Summary

Juan discussed how BCA sees geopolitics affecting portfolios mainly through regime driven shifts in trade and investment, not conflict headlines. The world is moving into multipolarity while the economic structure remains unipolar, with the United States as consumer of last resort and investment of last resort. The adjustment was framed as Europe investing more, China consuming more, and the United States retrenching via slower consumption growth and higher production. In the United States, fiscal is no longer going to be a major driver of growth, and tariffs act as a major consumption tax hike as deficit stabilisation rises in priority. The number one implication was a United States dollar depreciation of about 20 percent in real terms over five to seven years, benefiting international equities. United States equities could underperform mainly due to currency effects, while the dollar faces headwinds because it is very expensive, rate differentials are narrowing, and safe haven behaviour is less consistent.

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