Risk and uncertainty in the global environment

What it is about

A discussion that opens a series of webinars offering tools to analyze and assess the economic situation without formal training in macroeconomics.

It identifies features of the current global situation that show how fragile conventional tools are under today’s market conditions and international uncertainty. The speakers address artificial intelligence, growing militarization, climate change and other new challenges, with emphasis on the adaptations analysts need to navigate this environment.

Session summary

The session has two parts: risk, what can be measured and prepared for, and uncertainty, what cannot be quantified but is still there. The first reviews, through market indicators, how assets reacted to the conflict in the Gulf: the measurement of geopolitical risk, volatility in stocks, bonds, currencies and oil, energy prices and their futures curve, the dollar and credit spreads. It concludes that the market normalized quickly, unlike in earlier crises, although some energy derivatives were still lagging. It then looks at inflation, which remains above target in much of the world, the central banks’ rate cycle, the rise in long-term yields and its effect on the local bond curve, pension funds and banking.

The second part argues that the world is moving out of the post-war equilibrium and points to five forces: conflict and militarization, climate change, artificial intelligence, the retreat of globalization and expanding debt. It contrasts the readings of several well-known analysts, from reglobalization to a return to physical assets, and from ‘geoeconomics’ to debt cycles, and holds that what matters for a country is economic and political stability and the free movement of capital. The questions covered the new global equilibrium, the appreciation of the peso, rate expectations, the effect of artificial intelligence on productivity, the price of gold and private markets. The session opens a series of webinars on how to measure and anticipate country risk.

Topics covered

• Risk versus uncertainty: what can be measured and what cannot
• Geopolitical risk and how markets reacted to the conflict in the Gulf
• Volatility, oil and energy: spot price and futures curve
• Inflation above target and the central banks’ rate cycle
• Long-term yields and their effect on the local bond market
• Five forces of change: conflict, climate, artificial intelligence, globalization and debt
• Questions: the Dominican peso, gold, artificial intelligence and private markets