New Delhi, Feb. 15 -- Last week, I wrote that the markets would be volatile but optimistic. That proved prescient despite the slam-dunk trading session on Friday. What triggered the fall on Friday was the combination of political turmoil and the possibility of Russia returning to the US Dollar Standard and working with United States to develop natural resources, particularly energy. Emerging markets sold off as investors expected a flight of capital, with money moving to America amid prospects of better corporate earnings if conflicts ended.

From a rational trader's point of view, this opens a back door to dichotomy. On the one hand, cessation of hostilities means better prospects for global trade. On the other, a flight of capital towar...