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JPMorgan Warns Military Escalation In Ukraine "May Lead To A Lehman-Style Shock"

Tyler Durden's picture


The sudden military escalation in Ukraine in recent days has, according to JPMorgan's Alex Kantarovich, reduced the earlier hopes that the high level meeting in Minsk on 26 August would help to defuse the conflict. As Kantarovich warns, the markets are now bracing for the US/EU responses. In the worst case scenario, now appearing more likely, severe pressure on stocks may extend. As he concludes, "we believe that with the significant deterioration in the Ukrainian situation, markets may treat this as a Lehman-style shock."

Via JPMorgan Cazenove,

Lehman moment. We believe that with the significant deterioration in the Ukrainian situation, markets may treat this as a Lehman-style shock. We note there are substantial fundamental differences between the current situation and the 2008/09 crisis; the oil price is now holding up relatively well and the economic contraction may not be that deep. On the other hand, for traded stocks, the challenges and risks to investability presented by sanctions could be practically open-ended. We demonstrate that revisiting the post-Lehman lows would imply downside of 50% from an index perspective, and ~40% from the forward P/E perspective (Fig. 1 and 2).

Poor visibility. With several false dawns since the start of the conflict, the markets may no longer assume a quick and easy resolution of the conflict and ‘worse before better’ seems a likely sequence to us; we thus recommend reducing exposure to Russia and differentiating carefully among the sectors and names.

Exposure and defenses. We see Financials as particularly badly exposed - both from the sanctions perspective and from the macro perspective. We also highlight the acute pressure on economically sensitive consumers, exposed to the escalating trade wars. We again stress that the best defensive trade comprises exporters with no unwanted political affiliations as these also benefit fundamentally from the weaker ruble. The sell-off on 28 August provides a good illustration of the phenomenon (Fig. 3 and 4).

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So Buy US Stocks... because nothing says 'global growth' like a contagious collapse in a major nations markets...


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Fri, 08/29/2014 - 09:33 | 5158026 RonBurgundy
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Just so long as there's someone to blame it on

Fri, 08/29/2014 - 09:35 | 5158037 GetZeeGold
GetZeeGold's picture



If you're volunteering......that would be swell.

Fri, 08/29/2014 - 09:43 | 5158055 Zirpedge
Zirpedge's picture

I think this means that the NY Fed invited JP Morgan to review Ukraine's books and consult on their positions. The next morning JP Morgan changes it's long gold position and instigates a series of cascading defaults ultimately bankrupting Ukraine?

Fri, 08/29/2014 - 09:44 | 5158078 Manthong
Manthong's picture

Hmm.. ever think about how a bowling pin feels?

Fri, 08/29/2014 - 09:57 | 5158144 linniepar
linniepar's picture

Priming the catalyst.  Expect another lehman within 6 months...

Fri, 08/29/2014 - 10:02 | 5158166 Stackers
Stackers's picture

JPM calling for a "Lehman like shock" ? ...... Does this mean JPM is going to pull Ukraine's credit lines over night for no reason in a bid to bankrupt them and pick up their assets for pennies on the dollar ?

Fri, 08/29/2014 - 13:14 | 5159239 TheSecondLaw
TheSecondLaw's picture

That's what Chase Manhattan (name at the time) did to South Africa in the 80's after supporting it right through apartheid before that.

Fri, 08/29/2014 - 09:58 | 5158148 Save_America1st
Save_America1st's picture

I think it's more like:

Everything the government and the banksters have done since Lehman is going to lead to a Lehman-style shock. 

There....fixed it for ya, assholes. 



Fri, 08/29/2014 - 09:59 | 5158154 A Nanny Moose
A Nanny Moose's picture

But but but......Broken Windoze?!?! They will need a fixin'

Fri, 08/29/2014 - 10:42 | 5158351 Manthong
Manthong's picture

"“Everything the government and the banksters have done since Lehman is going to lead to a Lehman-style shock. 

There....fixed it for ya, assholes”'"


Everything the government and the banksters have done since 1913 is going to lead to a Lehman-style shock

There… fixed it a bit better.

