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A Crucial Day Ahead as Negotiations Intensify

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Insights and Market Perspectives

A Crucial Day Ahead as Negotiations Intensify

Author: Greg Valliere

March 14, 2022

RUSSIA STILL ISN’T WINNING THIS WAR: Moscow faces debt defaults, starting this week, as its troops suffer massive casualties, with a furious street-by-street battle looming in Kyiv. So there’s still a chance to find an “off ramp” at the negotiating table.THAT WILL BE THE FOCUS TODAY, as Russian and Ukrainian negotiators meet in a virtual summit, and as high ranking U.S. and Chinese officials meet in Rome.

THE SEEDS OF A DEAL were planted last week, when Dmitri Peskov, the Kremlin spokesman and a confidant of Vladimir Putin, said the following: if Ukraine changed its constitution to accept some form of “neutrality” rather than an aspiration to join NATO; recognized the separatist areas of Donetsk and Lugansk; and agreed that Crimea is part of Russia — the military strikes would stop “in a moment.”

UKRAINIAN PRESIDENT VOLODYMYR ZELENSKY, desperate to save his people from a massacre, has indicated a willingness to consider the steps listed by Peskov.

IN THE MEANTIME, THE OUTLOOK HAS NOT IMPROVED FOR PUTIN: On the military front, it’s clear that the battle for Kyiv will be pivotal, but Russian troops have been bogged down in the suburbs. The battle for the city could take weeks, inflicting enormous losses on Russian troops — and, undoubtedly, intensifying the anti-war mood back in Moscow.

IN THE MEANTIME, with the ruble virtually worthless, Russian debt will begin to default within days, as the country’s elites flee to the West and all Russians face a dramatic drop in their standard of living. The devastating impact of the sanctions, far worse than Putin anticipated, may be more important than developments on the battlefield.

PUTIN SIGNALED WEAKNESS in the last few days — he needs assistance from China. Whether Beijing complies will be a pivotal issue this week. Any sign of Chinese aid would raise the issue of massive U.S. and Western sanctions, surely a factor in this morning’s market sell-off in Beijing.

THE BIG SURPRISE CONTINUES TO BE the aggressive push-back by the U.S. and the West. President Joe Biden is under pressure from Congress to impose even more trade sanctions while increasing arms shipments to Ukraine. U.S. involvement in this war, somewhat similar to the pattern in World War 1, seems to be inching toward more engagement, despite the obvious risks.

THE GREAT WILD CARD continues to be Putin, the subject of a fascinating piece in yesterday’s New York Times Sunday Review titled “No Man is an Island, Except Putin.” It describes his isolation and inaccessibility, egged on by the oligarch Yuri
Kovalchuk, who has become an inseparable companion of Putin. Both want to revive the Russian empire.

KOVALCHUK, ACCORDING TO THIS MUST-READ ARTICLE, is an ideologue “subscribing to a worldview that combines Orthodox Christian mysticism, anti-American conspiracy theories and hedonism.” He and Putin are determined to restore Russia’s greatness — but, clearly, that has failed. Russia is a pariah, about to enter an economic Depression for years to come.


The views expressed in this blog are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies.

The views expressed in this blog are provided as a general source of information based on information available as of the date of publication and should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities. Speculation or stated believes about future events, such as market or economic conditions, company or security performance, or other projections represent the beliefs of the author and do not necessarily represent the view of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and AGF accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. Any financial projections are based on the opinions of the author and should not be considered as a forecast. The forward looking statements and opinions may be affected by changing economic circumstances and are subject to a number of uncertainties that may cause actual results to differ materially from those contemplated in the forward looking statements. The information contained in this commentary is designed to provide you with general information related to the political and economic environment in the United States. It is not intended to be comprehensive investment advice applicable to the circumstances of the individual.

AGF Investments is a group of wholly owned subsidiaries of AGF Management Limited, a Canadian reporting issuer. The subsidiaries included in AGF Investments are AGF Investments Inc. (AGFI), AGF Investments America Inc. (AGFA), AGF Investments LLC (AGFUS) and AGF International Advisors Company Limited (AGFIA). AGFA and AGFUS are registered advisors in the U.S. AGFI is a registered as a portfolio manager across Canadian securities commissions. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. The subsidiaries that form AGF Investments manage a variety of mandates comprised of equity, fixed income and balanced assets.

About AGF Management Limited

Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. AGF brings a disciplined approach to delivering excellence in investment management through its fundamental, quantitative, alternative and high-net-worth businesses focused on providing an exceptional client experience. AGF’s suite of investment solutions extends globally to a wide range of clients, from financial advisors and individual investors to institutional investors including pension plans, corporate plans, sovereign wealth funds and endowments and foundations.

For further information, please visit AGF.com.

©2023 AGF Management Limited. All rights reserved.

Written by

Greg Valliere

Greg Valliere

Chief U.S. Policy Strategist

AGF Investments

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