The New Geo-Political Era Is Changing EVERYTHING...But Wall Street Is BLIND To It | Michael Every
Feb 23, 2025
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Michael Every, a Global Strategist at Rabobank, discusses how rising nationalism and protectionism are reshaping the global economy. He explores the disconnect between traditional market metrics and the new geopolitical landscape, emphasizing investment opportunities amidst uncertainty. Every examines the shift from globalization, the implications of the Russia-Ukraine conflict, and the role of sovereign wealth in national security. He also highlights the necessity for strategic partnerships and the impact of mercantilist thinking on future investment strategies.
Investors are currently facing market fatigue due to overwhelming geopolitical changes, leading to a passive 'wait and see' trading approach.
The global shift from globalization to mercantilism and protectionism presents investors with both significant opportunities and substantial risks.
A systemic denial among asset managers regarding geopolitical changes may trigger a swift repricing of assets once the consensus shifts.
Nations are increasingly focusing on national security priorities in their investment strategies, altering traditional views of economic success and value.
Deep dives
Market Fatigue and Hesitance
Investors are currently experiencing market fatigue due to the overwhelming influx of headlines and significant geopolitical changes. Many are adopting a 'wait and see' approach, opting not to engage in trading or pricing assets until they perceive undeniable facts in front of them. This has resulted in an overall lag in market reactions, making it ineffective to rely on traditional market metrics. Therefore, a notable and dramatic market shift is expected once participants collectively acknowledge the reality of these changes.
Shift Towards Mercantilism
The ongoing shift away from globalization towards mercantilism has gained momentum, particularly under recent U.S. administration policies. Nationalism has risen as countries reassess their positions within the global economy, leading to an environment characterized by protectionist measures. This trend presents both significant opportunities and risks for investors as they navigate these structural changes. Effectively, investors must become adept at recognizing how these geopolitical shifts will influence capital flows and asset valuations.
Denial in Market Awareness
Numerous market participants are struggling to integrate the implications of current geopolitical developments into their trading strategies. There exists a systemic denial among asset managers and traders regarding the reality of these changes, similar to ignoring critical health signals. This collective blindness to the emerging risks may precipitate a swift and violent repricing of assets once the consensus shifts. Consequently, vigilance and readiness for rapid changes in market dynamics are essential for navigating this landscape.
Distorted Decision-Making and Strategies
As the balance of global power shifts, countries are likely to reevaluate their alliances and investment decisions based on national security priorities. The differentiation between policy and statecraft becomes crucial, as economic decisions may be increasingly tied to geopolitical considerations. In particular, nations may prioritize domestic production and security over global market competition. Investors must consider that markets are poised for upheaval and that existing investment strategies may soon become untenable.
Emerging Investment Opportunities
In this evolving landscape, certain sectors like defense may present lucrative investment opportunities due to rising military spending and strategic priorities. Countries are poised to invest heavily in industries deemed crucial to national interests, potentially creating legacy market shifts. However, investors are cautioned to approach these opportunities with skepticism, given the unpredictable nature of policy changes and their impacts on market valuations. Overall, an adaptive investment strategy, aligned with these macroeconomic shifts, is essential.
Reframing Economic Metrics
The traditional understanding of economic prosperity centered around GDP is being challenged as nations contemplate what constitutes 'value' in the current geopolitical climate. As market participants grapple with the implications of nationalism and economic statecraft, the criteria for measuring success may evolve substantially. Broader views of economic health will incorporate considerations such as sovereign wealth production, strategic investments, and sustainable development goals. Investors must remain flexible, ready to adjust their metrics for assessing value in a transforming global economy.
The Role of Nationalism
The resurgence of nationalism has implications for investment strategies and global alliances. Countries are increasingly recognizing that they cannot rely solely on global trade dynamics to ensure economic health and security. This shift toward self-reliance could lead to significant changes in both domestic and foreign investment patterns. As nations adapt to these developments, investors must stay informed about domestic shifts and how they interlink with international politics and market behavior.
GET MICHAELS FREE ARTICLE ON STATECRAFT at https://thoughtfulmoney.com/wp-content/uploads/2025/02/global_strategy_us_economic_statecraft_days_of_future_past.pdfWhen today's guest was last on this program back in Nov, he predicted we'd see continued momentum geopolitically away from globalization and towards mercantilism and protectionism.That has proven to be the case worldwide, and particularly so for the US, where Donald Trump's "America First' agenda has kicked off at warp speed -- shocking citizens, allies and enemies alike with its violent & swift disruption of what was Business As Usual just a month ago. How is this wave of nationalism around the world likely to impact the global economy?What are the biggest opportunities it may open up for investors? And what are its biggest risks?To discuss, we're fortunate to be able to spend the next hour with Michael Every, Global Strategist at Rabobank, who joins us from Thailand.Michael, thanks so much for taking time out of your busy morning to join us.Follow Michael at https://www.rabobank.com/knowledgeOn LinkedIn at https://www.linkedin.com/in/michael-every-38983214/?originalSubdomain=sgOr on X at @themichaelevery
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