The latest weekly PULSE market monitor from Citi analysts Tobias Levkovich, Lorraine Schmitt and Christina Wood is out.

“The PULSE framework is neutral on two (unanticipated and liquidity), negative on one (sentiment) and mildly positive on two (earnings and valuation),” says the note.

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U = Unanticipated = “A brazen act of aggression”

As this is written, however, drum beating in troubled Ukraine is reaching a fever pitch and Russia is seemingly making moves that point to serious military intervention/annexation in the Ukraine. The Ukraine is mobilizing men and military to counter Russia’s troop influx into Crimea; the country’s new Prime Minister said the Russian action was tantamount to a “declaration of war to my country.”

Russian troops have reportedly fanned out across the Crimean peninsula and taken over various military and civilian installations. The move drew a strong reaction from the Western world. The UK and France cancelled their participation in a planning meeting for the G8 summit, while President Obama called it a “brazen act of aggression.”

Ukraine: Flight to safe-havens

The standoff between Russia and the USA could drive investors out of stocks into safe-haven investments such as gold, or at least switch into defensive and quality stocks until the crisis defuses. In emerging markets, even European, investors may head for the exits preferring US Treasuries and currencies such as the US dollar and the yen.

One analyst said Monday could see a 2% downside gap if hostilities broke out.

A media report asked whether the Ukraine geopolitical crisis had the potential to become a black swan event.

Investors still euphoric

“Our Panic/Euphoria model held steady in euphoria territory,” says Citi’s market monitor with respect to investor sentiment. “This week’s Panic/Euphoria reading was 0.55, versus last week’s revised number of 0.55. Euphoria readings indicate the market may retreat with an 83% historical probability of losses in the next 12 months.”

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Given that Ukraine has been in the news for a while, aren’t investors being unduly sanguine about its potential for damaging stocks?