Geopolitical Risks: Intermarket Relationships with Commodities & Equities
The SIA platform has detected early moves that warrant attention, and these will be highlighted in today’s Equity Leaders Weekly. Noteworthy among these are the relative gains seen in Central Europe, Germany, and Poland ETFs. This is not surprising given the rhetoric from both newly elected President Trump and President Vladimir Putin of Russia. Recent comments from Putin outlined his terms for ending the war: Ukraine would need to abandon its NATO ambitions and withdraw its troops from the four regions claimed by Russia. This comes against the backdrop of Trump’s campaign statements, where he criticized the scale of U.S. military and financial support for Kyiv, claiming he could end the war within 24 hours, without specifying how. While Putin has repeatedly indicated openness to dialogue, talks are expected within days or weeks. However, this remains speculative, and today, we focus less on conjecture and more on the actionable data provided by point-and-figure charts, along with the powerful relative strength indicators available to SIA’s elite advisors.
A key weapon in the ongoing war has been the control over natural gas supplies, especially following the Nord Stream pipeline explosion. This disruption created significant challenges for European manufacturers, particularly in Germany and Poland. Fortunately, recent mild winters in Europe and the U.S. kept natural gas prices low, somewhat neutralizing this weapon. However, this winter is different, with deep snow in the Gulf of Mexico (America!) and a sharp chill over continental Europe. U.S. natural gas (NG.F) contracts have surged 53.37% over the past five months, while UK natural gas (GWM.F) has risen by 56.20%. At SIACharts, we focus heavily on intermarket relationships between asset classes. The relative strength of one versus another often provides valuable insights for advisors building a thesis for the upcoming year. If peace is announced, how does that impact aerospace and defense spending? How would it affect international capital flows into Europe and away from the U.S.? Conversely, if the war persists, does natural gas continue its upward trajectory, and how does this affect inflation and the bond market?
Natural Gas (NAT.GAS) Continues To Surge
Peace in Central Europe?
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