Navigating Global Turbulence: Insights from Christian Takushi’s Webinar

The recent webinar on October 23, 2024 on: “Why the US elections may not change Europe’s predicament” featuring seasoned macroeconomist Christian Takushi illuminated critical geopolitical and macroeconomic trends that could reshape global dynamics irrespective of electoral outcomes in the U.S. Drawing from his extensive expertise Takushi sheds light on the pressing challenges and opportunities facing Europe and emerging markets. The Webinar attracted investors from three different continents.

While many European political and business leaders are openly hoping for a Democratic win at the US elections, many investors are hoping on a continuation of the status quo. They can bet on several markets without having to price in the geopolitical and security deterioration of Europe. His independent analysis shows both a Harris or Trump administration would pose serious challenges and risks for Europe. US Foreign Policy under Harris or Trump is likely to get tougher and the biggest casualty sits in a trap of its own making, Europe.

The world being marked by volatility and uncertainty, understanding macroeconomic landscapes becomes essential for investors and decision-makers alike. Christian Takushi’s webinar for members of CFA Society Switzerland provided a platform for exploring intricate geopolitical factors influencing U.S. foreign policy and, by extension, Europe. In his presentation, he emphasized the importance of recognizing trends often overlooked by mainstream media and consensus, while also addressing the immediate implications of the upcoming U.S. elections on global economics and politics.

The Fragile European Landscape

Christian began by highlighting the exceptionalism surrounding European stability, attributing its prosperity to U.S. military protection, affordable Russian energy, and competitive pricing from China. However, he warned that these pillars are eroding, leaving Europe vulnerable as it is even more dependent on foreign powers over the next few years. This ongoing transition creates a precarious future for the continent’s investors, especially with the looming influence of geopolitical factors exacerbated by the U.S. elections.

Geopolitical Illiteracy in Europe

A fundamental message from the webinar was the need for improved geopolitical literacy among European leaders. Christian remarked that for years, many in Europe have perceived the EU as the primary driver of our peace and prosperity. A flawed perception. Looking forward, he argued, understanding the complexities of new global alliances (i.e. AUKUS etc.) and the emerging multi-aligned nations is essential—any misstep in assessing these relationships could exacerbate existing tensions and significantly constrain European companies’ future growth. Nobody in Europe should blame Washington for taking advantage of Europe’s predicament. To look after our interests is the job of our elected leaders, not Americas. 

All nations advance their national interests with all means at their disposal. There are no permanent allies, only common interests. The latter can evolve, diverge and even clash. 

The Rise of Multi-Aligned Nations

Emerging powers like Brazil and India and a whole array of mid-sized emerging markets are reshaping the global balance of power, seeking strategic partnerships with multiple nations instead of aligning strictly with U.S. or China. Emboldened by their economic rise and fiscal stability these emerging nations are signing treaties with everyone. Christian’s analysis suggested that these nations are increasingly pivotal in influencing the direction of global trade, economics and foreign policy, as their decisions can alter established norms and create new opportunities and risks for investors. Washington knows it can’t simply inflate its economy to achieve GDP growth indefinitely, it also wants access to the organic growth of these dynamic economies.

Implications for U.S. Foreign Policy

Christian asserted that regardless of who wins the U.S. elections, US foreign policy and US trade policy is going to be characterized by assertive moves that will impact Europe significantly. He outlined the consequences of possible electoral outcomes: A Harris victory could usher assertive foreign policies that may result in additional sanctions, embargos, wars and tech warfare – building on Biden’s Inflation Reduction Act (IRA), which Takushi called Biden’s WW3 declaration on Europe. Something few seem to notice here. A Trump win would unleash more assertive economic & trade policies with a focus on tariffs and bringing manufacturing back to America. Trump is feared in most non-Western capitals, existing wars are likely to stop in 1^st half 2025. Monetary, currency and cyber warfare will explode under Trump. Big and small powers will use his term to prepare for war.  The assertion that Europe’s fate hinges precariously on U.S. foreign policy underlines how dependent Europe has become on the USA.

