Russia – This is not Roulette.
This is not Russian Roulette. Every chamber in the gun is loaded. It is pointing right at the heart of Europe. The new “sheriff in town” is walking to other way down the dusty track away from the European village.
The first part of my forecast was for escalation in hybrid war fare in 2025. Then in 2026 comes kinetic military confrontation on land and sea in addition to what we’ve got now in the air. Within 3 years the Russians will be on the ground in the EU.
The Europeans now openly admit they cannot assemble a meaningful (ten thousand person) force on the ground to provide security guarantees for Ukraine. They acknowledge that without US, intel, logistics and some key weapons systems, they have no meaningful defense. So how will they defend Europe. And why would an imperialist Russia back off?
Here's the thing! if you buy a European equity today you pay 17 times earnings and get a dividend yield of about 3%. To get your money back it will take you 20-30 years. I would expect one of two things by then. The Russians will be all over Europe pillaging your returns. Or the cost of preventing this happening will be pillaging your European investments with run-away fiscal spending, inflation, interest rates and, above all, financial oppression to force your savings, profit and investments into war financing.
Sure, you can invest in the equity in the expectation that someone else will buy you out at a profit long before this happens. That’s a “greater fool” theory whose credibility got stretched even more on September 9. Prepare for war in Europe. Avoid European risk assets. Hold Gold, US defence stocks and Oil. Prioritise Asian assets. I am adding RMB to currency longs. We are already long/overweight Chinese equities.