Geopolitics
Erdogan's rule continues to decline. Social unrest will persist, governance will erode, and the macro backdrop will deteriorate further. We recommend underweighting Turkish assets.
Negotiations on trade, Iran, and Ukraine will prove critical this month. Markets will remain volatile because positive data surprises enable the White House to press its hawkish tariff hikes, while negative surprises force the White House to backpedal.
The US and Canada will resolve their trade dispute quickly, leading to a North American deal and better prospects for future relations, as well as for other US trade deals around the world. But even as tariff threats decline, the US economy will slow, weighing on its neighbors. Canada will fare better than Mexico.
The US will continue to lead global trade, but the past winners from China-US tensions face decline. Reglobalization is underway. India Port Infrastructure will be a long-term winner.
Do not play the bounce in US and global cyclical assets as Trump backpedals from the trade war. China will talk, but the pace will be slow and the outcome disappointing. Fiscal stimulus will surprise marginally in the EU, China, and even the US, but still may not rescue the business cycle.
