Geopolitics Needs Policy to Move Risk: 3-Minute MLIV

Summary

Bloomberg's Skylar Montgomery Koning discusses the crosscurrents weighing on risk appetite, arguing geopolitics matters mainly through policy changes and commodity prices. She favors commodities and gold as hedges, sees AI as net inflationary but not the end of the tech trade, and expects U.S. equities to outperform in tech-led periods. She also says low volatility makes hedges worth watching.

• Risk appetite has faded after a strong start to the year, with investors cautious before major U.S. data.
• The guest is less worried about geopolitical headlines unless they produce real policy changes.
• She says low volatility makes hedges worth looking at amid policy uncertainty.
• Geopolitical shocks often transmit through commodity prices, supporting commodities and gold as portfolio hedges.
• She sees AI as both inflationary and deflationary, but the inflationary impact dominates.
• She is not worried about the end of the tech trade because falling costs can lift adoption, productivity, growth and returns.
• She expects U.S. equities to gain or outperform other markets in tech-led periods because the U.S. has led recent tech revolutions.