Macroscope | Why a war in Ukraine and the end of cheap money add up to a market nightmare
- Central banks are starting to withdraw stimulus, making investors more sensitive to risks in the global economy
- On the Ukraine crisis, the actions of Russia – a major exporter of natural gas and oil – and the West’s response have major implications for inflation
Two years ago, investors suddenly became amateur epidemiologists in an effort to determine the level of economic disruption wrought by the Covid-19 pandemic. At the time, virologists themselves were deeply uncertain about the evolution of the virus, while testing capacity was too limited for sweeping conclusions to be drawn.
Yet, almost overnight, investment banks began producing reams of research on the pathogen, some of it highly technical, involving assessments of reproduction numbers and predictions of turning points in countries’ infection curves.
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‘We’re scared’: fear and uncertainty on Ukraine’s front lines
While there are crucial differences between the two cases, they give impetus to a realignment in geopolitics as Russia and China challenge the underpinnings of a vulnerable US-led liberal world order.