for themselves...

Instead of driving immediately back home to New Hampshire, they stayed in Maryland, where Winston's funeral was held, for a week... at an Airbnb house on the water that P.J.'s wife found. As he wrote...

And what we did while playing hooky was what every busy person dreams of doing – nothing.

We sat in the sun. We slept until whenever. We read at least a dozen books between us. We talked, although by mutual consent about nothing we were supposed to be doing at home or at work. If somebody felt like it, there was a walk (my wife) or a nap (me).

We didn't buy a newspaper, turn on a radio, or have a television. We didn't make the bed. We didn't cook. Our meals were all takeaway except when we visited the cute shore cafés.

We had no other contact with the outside world. Though I suspect my wife sent a few surreptitious text messages to our kids to make sure they were eating something besides Cheese Whiz on potato chips – or, in the case of our daughter abroad, camembert on macaroons.

It was heaven.

But it was humbling too, as I suspect real heaven will be. Should I by some chance make it there, I'll see a lot of people who accomplished much more than I did... like my friend Winston, for one.

It's also humbling because my escape to temporary heaven where I got to do nothing resulted in... nothing.

Life seemed to get along fine without me. Indeed, it seemed to get along a little too well now that I think about it. Kind of the way school got along fine when I played hooky.

Maybe a few people were mildly inconvenienced. I'll know when I get up the courage to open the 174 unanswered e-mails in my inbox. But it's not like the police were here when I got home with lights flashing on their squad car shouting through a bullhorn, "We've been getting all these 911 calls from the 'away' message you left on your laptop!"

This was P.J... as only he could, delivering a timeless insight and truth with humor...

It's easy to get caught up in our day-to-day schedule, the world's problems, stock market movement, or anything else. It's more difficult to hit the pause button on all that... But as I wrote in December, doing so can be good for the soul.

So, today, something tells me P.J. would hope at least one person is inspired by him to play "hooky" now or sometime very soon... Whatever that means to you or whenever you have the chance, go do it... You just might find your own heaven.

You can read the entire essay from P.J. here... And for more sharp wit and timeless lessons, you can also browse his Digest archives here. Our staff was honored to have a writer of P.J.'s caliber and standing publish under our banner from 2015 to 2017.

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In today's mailbag, some feedback and questions on our new Stansberry Research Investor Platform... and we want to acknowledge messages from several of you who had trouble downloading the free copy of P.J.'s award-winning book, Eat the Rich, that we offered yesterday. We apologize for any inconvenience.

The updates to our new website that went live yesterday caused a technical glitch with our linking system. If you want to try again, please use this link to get access to the free copy of the book.

"Wow, I'm glad I opened yesterday's Digest. I got to the sentence, 'You can now directly link your brokerage account to our Investor Platform,' and I immediately tried it.

"It was simple – and maybe took five minutes at most – to connect one of my brokerage accounts, and – voila! – there's all my positions, with a Stansberry Score for each one, and links to relevant information. Fantastic!

"Thanks for making my day." – Paid-up subscriber Lee D.

"On the old website, you had a tab listing the publication dates of all newsletters. This was very helpful. Is there a similar resource on the new website?" – Paid-up subscriber Richard D.

Corey McLaughlin comment: Richard, yes. If you find the "My Account" tab in the top-right corner of the platform and navigate to the "Help Center," you will find the publishing schedule there. For reference, here is the direct link.

All the best,

Corey McLaughlin
Baltimore, Maryland
February 17, 2022