Finance

Potential Russian invasion of Ukraine could tip economies into an ‘outright recession’ – Morgan Stanley

FRANKFURT, Feb 11 (Reuters) – Allianz (ALVG.DE) on Friday said it will pay about 207 million euros ($235 million) to acquire Greek insurer European Reliance , a move that will create the country’s fifth-largest insurer based on gross written premiums.

The 7.80 euros per share bid represents a 15.7% premium to Friday’s closing price, Allianz said, adding it was entering share purchase agreements covering 72% of European Reliance’s shares and launch a takeover bid for the remaining stake.

“This is an exciting opportunity for Allianz to elevate its position in the attractive Greek insurance market with an ideal entity such as European Reliance,” Allianz management board member Sergio Balbinot said.

As part of the transaction, European Reliance will be combined with Allianz Hellas, the insurer’s Greek unit. The merged entity will then be led by European Reliance CEO Christos Georgakopoulos, Allianz said.

($1 = 0.8814 euros)

Reporting by Christoph Steitz; edited by Grant McCool

(Kitco News) With risk asset returns already under a lot of uncertainty, Morgan Stanley is warning that a potential war in Ukraine could tip some economies into a recession and present a ‘polar vortex’ risk to stocks.

A potential Russian military action in Ukraine “materially increases the odds of a polar vortex for the economy and earnings,” Morgan Stanley’s chief US equity strategist Michael Wilson said in a note.

Further energy cost increases “would destroy demand, in our view, and perhaps tip several economies into an outright recession,” Wilson stated. “This is why we still favor a more defensive, rather than growth, bias within the quality bucket where we believe earnings achievability is less vulnerable to that growth disappointment.”

According to Morgan Stanley, the correction in the stock market is still not done.

Fears of a possible Russian invasion of Ukraine were renewed on Friday when the US said that Russia could launch military action in Ukraine “any day.”

“Any American in Ukraine should leave as soon as possible, and in any event in the next 24 to 48 hours,” US President Joe Biden’s national security advisor Jake Sullivan said.” [Conflict] could begin during the Olympics despite a lot of speculation that it could only happen after.”

In response, stocks tumbled while gold rallied above $1,860 an ounce. On Monday, the defensive play remained the winning one as the precious metal continued to rally, rising nearly $30 on the day, with April Comex gold futures last trading at $1,870.10.

Russia has continuously denied reports that it is planning to attack Ukraine. Over the weekend, Kremlin spokesman Dmitry Peskov accused the West of “hysteria.”

“This hysteria is being intentionally whipped up,” Peskov said on Sunday. “We are being accused of some sort of unusual military activity on our territory by those who brought in their troops from across the ocean. This neither exactly logical nor exactly polite.”

The idea of ​​a recession is starting to show up more in the analysis. Billionaire “Bond King” Jeffrey Gundlach has been on recession watch since January.

“The yield curve has us on watch already. Once you get the yield between the 10-year Treasury and 2-year Treasury inside of 50 basis points, you’re on recession watch. And that’s where we are,” Gundlach told CNBC on friday

In his January webcast, Gundlach mentioned the word “recession” or “recessionary” 16 times as he listed numerous warning signals to watch out for.



Gundlach believes that one of the main issues is that the Federal Reserve is well behind the curve.

“The Fed should have stopped quantitative easing not next week, not tomorrow, not yesterday, but a year ago. And what we’re seeing is the consequence of all this excessive stimulus,” he told CNBC. “We have enough recessionary potential with the flattening yield curve, and with the consumer sputtering based on sentiment, where inflation is, with the consumer not having stimulus. I think the probability of weaker economic activity later this year is pretty high.”

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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