FGF Navigator-Pulse #10: NEW//No Cease Fire/Campus Protests/Trump on Trial/Tech & the Zeitgeist

It's hard to believe that 3 weeks have passed since the direct exchange of missiles between Israel and Iran, causing a spike in Middle East risk. Our view at the time was that the subsequent “calm” was merely a pause in hostilities. As hopes for a ceasefire have been dashed and Israel’s assault on Rafah rages, I have been discussing the various angles. 

In short, it comes back to a point I make repeatedly: conflicts end when the costs--in blood, treasure or both--exceed what one or both of the parties is willing to bear. When it comes to the wars between Russia and Ukraine and Israel and Hamas, neither side has yet reached that point.

If anything, as we highlighted during our Q2 webinar, we expect a “Danger Zone” period of heightened geopolitical risk between now and U.S. elections in November, with the temperature of disputes likely to rise as combatants move to increase and then consolidate their gains ahead of a possible change of government. Other actors may attempt to exploit Washington's attention being focused elsewhere to strengthen their own position. 

Although the unusual U.S. gesture of holding back a scheduled weapons delivery to Israel is significant in the context of the overall state of worsening relations between Washington and Jerusalem, in our view it is unlikely to change the trajectory of the conflict.

Neither will the gathering wave of university protests over U.S. policy in the Middle East, even as such protests spread beyond Ivy League universities to campuses across the U.S., the U.K. and Europe.

The protests are unwelcome news for the Biden Administration, and could prove disruptive if they continue through the summer, especially if they collide with the Democratic National Convention taking place in August in Chicago.

Having said that, I disagree with observers who liken the current student protests to 1968 anti-Vietnam war protests, the key difference being the stakes of the protestors’ grievance—Americans are not being drafted to fight in the war in Gaza as they were in Vietnam.

Even though passions are running high and objections to the conduct of Israel’s Gaza offensive and its staggering human toll are widespread, by my reckoning (see my earlier work on Vox Populi Risk and mass protests here) is they do not, at this stage, meet the threshold for something more profoundly disruptive.

Instead, the campus protests should be considered in a similar vein to the wave of protests that followed the death of George Floyd at the hands of US police officers in 2020 (which were a more extensive and international phenomenon).

What the continuation of the US student protests, the failure to agree a ceasefire in the Middle East, Putin’s threats to use tactical nuclear weapons in Ukraine and Chinese President Xi’s tour of Europe this week highlight is a risk factor we identified at the start of the year in our 2024 Geopolitical Outlook as “New Doom Loops”.

This interlinkage between risk factors against a backdrop of weaker buffers amplifies their cumulative impact and causes it to ricochet across regions and sectors in new ways, e.g. Israel’s Gaza offensive and U.S. elections; Russia-Serbia ties and China’s courtship of Belgrade as a means of exploiting divisions in Europe.

More than ever, business leaders and investors must take a holistic view of global forces and the projection of power—the true explanation of geopolitical risk.

I'm pleased to announce that we will be kicking off our coverage of the global implications of U.S. Presidential elections in the coming weeks, as we transition to a model offering more frequent content and deeper coverage to FGF clients who have signed up for our Premium Access service. To find out more about this, hit Reply or write us at Info@fordhamglobal.com.

Speaking of US politics, at this writing, former President Trump was on trial in a dingy Manhattan courtroom where jurors listened to testimony about such matters as the former American head of state reportedly being spanked with a rolled-up magazine by a former porn star, to whom he is alleged to have paid hush money. Nevertheless, such is the state of affairs that Trump remains the bookies' favourite. 

I’d like to close by sharing the new ad launched by Apple CEO Tim Cook for its iPad Pro, described as: “the thinnest product we’ve ever created”, illustrated by images of musical instruments, books, records, a classical sculpture, games and more being crushed by the machine.

Judging by the comments, the ad has spectacularly flopped, with responses criticising Apple for depicting the destruction of "everything good created by humanity". I’d love to hear what you think of it. I find it a compelling example of how corporate culture can misread the zeitgeist...

All the best,

Tina

Bloomberg Horizons Middle East & Africa with Jumanna Bercetche

I joined Joumanna Bercetche on her new morning show, Bloomberg Horizons Middle East & Africa, to discuss the broad implications of Israel's move into Rafah. 

Bloomberg Surveillance with Tom Keene and Paul Sweeney

It was a pleasure to join Tom Keene and Paul Sweeney on Bloomberg Surveillance about the latest turns in the Middle East crisis, from the possibility the International Criminal Court will issue an arrest warrant for Israel’s Benjamin Netanyahu to the reason Egypt won’t accept refugees from Gaza in the event of an assault on Rafah.

We also discussed the wave of protests sweeping college campuses in the U.S. and how to view them through the lens of history.

FGF Q2 Webinar: Unconventional Wisdom

In case you missed our Q2 Geopolitical Outlook, “Unconventional Wisdom”, you can now watch its replay below.

It’s short and sharp at 30 minutes, tailored to the needs of senior decision-makers at global organisations. 

We covered the political signposts and geopolitical risks most likely to impact financial markets and the business environment, as you would expect—along with our views on how interest rates, the yield curve, and debt levels will be affected.

With thanks to input from my business partner Martyn Brush, ex-trader and Chief Risk Officer at Tier 1 financial institutions. 

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