Investment Strategist Says Global Economy Entering 'War-Cession': CNBC

As per investment strategist David Roche, the global economy is likely entering a “war-cession,” and markets are underestimating its duration.

Speaking to CNBC’s “Squawk Box Europe,” Roche, president of Independent Strategy, suggested that evidence of atrocities committed against civilians in Ukraine by Russian forces will prevent any possibility of swift peace negotiation with Russian President Vladimir Putin.

“He will not trade withdrawal for any ratcheting down of sanctions, so the sanctions stay in place. I think the implications for Europe are that you will see a recession because the sanctions will increase and move towards a total energy blockade,” Roche said.

“This is an enormous supply-side shock that will continue in food, in energy, in metals and I can go on. That will go on while at the same time, we’re dealing with inflation worldwide, we’re dealing with rising interest rates – I think the 30-year will be at least 3.5% in a year’s time – and we’re looking at, of course, supply disruptions in China due to what is happening on Covid, which people are not talking about, but which are obviously another supply side to the global system,” he said.

Investors have been closely monitoring central bank comments to assess the likely monetary policy tightening. Still, Roche suggested any talk of policy rates going “over the hump” in the coming years is “premature.”

“When the pain does become extreme on the output and performance, growth side of the economy, of course they will slip back, but I think it will take a lot longer to happen than the equity market assumes,” he said.

Photo by Gerd Altmann from Pixabay