The World Is Re-Arming and Most Portfolios Are Blind to It

The World Is Re-Arming and Most Portfolios Are Blind to It

The Ukraine War Is Now a Global Risk, and Almost No One Is Ready

In July 2025, something unusual happened in Washington.

The Pentagon quietly stopped sending weapons to Ukraine. There was no press conference. No briefing. Not even a proper explanation.

For seven days, Kyiv had no idea why U.S. support went silent. European capitals scrambled for answers. The White House claimed it had no idea either.

Then, without warning, the pause ended. Aid resumed. President Trump said he never ordered the hold and blamed a miscommunication.

This wasn’t a mistake. It was a signal. The U.S. government no longer has a clear or unified stance on Ukraine.

And that’s a problem.

Because while the West debates what to do next, Russia is not slowing down.

The West Is Fracturing While Russia Is Gaining Ground

Across the Atlantic, Europe isn’t doing much better. Earlier this year, the EU announced a 40 billion euro arms package for Ukraine. Weeks later, it collapsed under a Hungarian veto. Even France backed away from the cost.

The EU scaled it down to just 5 billion euros. But even that is only voluntary. What Ukraine got instead was a generic statement of “unwavering support.”

This is the reality now: Strong words. Weak actions. Political fatigue. 

Back in Washington, U.S. policy shifts by the week. One day weapons are paused. The next day they’re green-lit. No one seems fully in control.

The result is policy whiplash. Allies are confused. Markets are cautious. And Ukraine is left hoping America doesn’t walk away.

Russia Has the Upper Hand on the Ground and in the Factory

Russia sees the hesitation and is pressing forward. Its artillery advantage is five to one.

Every day, Russian forces fire about 10,000 shells. Ukraine struggles to answer with 2,000.

Factories in Russia are running nonstop. They now produce 250,000 artillery rounds per month. That’s three times what the U.S. and Europe can make together.

Meanwhile, Western governments are still trying to scale up. The U.S. set a goal of 100,000 shells per month by the end of 2025, but it is falling short. Europe is scrambling just to maintain what it has already sent.

Worse still, China just restricted exports of key minerals used in modern weapons. Rare earth metals. Magnets. Precision components. Gone.

Without these materials, the West cannot scale production fast enough. Russia, on the other hand, has domestic supply and a growing network of shadow imports.

The longer this goes on, the wider the gap becomes.

The Next Phase of the War Could Take Two Paths and Both Carry Risk

At this point, we’re looking at two broad outcomes.

Scenario 1: The war drags on

Neither side makes major gains. The front lines harden. The fighting continues. Energy markets stay volatile. Food costs remain elevated. Inflation sticks around.

Defense budgets increase across NATO. Arms manufacturers benefit. Investors with exposure to defense and commodities should hold strong.

But developing economies feel the pain. Higher fuel and grain prices strain fragile governments. Capital flees emerging markets.

This is not a collapse, but it is a grind. A slow, bleeding war that drags on with no clear end.

Scenario 2: Ukraine folds or the West escalates

The more dangerous outcome is a collapse of Ukraine’s defenses. U.S. aid slows. Russian forces surge. Kyiv could fall. The Donbas could be lost. Maybe even the Black Sea coast.

If that happens, sanctions will tighten. Oil prices will spike. Markets will panic.

There’s also a chance the U.S. or a NATO-aligned coalition intervenes directly. That opens the door to escalation between nuclear powers.

At that point, markets would move fast and hard. Stocks would fall. Safe havens would surge. Oil, gas, and defense stocks would jump. Risk assets would sell off sharply. Either path carries risk. One brings prolonged volatility. The other could bring a sudden shock.

This War Is a Financial Event, Whether You Realize It or Not

Many investors still think the Ukraine war is a regional conflict. It is not. It is a slow-moving geopolitical shock that is reshaping global supply chains, energy flows, and capital markets.

China’s mineral export controls. Russia’s production surge. Europe’s defense rearmament. U.S. policy uncertainty.

These are not isolated headlines. They are indicators of a larger shift.

The global system is moving into a new phase. And the market is not priced for it.

What to Do Now Before the Next Shock Hits

Here’s how to prepare for what comes next:

• Review your exposure to energy, defense, and commodities. These are the most direct beneficiaries of long-term conflict.

• Reduce dependence on fragile emerging markets and over leveraged tech plays. These are most exposed to shocks.

• Stress test your portfolio against an oil price surge. Or a sudden U.S. policy reversal. Or a sharp military escalation.

• Have hedges in place. This could be through inverse ETFs, long volatility positions, or energy and defense plays.

• Stay informed. The situation shifts fast. Headlines can flip sentiment overnight.

This war is not ending soon. Russia is not backing down. Western unity is cracking. And markets are still operating as if none of it matters. They’re wrong.

The next market shock won’t come from a virus or a central bank. It will come from a war.

And when it does, those who are unprepared won’t just miss the signal.

They’ll pay for ignoring it. Now is the time to prepare.

Stay Sharp,

Giedon Ashwood