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00:00Tina Fordham is somebody we chat with a lot when we want to get smarter about geopolitics,
00:04what's going on, how does it affect markets? And there's a lot going out there, folks,
00:08as you know, and we try to stay on top of it. And Tina helps us out here. She's also
00:11an author of a new book, Mad World, a geostrategy survival guide for leaders. Talk about perfect
00:18timing for a book talking about geopolitics. Tina, thanks so much for joining us here in
00:22our studio here. Talk to us about this book here, Mad World. What's the idea behind it?
00:27What are you trying to get across with this book? Thank you for having me. Mad World,
00:32the time for this book is now. I have been advising market participants, boards and C-suite leaders
00:40for more than 25 years about geopolitics. In fact, 9-11, when I was at Eurasia Group as head of
00:46global
00:47political risk, was really a turning point because before we were having to try to persuade investors
00:52that they needed to think about geopolitics. So that took us to the next level. And over the
00:57course of the last 25 years, the nature of the questions has really changed, right? So when we
01:03first started, it was very much about how to, you know, identify hotspots to avoid. Now, the questions
01:11that I'm getting are all about what's happened to the world. How can I make sense of this rather than
01:18take me through the kind of risks that I can consider in my portfolio allocation? It's much
01:25more existential. Where does all of this take us? Well, one thing I point out is something you
01:30mentioned is a geopolitical super cycle. What do you mean by that? So this is my term, obviously used
01:38in this context most often for commodities. But in astronomy, it refers to expansion. And we published
01:45this research back in 2024, because we observed through a database that we constructed and our
01:52analytical approach, a tripling of geopolitical shocks before 2025 and Trump 2.0. I say this because
02:00based in Europe, as I am talking to a lot of non US investors, one of the things I hear
02:06most often
02:06right now is, this is bad, but it'll all go away in 2028. That's not true. If our geopolitics
02:14super cycle data and thesis is correct, which is that this really started to accelerate after the
02:21global financial crisis. And as the kind of buffers to absorb geopolitical shocks get dismantled,
02:29eroded, the impact will be greater. If I'm a CEO today, or if I'm a board member of a public
02:37company,
02:37I probably grew up in a world post World War Two, where the US was kind of the leader,
02:42they took care of everybody more or less, we all democracies worked generally, communism did not
02:48work generally, globalization became a thing. That's the world we grew up in. That's right.
02:53Is that the world today? So that's the Pax Americana in international relations terms. The average
02:59CEO is 55. I'm a little older than that. This book, you know, Mad World is also a great song
03:06from
03:06Generation X. This is a book for Generation X leaders in particular, who are having Paul,
03:13as you say, a great deal of trouble adjusting to the fact that the single biggest change is the
03:19withdrawal of the US as the backstop for trade and security and what that means. And that's why it's
03:26wrong to just focus on when will the Strait of Hormuz open? You know, when will Russia and Ukraine make
03:32a
03:32deal? Because the removal of that backstop, the erosion of trust in the US as a guarantor is
03:38driving all kinds of new configurations of power cooperation. Lots of CIOs say to me, well, it's not
03:45in the data. No, it's not in the data yet. But we can map that and you can see it
03:50with your own eyes.
03:51Yep. Well, let's take a step back. So what do you mean by geopolitical risk events? Because you
03:55mentioned a couple different things. Is it conflict? Is it, you know, could be cyber attacks? It could be
04:00anything like that. So in our research, which is publicly available, it's on our website, we looked
04:05at five types of shocks. As I say, you know, we had to manually construct this database. It doesn't
04:11exist. And that's why running regressions and doing kind of pattern spotting on geopolitics for
04:16markets is so difficult. Climate change events, conflict, state-sponsored cyber attacks, which is
04:23a slightly different metric. Tariffs and sanctions, which increased tenfold, again, before Liberation
04:31Day. This is part of an accelerating trend. And our thesis says that an increase in drivers, which is
04:38things like, you know, trust or inequality, for example, an erosion of buffers, you know, guardrails,
04:46if you like, means more shocks. And that's why we're seeing a steady increase. It's not all about
04:52the Trump administration for those who are inclined that way. But it also means that this is a structural
04:57change in trend. And that, I think, is one of the biggest sticking points. Because most market
05:03participants will say, well, geopolitics doesn't, hasn't moved the needle very much. And indeed,
05:08thinking back to 9-11, I was with Secretary Clinton last night at the Columbia University ceremony
05:14talking about it. I was here in New York on the day. It was a huge disruption for us in
05:20New York City.
05:21It wasn't necessarily a huge market event. But of course, it unleashed a whole series of effects.
05:26And I think this is the difficulty for markets. The signal and noise construct doesn't capture
05:33the sort of non-linearity and the trajectories for geopolitical risk.
05:40Prime Minister Carney of Canada stated recently in a speech, I think it was Davos, I'm not sure, that
05:46countries like Canada, these mid-sized countries, they got to band together because to the extent
05:51the US is abdicating its leadership, global leadership role, it's up to the rest of democratic
05:58countries to kind of band together, if you will, form trade alliances, that type of thing.
06:02Is that a substitute? Is that a workable substitute for maybe a new kind of world order or maybe the
06:08US
06:09does not have as heavy a hand? So Carney is really driving this charge. And let's remember that he's
06:14not just a, you know, an average politician. He's a Goldman Sachs banker. He was the head of the Bank
06:20of
06:20England. And he has really led this charge now. Can the middle powers accomplish anything together?
