Tina, you are a leading independent consultantand the founder of Fordham Global Foresight,you've been advising CEOs,investors, three star generals,the United Nations, and many other people.And for the last 25 years,you've been working on the intersection of geopolitics,business and the drivers of social change.Yeah. And very recently,you've been named one ofthe most influential women in financial, congratulations. Thank you.Now, just a few weeks away from the US Presidential elections.I think one of the most important events inthe political cadar you've been following it for the last five US elections.And I recall in 2016 how you warned us.You warned us about the polls.Can we go back to that and what you were thinking?Yes. But, we always knew that 2024 was going to bea big year for global elections with more than half ofthe people on the planet going to vote andthe US elections in November really being the kind of centerpiece.And now it's only a few weeks away.And so we're looking at the polls.And one of the striking things is justhow close they are and how stable they are.Just not budging.And that in itself is unusual.And I think, you know,almost whatever aspect we talk about in this year's US elections,we kind of have to rip up the old playbook,when we look at them, because it's clearly not the economy stupid,as was famously said byJames Carvil who was Bill Clinton's campaign strategist,back in the late 90s,because the US economy is the envy of the world.Now, American may not be feelinggreat about it because of inflation, especially, you know,cost of living on basic goods,but the US economy is performing very well.We have a bull market.And yet, the incumbent, President Biden, who,of course, withdrew from the race,saw his approval ratings in the tank.Yes. And so that correlation,such as it was, has broken down,and the dramatic developments over the summer,with Biden withdrawing from the race after his disastrous performance,the first assassination attempt against President Trump,and then Harris rising to the top of the ticket with her running mate,Tim Walls, and we're in this place where the poles are stuck.So an enormous amount of drama over the summer.And now that we're in the home stretch,the divide is just two percentage points with Harris in the lead.But what's interesting about this race, Well,there are many things that are interesting about it isif you look at investor perspective,investors have gone back to where they were in June or so,which is all in for Trump.And you can see the disconnect in the prediction markets,which I have to kind of highlight,have historically been prone to intervention and manipulation,and it only recently became legal again inthe United States to invest in the prediction markets.Investors seem to have decided that Trump is the more likely winner,the tiny lead that Harris has got Democrats feeling very anxious.And what it means for all of us observersis a polling error in either direction,could see a victory.And that means even a one point shift.In the battleground states or the swing states. Swing states, of course.Seven swing states, so there's very little in it.And you mentioned inflation.Can I pick your brain?Of course, there's been some interesting discussions aroundFederal Reserve appointments and independence of the Federal Reserves?What you're thinking then in terms of the candidates?Well, you know, we can only observethe policies that they announce in the campaign.And one of the developments that Ithink hasn't gotten as much attention as it mighthave is the idea that Trump first mentioned in one of the debates,where he said he thought the president,meaning him should have a view,should be able to have a view on interest rates.Now, you know, we know that Trump isa a real estate guy and interest rates matter a lot for real estate.And he does indeed have very strong views about it.But the concept has been developed further since,and there have been some articles about it.And what will be interesting for any of your viewers here in the UK isthat it appears that they want to havesomething modeled on what we have here in Britain,which is, like, a shadow Chancellor type of role,which I guess gives it a veneer of,you know, kind of political acceptability.It's not clear how it would work in practice to havea president who had a role in setting central bank policy.Yeah. But at the moment,it doesn't seem to be bothering markets.I think if Trump were to win,you would see a lot more effort to understand what this might mean.But, of course, it would be a huge change in policy in practice, too.Being some big developments,of course, this week in the Middle East.And you often mentioned a new geopolitical risk super cycle,the convergence of a structural increase in conflicts,of course, the maximum numberof historically of the number of elections in one single year,and fewer buffers to mitigate those risks.Yeah. How are the developments inthe Middle East changing the trajectory of what we were expecting?Well, the geopolitical supercycle thesisis something that I wrote over a year ago,about 18 months ago.So before the latest escalation in the Middle East conflict,the October 7 attacks actually happened.And, you know, you summarize it very well.The conceptual foundation of this thesis is thatthe drivers of geopolitical risk continue to accelerate.And that's everything from the number of elections and possible changesin government to more structural themes or even,you know, climate change events that translate intofactors like more