The market's, thus far, yawning response to the Ukraine conflict...

According to economist and Reuters columnist Anatole Koletsky, "Russia’s annexation of Crimea is the most dangerous geopolitical event of the post-Cold War era". And according to Ian Brenner, President of the Eurasia Group, “We are witnessing the most seismic geopolitical event since 9/11". While these gentlemen's statements should not be taken in the least way lightly, clearly, the U.S. financial markets, to this point, have taken the Ukraine situation, well, lightly.

Yes, today, the Dow tumbled 154 points, the Nasdaq 31 and the S&P 14, but wouldn't you think that "the most seismic geopolitical event" would wreak a bit more havoc than a less than one percent sell-off of the major U.S. averages (not to suggest that the worst isn't yet to come)? Especially since everyone and his uncle, and his advisor, says the market is way overdue for at least a 10% correction. What better excuse to lock in 2013's amazing profits than the geopolitical event of an era?

So what gives? While, like I suggested, the market's reaction---like the conflict itself---may be far from over, I have a couple of theories as to why, thus far at least, U.S. stocks have greeted the situation rather yawningly:

One, the U.S. market's experience with political, geo or otherwise, events of late---think debt ceiling standoffs, budget battles, "fiscal cliffs" and Syria---has been that politicians will forever politic their way (kick the can) to a market-soothing resolution. It'll be interesting to see if indeed Putin is as careless when it comes to the economic consequences (at home) of his actions as some pundits claim. They'd have to be right if this is indeed to escalate to a level that would cause the market some serious consternation. For, when it comes to energy, for one example, Russia is no longer (potentially) the only game in town, and Putin knows it. And, suffice it to say, if the presently plummeting ruble is any indication, Russia's economy will have hell to pay if Putin can't, sooner than later, find a face-saving way out of this mess he's gotten himself into. Of course he had to know this going in, which is reason to be concerned.

And two, as I reported the other day, short interest on the S&P 500 is at a 52 week high. Meaning there's a fair amount of traders who were betting big on a market decline going into March. Now you'd think that the Ukraine situation, given its potential, would embolden short-sellers to step up their bets in a big way, exacerbating the downdraft, and, for the first time in a long time, actually make a little money betting against the market. But the thing is, life has generally been hell for the shorts for these past few years, and knowing that there's still plenty of sideline cash, perhaps looking for an entry point, they've got to be scared as, well, hell, that they'll get stung yet again at the first hint of resolution (the Dow, out of nowhere, sprung from down 250 to down 100 at one point this afternoon).

Not to say that the Ukraine conflict won't indeed prove to be the catalyst for the inevitable stock market correction to come---and, since its inevitable, I say the sooner the better---at this juncture it's far from certain.

Stay tuned... But don't react...