Stocks reacted with a sharp though shallow sell-off on the news this morning with the S&P 500 (^GSPC) falling about a half percent in early trading. It says much about the stock market’s lack of concern towards the conflict that a less than 1% drop would be considered a negative. Less than a month ago it looked as if the combination of ISIS and Putin were going to break the bull’s back.

In the attached clip Euro-Pacific Capital CEO Peter Schiff says U.S. investors are ipmervious to anything short of a Russian invasion of our Central Bank. “The real deal is the Federal Reserve. That’s what everybody cares about. Perversely to the extent that we do have a difficult international situation that may give the Fed the excuse that it needs to postpone the taper and rate increases. That’s what the market wants. That’s what’s driving this market. That’s the only thing driving this market.”

The complacency may be Fed-based as Schiff says but history is on the side of the bulls when it comes to the logic of ignoring international macro issues when investing. No less an authority than tax-hedging billionaire Warren Buffett has repeatedly reminded his acolytes that stocks bottomed in 1932, well-before it became clear that the U.S. would be dragged into World War II, let alone emerge triumphant.

It’s also important to note the disconnect between media reportage and organic surprise. It’s been clear that Putin is going to do whatever he wants for months. His launching an attack (or “incursion”) today is a surprise but it’s hard to make the strong case that Putin is going to stop before achieving his goal of expanding Russia’s borders to create a land-link to Crimea.

Even assuming Putin is successful (and why wouldn’t he be?) Schiff says investors are unlikely to flee stocks unless or until there’s a sustained threat to the U.S. Dollar. “We’re flexing a lot of muscle we don’t have and we’re irritating people we need to be sucking up to. America depends on its ability to export dollars to import all the things we don’t produce.”

Putin of course would love for the dollar to lose its status as the global currency of choice. His march to Crimea may not be a threat to our shores but the manner in which he’s exposing the United States’s impotence weakens our stance with trade partners. For now at least this is a situation that won’t matter until it really matters. To best gauge that point keep your eye on the dollar.

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