Multipolarity

Many clients have asked us for an analysis of the long-term implications of the Hormuz Crisis. In this report, we posit that the conflict has been catalyzed by the multipolar context and that it will merely ossify the trends already afoot. Nothing offers incentives for more global capex like the threat of losing a critical energy supply chain. Therein lies the paradox. While capex is mildly inflationary in the short term, it is wildly disinflationary in the long term. This may be a worthwhile insight given all the consternation about long-dated bonds at the moment.

The dollar is not being replaced by a single rival, it is being diluted by a rising cast of “other” reserve currencies. This report identifies the hidden winners of reserve diversification and why they may matter more than investors think.

We have long argued, on a case-by-case basis, that countries willing to play the superpowers against each other win in a multipolar world. The logic is intuitive, and in this report, we measure it systematically.

The debate over “what replaces the dollar” is misguided. The real shift is toward a multi-anchor system where reserve functions fragment. That changes everything from term premia to cross-asset correlations. The implication: portfolios built for the old regime are already behind the curve.

World War III will not happen. But if you disagree, here is our portfolio to hedge it: commodities, neutrals, and crypto.

In our Beta report, we introduce a new framework for thinking about long-term investing in a multipolar world: The Garrison State. Investors need to shed their outdated view that geopolitical risks are... a risk. History teaches us that pressure makes diamonds. And geopolitical pressure makes Garrison States, which tend to outperform precisely because by definition, the bevy of risks that surrounds them is existential.