migration, more conflict.We can see this in the data.The International Crisis group shows that since 2012,there has been an increase in the number of conflicts,the duration of conflicts, et cetera.The purpose of international institutions,like the United Nations or central banks, the IMF,and the world bank, of course,is to try to mitigate and moderate the impact of these kinds of developments.But they have less backing,and there's less international cooperation.So we're seeing what the implications of that is,and that's more risk events.Risk events. And of course. Yeah. You know where weare at LSEG and FTSE Russell.Yeah. We capture all this data.Very good in data and analytics.We look at Russell 2000, 100, Chapter 850.Well, so you're going to be asking,how do we see this in the data?And this is a question that Ihave very often throughout the course of my career.So linking it back to the Middle East conflict.This is the biggest instance of escalation in the Middle East since 2006.In contrast to that period,the impact on oil prices has been modest to negligible.About two weeks ago, we had a relative spike becausewe've had this cycle of escalation between Israel and Iranthat is getting more serious withthe suggestion that Israel might attack Iran's nuclear facilities,which would be a massive risk event.That has since receded to perhaps attacks on military installations.If there was an attack on Iran's energy facilities, or indeed,if we look at the Ukraine conflict,if Ukraine were to attack Russia's energy infrastructure,which it has done some of.In either case, there would be an impact on markets.And when we talk about geopolitical risk at the first order,we're talking about systemic impact,and that means either throughthe commodities price channel or in the form of a growth shock.So when I talk to people who are on the younger side,they say, geopolitical risk,we don't see it doesn't really matter tragic.And concerning but no market impact.What I would suggest is to have two global conflicts,both of which can potentially become systemic.First of all, we haven't been inthis place at any time in the last couple of decades.And again, you know,my analysis of the buffering factors,international institutions and financial institutions is correct,if these conflicts were to get out of control,there would be an impact on markets.But Next point I would make is that it isn't just the direct market impact.Usually geopolitics has more pronounced second and third order effects.And so that can be things like risk aversion or also in the Middle East case,the supply chain impact.I work with a lot of corporates,and they are definitely feeling the impactfrom the disruptions in the Red Sea,a byproduct of the conflict in the Middle East.So we shouldn't take an overly narrow viewof why this level of heightened geopolitical riskMatters or does it matter for markets.It's very much influencing the environment.And I tell me through different transition mechanisms,the commodity prices, effect markets, of course. Yeah.Currency markets are the quickest.The quickest way to respond to the equity markets.Well, equity markets are the least sensitive geopolitical risk.But I would argue that because of the way,that equity markets work,that there is nevertheless that impact in terms of risk appetite.You're speaking to CEOs, CIOs.Do you know it's a difference between the people in Europe versus the US?How they think about risk.Do they think about risk in terms of a central case andmaybe a base case and then a downsideor how do they talk about in terms of your framework?Well, it depends on who you're talking to, right?So if you're talking to your head of trading, Yeah,you get a different conversation then with a CIO or a CEO.And as you suggested,there are definitely regional differences and generational differences, right?So, you know, a 40-year-old head of trading um,tends to be quite dismissive about geopolitics.Not only that, but about elections.I spoke to one head of trading at a European bank who said,I'm not worried about US elections if Harris wins,you know, there'll be more spending,and that'll be inflationary.Well, in fact, of course,the Congressional Budget Office has scored the policies of the two candidates,and it's trumps that are more inflationary.But that's what I meant about the old fashioned perspective.Mm. Just kind of going on, you know, the kind of,um stereotypical view of Democrats and Republicans mightleave some market participants unprepared for the extent to which,you know, old is new and change is a goal in itself.And nobody's really sticking to the historic policy positions.Harris needs to distinguish herself from her boss, Joe Biden,and her way of doing that appears to be kind of findinga middle ground between Biden's positions and Trump's.But it seems to me that one ofthe almost coping mechanisms for investors in more,you know, geopolitically influenced times is to tune it out.Yes. If you can't seethe direct impact on the asset class that you look at or,you know, the stock that you're trading, it's noise.I think there is something in betweenthe signal and noise construct and the base case and tail risk idea.We've talked about this before.You know that I advise my clients tothink in terms of plausible hypotheticals.And that means a 20% probability event.I mean, those happen every day.They happen all the time. Yes. But the view by most investors tends to be.Unless you're telling me it's 90%,I'm not going to plan for that.I mean, I'm simplifying quite a bit. Of course.But