by Kaisa Stucke, CFA

“Catalonia, a new state within Europe” is the slogan of the pro-independence secession movement in the Spanish region of Catalonia.  Catalonia has always pined for more autonomy, but calls for secession have intensified as the Spanish economy has suffered from slow growth and corruption scandals have discredited the central government.  At the end of September, Catalonia held regional parliamentary elections.  These elections were touted by some as a prelude to Catalan secession from Spain.  However, the Spanish federal government has made it clear that it will not hold negotiations for secession and, in fact, even holding an independence referendum is considered unconstitutional.  Although the majority of Catalans support independence, they could likely be appeased with more autonomy, especially financial autonomy.

This week, we will look at the separatist movement in Catalonia.  We will start by giving a brief overview of the region’s history and politics, then look at the roots of the independence movement.  We will explore the probability of independence, the potential future relationship between the region and the central government, and the roles of the EU and the Eurozone.  As always, we will conclude with market ramifications.

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by Bill O’Grady

Last month, Russia moved a significant amount of military hardware into areas of Syria controlled by the Assad regime.  The action caught the Obama administration by surprise and raises questions about what Russian President Putin is trying to accomplish.

In this report, we will examine Russia’s short-term geostrategic goals and the tactics Putin is using to achieve these aims.  As always, we will conclude with potential market ramifications.

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by Kaisa Stucke, CFA

Meteorologists have been calling for an El Niño event since last year.  Current forecasts place the likelihood of an El Niño occurrence this winter at over 90%.  Now, talk has turned from the likelihood of an El Niño to whether the abnormal weather pattern event will be super-sized or monster-sized.  Water temperatures in the Pacific, one of the first signs of a looming El Niño, have measured much higher than normal.  In fact, water temperatures have been on par with the most severe El Niño event from the past 30 years.  As investors, we monitor larger climate events as severe weather can have an effect on most commodity markets.

This week, we will look at how an El Niño develops and its possible climate, economic and geopolitical effects on the global economy.  As always, we will outline the potential investment implications of this event.

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by Bill O’Grady

On September 12^th, Jeremy Corbyn, a longtime Member of Parliament (MP), was elected as the new leader of the U.K.’s Labour Party.  When he announced he would run in June, his candidacy for the position appeared laughable, but by the time the party election was held it was clear that Corbyn would win.  Corbyn was considered a fringe member of the Labour Party; he has never controlled a major mandate (e.g., Exchequer, Defense, etc.) or held any position of responsibility in the party.

In this report, we will begin with a short biography of Corbyn followed by a description of how he won his party’s leadership role.  With this background, we will explore Corbyn’s long held policy positions and their potential impact on U.K. policy.  We will offer our reflections on Corbyn’s win, including an examination within the context of other political developments in the West.  As always, we will conclude with potential market ramifications.

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by Bill O’Grady

Last week, we wrote our first formal book review as a Weekly Geopolitical Report.  The book, Superpower: Three Choices for America’s Role in the World, is a recently published book by Ian Bremmer in which he discusses three models for American foreign policy.  In our closing comments last week, we promised to take a deeper look at Bremmer’s three foreign policy models to examine their costs and benefits.  In this report, we will analyze his three models of exercising the superpower role, Indispensable America, Independent America and Moneyball America.  From this analysis, we will discuss which model is the most likely choice.  As always, we will conclude with market ramifications.

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by Bill O’Grady

This is the first formal book review we have conducted as a Weekly Geopolitical Report, although we have leaned heavily on books or papers for much of the content in other reports.  We believe this book is important because of its message and due to the proximity to the 2016 elections.

Our subject this week is a new book titled Superpower: Three Choices for America’s Role in the World, by Ian Bremmer of the Eurasian Group.[1]  Bremmer is a well-known political scientist and author who writes often about geopolitical issues.  His new book comes at an important juncture in American history.  At some point, America’s leadership will need to select a workable foreign policy for the post-Cold War world, which involves determining what America will do about the superpower role.  This is a topic we discuss often and, after reading this book, view Bremmer’s analysis as critically important in the examination of America’s foreign policy.  In this report, we will review Bremmer’s book, starting with his premise that none of the presidents since the fall of the Berlin Wall have developed a coherent foreign policy.  We will then focus on his three models of exercising the superpower role.  From this analysis, we will examine Bremmer’s choice in the matter and offer a critical assessment of his opinion.  As always, we will conclude with market ramifications.

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[1] Bremmer, Ian. (2015). Superpower: Three Choices for America’s Role in the World. New York, NY: Penguin Publishing, Random House.

by Bill O’Grady

In the spring of 2014, we wrote a series of Weekly Geopolitical Reports that looked at the 2016 elections.  In these reports, we described the economic and political environment that had the potential to make the 2016 election historically important.  The emergence and remarkable staying power of Donald Trump and Bernie Sanders suggests that our earlier analysis and conclusions may be coming to pass.

In this report, we will recap the economic and political factors that led us to conclude last year that the next presidential cycle could be unusually significant.  From there, we will look at the unlikely rise of Donald Trump and Bernie Sanders and what their success thus far signals about the electorate and the next presidential election.  Finally, we will analyze their potential impact on the election, including the possibility that each might mount an extra-party candidacy.  As always, we will conclude with market ramifications.

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