Editor’s Note: Today we have an important message from The Oxford Club’s Chief Investment Strategist Alexander Green. He advises that if we’re looking for a clue as to whether the U.S. will be entering a recession, we need to look toward Russia.
Alex details how Vladimir Putin’s greatest mistake was an unprovoked attack on Ukraine. And since Putin cut off all gas supplies to Europe through the Nord Stream 1 pipeline, the European energy crisis just became an outright catastrophe.
Read on for Alex’s insights…
– Rebecca Barshop, Senior Managing Editor
Vladimir Putin has made a lot of mistakes in his life.
But on February 24, he made his greatest blunder. And possibly his last.
That was the day the Russian president ordered the invasion of Ukraine.
Eight months into an unnecessary and unjustifiable war, here’s the bottom line…
Putin has gutted the Russian military, crippled the Russian economy, tanked the Russian currency, weakened Russia’s partnership with China, alienated Russian trading partners and caused a stampede of draft-eligible men out of the country.
Rather than snuffing out Ukrainian independence, he has fortified and ennobled it.
Rather than weakening NATO, he made the alliance bigger and stronger than ever.
Rather than demonstrating his country’s strength, he has shown that the cream of the Russian army can’t advance more than a few miles into a neighboring country without losing thousands of tanks, legions of soldiers and many of the country’s best generals.
His army is retreating in Ukraine. His air force can’t fly over the country. And his navy is afraid to approach the shore.
The barrage of Russian missiles that have slammed into civilian infrastructure have rightfully branded Putin a terrorist and war criminal.
I should also mention that he’s threatening to use nuclear weapons.
If there is any justice in the world, we will awake one morning to find that Putin has “fallen” from a tall window in Moscow.
Aside from the humanitarian crisis he’s created in Ukraine, Putin shut off the Nord Stream 1 pipeline to Europe, declaring, “We will not supply gas, oil, coal, heating oil – we will not supply anything.”
As a result, the cost of natural gas in Europe is up nearly 70-fold from its pre-crisis lows.
Goldman Sachs estimates European energy bills will hit $2 trillion in the next year, almost as much as France’s entire economy.
With winter just around the corner, Europeans are not just worried. They are furious.
Not only with Russia but with themselves for making themselves dependent on a corrupt autocrat like Vladimir Putin.
No matter how the war in Ukraine ends, Europeans will never go back to depending on Russia for their energy needs.
New York Times columnist Thomas Friedman agrees with me on this point. He recently wrote…
There is only one cardinal sin in the energy business: Never, ever, ever make yourself an unreliable supplier. No one will ever trust you again. Putin has made himself an unreliable supplier to some of his oldest and best customers, starting with Germany and much of the European Union. They are all now looking for alternative, long-term supplies of natural gas…
And they are finding them.
In fact, there is a little-known company that provides a superb way to profit from “Putin’s folly.”
It’s not a European firm. The continent lacks the energy infrastructure to quickly produce its own natural gas.
This is a liquefied natural gas (LNG) play based on America’s own plentiful natural gas supplies.
You see, when cooled to negative 260 degrees, the volume of natural gas decreases 600-fold, making it easy to transport by ship.
(When the ships reach the import terminal, the LNG is regasified and transported through pipelines to provide heat and electricity.)
The company I’m referring to is able to make $200 million on each trip from the U.S. to Europe.
And it is about to make a lot of trips. In fact, the firm has already locked in several years of shipments.
Burned by Putin, Europe is happy to buy as much as the company can supply, for as long as they will supply it.
Even if the war in Ukraine ended tomorrow, Western Europe is never giving its natural gas business to Russia again.
That’s unfortunate for Putin (and the long-suffering Russian people).
But it’s a capital development for the handful of investors who understand what’s happening here and exactly how to take advantage of it.
I recently sat down with journalist Bob Paff to talk about just this opportunity.