Tag: hegemony
Bi-Weekly Geopolitical Report – China’s Rising Power and the Implications for US Hegemony (October 27, 2025)
by Patrick Fearon-Hernandez, CFA | PDF
In a recent report, we noted that the world is now transitioning away from its 30-year era of Globalization, when the United States mostly embraced its traditional role as global hegemon, i.e., the big, dominant country that provides international security, ensures relative order, and issues the reserve currency. Our previous report showed that the world is now entering a new era of Global Fracturing or, potentially, Chinese Hegemony. In this report, we take a deeper dive into the current US-China balance of power. We show that in all key aspects of power — military, diplomatic, technological, and economic — the balance appears to be shifting noticeably in favor of China. As this monumental shift in international relations becomes more obvious, US leaders and voters are increasingly struggling to decide whether they want to cede hegemony to the Chinese, defend it, or reform it into something that is more “America First.” Whatever they decide, the US role as global hegemon is changing as China’s relative strength increases. We conclude our report by discussing the investment implications of this change.
Don’t miss our accompanying podcasts, available on our website and most podcast platforms: Apple | Spotify
Bi-Weekly Geopolitical Report – US Influence on the Wane: New Evidence (September 29, 2025)
by Patrick Fearon-Hernandez, CFA | PDF
World history goes through phases, not as a cycle of recurring situations but as a series of “regimes” or broad sets of trends and relationships. Each regime is complex, since it encompasses issues such as the political landscape in various countries, the dominant global approach to economic policy and trade relationships, the structure and operation of security alliances, and even cultural norms. The most recent regime was the post-Cold War period of globalization that ended around 2008. Since each regime is so complex, and its elements or facets can change at a different pace, it can be hard to know for sure that a transition is taking place. It can be even harder to know what the new, following regime will look like.
Importantly, several major developments over the last few months have confirmed that the world is still transitioning away from the Globalization period. These developments have also provided added evidence about what to expect during the incoming regime of Global Fracturing or, potentially, Chinese Hegemony. As shown in this report, one key message is that the US continues to lose influence in international affairs as it steps back from its traditional role as global hegemon. Recent evidence of this includes the latest United States-China trade talks, the Russian drone incursions in Poland and Romania, and Israel’s attack on Hamas officials in Qatar. These developments are in line with other examples in recent years, such as the Obama administration’s decision not to enforce its “red line” against Syria’s use of chemical weapons in its civil war and the Biden administration’s chaotic withdrawal of US forces from Afghanistan. In this report, we discuss the latest developments and outline how they might affect financial markets going forward.
Don’t miss our accompanying podcasts, available on our website and most podcast platforms: Apple | Spotify
Bi-Weekly Geopolitical Podcast – #74 “US Influence on the Wane: New Evidence” (Posted 9/29/25)
Bi-Weekly Geopolitical Podcast – #71 “Update on US and China Defense Spending” (Posted 8/11/25)
Bi-Weekly Geopolitical Report – Update on US and China Defense Spending (August 11, 2025)
by Patrick Fearon-Hernandez, CFA | PDF
In our Mid-Year Geopolitical Outlook, we reminded investors that President Trump’s import tariffs aren’t the only issue between the United States and China, despite the media frenzy surrounding them so far this year. We warned that even as the trade dispute persists, China is continuing to press for geopolitical advantage by beefing up its armed forces, pushing an all-of-nation effort to surpass the US in science and technology, and launching a diplomatic charm offensive to exploit the US’s weaker image as it cuts foreign aid, reduces its support for allies, and erects across-the-board trade barriers.
In this report, we focus on the US-China military rivalry from the perspective of “defense economics,” i.e., the impact of a country’s overall economic strength on its military effort and the impact of its military effort on the economy. Even though China is now facing significant, structural economic headwinds, we show that its high defense spending and relative fiscal flexibility will probably make it more challenging for the US to defend its position as the global hegemon. As always, we wrap up with the implications for investors.