zerohedge.com / by Tyler Durden / 08/29/2014 09:31
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).
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