NEW YORK (Real Money) -- The market initially got it wrong. That's how I feel in retrospect about the downing of MH17 over Ukraine. That July 17 event I now think set into motion a lot of what caused last week's selloff and could cause more pain the weeks ahead.
It didn't hit me until I read last week that Ben van Beurden, the charismatic CEO of Royal Dutch Shell (RDS.A), described the crash as the event that could be a "bit of a game changer" from "a trade and investment perspective."
First, it was on the conference call of a terrific earnings report and the stock went higher, which threw me off. Initially, I dismissed it. But then, when I mentioned it to BP (BP) CEO Bob Dudley, he was pretty matter of fact that it's a big deal. Considering that BP's partner Rosneft pumps roughly a million barrels of oil a day from Russia, much more than any other company, the game-change comment seems far more than just a throwaway.
In reality, it represented a change of sentiment along so many measures of business. First, because Vladimir Putin apologized for nothing and seemed hardened by the incident, one has to presume that it would mean nothing to him to turn off the natural-gas spigot to Europe.
It is inconceivable to me that the continent wouldn't almost immediately be thrown back into a recession if that happened. It's one thing to be cold. You can put on a sweater. It's another thing to have shut down plants that use natural gas, and given how it is the fuel for much of industrial Europe these days, shutdowns would seem likely.
Europe cannot sustain a business interruption. It would either have to come to the peace table and say to Russia you can have Ukraine, something that at least in our president's eyes seems to have a real historical parallel to the appeasement of Germany when it came to the Sudetenland of Czechoslovakia, or it would put through sanctions that at another time would mean, let's just say it, war. You have any other answers? I know I don't.