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"Riding the rally" but worried about geopolitics: Russia-Ukraine threatens bull run, strategist says

U.S. stocks jumped Monday morning despite rising tensions in Eastern Europe and the Middle East. NATO said Russian manned artillery units operating inside Ukrainian territory were firing at Ukrainian forces, escalating the separatist war between the Kremlin and Kiev. Russian trucks purportedly containing humanitarian provisions had also crossed into Ukraine without clearance by Ukrainian officials, a move condemned by NATO’s secretary general.

Meanwhile, Islamic militants took control of a Syrian air base located in northeastern Raqqa province over the weekend, cementing ISIS’s control in the region.

Nevertheless, U.S. stocks were sharply higher: In recent trading, the Dow was up 0.6% and the S&P 500 within a hair of 2000 for the first time. The price action raises the question of why the market isn't paying more attention to geoplitical events. 

David Nelson, chief strategist at Belpointe Capital, believes U.S. stocks will move higher and is “riding the rally” like many other investors. He believes stocks are pushing new boundaries not because of Fed policy but because the economy is getting stronger. He expects the Fed to raise interest rates in the first quarter of 2015.

Still, he is concerned about the risk Ukraine poses to the bull market.

“Ukraine is still the bigger issue…there are definite economic implications for stocks and markets,” he notes in the video above.

The European economy has taken a hit and is teetering toward recession again because of the crisis in Ukraine. An index that tracks business confidence in 7,000 German firms dropped to its lowest level since last July, reports Reuters. GDP in Germany, the largest economy in Europe, shrank 0.2% between April and June.

Meanwhile, French President Francois Hollande asked his prime minister on Monday to form a new government Monday, hoping a shakeup of his cabinent can help prevent Europe's second-largest economy from slipping into outright recession. 

Related: European vacation proves costly for many U.S. investors

Nelson argues that what’s happening in Russia and Ukraine symbolizes a broader trade war against U.S. corporations.

Russian President Vladimir Putin slapped sanctions on America’s poultry industry, according to the National Chicken Council. Russia is the second largest importer of U.S. chicken. Last year U.S. poultry produces exported nearly 267,000 metric tons of chicken to Russia, valued at $303 million. The Wall Street Journal reported earlier this month that Boeing (BA) and United Technologies (UTX) are stockpiling titanium parts in case economic tensions between Russia and the West disrupt supplies of the metal.

Related: Putin clamps down on Big Macs

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