Tina Fordham on the End of US Exceptionalism and the Geopolitical Risk Supercycle

The Geopolitical Risk Supercycle

• 💡 The world is entering a new geopolitical risk supercycle, characterized by a measurable increase in significant risk events since 2010.
• 🎯 This phenomenon challenges the traditional view of geopolitics as mere news flow or noise, establishing it as a quantifiable signal for investors.
• 📈 Geopolitical risks have been rising and predate recent trade policies like tariffs.

Measuring Global Disruptions

• 🔬 Researchers have developed an aggregate indicator using open-source data to measure geopolitical risk.
• 🌍 Geopolitical risk is defined as actions countries take to project power beyond their borders, which is increasing in a more contested global landscape.
• ⚠️ The use of tools like tariffs and sanctions has significantly increased, indicating a shift away from a "golden normal era."

Investor Strategies in a New Era

• 💰 Investors are already reacting by piling into gold and seeking new safe havens.
• 🛡️ Certain sectors, particularly defense, are benefiting from a security-led global order.
• 📈 Interestingly, there is renewed interest in markets like Europe and the UK, with some countries perceived as offering more policy and political stability than the United States.
• 📉 This shift contributes to the idea that the U.S. exceptionalism trade may be over.