Sanctions and the oil market
Commenting on whether sanctions would affect crude flows from Russia to India and China, Dennis said:
“As always, these things are very difficult to predict, especially when President Trump is involved. You don’t know how persistent he will be on sanctions.”
While acknowledging that oil prices have risen due to sanctions against two major Russian companies, Dennis called the developments “very positive.”
“The developments are very positive because while the price of oil has obviously risen as a result of these two major Russian oil companies being sanctioned, the fact is that we appear to be making some potential progress on both China and India of course anyway, reducing their imports of Russian oil. I think this is something that will be welcomed.”
However, he warned that India is now facing a supply problem. “For India this means that you have to find the oil somewhere else and that is of course a challenge.” Dennis also highlighted the political impact of higher crude prices in the US.
“One of the things Trump hoped to achieve during the holiday season was to get gasoline prices even lower, and that is unlikely to happen if oil prices continue to rise or remain as stable as they were after these sanctions were imposed.”
He warned that policymakers now “must be very careful about how high oil prices are allowed to rise.”
Trump’s meeting with Xi Jinping
Dennis believes Trump’s decision to meet Chinese President Xi Jinping at the ASEAN summit could mark a thaw in tense US-China relations.
“What’s so interesting about what Trump is doing is that for a few days he was going to meet Putin and not meet Xi, and now he’s going to meet Xi and not meet Putin. It’s kind of a roller coaster and as they say, you have to take each day as it comes.”
He said the planned meeting could pave the way for an easing of trade restrictions.
“If he is going to meet Xi on the sidelines of this conference in Asia, that signals some positivity… hopefully he gets to the point where China’s decision to ban rare earth exports to the US can be relaxed in the future.”
Dennis also noted that the meeting could help prevent another rate escalation.
“It also probably means that the threat we had from Trump to increase Chinese tariffs and US imports from China by another 100% will not happen.”
In conclusion, he called the planned interaction ‘a positive development for the financial markets’.
Investment strategy amid uncertainty
When asked how investors should position themselves amid geopolitical developments, Dennis advised against traditional safe havens.
“I don’t believe you play through gold and silver. I was on another network two weeks ago and said I thought we were somewhere near the gold peak.”
He warned that bonds also carry risks.
“Bonds are frankly risky here, as we are likely to see further increases in US inflation in the near term.”
Despite the uncertainties, Dennis remains optimistic about equities, especially in emerging markets.
“Emerging markets are outperforming developed markets by about 1,200 basis points this year, which is a huge outperformance. You’re seeing a lot of buying in emerging markets equities earlier this year due to the lower dollar.”
Even as US valuations appear high, he still favors equities over other asset classes.
“The way to play it is a lot more stocks than bonds or commodities.”
The Indian market position
Reflecting on India’s recent performances, Dennis admitted:
“I misunderstood India this year. I thought it would do better than it has done. Of course, it is underperforming.”
He pointed out that there are reasons to expect improvement.
“Inflation in India has fallen to just above 1.5%. Real interest rates are quite close to 400 basis points. Therefore, there will eventually be more rate cuts from the RBI.”
While food price weakness partly explains low inflation, he says the broader economy remains resilient.
“The economy still looks quite good and that will be supported by the kind of restructuring, if you like, of the GST.”
Dennis believes that India’s relative valuation versus China has improved, and positioning could become favorable again.
“If you were to see a trigger: better economic growth, another rate cut, another bit of rupee recovery, India would do relatively well here and I’m still constructive even though the country has clearly been a significant underperformer this year.”
The bottom line
Dennis’ message to investors is one of cautious optimism. The global economy faces moving parts — from sanctions to shifting trade alignments — but emerging markets, especially India, could see tailwinds if policies and growth trends align. For now, he says, equities remain the most attractive way to play the global market cycle.
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