Let’s review the current litany of geopolitical woes:

Eastern Europe is engulfed in a bloody land war. Russia and China have formed an alliance against the United States, with Russia’s leader threatening the use of nuclear weapons. Great Britain is rocked by political instability. Neo-fascist parties are on the rise in Western democracies.

The headlines seem torn from the previous century, but it’s all happening as the fourth quarter of 2022 unfolds. Accordingly, currency markets are in turmoil, central banks around the world are taking emergency measures to prevent financial contagion, and rising bond yields are pressuring equities.

Below, I’ll show you how to mitigate these investment risks, so you’re not whipsawed by the daily news from abroad.

But first, let’s turn our attention to America’s cousins across the pond, to see what Britain’s former prime minister has in common with…a head of lettuce.

European stocks have been on a roller coaster, as the United Kingdom descends into political farce. Liz Truss this week stepped down as British prime minister, setting off a fierce succession battle and rattling bond markets.

As support for the Tory leader withered, so did a head of lettuce.

“Will Liz Truss outlast this lettuce?” That was the question posed all this week in a live video by The Daily Star, a British tabloid. The video featured a photo of Truss, alongside a head of lettuce sporting a pair of plastic googly eyes.

The lettuce gag was inspired by a snide comment in The Economist, which remarked on Oct. 11 that Truss had made so many missteps so early in her tenure, her grip on power amounted to “roughly the shelf-life of a lettuce.”

The lettuce won, when Truss resigned Thursday. The photo of Truss was flipped face-down on the table, next to the triumphant head of lettuce, as a recording of “God Save the King” played repeatedly amid swirling colored lights. The live feed garnered tens of thousands of viewers from around the world.

It’s all very funny, until you realize that the stupendous incompetence of the Truss regime has wreaked havoc in global financial markets, driving the value of the British pound to historic lows and propelling the U.S. dollar ever higher. I explained the direct consequences for investors in my previous article, London Calling: How Britain’s Folly Affects You.

Personality cults…

The 20th National Congress of the Chinese Communist Party, held this week Oct. 16-22, has been jingoistic and anti-Western in tone. The Communist confab will conclude on Saturday, when the obedient attendees are scheduled to confirm the increasingly autocratic President Xi Jinping for a record third term.

Citing national security concerns, the Biden administration last week unveiled sweeping limits on the sale of semiconductor technology to China. The world’s two biggest economies are now embroiled in a new trade war that’s weighing on tech sector equities.

Then there’s Russia, which seems intent on fighting Cold War II.

Russian President Vladimir Putin is turning ever more brutal, as his misadventure in Ukraine goes from bad to worse. Putin’s conscription of military recruits has been a disaster, causing domestic unrest and prompting thousands of Russian men to flee the country. Untrained and poorly equipped Russian troops have been thrown into the maw of battle as cannon fodder.

In its desperation, Putin’s struggling war machine has been targeting Ukrainian civilians, earning international opprobrium for atrocities. Putin also has been rattling his nuclear saber, conjuring comparisons to the 1962 Cuban Missile Crisis.

The exercise of crude power…

In a slap at the U.S. and Europe, OPEC+ at its latest meeting this month announced drastic cuts to crude oil production, setting back President Biden’s efforts to curb inflation. The oil cartel is dominated by Saudi Arabia and Russia.

The House of Saud is fed up with the White House’s carping about human rights, whereas the Russians are furious over Western sanctions that were imposed in retaliation for the Ukraine invasion.

Inflation is largely driven by elevated oil prices and war-induced supply disruptions, and it’s a global phenomenon (see chart).

Meanwhile, a far-right political party that traces its origins to Benito Mussolini (yup, Hitler’s pal during WWII) has taken power in Italy, the third-largest national economy in the European Union. Fascistic parties also are on the rise in France, Spain, and…if you go by the rhetoric of President Biden…in America.

Rising tensions, rising yields…

Amid this geopolitical clamor, it’s no surprise that bond yields continue to rise, with the benchmark 10-year Treasury on Friday hovering at 4.28%, its highest level since 2008. Rising yields have been clobbering global equities, especially in Asia.

As the yen nears a 32-year low against the U.S. dollar, the Bank of Japan has initiated an emergency bond buying program to set a floor for bond prices.

The Bank of Japan is buying back at least $1.5 billion worth of bonds to shore up the fixed income market. The Japanese central bank’s actions echo those taken earlier this month by the Bank of England to rescue the pound.

Britain’s currency had plunged in response to Truss’ now-scuttled plan to cut taxes, a fiscal strategy widely derided because it flew in the face of rising inflation and monetary tightening.

As global headwinds mount, investors are fleeing to the safe haven of the U.S. dollar, which in turn is putting stress on the global financial system.

Foreign governments are struggling to maintain the value of their currencies, a dilemma that’s especially acute for emerging markets. A strengthening dollar drives up the price of crude oil and makes it harder to pay debt.

And yet, on Friday, the major U.S. stock market indices sharply rebounded and closed higher as follows:

• The DJIA: +2.47%
• The S&P 500: +2.37%
• The NASDAQ: +2.31%
• The Russell 2000: +2.22%

It’s been a wild week, but the four indices ended with weekly gains. Fueling Friday’s rally was chatter on Wall Street that, after the Fed followed through with its expected 0.75% rate hike in November, it would likely step down to 0.50% in December, to reassess its tightening. If not a pivot, then a “pause” could be in the offing.

Your hedge against geopolitical risk…

A time-proven way to protect your portfolio against geopolitical risk (and still generate income) is to increase your exposure to U.S.-based dividend-paying stocks.

That’s why you should consider our premium trading service, Rapier’s Income Accelerator, helmed by our income expert Robert Rapier.

Robert’s trades are income-generating machines that work in defiance of the global headwinds I’ve just described. With just a few simple steps, Robert can show you how to exponentially boost your income from high-quality dividend stocks. Click here for details.

John Persinos is the editorial director of Investing Daily.

To subscribe to John’s video channel, click this icon: