The world today is challenging many of the foundations of a status quo that have stood since the end of World War II in 1945 and the fall of the Soviet Union at the end of 1991. DoubleLine Deputy Chief Investment Officer Jeffrey Sherman moderates a discussion with Global Bond Portfolio Managers Bill Campbell and Valerie Ho on escalating geopolitical risks reshaping world markets and economies. This episode of The Sherman Show was recorded Feb. 24, 2022.
Starting with Russia-Ukraine (1:38), Mr. Campbell analyzes the historical relationship of those countries and the strategic objectives of Russian President Vladimir Putin, concluding Russian forces will remain in Ukraine until a new government is in place that guarantees the country will remain aligned with Moscow and outside of NATO. Next, Mr. Sherman asks Ms. Ho (17:44) to survey the political risks stemming from the upcoming presidential election in Brazil, with the base case of former Brazilian President Luiz Inácio Lula da Silva winning a third term, and Chile, where a constituent assembly is more than halfway through the 12-month process of a sweeping rewrite of that country’s constitution. While Lula appears bent on expanding social benefits and directed credit in the face of anemic domestic growth, double-digit inflation and high levels of debt, Ms. Ho doubts (20:11) he will go so far as to provoke a crisis of confidence.
Turning to “the other elephant in the global room” (28:20), Mr. Sherman asks for an assessment of building risks around China-Taiwan. Mr. Campbell says he is growing more concerned that China is moving toward militaristic rather than diplomatic means to reassert its sovereignty over Taiwan. However, he does not expect Chinese President Xi Jinping to force the issue until after the 20th National People’s Conference in October, which is on track to “solidify his next term, which will make him leader for life.” That probably means Taiwan will not move to the front burner before 2023. The discussion turns to Mexico (39:07), and Ms. Ho analyzes the factors that have prevented America’s southern neighbor from capitalizing on U.S. efforts to realign its supply chain away from dependence on Chinese imports. She and Mr. Sherman also (42:52) discuss the prospects for further supply-chain disruptions around the world as trucker protests draw inspiration from the “Freedom Convoy” in Canada. Finally, with Iran reportedly weeks away from achieving weapons-grade uranium enrichment, Mr. Campbell examines (45:25) the many challenges and obstacles besetting Washington’s quest for a nuclear deal with Tehran.
The views and opinions expressed herein are as of the date recorded and should not be construed as an offer to buy or sell any securities. Such views/opinions may differ from those of DoubleLine Capital or other of its affiliates and are subject to change without notice. DoubleLine has no obligation to provide any updates or changes. The following audio presentations represent DoubleLine’s intellectual property. No portion of these presentations may be published, reproduced, transmitted or rebroadcast in any media in any form without the express written permission of DoubleLine. DoubleLine has no obligation to provide any updates or changes. To receive permission from DoubleLine please contact [email protected].
Neither DoubleLine nor any of its affiliates makes any representation or warranty as to the accuracy or completeness of the statements or any information contained in this podcast and any liability therefore (including in respect of direct, indirect or consequential loss or damage) is expressly disclaimed.
DoubleLine is not providing any financial, economic, legal, accounting or tax advice in these podcasts. The receipt of these podcasts by any listener is not to be taken as constituting the giving of investment advice by any DoubleLine entity or individual to that listener, nor to constitute such person a client of any DoubleLine entity. The portfolio risk management process includes an effort to monitor and manage risk, but does not imply low risk.