Discussions at the recent Group of Seven Nations meeting point to the continued development of a multipolar world, as supply chains become less global and more local. Investors should watch for opportunities in this disruption.
----- Transcript -----
Welcome to Thoughts on the Market. I'm Michael Zezas, Global Head of Fixed Income Research for Morgan Stanley. Along with my colleagues bringing you a variety of perspectives, I'll be talking about the recent G7 meetings and its implications for markets. It's Wednesday, May 24th at 9 a.m. in New York.
Over the weekend, President Biden traveled to Japan for a meeting of the Group of Seven Nations, or G7. G7 meetings typically involve countries discussing and seeking consensus on a wide range of economic and geopolitical issues. And the consensus they achieved on several principles underscores one of our big three secular investment themes for 2023, the transition to a multipolar world.
Consider some of the following language from the G7 communique. First, there's discussion of efforts to make our supply chains more resilient, sustainable and reliable. Second, they discuss, quote, "Preventing the cutting edge technologies we develop from being used to further military capabilities that threaten international peace and security." Finally, there's also discussion of the, quote, "importance of cooperation on export controls, on critical and emerging technologies to address the misuse of such technologies by malicious actors and inappropriate transfers of such technologies."
So that all may sound like the U.S. is drawing up hard barriers to commerce, particularly with places like China. But importantly, the communique also states an important nuance that's been core to our multipolar world thesis. They say, quote, "We are not decoupling or turning inwards. At the same time, we recognize that economic resilience requires de-risking and diversifying.".
So to understand the practical implications of that nuance, we've been conducting a ton of research across different industries. My colleagues Ben Uglow and Shawn Kim have highlighted that the global manufacturing and tech sectors are very exposed to disruption from this theme. But their work also shows that capital equipment and automation companies will benefit from the global spend to set up more robust supply chains.
So bottom line, the multipolar world theme continues to progress, but the disruption it creates should also create opportunities.
Thanks for listening. If you enjoy the show, please share Thoughts on the Market with a friend or colleague, or leave us a review on Apple Podcasts. It helps more people find the show.
Inside Japan’s Economic Transformation
Special Encore: The Curious Connection Between Airlines and Fashion
Spirited Debates Around Our Midyear Outlooks
Why an ‘Everything Rally’ Is Still Possible
Why TMT Bonds Are Underperforming
European Economic Outlook: Decidedly More Optimistic
Global Questions About the US Elections
Midyear European Equities Outlook: In the Sweet Spot
Midyear Credit Outlook Favors Moderation
Midyear Housing Outlook: Is Home Sale Activity Picking Up?
Midyear US Economic Outlook: Continued Resilience
Midyear Cross-Asset Outlook: Bullish Possibilities
Midyear Economic Outlook: Reasons for Optimism
Seeking Better Value in Emerging Market Debt
Get Ready for a Summer Travel Boom
The Narrow Scope of US Tariffs on China
Lessons from Retail Success Stories
Spring IMF Meetings Spark Cautious Optimism
How Mexico’s Elections Could Change Global Markets
The Fed Sends a Clear Message
Create your
podcast in
minutes
It is Free
The emPOWERed Half Hour
Now, What’s Next?
Access and Opportunity
At Scale: A Sustainability Podcast