David Roche, a veteran investment strategist and the president of the institutional research firm Independent Strategy, told CNBC on Friday that he doesn’t see Vladimir Putin ending the war in Ukraine anytime soon—and markets aren’t anticipating just how bad things could get.

“The war in Ukraine is not going to be fixed,” Roche said. “It will be a very long duration. Because the sort of pictures which the public are going to see, the atrocities we discover, prevent any possibility of negotiating with Vladimir Putin. So, by definition, we are looking for a regime change.”

The U.S. and its allies have already ratcheted up sanctions on Russia after mass graves and executed civilians were uncovered in Bucha, outside Ukraine’s capital, Kyiv, earlier this month. President Biden went so far as to label Russia’s actions “war crimes” and called for Vladimir Putin to be tried for his actions in the country.

But Putin won’t be willing to trade a withdrawal from Ukraine for the chance at reduced sanctions, no matter the economic costs, Roche said. That means the West’s efforts to segregate Russia from the international community will only increase, moving towards a total energy blockade, and throwing global markets into chaos.

“This is an enormous supply-side shock that will continue in food, in energy, in metals, and I can go on,” Roche said. “At the same time, we’re dealing with inflation worldwide, we’re dealing with rising interest rates…and we’re looking at, of course, supply disruptions in China due to what is happening with COVID…that’s a lot for markets.”

The impending “War-cession”

Roche isn’t alone in his fears of a looming economic downturn. Billionaire investors, former Federal Reserve officials, and now even top Wall Street banks have said that a recession could be on the horizon as central banks rush to control surging inflation that’s only been exacerbated by the war in Ukraine and lockdowns in China.

But Roche argues that strict sanctions against Russia are kicking off a “war-cession,” which is different than the typical recession in some critical ways.   

“In a normal recession, output and demand go down, and inflation goes down,” he explained. “In this sort of a recession, a ‘war-cession,’ you actually have output which falls at the same time as costs and inflation rise.” 

Roche said the “war-cession” will put central banks in a particularly tough position. Officials will be forced to choose between acting to slow inflation, thereby damaging economic growth, or letting the economy run hot at the cost of rising consumer prices.

He suspects central banks will stick to their campaign to fight inflation by raising interest rates over the next six to nine months. That, in turn, will hurt stocks, reduce economic growth, and help to precipitate a “war-cession.”

Eventually, the economic pain will become too extreme for central banks, and they’ll be forced to cut rates, but that’s going to take a lot longer than markets are predicting at the moment, Roche argued.