The global set up is relatively more cheerful this week but there are some key concerns. Geopolitical worries have taken centre-stage. While the latest round of talks amongst the European leaders ended without a common view on resolving the Ukraine conflict, Chris Wood, Global Head of Equity Strategy at Jefferies, in the latest ‘GREED and fear’ report highlighted Ukraine as a key worry along with gold and inflation.
Ukraine crisis: Solution in sight?
Referring to the Ukraine issue, Chris Wood quoted Donald Trump, “This war MUST and WILL END SOON” and said that “clearly resolution of Ukraine, along with revision of the German debt brake, are two catalysts that could trigger continuing outperformance of European stocks.”
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The MSCI Europe has outperformed MSCI AC World by 6.8% since late December. According to GREED and fear report, they believe that after Trump’s 90-minute phone call with Putin, the “Ukraine story is back front and centre. Clearly, Trump has not focused on it in his first three weeks in office, prioritising Gaza instead.”
According to him, “Russia would have agreed a deal at any time in the last three years for a simple guarantee that Ukraine will not join NATO. Still, Trump’s conversation with the Russian President suggests GREED & fear that he has rejected this line of thinking since it will only perpetuate continuing loss of life in a war which Russia should ultimately win based on the law of numbers.”
According to the report, Trump’s comments and US Defense Secretary Pete Hegseth’s comments indicate that “a deal would not be based on Ukraine’s pre-2014 borders. This is a conflict for which the resolution “will not be easy” and less likely to project as a “win” for “Ukraine or indeed NATO since Russia is not, in GREED & fear’s view, going to exit Crimea or indeed much of Donbas.” It highlights that it would be better from a political perspective, “for Trump to negotiate a resolution quickly and blame the Biden administration’s policy of ‘fighting to the last Ukrainian’.”
Meanwhile, the report highlighted that if “leverage can be applied on Moscow, as regards Ukraine, that would have to be from Beijing not Washington.” Meanwhile, GREED & fear recommended “global investors to increase their weightings in both Europe and China.” “GREED &
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