In the past 15 years the US economy has left Europe in the rear-view mirror. While America booms, Europe appears to be flatlining. The question is why? Americans say it’s entirely Europe’s fault: bad policies, failing politics, and lack of unity. However, the consequences of the (as yet unresolved) European Sovereign debt crisis triggered by the Global Financial Crisis of 2008 was the speedbump.

NATO has been the core of the Western Alliance and Transatlantic Economy. The men in the ill-fitting Florsheim dress shoes have broken it. What will follow is uncertain, but will clearly impact global markets and geopolitics to an enormous degree. The deepening Atlantic rift puts the need for European defence, sovereignty and resilience right at the top of the priority list.

England will take a confidence boost from the World Cup win vs Mexico. The Russians will be furious – their war plan requires The West’s resilience and pride is weakened through disinformation and instability. Countering Cognitive Warfare requires the acknowledgement it’s happening, that we fight it, and acknowledge our strengths and weaknesses, and that unity wins!

Compare and contrast the USA and Britain. The new country and the old. Our problems are not in our inventiveness, our skills or our people, but in how our societies work. We suffer from Politics that don’t govern, Businesses that don’t share, and Bureaucracies that don’t deliver. These are problems of late-stage democracies in need of a reset. Politicians keep promising – maybe one day one of them will actually make changes!

Investing in defence was a sadly neglected skillset for many years following the end of the Cold War. Defence primes became utility like seeking to preserve margins as real budgets declined on the peace-dividend. The War in Ukraine has highlighted many things, but critically that what the Primes are selling isn’t what’s going to win the next War. To invest in defence – you need insights into the future of the battlespace.

Today is the 81st anniversary of VE Day – the end of the Second World War in Europe. Markets are fixated on rising stock prices and probably won’t notice. Complacency is the danger. The Wars in Ukraine and Iran highlight success and failure and point towards a very different future world than the expected one. There are massive implications for markets – but that’s a tomorrow problem for markets focused on “now”.

Viktor Orban was a curious beast. A pragmatist and a populist who tried to play off Moscow, Washington and Brussels. Hungary is not yet solved, but it could be a transformational moment for Europe in terms of Populism and Unity.

The difference between successful democratic economies and autocracy is that the rule of law works better. Autocracies trend towards corruption and inefficiency. Insider dealing and corruption is a fact of the financial markets – punishing it is a matter of the enforcement of justice and the willingness to do so. Europe is acting over Epstein. What’s happening in the USA? 

The Russians have captured the FT, apparently! The headline that Gilts are about to crash because the Government will borrow more to increase defence spending is Pravda 101. The reality is Gilts should rally on increasing the strategic deterrence that defence spending will create.

Gold surges through $5000 and markets remain distracted by the sturm et drang of words and events. The world is changing – but are we thinking about all the wrong things? The real issue for the future may be investment choices between authoritarian states vs nimble democratic nations.