06:30That's about how countries can pool sovereignty. The BRICS never amounted to anything. But let's
06:35think about it differently. Other countries in the world and not just democracies or kind of fully
06:41consolidated democracies don't want to be rule takers from either America or China, right? And where I am
06:49in Europe, certainly Japan, Australia, India, even China, to a certain extent, wants to remain in the
06:55rules-based system. China just wants the rules to reflect their priorities. And that's what the
07:01competition is against. Because, you know, all day here on Bloomberg, you're talking about the impact
07:06of AI. And we're looking at commodities outperforming. That's a geopolitics story, too. It's about power
07:14an advantage. Can the U.S. catch up? This is, you know, the reason why President Trump has rolled back
07:21so many, you know, obstacles, because we're behind in the race with China. But in the meantime, there is
07:26a whole subset of huge countries that want to continue to be in the rules-based system. And that's the
07:33contest that I think is not, you know, kind of properly in front of people as what is at play.
07:39We're in the middle of midterm elections. So what did you take from President Trump's 100-minute
07:45speech last night, this Trump dividend that he was talking about?
07:49President Trump has wanted to do something like this for a long time. I mean, my first question
07:53was, does it come with a pony and free ice cream? But my second thought, and what I think bond
07:59markets
08:00will be thinking about, is the cost of this. So one element of the argument is the market reaction.
08:08Right now, Scott Besson says he is the house, you know, daring on markets to bet against him. But do
08:16American households kind of let that promise cut through and say, yeah, I'm not happy with a lot
08:21of these policies, but I'll take the five grand. It worked in the Brexit campaign. Don't forget,
08:28people did not focus on the warnings and the downside risks. They focused on the UK is sending a lot
08:35of
08:35money to the EU that can be used on health care. And so it can work.
08:40So talking to your institutional investor clients, it seems like investors have just put Iran,
08:47they've compartmentalized Iran, Ukraine, and pushed it aside, and the markets continue to move higher.
08:54How do you think those issues play out with markets here? Because Donald Trump, President Trump,
08:59doesn't seem like he's in any hurry to clean up what's going on in Iran.
09:02He can't. Yeah, the United States is trapped in Iran of a, you know, a trap of its own making
09:09because of the unclear war aims and everything else. And, you know, the idea that geopolitics is
09:14about power is the most useful way of thinking about both Russia and Ukraine and the US and Iran,
09:20which is you've got two military superpowers who assumed that these wars would be over quickly,
09:27and that they would consolidate power. Now you've got the spectacle of a much weaker power in both cases,
09:34able to hold the greater power at bay. That does send a big signal around the world that the US
09:41can't win
09:42against a country like Iran that has absorbed a lot of damage and been under sanctions for 40 years.
09:48To me, the risk is blowback and opportunism.
09:52So we're entering seven months with the war, right? Pushing up energy prices, all this. What kind of
09:56mindset should leaders take when thinking about the war, corporate leaders?
10:03So this impacts costs, and that's the most obvious one. I mean, I was one of the few, you know,
10:10analysts from the beginning saying this war would not be over quickly, which is what the market was
10:14priced for. It would not be like June 2025, which was a week of attacks. High oil prices stayed with
10:21us. Yes, you know, as the Treasury Secretary said, alternatives to the Strait of Hormuz will be found.
10:27But that's not really the most important part. It's freedom of navigation. It's the monetization
10:34of choke points, which Iran has gained new leverage and revenue that it didn't have before,
10:40sends a signal to other powers. And so if you have a supply chain that is in
10:44any way complex and goes through, you know, choke points like the Straits of Malacca,
10:49like the Straits of Gibraltar, Panama Canal, and everything else, I mean, I spent yesterday with,
10:54you know, board strategy away day and have been here all week talking about this,
11:00trying to balance the risks of the changing global order with the benefits of AI is really
11:07crystallizes the biggest challenge for corporate leaders. Can they, you know, realize those gains
11:14without encountering these downside risks? And we're in a little bit of a feedback loop there.
11:21You're based in London. Europe, broadly defined, is more exposed to energy coming out of the Middle East.
11:27What's the view there about how maybe Europe needs to maybe diversify its energy sources here?
11:35I mean, that varies by country. Where I am in the UK has extremely high electricity costs,
11:40did not kind of plan for a future like this. Spain, for its part, had invested in renewables.
11:47Germany, where we just had those controversial elections over the weekend with a strong performance
11:52by an extreme right-wing party also suffering from its choice, you know, back in the Merkel era to
11:59depend on Russian energy. A lot of voters might be saying, let's just kind of go back to the way
12:06things were when we had cheap energy and Russia wasn't, you know, engaging in hybrid warfare in our
12:12airports and cyber attacks. Europe is under attack from Russia, make no mistake about it. But,
12:18you know, we're looking at two levels. We're looking at what the impact is on markets in the
12:22economy, and then how it kind of registers with everyday people in terms of their own threat
12:28assessment. And what can politicians do? Most European leaders are in a tough place because
12:34they now have to spend more on defense. It's not popular with voters, and it's even less popular
12:39if they don't perceive the extent of risks. That's really different, though, in the Baltic states in
12:45Northern Europe. I was in Sweden and in Finland the last couple of weeks, in Denmark, totally
12:50different conversation, and in Western Europe. But the decline in trust of the U.S. is probably
12:56the biggest change, and that has occurred since the Greenland developments that I've witnessed.
13:02You know, that rolls back 40 years or more of the transatlantic alliance and looking to the U.S.
13:10not just for, you know, protection, but for partnership.
13:14Yep. All right, Tina, thank you so much for coming in here today. Tina Fordham, she's a founder
13:18of Fordham Global Insight.
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