Russia

Last month we "stuck our neck out" and reaffirmed our bullishness towards risk asset. This month, we have confirmation that the risky bet is paying off. Iran and the US remain materially constrained from total war. The AI capex thesis is holding up and slowly mutating into a price war that will only boost adoption and necessitate more investment. We open a new AI-related trade (long hard disk makers) and go long gold. 

Taiwan will not be invaded soon but focus on external constraints, not internal. Strongmen or “visionary” leaders can override geopolitical constraints at critical junctures, at least initially. 

As part of our new and improved GeoMacro service, please find attached our Global Risk Outlook, a quarterly digest of scenario probabilities and estimated market impacts for all the major geopolitical topics in the world today. 

Geopolitical risk may rotate to Russia/Ukraine in Q3, while the Middle East could reignite in Q4. 

The odds of a near-term US-Iran deal have gone up slightly, but the odds of a Russian provocation that divides NATO have also gone up. 

US restrictions on Russian crude exports could disrupt global oil supplies and trade flows over the near term. However, they are unlikely to have a meaningful impact on crude prices over a cyclical timeframe. Stay short Brent. 

Reduce risk exposure in the very near term as President Trump's ceasefire effort falters, Russia tensions spike, and US-China trade prospects suffer.