that 2016 election that you're talking about, I mean,I think I was the only kind of cell side research analyst onthe street saying that it is very plausible that Trump wins.Nobody had it as a base case.But the investors that I had talkedto about that were at least less surprised.And that's why you know,the motto for Fordham Global Foresight is from Louis Pasteur,fortune favors the brave,but chance favors the prepared mind.And it's why, I think the plausible hypotheticalsconstruct is a more useful way than base case and tail risk.Cause we're talking about even nuclear conflict has morethan a tail risk chance of happening.And even if the risk is small,Yes, the consequence is disastrous.That by itself should adjust people's risk framework.Can we switch to manipulation?Because you mentioned work at the beginning?Now, FBI director Christopher Raenamed effectively Rogue state interfering in the 2024 elections,and a report 2019 report bipartisan Senate Intelligence Committee report.Found actually evidence of false reports and conspiracy theories, exactly.So. So how do you think about social media?And the potential for manipulation in your world of geopolitical analysis?Well, we always knew that in an electionwhere the global consequences are so significant,the potential for foreign for external intervention was going to be high.Yeah. And this has been the case for the last couple of elections.But, of course, social media means thatthese efforts can really take place on steroids.And it's extremely difficult to trace and to track what the impact is.We saw this in this country with the far right riots,you know, that were supposedly about immigration,the role of social media there,disinformation and misinformation,a bit different from the manufactured stuff.And it is an enormous worry.And I think sometimes that it's not as clearas it might be why interfering in elections is so significant.And I would put it this way,because doing so undermines our faith in institutions.Sure. And if people don't believe that, you know,these institutions are legitimate,don't believe in the outcome.They don't trust their neighbors and their,you know, fellow citizens at the moment in the United States.We have record low trust in the media.That's not so new.But on a related point,we have record low trust in the Supreme Court.And that matters considering that the Supreme Court might have toadjudicate in a close race or if there are recounts and everything else.So I feel like there's a lot of denial going on.The other element that I think is elusive aboutthis foreign interference in elections is why would they do that?Why would Russia or China or North Korea or Iran interfere in US elections?And we know that there wasexternal interference in the Brexit referendum elsewhere.In the case of US elections,it's pretty simple because casting doubt on democracy asa desirable system is very much in the interest house divided cannot stand.Yes.Yes. And casting doubt is a much lower cost way of projecting power,which, after all, is what geopolitics is.It's projecting power.It's not current events, then going to war.Yes. And cost effective.Yes, it's cost effective.Relatively low risk doesn't trigger a military response. And impact.Relatively low cost and causes people to doubt,you know, each other and the system.And so with that in mind,It seems to me it's only likely to become something that's used more often,and we need to get smarter about it.I mean, you know, our kids are being taught inschool how to identify misinformation and disinformation.And I wish, you know,my aunts and uncles and cousins and people on Facebook hadthis training because you can see how quickly it's disseminated.Yes. Now, in this year,we're talking about US elections.What else are you monitoring?Of course, this is the big event that everyone is focused on.Do I have to be doing more than that?The most important event?I mean, conflicts are very much front of mindand how to think about them from a business and investment perspective,try to identify where they might go and the trajectory of escalation.But still the outcome of the US elections matters.Lot. And we spoke earlier about regional differences.One of the facts is that being here in Europe,as we are, we're veryexposed to what might happen next in the Ukraine conflict.So if US funding for Ukraineis stopped or ceased or paused or whatever might happen,the question becomes, C Europe do more?Can Europe take responsibilityfor security on the European continent as a whole,which, of course, has been shared by NATO for quite a long time.That's a huge question,especially when we look at this state ofpolitical stability in the two biggest EU member states,France and Germany and the inroads being madein other European Union states thatare amount to blocking support for Ukraine.Of course, in the US, there's a much more active dispute about,you know, is it in US interests or values?So conflict is the quickest route to disruption.The other means that we discussed like intervention,in bio social media and disinformation are less pronounced.But also quite disruptive.And the bottom line is,you can't just look at your PNL and predict what's going happen.Absolutely. And of course,we will closely be monitoring all the developments through the navigator.And for those who haven't been following Tina yet,you can go on Spark and follow her navigator regularly.And with that, I will come to an end.I'd like to thank you for the exchange of thought.Fantastic talking to you. Thanks for having me.
