The big news of the day is the announcement by four Ukrainian oblasts — Lugansk, Donetsk, Kherson and Zaporizhia — that they will be holding referenda to join the Russian Federation next week.

Now, I know we discussed the possibility of these referenda in the past. I’ve brought it up in past Market Reports, interviews and podcasts. It was all part of my “September to Remember” theme that’s been at the forefront of my thinking these past few months.

Well, the rumors were true. And they made sense. Russia was preparing these places with practical civilian infrastructure moves since the initial military push established control for them in the south.

They’ve replaced government officials, brought in the Russian ruble as the local currency, issued Russian passports (which the EU refuses to honor) and change the character of these places at a functional level to both stabilize them and prepare for this outcome.

You can throw all the shade on these referenda you want, call them shams, cynical political moves or what have you but in the realpolitik sense, these will be just as real as the one in Crimea in March of 2014.

There really is no other option for Russia to do this now that NATO has all but entered the war. Reports are that as many as one-third of the troops used in the great Kharkiv counteroffensive were NATO troops, not Ukrainian military.

Once these referenda take place, and they will very likely be overwhelmingly in Russia’s favor, it will allow Russia to move its regular military assets not covered by the Special Military Operation declaration by Putin into these regions.

It will mean a clear advancement of Russia’s military to the West and do so after the main bulk of Ukraine’s veteran forces have been obliterated. No longer will NATO be prepping a war against a hodgepodge of Russian special forces, LPR/DPR militia and Chechens.

Now there will be front line Russian military assets in the Donbass. In this way the SMO doesn’t necessarily have to be upgraded, but it will.

The West knew this was coming. The rumors told you that these referenda were in preparation for months. This is why there had to be a successful offensive in the north near Kharkiv. Without this there is no narrative to spin other than ‘Putin is winning.’

Now the Bellingcat/ISW boys can run with the “Putin is desperate thanks to Kharkiv” noise. It’s silly. It’s propaganda but it’s what they have.

Putin is due to speak soon. The betting odds are on his upping this from an SMO to a “Counter-Terrorism Operation.” This will bring far more military assets online after having moved forward Russia’s defense forces to the Donetsk River.

For the most part, as has been pointed out many times, the Russian Air Force has been mostly absent from this fight. Too many in the West believe this is because Russia doesn’t want to put these assets at risk out of fear.

That’s very possible.

The other possibility is that there was no need to put these assets at risk while artillery was doing a fine job of making sure the line of contact was secure. With the attacks on Russian territory that have taken place recently Putin has all the political support he needs to take this to the next level.

I was asked this morning on Twitter if I thought Putin was waiting for these moves until after talking personally with India’s Narendra Modi and China’s Xi Jinping.

That’s possible. The SCO Summit looks a lot more significant now as do all of the border conflicts that arose out of nowhere while it was happening. Clearly someone was trying to send a message that Putin better not do what he intends to do or the consequences would be horrible.

I think we can see now how that message was received.

It Putin didn’t get the green light from Modi and Xi I would be completely shocked. It plays to their strategy of forcing the West to overcommit to a war it can’t win or finally suing for peace.

The panic from Zelenskyy and company is now very real. Biden keeps sending money there to get as much love from the Military Contractors as possible before the mid-terms.

In the near term I don’t think this changes very much. Russia will consolidate its gains and then wait out the winter to see how the West deals with it.

It’s possible that once these referenda happen there will be a lot of soul searching on Capitol Hill, especially after a lot of the old Davos warhorses leave the stage in January.