Two parts this morning: What the Bank of England actually said, and The Big Lesson from the Ukraine War is simple: “Things are seldom as bad as we fear, but never as good as we hope.” Global geopolitics and markets have taken a knock, but will coalesce around whatever new global links emerge.
Nearly a year on Ukraine is unbeaten. How will it end, and how will markets react? Putin is upping the stakes, hoping he can bluff and threaten his way to a result. It’s not about Ukraine surviving, but what happens if Putin loses badly and Russia collapses as a failed state. Sanctions don’t work – what else can the West do?
The market is talking about a no-landing scenario – but should be watching what Central Banks are saying, and China’s position re Ukraine. The market remains vulnerable to recession and rising geopolitical tensions. They are very closely linked.
The UK’s Met Office says it was warmest year on record – what does that mean in terms of climate change opportunities in the long-run, and how the geopolitical threat mellows now that General Winter has abandoned Putin?
COP27 is about the politics of global energy – energy being the lifeblood of growth and prosperity. The Ukraine war’s outcome is also about energy: can Europe withstand Russia’s General Winter and coordinated assaults on its’ economy and political stability.
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.
