Putin's threats to use nukes in Ukraine have been widely discounted as mere bluffs in the west (at least publically).

 

I think it's wise to consider the possibility that he actually would use low-yield nukes, and the implications of such a course of action.

 

Consider the following:  Russia detonates a 1 kT nuke (~10% of the size of the one used on Hiroshima)  over the Black Sea, perhaps 25 miles away from Odessa.  This would likely kill few if any people, and the fallout would likely be relatively small. 

 

This would likely force Ukraine to accept the annexation of their eastern provinces, and give Putin a victory that would allow him to remain in power.

 

World opinion, especially in the west, would be outraged, but how long would it last?

If the detonation of the nuke forced Ukraine to accept the annexation of their eastern provinces, and stopped the war, many, especially outside the west, would be happy, as normal trade flows might resume fairly quickly, which is important to the third world, currently facing high prices for food, fuel, and fertilizer.

 

The alternative is a long, grinding war which neither side is likely to win decisively.

 

Markets would tank hard at first, but would likely come roaring back. 

 

The more successful Ukraine is on the battlefield, the more likely it is that Russia would go nuclear.

 

Due to this possibility and the possibility of other shocks, I remain over 90% in cash.