Bi-Weekly Geopolitical Report – The US Geopolitical and Economic Bloc as an Investment Region (August 5, 2024)
by Patrick Fearon-Hernandez, CFA | PDF
More than a decade ago, we at Confluence began describing how United States voters have become more reluctant to shoulder the costs of global hegemony. We’ve shown how increased populist isolationism in the US and other Western nations helped embolden Chinese General Secretary Xi, Russian President Putin, and other revisionist authoritarians to become more assertive in their efforts to undermine the US-led world order. As the resulting geopolitical tensions prompted leaders around the world to seek military, economic, and cultural allies to preserve their security and prosperity, we noted a clear fracturing of the world into relatively separate geopolitical and economic groups or “blocs.” We think this global fracturing is bound to have big implications for investors.
To better understand the new blocs and gauge how they might impact investors, we developed an objective, quantitative method to predict which bloc a country would adhere to in the coming years. We first published our findings in our Bi-Weekly Geopolitical Report from May 9, 2022. In our report today, we update the analysis. We will also do a deep dive into the attractiveness of the US bloc as an investment region, the prospects for the bloc staying together after the US elections in November, and the implications for investment strategy.