Fri, 08/29/2014 - 09:48 | 5158094 josephpetronyc
josephpetronyc's picture

yes if rember the ukrain did send they gold to jpm ;) now defualt its mine and i can cover some of those paper shorts i have been writing  . thanks russia and president Zero for doing nothing

Fri, 08/29/2014 - 09:40 | 5158056 nope-1004
nope-1004's picture

JPFed.  Sick of listening to these bankers spew their garbage.  Tell us something we don't know about an economy in terminal decline, idiot?


Fri, 08/29/2014 - 09:43 | 5158067 knukles
knukles's picture

Can always blame it on Zeus and Helios, call it divine and be done with it.  Oh and don't let me forget the two modern gods of weather, Haarp and Chemtrail

Fri, 08/29/2014 - 09:50 | 5158103 williambanzai7
williambanzai7's picture

Fri, 08/29/2014 - 10:51 | 5158408 forensicator
forensicator's picture

They know the crash is coming and by damn, Putin must be the fall guy.

Fri, 08/29/2014 - 09:33 | 5158030 Doubleguns
Doubleguns's picture

Soon to be slaughtering muppets by the millions.

Fri, 08/29/2014 - 09:35 | 5158031 RisingSun
RisingSun's picture

MOAR MOAR Russian "non-involvment" in Ukraine. Putler soon will look like a pinocchio.

KOSTROMA: Several dozen women gathered on Thursday (Aug 28) outside a military base in central Russia to demand Moscow come clean about where their husbands are after reports of secret funerals for soldiers covertly sent to fight in Ukraine.

From few days back:

Some pics of those funerals & more than 400 dead Russian "volunteers" soldiers in Ukraine: (400 Russian dead soldiers and what they mothers are saying) (NSFW pics of dead Russian soldiers in Ukraine)

Fri, 08/29/2014 - 09:43 | 5158072 Winston Churchill
Winston Churchill's picture

Still flogging your dead horse ?

We don't care about the Ukrainian battle. Its the war, stupid,that matters.

Try to look at the bigger picture insted of getting bogged down in the weeds.

You are falling into your PTB programming, take a red pill, and chill.

Fri, 08/29/2014 - 09:51 | 5158108 Bay of Pigs
Bay of Pigs's picture

He is a troll/spam bot. Don't waste your time.

Fri, 08/29/2014 - 09:44 | 5158079 Haus-Targaryen
Haus-Targaryen's picture

In other news -- the Ukie government is still run by shithead puppets. 

Fri, 08/29/2014 - 09:38 | 5158048 RattNRoll
RattNRoll's picture

If it goes nuclear it wont matter anyways.

Fri, 08/29/2014 - 09:43 | 5158077 NoDebt
NoDebt's picture

True. But the day before that, markets will again be hitting new all-time-highs.  There will be a futures ramp early the next AM and then everything will be wiped out.    That's called "going out on top".

Fri, 08/29/2014 - 09:51 | 5158110 Keyser
Keyser's picture

That won't happen for a variety of reasons... 

Fri, 08/29/2014 - 09:47 | 5158059 NoDebt
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"markets may treat this as a Lehman-style shock"

Why?  The two situations are completely different.  Lehman was about counterparty risk and financial contagion between large globally-interconnected banks.  I don't see that here.  

China finally collapsed it's metals-backed rehypothecation chain, which ZH had been crowing about for YEARS.  And what happened to global markets?  Nothing.

Entire nations along the southern Europe are either already collapsed or wards of the ECB/IMF.... markets don't care.

ISIS comes out of nowhere and takes over half of Syria and Iraq- including oil-producing territory.  What happens?  Nothing.  In fact, the price of oil is DOWN since then.

So why should Ukraine and a proxy war with Russia bother them more than the above events?  This is a big nothing sandwich as far as markets are concerned.

Now go buy some stawks.

Fri, 08/29/2014 - 10:17 | 5158220 Dapper Dan
Dapper Dan's picture


"ISIS comes out of nowhere and takes over half of Syria and Iraq- including oil-producing territory.  What happens?  Nothing.  In fact, the price of oil is DOWN since then."

Oil price is down because gas sales in the US are way down.

The question I have,  why is this happening?

scroll down link and look at 2014 compared to 2013    jan thru may

Fri, 08/29/2014 - 10:42 | 5158354 Winston Churchill
Winston Churchill's picture

About -18% down yoy.

