Obama's Cold War Rhetoric Hurts Stocks More than Putin – EXCEPT FOR THESE STOCKS

Yesterday, President Obama spoke boldly about Russia’s incursion into the Ukraine. It was a must, given that he had just allowed the Russians to trample over a Ukrainian nation we promised to protect when they turned over their nuclear weapons. Now defenseless, we did nothing but complain about it while Putin ignored us and pushed through a sovereign state to “protect” a Russian speaking population, and oh yeah, the very valuable Russian naval base located in Crimea. After the fact, our NATO friends on the Russian border are worried we might leave them hanging out in the cold as well, so the President and Vice President have traveled to Europe to reassure our friends and allies that we really do have their back (and never mind that Crimea thing).

NOTE: I just authored an article at Seeking Alpha that is a must preliminary read to this report. Don’t worry, it will open in a new window so you will not lose your place here – JUST CLICK THIS LINK: Cold War Rhetoric Threatens US Stocks More Than Russia.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

We took note that the US stock market actually celebrated when the West did not face up to Russian aggression, because greedy traders would rather not see their portfolios disrupted for this obviously Russian territory (as some sought to see it) due to a small majority of Russian speaking people located there; never mind the fact that it has been Ukrainian for the last 60 years! After the official annexation by Russia and abandonment by the Ukraine, the SPDR S&P 500 (NYSE: SPY), SPDR Dow Jones (NYSE: DIA) and PowerShares QQQ (Nasdaq: QQQ) all took back losses that started when the Russians first moved in under cloak of unmarked cloaks. So I authored, Risk On, the Snake in Our Garden Promises Not to Bite Anybody Else.

At this point, all the President’s bravado does is test the pride of the proud Russian leader and probably push him to consider counter-actions to current and potential US/EU sanctions. Let’s think about some of the things Russia could do shall we? The most obvious counter would be to cut off the gas to Europe that runs through Ukraine and Belarus. This would further punish Ukraine, and is possible despite the Ukraine controlling 80% of Crimea’s energy supply. I doubt Russia cares if Crimea goes dark for a few days if it can severely scare Europe by doing the same to their Western neighbors. Many EU members are reliant on Russian energy, though Germany is obviously well-served by alternative energy resources. Don’t forget that Germany is a manufacturing hub and requires significant energy, some of which it sources from Russia.

Let’s also note here that some of the President’s threats have included public statements about re-sourcing energy from other places, like say the U.S., to Europe. That’s an open threat to Russia and something that could push the powerful Russian position into action; it might test the West by showing it just how needy it is of its energy. These issues obviously support energy prices and companies, including major players like Exxon Mobil (NYSE: XOM), Chevron (NYSE: CVX), ConocoPhillips (NYSE: COP) and Phillips 66 (NYSE: PSX). It should also benefit natural gas and mixed producers and explorers because of the expected viability of LNG over the next decade. That means look for benefits for Chesapeake Energy (NYSE: CHK), Pioneer Natural Resources (NYSE: PXD) and Cheniere Energy (NYSE: LNG). To avoid company specific risk, buy the Energy Select Sector SPDR (NYSE: XLE), or the United States Oil (NYSE: USO) and the iPath Crude Oil (NYSE: OIL).

Another thing Putin could do is harm the euro and the U.S. dollar, along with Western economies. Cutting off the energy to Europe would do direct damage to the European economy and currency, but the dollar might benefit as a relative substitute. So, I expect we can expect Putin to find other means to strike against the dollar as well. Let’s not speculate about the many legal and illegal means that might be employed by the former KGB man, but you can be sure he’s been thinking about it for a long time and has plans at the ready. So that means gold and silver should find demand again, as mankind’s fall-back currency. Therefore, investors would want to look toward the SPDR Gold Trust (NYSE: GLD), iShares Silver Trust (NYSE: SLV), Market Vectors Gold Miners (NYSE: GDX), Direxion Daily Gold Miners 3X Bull (NYSE: NUGT) and the physical commodity, along with many of the miners themselves like major producer Goldcorp (NYSE: GG) and Newmont Mining (NYSE: NEM). My recent write-up on this at Seeking Alpha entitled, The Asinine Gold Selloff, caught a lot of interest and debate – please feel free to comment as well.

Finally, the old defense sector plays should find some support from Congress given the reality of the dangerous world we’ve just been reminded of. Plus, we’re going to be supplying Ukraine and other weak Eastern European nations with weapons to defend against that bad neighbor. So, ideas like Alliant Techsystems (NYSE: ATK), Lockheed Martin (NYSE: LMT), Northrop Grumman (NYSE: NOC), Raytheon (NYSE: RTN), General Dynamics (NYSE: GD), Honeywell (NYSE: HON) and Boeing (NYSE: BA) all make the grade. To avoid company specific risk, buy the SPDR Aerospace & Defense ETF (NYSE: XAR), iShares U.S. Aerospace & Defense (NYSE: ITA) and PowerShares Aerospace & Defense (NYSE: PPA).

Therefore, even though the market might be threatened by this geopolitical tension, there are specific sectors within the broad pool of securities which might benefit. We suggest energy, precious metals and defense for some protection.

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