The Invasion of Ukraine

ACCILENT MARKET VIEW - 03-2022

In this video, Accilent's President and Portfolio Manager Dan Pembleton MBA, CFA and Portfolio Manager Mark Taucar CFA of Accilent Select discuss the economic consequences of the invasion of Ukraine.

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Video Summary

Geopolitical & Economic Analysis

• Invasion not unexpected: Particularly post-2014; part of Russia’s long-term strategic ambitions

• Timing benefited Russia:

  • High oil prices (1/3 of Russia’s economy is energy-based)

  • Global push for green energy weakened European energy security

• European Green Policy:

  • Overemphasis on green energy led to reduced fossil fuel capacity

  • This dependency inadvertently strengthened Russia’s position

Strategic Missteps by Russia

• Putin expected a swift victory ("fool’s checkmate" analogy)

• Grossly underestimated Ukrainian resistance

• Now facing the need to use much greater military force than anticipated

  
  

Economic Impact

• Oil price spike: War premium on oil prices due to conflict and supply fears

• Sanctions:

  • Coordinated global sanctions, including freezing central bank assets

  • Targeting oligarchs to pressure Putin internally

  • History shows sanctions often hurt civilians more than regimes

    
    

Market & Investment Insights

• Global inflation risk rising due to oil prices and supply chain issues

• Central banks face challenges balancing rate hikes with inflationary pressures

• Accilent Capital’s portfolios are:

  • Diversified

  • Designed to manage geopolitical risk

  • Focused on long-term performance

    
    

Final Takeaway

• War and geopolitical shocks cause short-term volatility, but markets historically recover

• Investors should stay disciplined and avoid emotional decisions