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Germany As The Key

In a recent post (Nord Stream 2 and the Ukraine War),

Did the U.S. want Russia to invade the Ukraine?https://t.co/6Slg6aNlrn

— Portfolio Armor (@PortfolioArmor) August 29, 2022

I mentioned Mike Whitney’s assertion that the United States welcomed the Ukraine War as a way to cancel Nord Stream 2 and build a wedge between Russia and Germany:

Interesting post to look back at now, @DarrenJBeattie and @ChrisNahr. https://t.co/5byZY4izCc

— David Pinsen (@dpinsen) August 20, 2022

Whitney may have overstated the case a bit there, but his opening quote is apposite: 

“The primordial interest of the United States, over which for centuries we have fought wars– the First, the Second and Cold Wars– has been the relationship between Germany and Russia, because united there, they’re the only force that could threaten us. And to make sure that that doesn’t happen.” George Friedman, STRATFOR CEO at The Chicago Council on Foreign Affairs

It’s also worth noting that this has been the “primordial interest” of Great Britain for far longer than it has been for the U.S.: to keep any one power or alliance of powers from dominating Continental Europe. That puts Britain’s enthusiasm for a policy that is wrecking Germany economically in a different light. 

A few days ago, the controversial Finnish-German internet entrepreneur Kim Dotcom offered his take on how Germany could end the Ukraine War. I’ve included his Twitter thread on this in full below. Following that, I’ll add a brief example of the Portfolio Armor approach to investing recently, as the economic fallout from the Ukraine War has piled up.
 

Kim Dotcom on Ending The Ukraine War

🧵Thread 🧵

How to end the war in Ukraine.

Germany can end the war in Ukraine single-handedly. The US cannot afford a proxy war with Russia if Germany backs out of sanctions against Russia. Let’s be honest: Russia is not a threat to Germany. It wants good relations with Europe.

— Kim Dotcom (@KimDotcom) September 3, 2022

The US considers Germany an economic threat and a geopolitical nuisance. It would like to turn the EU powerhouse into a failure and gain control by putting Germany in a position of dependence, like having to buy oil and gas from the US, at a premium, instead of cheap from Russia.

— Kim Dotcom (@KimDotcom) September 3, 2022

Germany is currently committing economic suicide by supporting the US proxy war in Ukraine. And why? Because Russia may attack Germany one day? Nonsense. Russia wants strategic security and not have NATO controlling Ukraine 300 miles from Moscow. EU leaders knew this all along.

— Kim Dotcom (@KimDotcom) September 3, 2022

After that the relationship with the US, UK, Poland and the Baltic states may sour but that’s OK. They will get over it. Ukraine will get over it. Instead of wasting money on weapons let’s help Ukraine in a big way by building new modern infrastructure. We are great at that.

— Kim Dotcom (@KimDotcom) September 3, 2022

It’s not too late for Germany to turn this around. Christmas is coming and I would like Ukrainians to have peace, Russians to have security, Europeans to enjoy warmth in front of the Christmas tree and for American citizens to have a look at how to fix their rotten Government 🕊

— Kim Dotcom (@KimDotcom) September 3, 2022
 

Investing Cautiously in the Meantime

Here’s an example of our recent approach to investing as the economic impact of the Ukraine War and associated sanctions regime has reverberated through the global economy. This was a hedged portfolio our system created on July 21st for an investor who was unwilling to risk a decline of more than 20% over the next six months.

This portfolio included energy names such as GUSH, BOIL, and DQ, along with bearish ETFs TTT, TMV, and WEBS (which shorts internet companies). The Max Drawdown, or worst-case scenario for this portfolio was a decline of 19.25% if every underlying security went to zero. The expected return here was a gain of about 10% over six months.

Here’s how that portfolio has done so far, as of Tuesday’s close:

So far, this portfolio is up 5.3%, net of hedging and trading costs, while SPY is down 2.01%.

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