Tag: China

Bi-Weekly Geopolitical Report – The 2022 Mid-Year Geopolitical Outlook (June 21, 2022)

Posted on by Rebekah Stovall

by Bill O’Grady and Patrick Fearon-Hernandez, CFA | PDF

(N.B. Due to the Fourth of July holiday, our next geopolitical report will be published on July 18.)

As is our custom, we update our geopolitical outlook for the remainder of the year as the first half comes to a close.  This report is less a series of predictions as it is a list of potential geopolitical issues that we believe will dominate the international landscape for the rest of the year.  It is not designed to be exhaustive; instead, it focuses on the “big picture” conditions that we believe will affect policy and markets going forward.  They are listed in order of importance.

Issue #1: The Russia-Ukraine War

Issue #2: Xi as China’s President for Life

Issue #3: The Global Food Crisis

Issue #4: Weather Disruptions

Issue #5: Latin American Politics

Issue #6: The U.S. Midterms

Issue #7: Fed Policy and the Dollar

Quick Hits: This section is a roundup of geopolitical issues we are watching that haven’t risen to the level of the concerns described above but should be monitored.

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Don’t miss the accompanying Geopolitical Podcast, available on our website and most podcast platforms: Apple | Spotify | Google

Bi-Weekly Geopolitical Report – Mineral Commodities in the World’s New Geopolitical Blocs (June 6, 2022)

Posted on by Rebekah Stovall

by Patrick Fearon-Hernandez, CFA | PDF

For many years, we’ve discussed how the United States has been backing away from its historical role as global hegemon, setting the stage for deglobalization and a fracturing of the world into separate geopolitical and economic blocs.  In our Bi-Weekly Geopolitical Report from May 9, 2022, we provided a detailed, comprehensive forecast of which countries are likely to end up in either the U.S.-led or China-led bloc, which countries will lean toward one or the other, and which ones will try to be neutral.  As a follow-up to that analysis, this report looks at the distribution of key mineral resources among those camps and what the different endowments might mean for geopolitics, the global economy, and financial markets in the future.

With China and Russia becoming ever more threatening from a military and geopolitical standpoint, and with the coronavirus pandemic demonstrating the vulnerability of supply chains even in peacetime, investors have become more sensitive to the security of commodity supplies and the way nations might try to monopolize or weaponize them.  As such, we conclude with a discussion of the ramifications for investors.

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Don’t miss the accompanying Geopolitical Podcast, available on our website and most podcast platforms: Apple | Spotify | Google

Bi-Weekly Geopolitical Report – Parsing the World’s New Geopolitical Blocs (May 9, 2022)

Posted on by Rebekah Stovall

by Patrick Fearon-Hernandez, CFA | PDF

For more than a decade, we at Confluence have been tracking and writing about the waning commitment of the U.S. to its role as global hegemon.  We’ve shown how U.S. retrenchment and protectionism have helped erode globalization.  Factors like deregulation, falling transportation costs, improved technology, and easing geopolitical tensions following the end of the Cold War may have promoted political and economic integration for decades.  Now, however, governments across the globe are erecting barriers to trade, investment, and migration, leaving authoritarian strongmen emboldened to assert themselves.  The latest example of that has been Russian President Putin’s invasion of Ukraine.

Amid these developments, we’ve argued the world will fracture into at least two main political and economic blocs: a U.S.-led bloc consisting mostly of liberal democracies and a China-led bloc of mostly authoritarian states.  This report discusses which nations are likely to join each bloc, which will merely lean toward one bloc or the other, and which may try to stay neutral.  Based on our predicted makeup of each bloc, we describe their differing political, economic, and financial characteristics.  As always, the analysis also includes ramifications for investors.

Read the full report

Don’t miss the accompanying Geopolitical Podcast, now available on our website and most podcast platforms: Apple | Spotify | Google

Bi-Weekly Geopolitical Report – Two Power Plays in Kazakhstan (January 31, 2022)

Posted on by Rebekah Stovall

by Patrick Fearon-Hernandez, CFA, and Bill O’Grady | PDF

Don’t miss the accompanying Geopolitical Podcast, now available on our website and most podcast platforms: Apple | Spotify | Google

Over the past month, unrest has developed in Kazakhstan.  The unrest began as protests against rising fuel prices, but it soon blossomed into broader, more widespread, and violent civil disorder that had the appearance of an inter-elite conflict.  Although Central Asia doesn’t usually garner the world’s attention, instability in the region could affect larger countries, such as China, Russia, and India.  The volatility in Kazakhstan was also something of a surprise as the country has tended to be stable during its period of independence since the fall of the Soviet Union.

Despite being often overlooked by the Western media, Kazakhstan is an important country.  It’s a major oil producer and the world’s dominant supplier of uranium.  Oil prices, already elevated, rose further on fears that the Kazakh disorder would lead to additional supply disruptions.  Uranium and associated equities also rose in price on the reports.  In this report, we begin with some background on Kazakhstan, including a short history and a discussion of the region’s role in Russia’s imperial behavior.  We next delve into the reasons for the January unrest and the way it played out for Kazakh and Russian leaders.  As always, we conclude with market ramifications.

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Bi-Weekly Geopolitical Report – What Would a U.S.-China War Look Like? (January 18, 2022)

Posted on by Rebekah Stovall

by Patrick Fearon-Hernandez, CFA | PDF

(Note: As we shift to a bi-weekly publication schedule for this report in 2022, we introduce the accompanying Geopolitical Podcast, now available on our website and most podcast platforms: Apple | Spotify | Google)

We’ve written extensively about the worsening geopolitical tensions between the United States and China, which have already affected investors.  For example, the Trump administration’s tariffs on Chinese imports have skewed economic developments in each country.  Businesses in each country have suffered, while others have benefitted.

Looking ahead, the risks are even bigger.  It’s important to stress that a U.S.-China war is not inevitable.  On each side, the top leadership probably wants to avoid war.  However, as each country flexes its muscles and pushes back against the other, there is a growing risk of miscalculation or mistake that leads to shooting and bloodshed.  Even if the conflict became “World War III,” it would not necessarily look the same as World War II.  A conflict between today’s two greatest powers would exemplify a new, unique form of modern warfare in terms of the domains in which it would be fought, the weapons utilized, the tactics and strategies employed, the alliances facing each other, and the goals pursued by each side.  This report describes the likely lead-up to such a war and how it might be fought.  As always, we wrap up with a discussion of the likely ramifications for investors.

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