Investment Institute
Opiniones por clase de activo

Geopolitics beyond Ukraine

  • 16 Mayo 2022 (7 min de lectura)

Key Points

  • Short-term convergence of economic interests between Beijing and Washington, but pressure around the Taiwan issue is mounting.
  • It will probably take a significant slowdown in domestic demand to anchor a deceleration in US inflation, but some supply-side action – e.g., on oil – could help. The negotiations with Iran on a nuclear deal are becoming key on this front.

The geopolitical bandwidth may seem to be saturated by the Ukraine war, but the world’s widest fault line remains the rivalry between the US and China. Yet, the economic interest of the two parties may – for a while – converge. Even if no final decision has been made, the Biden administration is looking into terminating the punitive tariff hikes levied on Chinese products under the Trump administration to help in the fight against inflation. Faced with yet another postponement of its much-expected transition to a growth model driven by domestic consumption, being able to count on unimpaired access to the US market would come at the right moment for China, which could foster a more conciliatory attitude towards Washington. Yet, Joe Biden is at the same time exerting more pressure on the Taiwan issue. It’s far too early to talk about a “general détente” between the two superpowers. Still, the discussion on the tariffs acts as a nice reminder of an iron law of economics: protectionism is inflationary. This may degrade a bit the level of popular enthusiasm for “deglobalization”.

Last week’s release of the US inflation print for April seemingly indicated that, although the rise still exceeded market expectations, consumer prices may have started decelerating. Yet, when corrected for the used cars’ item, the data suggests inflationary pressure continues to widen to more sectors. The US administration’s response – e.g., calling on Congress to support the Clean Energy Act or tweaks to the Affordable Care Act – could easily be drowned in bitter politicking, with the looming mid-term elections pushing for even more polarization. It may be more because of what the Biden administration can no longer do – stimulating demand – that inflation will ultimately slow down, albeit at a cost to economic growth which we think will be substantial in the second half of the year.

Yet, the supply-side component of inflation could respond to US policy, especially if it coordinated with strategic partners, e.g., in this initiative to create an “alliance of oil buyers” to negotiate with OPEC.  This however draws attention to the nuclear deal with Iran (Tehran is proposing to double its oil output as a trade-off) which remains politically extremely delicate.

Related Articles

Opiniones por clase de activo

Monetary policy and the market-based R-star

  • por Alessandro Tentori
  • 27 Marzo 2024 (7 min de lectura)
Opiniones por clase de activo

Pull to par

Opiniones por clase de activo

Riding out market volatility: Lump sum versus regular investing

  • por Mathieu L'Hoir
  • 19 Abril 2022 (7 min de lectura)

    Advertencia sobre riesgos

    El valor de las inversiones y las rentas derivadas de ellas pueden disminuir o aumentar y es posible que los inversores no recuperen la cantidad invertida originalmente.

    Volver arriba
    Clientes Profesionales

    El sitio web de AXA INVESTMENT MANAGERS Paris Sucursal en España está destinado exclusivamente a clientes profesionales tal y como son Definidos en la Directiva 2014/65/EU (directiva sobre Mercados de Instrumentos financieros) y en los artículos 194 y 196 de la Ley 6/2023, de 17 de marzo, de los Mercados de Valores y de los Servicios de Inversión. Para una mayor información sobre la disponibilidad de los fondos AXA IM, por favor consulte con su asesor financiero o diríjase a la página web de la CNMV

    Por la presente confirmo que soy un inversor profesional en el sentido de la legislación aplicable.

    Entiendo que la información proporcionada tiene únicamente fines informativos y no constituye una solicitud ni un asesoramiento de inversión.

    Confirmo que poseo los conocimientos, experiencia y aptitudes necesarios en materia de inversión, y que comprendo los riesgos asociados a los productos de inversión, tal como se definen en las normas aplicables en mi jurisdicción.