GeoMacro
A blend of geopolitics and macro, synthesizing the new and old macro to generate alpha and identify the beta through probability-weighted market views.
The world has descended into a full blown Doomer panic since the 27-year-old Anthropic engineer quit over the threat that AI would cause human extinction. Now-famous Jacob Coxon posted that “The people building AI earnestly believe that it could kill us all by the end of the decade. This is not a marketing stunt.”
The situation in the Middle East is becoming complicated. Over the past week, several events raise the odds that Brent prices could burst through their 2026 high of $126 per barrel.
President Trump is raising tariffs again, now through 2027 – and more countries will retaliate this time. While markets can climb over “Liberation Day 2.0,” investors should be wary of today's aggressive policies engendering drastic policy change in 2028.
Alternative for Germany’s election win in the state of Saxony-Anhalt is overrated.
There is no evidence that there is a run on US government bonds. All the data at our disposal, and the curated views of our bond specialists, suggest that the US bond market may have 99 problems, but a coordinated run on its safe haven status is not one.
Markets have become obsessed with the rise of global long-dated yields. To some extent, we agree with the concern. Bonds are trading on "vibes," alarmed by the incoherent US geopolitical policy. Oil prices are obviously the conduit between that policy and the markets. On the other hand, growth is also robust. As such, bond market selloff is not all just negativity. The one secular theme driving the bond market selloff that does not bother us all that much is fiscal policy. We see signs — including actual budget deficit data! — that the US, policymakers and voters alike, is starting to understand that there are limits to profligacy. As such, we would advise clients with a long term focus to begin nibbling at the hated bonds.
Our colleague Matt Gertken has penned a sober analysis on the midterms, calling for a Democratic Party sweep in 2026. It is a measured, data-driven, analysis that we encourage you to read. This quick Insight is neither sober nor data driven. It is hyperbolic and based on “vibes.”
US aerospace and defense stocks still have a structural tailwind from geopolitics, but face rising cyclical challenges from macro and market fundamentals, as well as eventual Iran and Ukraine ceasefires and political change in the United States.
Many clients have asked us for an analysis of the long-term implications of the Hormuz Crisis. In this report, we posit that the conflict has been catalyzed by the multipolar context and that it will merely ossify the trends already afoot. Nothing offers incentives for more global capex like the threat of losing a critical energy supply chain. Therein lies the paradox. While capex is mildly inflationary in the short term, it is wildly disinflationary in the long term. This may be a worthwhile insight given all the consternation about long-dated bonds at the moment.