Investment Opportunities Ahead

Despite the looming challenges, Christian noted opportunities for discerning investors. European investors that have reviewed their global diversification to include geopolitical shifts and risks have increased exposure to geopolitically neutral and fiscally healthy economies in the Southern hemisphere. Especially to mid-sized economies since these run the most disciplined fiscal-monetary policies and are the least exposed to future wars. He pointed also to specific sectors in Europe poised for growth amidst this turbulence: defence, energy & food security, restructuring of supply chains etc. Engaging with this knowledge equips decision-makers with the foresight needed to navigate potential upheavals, capitalizing on shifts rather than being upended by them.

Impact of US elections on Switzerland

Regardless of who wins the upcoming US elections, Christian explained how the changes that follow are likely to impact European and, by extension, Swiss economic policy. While the US political process has become very unpredictable, the direction and nature of American foreign policy is much more predictable. Assertive US foreign policy presents Switzerland with the challenge of re-evaluating its economic and diplomatic ties versus USA, UK, EU, China, Russia after a war settlement, India, Brazil and then the fiscally responsible mid-sized emerging economies (Takushi calls them Emerging 7). Simply docking to an overwhelmed and nearly paralyzed EU, because it is so far our biggest trading partner would be ill advice.

For example, if the US pursues a more aggressive trade policy towards Europe under a new administration, this could affect Swiss export markets. Even if Switzerland tends to benefit from EU crises, reduced investor confidence in the security and stability of Europe would have an overall negative impact on the Swiss economy. Switzerland is already losing clients to the USA. More and more companies and investors are trying to avoid Europe – Some are being lured with big subsidies though. Unsustainable.

In summary, the current geopolitical situation is an urgent topic for Switzerland. Christian Takushi emphasises that Europe, including Switzerland, is facing the challenges of a changing global order they didn’t prepare for. It is essential to develop geopolitical literacy and expertise in order to respond dynamically to new global trends and changes. Europe doesn’t have one truly independent geopolitical think tank that deserves that name. Our leaders depend greatly on intel and analysis sent by London and Washington.

Switzerland’s role as a safe haven could continue, but in view of the current geopolitical uncertainties, it is no longer guaranteed nor unconstrained.

Switzerland took its security for granted. Europe dismantled its military and left its key Maritime Routes unprotected. Those routes via the Middle East are now very vulnerable and partially blocked. Additionally the potential use of tactical weapons somewhere in Eastern Europe or the Middle East means Switzerland is simply not the safest place in the world to have all your savings in or the ultimate safe haven for your family any longer. It’s kind of in the wrong continent. The erosion of Swiss neutrality has hurt the Swiss Safe Haven status.

Since 2015 Takushi is recommending for Bern and Swiss companies to aggressively reduce their dependence on the EU and to increase their business efforts in fiscally responsible emerging markets, especially those that are proactively multi-aligned and not involved in wars. 

To maintain its leading role in international finance, Switzerland must proactively adapt and adjust to the changing landscape. In this context, the realisation that the world is moving towards a complex network of relationships and alliances is of immense importance for investors and decision-makers.

Preparing for an Uncertain Future

Christian Takushi’s insights serve as a clarion call for heightened awareness of geopolitical dynamics and a reevaluation of investment strategies in light of shifting global alliances. As we await the outcomes of the US elections, understanding the broader implications of these developments is vital for both corporate leaders and investors. The complexities and interdependencies of today’s geopolitical landscape demand proactive engagement, adaptability, and a commitment to informed decision-making as we navigate this unchartered waters.

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Christian R. Takushi MA UZH is a Macroeconomist and Geopolitical Strategist with 34 years of experience as a researcher, fund manager and strategist in the investment industry. He has predicted major political and economic events (including the CHF breakout in 2011, the CHF-EUR peg collapse in 2014, Brexit, Trump, blockade of European maritime trade routes, return of wars). As geopolitical economist with expertise on Asia, the Middle East and Latin America he advises governments, central banks, companies, pension funds and asset managers. 

Master in Macroeconomics – Member of the CFA Institute & Swiss Financial Analysts Association.

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