The Russian attack is considered a black swan with the effect of an increase in the risk premium of the European stock market. The main drivers for the growth of the markets remain positive revisions of earnings, not the trend in rates or local geopolitical crises. Earnings overvaluation exposed markets to stark investor reactions. The Russian-Ukrainian crisis offers the markets an opportunity to bring valuations back historic averages. A protracted conflict, however, could create serious risks: stable high levels of raw material prices; crisis of the international payments system (with costs for Western countries); Russian retaliation for sanctions through cyber attacks and the start of a new form of cold war. Growth forecasts for the global economy remain positive for now (with a negative… Read more
