The world is watching for signs confirming global recession, so naturally markets have rallied (!). Political instability is resolved to be replaced with some bleak truths and spending choices. So.. steady at the wheel, nothing to worry about then?
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.
After the brutal lessons of April, May will set the tone for a new market – lots of threats, but full of opportunity.
The Ukraine War has catalysed a tsunami of negative economic events around the global economy – and markets are remaining pretty much blind to the long-term consequences.
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.
Yet another difficult week in prospect for markets as $130 oil threatens a global shock, geopolitics remains on the edge, and London tries to rid itself of an infestation of oligarchs without exposing the politicians who let them capture the state.
Russia thought it would roll over Ukraine, but the West’s Financial Blitzkrieg now threatens to trigger the unravelling of Putin’s autocracy. Excellent! The West needs Russia and Russia needs the West. It’s Putin’s kleptocracy we could all do without…
The World has changed and changed utterly – although we may not realise it yet. We are likely on course for massive disruption, inflation, rising geopolitical crisis and uncertainty, and a high probability of stagflation. But – don’t tell anyone. Anyone for a choc-ice?
We can't believe it, but its happened. Stop. Look. Listen.