The biggest crisis the West faces may not be the challenges of energy, confidence, inflation and growth, but restoring trust in the narrative by cutting out the disinformation planted by our enemies. Time for some leadership.
The news looks bleak. A cataclysm of gloom is set to sink Europe and the UK – but, maybe things aren’t as bad as we think. Good news and a realisation things can get better could stabilize sentiment, and build a recovery base. Maybe?
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.
May markets are finishing on a dead-cat bounce - things could get more unstable through June. The outcomes in Ukraine are looking less favourable, and Europe will struggle with sanctions. The weakest link is unsurprisingly Italy. A bigger crisis in terms of famine will shortly become apparent in North Africa.
Who really knows what is happening in Ukraine, or what the players are thinking? The long-term economic consequences could be huge, marking the moment the post Cold-War global consensus and order breaks down. The potential consequences include social and political instability, war, famine, and who knows what else.
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!