Hard to fudge that number, unlike the others.

Fri, 08/29/2014 - 09:43 | 5158062 Dr. Engali
Dr. Engali's picture

Ahhh, and there it is, their plan for the collapse. Which we knew along was the inevitable outcome.

Fri, 08/29/2014 - 09:42 | 5158064 q99x2
q99x2's picture

The US markets are a software application. Even if the electricity is lost the BUPS and power generators will keep it going.

BTFD M'Fers. 

Fri, 08/29/2014 - 09:42 | 5158069 FrankieGoesToHo...
FrankieGoesToHollywood's picture

Is this intended to be a forward looking positive forecast for the JPM share holders?  I mean if there is a huge bankruptsy coming like Lehman, JPM, fueled by FED money, stands to make a killing.  Again.

Fri, 08/29/2014 - 09:44 | 5158074 Space Animatoltipap
Space Animatoltipap's picture

Nice excuse for their own collapsing madness.

Fri, 08/29/2014 - 09:51 | 5158109 nickels
nickels's picture

Obama-Putin tag team. Putin gets Ukraine, Obama gets excuse for declining market "despite inspired and heroic efforts by the Fed". Boat drinks later.

Fri, 08/29/2014 - 09:50 | 5158095 buzzsaw99
buzzsaw99's picture

the 2008-2009 event worked out very very very well for jpm. they probably refer to the era as "the good old days".

Fri, 08/29/2014 - 09:47 | 5158096 Shizzmoney
Shizzmoney's picture


"markets may treat this as a Lehman-style shock"

Therefore, we must invade!

Fri, 08/29/2014 - 09:48 | 5158097 Quinvarius
Quinvarius's picture

All those pension funds holding onto the banker's money in the stock market.  They want it back.  Those are just banker profits in the culling, and nothing more.

Fri, 08/29/2014 - 09:53 | 5158119 Son of Captain Nemo
Son of Captain Nemo's picture
JPMorgan Warns Military Escalation In Ukraine "May Lead To A Lehman-Style Shock"

Your move creep!...

If you get this one started book a date with all the execs at Goldman Sachs for the top of Freedom Tower...

I understand that the "slide" that will be built at the top in your honor offers the best view of Manhattan and is the most exhilarating ride you will ever have...

Fri, 08/29/2014 - 09:55 | 5158138 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

We believe that with the significant deterioration in the Ukrainian situation, markets may treat this as a Lehman-style shock for JPMorgan.


If anyone is reading the ministry of truth propaganda the read between the lines here is Russian hackers are penetrated deep enough into JPMorgan's computer systems that they will press the right buttons and cause a chain reaction meltdown if the Luciferian's masquerading as jews who ethnically happen to be Khazar's and their Ashkenazi blood relations who happen to be in the owner's circle of the Central Banks keep pushing to re-establish the Khazar empire in it's original geographical location aka the current Ukraine

Fri, 08/29/2014 - 10:30 | 5158273 StandardDeviant
StandardDeviant's picture

Wooowwww...  You couldn't ask for a better illustration of Poe's Law.  Very impressive.

Fri, 08/29/2014 - 10:06 | 5158183 londoncalling
londoncalling's picture

so so wrong

military escalation won't come

europe will back itself in to a deeper recession as it can only retaliate with sanctions

at some point some europeans will wonder why they are suffering and start seeing russia as the answer not the problem

i'm sorry to say but for now the problem for europe is being too allied to the usa

the usa is trying to use the eu as if it was the cold war the eu suffers the most though, and for what? the protection of america? from what? 

with friends like the usa right now, who needs enemies

interesting to see where cameron goes with this

it's not so hard to see where merkel goes with it though

Fri, 08/29/2014 - 10:06 | 5158185 SMC
SMC's picture


Teeing up the “blame game”. No doubt “Just Us” will get adequate warning.

Fri, 08/29/2014 - 10:11 | 5158207 LawsofPhysics
LawsofPhysics's picture

Sacrafice one of your own already you corrupt fucking bankers.  You can do it your way, or we can do it our way...


tick tock motherfuckers...

Fri, 08/29/2014 - 10:25 | 5158228 ekm1
ekm1's picture

Just one slaughtered lamb is absolutely not enough

Triple Lehman is inevitable.

