Die Wende – the shift

There has been no shift in our view of the Russian invasion of Ukraine since April last year (see our report Four Quartets No.1 — Burnt Ukraine). Now there is. Within a few weeks some of the sting may go out of the war. Markets would react by moving to a “risk on” phase. We are removing some of our war hedges: cutting our long agricultural commodities and energy positions by half. We stay long gold. We stay short bonds and expect spreads to widen. The US dollar will remain strong. But increasingly it will stand on one leg: the singular one of Fed tightening.

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