The Impact of Geopolitical News on the Stock Market
In Geopolitical news, the most significant development is Europe’s ongoing and worsening energy crunch due to the sanctions they applied on Russia. While it might be noble to support Ukraine, one has to factor in the untold economic cost and hardships these sanctions have caused and will cause to the citizens of these nations. Against this backdrop, the best solution is a compromise.
Europe’s Dependence on Natural Gas and Oil
This chart is one of many reasons that Europe is in trouble. Overall, Europe consumes a large percentage of natural gas and oil. For almost 60 years, Europe’s industrial prowess revolved around a straightforward tenet of cheap, reliable energy. During this time, despite all the tensions between the West and Russia, it remained a reliable supplier.
Russian Interests and Alternatives
Even though the U.S. is the World’s largest producer of Natural gas (production may have inched higher in 2022 due to Biden’s contribution), it also is the World’s largest consumer. Net-net, this makes Russia the World’s largest exporter of Natural gas. Russia is no longer interested in the West; therefore, by default, it will want to punish those that tried to seek its demise. Only two options are left: resist and die, beg, and possibly stabilize. However, by far and large, Europe’s heydays are gone. Energy wars that fall under the Geopolitical news umbrella will serve as the trigger for the next, albeit a more potent downward move.
Preparing for the Winter
Russia no longer has any interest in negotiating; all one needs to do is listen to the rhetoric emanating from its leaders. Europeans who are retired or can work remotely would do well to start looking to spend winter in Turkey (on the Mediterranean side). The climate is superb, the food is fantastic, and the Turks on the Mediterranean side are used to catering and dealing.