Markets and Geopolitics intersect in the Great Game being played in Ukraine. The West’s economies are diverging as a result of inflation shocks and looming recession. Divergence will play into Russian’s hands, and presents a clear market strategy: Buy Dollars and Sell Europe.
Ultimately the economic history books will record Russia’s invasion of Ukraine as a speedbump, and perhaps a triumph for a United Europe. The consequences of an Economic War with China could be much, much more significant!
Macron’s victory has been hailed as a market plus, a win for Europe and common purpose, but it’s likely just a crisis averted, perhaps, for a few more years. Around the globe populism will likely be fanned by inflation, food and energy insecurity and become an increasingly destabilising force on markets.
Energy and Food Security are intricately linked – and constitute the biggest and most immediate “no-see-um” threat markets have faced in decades. It’s time to get real about addressing energy transition and security, and climate change by accepting Nuclear energy is the most viable solution in the time left us.
The West will win the economic war against Russia, but it will take time and impose recessionary costs, while triggering pain across markets (including the housing bubble). But when it’s done… it will time to put your buying boots on!
Lots of stuff we should be worrying about this morning, but who can resist the opportunity to take a pop at the perfidious, shameless French.. They threaten the future of Europe and everything else. (Well… maybe..)
Markets are nervous and set to tumble – spooked by $140 oil, soaring commodities, rising populism on inflation, and stagflationary risks. Some ask: “perhaps this could all be avoided by settling with Putin?” Forget the past at your peril. Appeasement is not the answer. Intimidation stops when you fight back. Now is the time for the west to step up the pressure.
Trying to strip out noise from facts has never been so complex! It’s time to resort to the rarest of all commodities; Common Sense - to work out how this will likely play out. There will be clear winners – and one massive loser – and significant economic pain before we get there.
The risks in Ukraine are escalating as Russia shows the nuclear card – but markets are behaving as if its Russia has been backfooted as the West finally wakes-up to the threat. Russia might have miscalculated some aspects of its strategy, but it would be wrong to think much has changed – yet!
