Wall Street’s geopol bets

Imagine if you were sitting on $15.3 trillion — that’s bigger than the GDPs of Germany, Japan, and the UK (combined).

You can afford the best advice so, as well as becoming an Intrigue Insider, you hire a former US national security advisor, a Swiss central banker, and let’s throw a top Canadian central banker in there too because who doesn’t love Canada, right? Actually, don’t answer that.

Anyway, what would this crack team advise you on geopolitics?

Well we don’t have to guess because BlackRock — the world's largest asset manager — literally just did all that then burped out its latest Geopolitical Risk Dashboard.

Here are their top four predictions, starting with… 

1. 🛢️ Oil - “We do not expect outright global fuel shortages [...]. However, energy markets will remain vulnerable to renewed price spikes.”

This one’s less of a spicy forecast and more an example of basic pattern recognition, but that doesn’t mean it's not a sound observation.

The world has now shrugged off a historic disruption to a fifth of its oil supply like a mild hangover — we’ve explored the how, including a mix of aspirin alternative supply routes, emergency releases, demand destruction, and China tapping its own vast-if-secret reserves. In a note released yesterday, the International Energy Agency now sees total 2026 oil demand dropping for the first time since Covid.

Even the latest Houthi hits on Saudi Red Sea assets are getting treated as incremental rather than systemic. But maybe that brings us back to the underlying value of BlackRock’s point: this is no longer a Hormuz story, but a structural story — deal or no deal, prices will now keep trading a broader, residual risk as economies pay a premium for secure supply.

2. 🚢 Trade - “The Europe-China dispute over continued Chinese overcapacity exports into Europe may become the key trade battleground this year.”

This one is heating up faster than your laptop on a Zoom call, and the numbers themselves are alarming… but not surprising: we always warned Trump’s tariff wall against China’s subsidised overcapacity would send that wave of low-cost and often high-quality goods crashing elsewhere. And now it’s crashed:

• China’s manufacturing surplus is now at ~2% of world GDP (!)

• China’s EU surplus just passed its US surplus for the first time in 30 years, and

• China’s EU trade gap is widening, already twice as large as it was pre-pandemic, not just as China sells more (despite EV tariffs as high as 35%), but also buys less — China is now Germany’s ninth buyer, down from #2 in 2021!

In practice that means jobs vanishing, towns declining, and populists surging.

Brussels understands the problem, but Beijing understands Brussels: Europe talking tough on EVs? China suddenly probes French cognac. Escalate further? Well now Spanish pork gets investigated. Oh you think you can double-down? Bam — ask Europe’s dairy farmers how they’ll feel about losing China access. And so on.

The only way to survive this divide-and-conquer might be a country-wide levy like DC’s Section 301 tariffs, though that requires something Europe struggles to find (common ground) and risks something China loves to dish (retaliation). Ideally the EU and US would confront this together, but US-EU ties are toxic.

3. 🌎 LatAm - “We expect the US to continue deploying a wide range of economic, diplomatic, and military levers to pressure adversarial regimes.”

Considering the State Department just posted a video captioned “American dominance in the Western Hemisphere will never be questioned again”, this feels like another safe bet from BlackRock.

Cuba is the obvious adversary, though US economic pressure alone doesn’t seem to be budging the regime, and DC doesn’t seem to have any appetite to go sharper yet.

Nicaragua’s own ailing dictator (Ortega) is also weirdly raising his own head above the parapet with moves like cancelling future elections, but his Nicaragua isn’t as ideologically symbolic as Cuba, nor as rich or antagonistic as Maduro’s Venezuela.

So the more immediate spice might come via Brazil’s October elections, pitting the left-leaning President Lula against Trump’s more ideologically aligned Bolsonaro Jr. The US president has already wielded tariffs, visa restrictions, and even cartel terrorist designations in a presumed attempt to nudge things, so watch for an incremental dial-up ahead of October.

4. On the US-China tech race - “We do not see meaningful U.S.-China cooperation on frontier AI in the near term.”

Sure, frontier AI is hardly friendship bracelet territory, so this is a room-temperature take (which we share). But we’d just note a narrow lane for cooperation has now opened: May’s Trump-Xi summit led to a new dialogue on AI ‘best practices’, with a first round due next month (just ahead of Xi’s planned reciprocal US visit).

And again, they’re not exchanging lab notes like best buds at college, so much as just trying to avoid their historic AI race inadvertently empowering crims or terrorists. And there’s reason to be hopeful — it was right at the Cold War peak that the US and the Soviets managed to curb existential risks via nuke treaties.

Shout-out:

• Thanks to ‘RH’ in the Intrigue group chat both for today’s email subject (Great minds Fink alike) and sub-title (Between a BlackRock and a hard place). 😂 Join the chat today!