Page 19 - ISQ October 2022

INVESTMENT STRATEGY QUARTERLY

Europe: Playing Sheriff Means Accepting

“Black Hats” And A Lot Of “High Noons”!

Jeremy Batstone-Carr, European Strategist, Raymond James Investment Services Ltd*

This is a watershed moment in global politics…the time to

invest in the power of democracies

– Ursula von der Leyen,
Commission President.

September has historically been the most difficult month observe that what the EU is promising is not simply a semi-war/
of the year for financial assets, and 2022 has proved no planned economy, from energy and environmental awareness
upwards, but muscular liberal-democratic mercantilism from
exception. The month in Europe has been “bookended” by
the top down. Well said! The problem is that Europe does not
a severe energy crisis which, with winter just around the yet have the muscular clout to enable it to brandish its flash
corner, may yet serve as the catalyst for both political and sheriff’s star with authority.
economic instability. Indeed, what was proposed amidst the lectern thumping would
likely have been considered the very opposite of what passed
Profoundly aware of the pressures facing regional unity,
Commission President Ms Ursula von der Leyen has given a for democracy just a few years ago. Governments should
forceful speech emphasising the importance of togetherness in impose a ceiling on energy producers’ revenues and add a
the face of myriad challenges. “The months ahead of us will not windfall tax on the profits entitled a “solidarity contribution”.
be easy”, the President warned, “Be it for families who are The plan, very obviously, is to try and manage energy costs in a
struggling to make ends meet or businesses that are facing high inflation environment sufficient to distribute additional
tough choices about their future”. With regard to Russia’s money to those who most need it. The risk is, of course, that
invasion of Ukraine, Ms von der Leyen stated, “This is not only a the plan discourages oil and gas companies from investing
war unleashed by Russia against Ukraine. This is a war on our against a backdrop of already profoundly curtailed capital
energy, a war on our economy, a war on our values and a war expenditure in the dash for “green” credibility.
on our future”. As metacrises go, that sounds like the full works. Importantly, such a windfall tax is merely a proposal, not a
compulsion. Admittedly, the proposal comes from the highest
Ms von der Leyen’s speech was heavy on regional values but
much lighter on specifics. This prompted one commentator to levels of the administration, but it still requires ratification by

*An affiliate of Raymond James & Associates, Inc., and Raymond James Financial Services, Inc.

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