‘The market tends to rebound’ following geopolitical crises: Yahoo Finance’s Andy Serwer

Yahoo Finance's Editor-in-Chief Andy Serwer discusses how the Russia-Ukraine war and subsequent sanctions will impact global markets as well as Putin's endgame.

Video Transcript

- So much of the Russia Ukraine developments circle around one character, Russian President Vladimir Putin. And that's the subject of this weekend's piece from our Editor in Chief Andy Serwer. And Andy, your piece touches on Putin's motivations for all of this, but you noted that if markets are any indicator, they too will shrug this off.

ANDY SERWER: Yeah. Boy, markets, talk about a difficult time for all of us to process this information, Brian. And we saw those two rally days at the end of last week and then this morning. Things are looking pretty grim.

I guess you're talking about what's going on with the ruble and Russian rates. But let's not forget the other piece of news this morning is Putin putting his nuclear forces on high alert, and nuclear forces high alert, not good for stock prices, right? I think that's kind of a simple correlation.

But yes indeed, over the long run, this is sort of my point, that these times of crisis and even the most significant, you go from Cuban Missile Crisis to 9/11 and then even bigger events like Vietnam and World War II that, over time, the market tends to rebound. And that goes back to the old line that stocks go up, and our economies expand, and the stock market reflects that. So over time, the market will rebound.

And it usually isn't that long. It's usually 12 months from these kinds of events. That is, if we don't go into a recession, which at this point, from the US standpoint, would be doubtful that we're going into a recession. But that suggests that if we're going to rebound, that Putin's not necessarily going to be the winner here.

- And your column got me thinking back to past periods of crisis for markets. And of course, the Great Recession. I'm sure you remember this. There was this thought that somehow we can decouple from what was happening in the housing market.

But I think, obviously, that was proven wrong, and it might be proved wrong again in here. I know markets are declining here. But JPMorgan out this morning saying the Russian economy can fall 20%. It's going to be hard to think that US markets can decouple from something like that.

ANDY SERWER: Yeah. That is a great question. And by the way, you wrote a great column yourself this morning, Brian, about this and how it's a financial war really at this point. And you're seeing a tremendous amount of rallying by the private companies in the United States, the government of the US, the governments in Europe, and private sector in Europe as well.

And this is putting a tremendous amount of pressure on Russia. The Russian economy is not that big. It is not that impactful to the global economy. It is a huge force in the energy markets when it comes to Europe. We know that a country like Italy gets 40% of its energy from Russia.

And they're about 10% overall of the global energy market when it comes to supplying oil and gas. So that's very significant there. But after that, not so much. You look at exposure by US companies. McDonald's has about a 4% share. There was a few others. In other words, McDonald's gets 4% of its revenues reportedly from Russia. But other than that, there's not so much exposure.

But you're right, decoupling is hard. This conflict can cause all kinds of friction in supply chain, beyond even oil and gas as well, disrupting European economies, which would have a tremendous amount of impact for the US. So I think that's an excellent question. Obviously, it's not as central as Europe. But it remains to be seen exactly how central it is.

- How about China? How do they play into this? Second-largest economy in the world. We know that Xi Jinping, the president, has tried to serve as perhaps one of these brokers, as many other jurisdictions have, to a negotiation between Ukraine and Russia. How important are they to all of the political calculations here for Putin?

ANDY SERWER: Hugely important. And if Putin continues along this course or even goes further off the rails, Brian, the person perhaps with the most leverage here globally, outside of Russia, is Xi Jinping. As he suggests, they have those two leaders, those two presidents, Putin and Xi Jinping have become closer over the past couple of years, in large part as an alliance against the West and, in particular, the United States.

I wrote, be careful of your new best friend here, m Xi Jinping. This is your new best friend that we're talking about here. Because national sovereignty is supposed to be a big deal for the Chinese. But then you look at what Xi Jinping has to deal with now that Putin has invaded Russia. So I think that the Chinese president has leverage.

But it's tricky because he has to balance off-- he doesn't want to throw himself back into the camp with the US. So it's a balancing act. But you've already seen late last week the Chinese president was calling for Putin to stand down a bit. So I think this very much bears watching, that relationship.

Yahoo Finance Editor in Chief Andy Serwer. Thanks so much.