Russia crisis – West flubs, Ukraine burns

President Biden has now offered a face-to-face summit with President Putin to discuss Russia’s security concerns. So, President Biden is still bending and flubbing. Biden’s offers are unlikely to be enough though. They are likely to confirm to Putin his view that the West is too decadent to respond forcibly. War is now ultimately more likely, we give it a >55% probability. Our investment strategy as insurance against war is unchanged: long oil, natural gas, the US dollar, gold and grains. The result would also lead to a steepening of yield curves globally; long rates would rise because of the resulting inflation shock and short-end yields would fall as central banks stormed in to rescue economies.

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