The only issue is whether assassinations would be needed to trigger it or not.

Fri, 08/29/2014 - 10:18 | 5158233 NRGIsFree
NRGIsFree's picture

In other words..

Our inability to preside over the entire worlds energy supply and governance will result in collapse. As with any Pozzi continuos expansion is required. This expansions is now being sternly thwarted by BRICS nations. For the layman/American, "Russia is very bad and is very aggressive. Puttin is to blame for any discomfort you may experience. Please send money and cannon fodder to fight for "US national security interests".

Fri, 08/29/2014 - 10:32 | 5158290 nakki
nakki's picture

What ever happened to al-cia-da? I miss those days when we had just one enemy, everyone had just one name. It was so much easier for my feeble brain to understand.  Now we have the Russians separatist, the Muslim brotherhood, Assad, and the biggest threat to mankind like ever, Isis. Oh how I miss the good old days.

Fri, 08/29/2014 - 10:38 | 5158311 falak pema
falak pema's picture

Well the bank that iconises par excellence the TBTF mantra of "if you don't save us its the end of capitalism"; holding the financial WMD over the heads of the CBs since Lehman collapse; now changes the rhetoric after six years of ramping up the world Casino to no apparent effect.

With the OVERT collusion of the crony corrupt of TPTB, on ALL sides of the TRILATERAL, aided by the CB Zirp doctrine cum greenback QE pump n dump.

Putin and Ukraine now become the bogey man false flag trap, puttin the blame on mame; Commie minded Eve once again, for having bitten the apple of Statist totalitarianism. 

Convenient excuse for explaining why McCain killed peaceminded, industrious Abel of the middle class.

Its all about the Apple of Foxconn and how it generates PROFIT for ONLY the 0.001 % !  

No trickle down there except gun n bullets! 

"We made Putin an offer he couldn't refuse and he has! Not on! "

Fri, 08/29/2014 - 10:39 | 5158334 vulcanraven
vulcanraven's picture

Predictive programming. 

Fri, 08/29/2014 - 11:10 | 5158516 huggy_in_london
huggy_in_london's picture

The market is way too complacent on this and all that is going on in the middle east (and africa for that matter - wasn't that the next great thing?  I'll have ebola with my fries please).

There will come a day, and maybe its next week, when the penny drops and whoosh, there won't be a buyer in sight.  It won't even need much selling but the buyers will just disappear.  The only thing keeping them there now is this self affirmation amongst them that the market is supposedly "still cheap, or hey, at least not expensvie", and that "theres nowhere else to put your money".  Both of those sound bites are incorrect.  Sometimes capital preservation is much more important than chasing the last percent. 

Vol is always mean reverting, and it's always just a question of time.  Vols across all markets at these type of levels is screaming that an accident is just around the corner.  

Right... now red arrow away....but deep down you know that your "profits" are a headline from becoming your worst nightmare (nothing worse than that over a weekend....)

Fri, 08/29/2014 - 11:22 | 5158585 Ban KKiller
Ban KKiller's picture

JP Morgan. Always tells the truth. Their truth to their muppets. 

Death, by law, to banksters and their stooges. Messy, but simple. 

I mean, IF we had law that applied to banksters. 

New sticker "This bank is a continuing criminal enterprise". 

Fri, 08/29/2014 - 11:30 | 5158631 Rouge Trader
Rouge Trader's picture

Putin should stop being a pussy and start escalating. 

Fri, 08/29/2014 - 20:09 | 5160881 cart00ner
cart00ner's picture

Why not - he's already being accused of it... 

Fri, 08/29/2014 - 11:56 | 5158773 rosiescenario
rosiescenario's picture

The Ukraine situation creates a major negative impact on the German economy, which in turn damages Deutsche Bank which happens to have out about $75 trillion in derivatives. The counter parties of these include all the major banks. Therefore, any military action in the Ukraine makes the bankers pucker up.

Fri, 08/29/2014 - 12:52 | 5159110 digitalindustry
digitalindustry's picture

Russian Hackers did it.

Fri, 08/29/2014 - 13:53 | 5159474 zipit
zipit's picture

There will be another shock.  It will make the Lehman one look like child's play.  The movie theatre is full, the fire exits are locked.  Try to get out.

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