GeoMacro

The market narrative around the Gulf conflict rests on three flawed myths: the UAE is not “finished,” Iran cannot close Hormuz indefinitely, and the war is not fundamentally about China.

China's slowdown coincides with at least a minor global oil shock – a combination we have long feared.

Trump is saving face with new tariffs but will avoid any major new tariff shock until 2027. For now, Iran risk will overshadow tariff volatility.

The CNY is undervalued and highly competitive. This gives China room to let the currency appreciate while remaining an export-driven powerhouse, gradually shifting from export intensity toward stronger domestic consumption. This achieves two objectives. First, it narrows the capital account deficit and strengthens the CNY’s role as a global anchor. Second, it enhances Beijing’s geopolitical autonomy by reducing reliance on foreign final demand.

President Donald Trump’s political capital is moderate, as he frontloaded his most disruptive policies within the first year.

Beyond the imminent SCOTUS ruling, we revisit our bullish Europe thesis – with the Chart of the Month suggesting that Germany is so back – as well as our bearish USD view. Also, a few charts on oil and geopolitics.

Ignore Japan's constitutional debate. Rearmament will accelerate anyway. Tech, defense stocks, and industrials will benefit. The threat to JGBs is real but will probably be contained.

Special Report

China is providing limited stimulus, promoting tech and trade, and maintaining a tariff truce with the US in 2026. Structural flaws and great power struggle continue to cast dark clouds over the long run.

Special Report

Checks and balances in the US political system are underrated. Social unrest and government shutdown will have fleeting market implications.

Our top five "Black Swan" risks this year are familiar but all too realistic in the current climate. Investors should stay overweight US equities and EM-ex-China until some hurdles are cleared.