The IRF Podcast

“Russia and the Ukraine; David Roche cuts through the markets’ complacency”, David Roche, Independent Strategy

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Legendary strategist David Roche, founder and CEO of Independent Strategy, in conversation with the IRF's own JP Smith, himself a former specialist on Russia, focusing on the implications of the build up of Russia's forces around the borders of the Ukraine.----more----

  • Putin's prioritises political and ideological  motives over economic and/or financial considerations, he is therefore very likely to take some tangible military actions, most likely after the Beijing Olympics.
  • The US has persuaded its European allies to co-operate in the imposition of stringent sanctions should Russia move militarily. These sanctions combined with the likely Russian response will drive further increases in the prices of key commodities, namely natural gas, oil, selected metals, grain and gold.
  • China's endorsement of any Russian incursion into the Ukraine compounds the broader geopolitical risks.
  • The situation is far more serious than the lead-up to the war in Iraq in 2003 or Russia's assaults on Georgia in 2008 and the Crimea in 2014, but investors are far too complacent about the supply side shock, which would follow any significant Russian military action.
  • The very real possibility of stagflation is negative for both bond and equity markets, with European equities especially vulnerable given the potential impact of even higher natural gas prices on inflation, consumption and government deficits. The most obvious long positions are in selected commodities of which oil is the most obvious (though technically stretched at present), while gold should also be attractive given its history as a store of value and the recent lacklustre performance, which has led many of the stale bulls to exit the market.
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