The Outlook for Geopolitics in 2019

Geopolitics could drive uncertainty and downside risk

The trend toward monetary tightening looks likely to continue, and further unilateral sovereign actions promise more surprises.

These moves could have secondary and tertiary effects, for example on companies within complex supply chains or those with specific regional exposures that may need to alter their business models or absorb additional costs.

Any resolution of these geopolitical themes could trigger re-ratings in the markets they affect and should be monitored during the coming months.

Key takeaways:

  • Consider currency hedges since negative geopolitical events primarily transmit via currency
  • Look to buy stocks on the dips to potentially profit from mean reversion
  • Don’t necessarily rely on bonds as proxies, as investors treat bonds differently from currencies or stocks when a geopolitical event happens
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More on the 2019 Global Market Outlook

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