So Vladimir Putin says the "military exercises" are done. He says he does not want to annex the Crimea, and military actions are a "last resort." That has helped send Wall Street shooting higher at the opening bell.
The papers are full of advice to President Obama on what needs to be done, including headlines such as "Bold Energy Policy Best Response to Russia in Ukraine," and "The Economic Levers That Might Stop Putin."
No one knows what will ultimately deter him, but he is not presiding over a healthy economy and that is likely the major factor.
Putin's Russia is facing:
1) selling pressure on the ruble;
2) outflows of foreign capital;
3) sanctions from many international organizations;
4) potential disruptions of oil and gas supplies to Europe; and
5) the potential of a civil war in the Ukraine.
Of all of these, the risks to the gas supply are most relevant. He is facing the potential for disruption of the pipelines that run through the Ukraine, through shut-offs or sabotage. There is, of course, considerable risk for Europe: a disruption of gas supplies would cause a spike in prices while Europe is still in winter. That would be an unwelcome headwind for a very fragile European recovery.
Meanwhile, money may start to trickle into the Ukraine soon with International Monetary Fund (IMF) officials already there. The U.S. has offered $1 billion in loan guarantees, but they want it used to reduce gas subsidies and they also want cuts in spending. This is exactly what the IMF has been seeking, unsuccessfully, from the Ukraine for years. They cut off more loans in 2011, precisely because the Ukraine government never reduced gas subsidies or cut spending.
For the moment, European stocks, particularly financials, are rebounding, with most bourses up two percent or more. The (a reliable barometer of market risk appetite), along with emerging assets.
In the U.S. yesterday's gains in the "flight to safety trades" are all reversing, with the , , and Treasuries weaker.
are down, reversing most of yesterday's gains.
Elsewhere
1) Earnings were a mixed bag, with Autozone beating and RadioShack a pure mess.
The battered electronics retailer is down 20 percent as the company reported a dramatic miss (loss of $1.29 vs. expectations of a 14 cent loss and $935.4 million in sales versus expectations of $1.12 billion), with same store sales down 19 percent.
The chain blamed a litany of factors, including "a holiday season characterized by lower store traffic, intense promotional activity particularly in consumer electronics, a very soft mobility marketplace and a few operational issues." As a result, they are closing 1,100 stores and will have about 4,000 left.
It's pretty simple: they are in free-fall. Despite a re-design of some "concept" the stores (brighter, easier to find products) they are losing market share fast. Like Circuit City, like JC Penney, the management team is finding it hard to overcome the slow economy and the loss of market share.
Much of the decline is in wireless sales. Their expenses are way out of whack with their costs: gross profit of $288 million vs. selling, general & administrative expenses (SG&A) of $389 million.
2) Chip maker Qualcomm rallies after raising its quarterly dividend by 20 percent to 42 cents per share and increasing its buyback authorization by $5 billion to $7.8 billion. The company has repurchased 27.6 million shares for a total of $2 billion so far this fiscal year.
They have been on a roll since the Barcelona wireless conference, with talk they will be major players with China Mobile.
—By CNBC's Bob Pisani