Investors once again have turned to a risk-on mode.
I believe many have pinned their hopes on positive outcomes for the Ukraine war, confidence in Russia’s promises (which I don’t have) and a belief that Greece will respect its debt obligations and come to an agreement with Germany.
If we don’t get trustworthy and sustainable solutions for all of the above, we could be headed for shocks that could be negative to a wide range of markets where many have invested amid their desperate “search for yield.”
Long-term investors who want to avoid falling into the “hope trap” should
read the full text of “The Minsk Agreement” as published by the Ukrainian information agency UNIAN.
I wouldn’t pin any hope on this agreement for a peaceful outcome.
Investors should remain vigilant and prepared for the worst outcome. But can such a fate be avoided?
Nikolai Patrushev, head of the Kremlin's Security Council
said: “The Americans are trying to draw the Russian Federation into an interstate military conflict, to achieve regime change through the events in Ukraine and to ultimately dismember our country … adding the start of arms supplies would be one more confirmation that the U.S. is a direct participant in the conflict.”
Meanwhile, investors shouldn't overlook that there is a growing German public antipathy toward Greek membership in the eurozone. This was confirmed by a survey for Germany’s third largest weekly
magazine “FOCUS” and that showed 48 percent of German respondents were in favor of Greece leaving the eurozone, while only 29 percent supported Greece keeping the euro, and 23 percent remained undecided.
Because of further rising geopolitical risks in many places of the world, but mainly in Eastern Europe and with Russia in particular, at least for now, as a long-term investor I’d prefer to play it, above all safe and therefore give preference, which doesn’t mean exclusivity, to the U.S. dollar and dollar denominated investments (as liquid as possible) that are mainly located inside the U.S., which have, at least to me and in the context of today’s world, as close as it gets, “safe haven” status.