Sunday, February 20, 2022

The most likely scenario for the next couple years

 The Winter Olympics is over and Russian gloves will be off very soon now their courtesy to the host China is no longer needed. The full scale invasion of Ukraine is nearly inevitable.

 

It beats me why the largest land empire needs more land. Why don’t they want more money or people by becoming more productive and reproductive? I guess that one goal of Russia may be just to get rid of Biden and help Trump. By pushing inflation up significantly more could doom the Democrats in 2022 and 2024.

 

In the most extreme and also most likely scenario, the invasion and subsequent Western sanction and Russian retaliation will produce large jump in energy and grain prices and prices in many other things, and push the inflation further and much higher. This wholesale global geopolitical change could lead to a new cold war between the West and Russia and maybe even China.

 

This further flare of inflation will set off more and more determined global central bank tightening. The global stock markets will drop 30-50% from the current level in a first sharp drop, a strong rebound, and another drop over the next couple years. Some current prime assets, e.g., Tesla, could drop to unfathomable levels if technics are aligned.

 

Commodities and related stocks, and emerging markets are likely to be the best assets after the second drop if one has cash. They could run up many times in a short few years after that.

 

The technical signals are also pointing more and more to this scenario.

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