Lauren Goodwin of New York Life Investments - Geopolitical Risks: Prepare for the Future by Stress-Testing Different Scenarios

20-11-2023 • 30 mins

As nations grapple with shifting power dynamics, territorial disputes, and evolving international relations, geopolitical risks loom over the global economy and financial markets. From the threat of trade wars disrupting international commerce to the intricacies of diplomatic tensions altering investment landscapes, each scenario poses unique challenges and opportunities.

In this episode, Rusty talks with Lauren Goodwin, Economist and Portfolio Strategist at New York Life Investments, focused on cross-asset and international analysis. In her role, she and her team are responsible for research, macro and asset class views, asset allocation, and thought leadership. Throughout her career, Lauren has linked the macroeconomic environment to investment decisions, whether in banking, corporate strategy, policymaking, or asset management. Lauren has extensive quantitative and forecasting experience and prides herself on translating that experience into actionable insight.

Lauren talks with Rusty about the current geopolitical concerns, with a special emphasis on the Middle East and how they might impact the economy and markets. Lauren also provides insights on various scenarios, including the Israel-Hamas conflict, the war in Ukraine, US-China relations, and their potential impact on stock, bond, and commodity markets. The conversation highlights the importance of focusing on real policy changes and diversification in the face of geopolitical risks.

Key Takeaways

[01:34] - Lauren's professional background.
[03:56] - Lauren's thoughts on the geopolitical situation in the Middle East.
[05:34] - The impact of the Middle East conflict on the stock and commodity markets.
[07:57] - The war in Ukraine and its implications.
[10:00] - US-China relations and the risk of China invading Taiwan.
[12:55] - Lauren's advice to advisors about the upcoming presidential election.
[16:12] - What advisors should consider when it comes to geopolitical risks.
[19:04] - Lauren's response to Rusty's base case scenario.
[21:18] - Lauren's thoughts on Rusty's good case scenario.
[23:31] - Lauren's take on Rusty's bad-case scenario.
[24:55] - How portfolios are impacted by globalization.

Quotes

[04:27] - "Be patient as geopolitical events are developing. Short-term moves are likely. But it's the underlying trend that can be obscure at first and really tends to drive an optimal asset allocation." ~ Lauren Goodwin

[16:45] - "When it comes to setting forward our scenarios for 2024, a lot of what we're thinking about are plain old economic risks that impact the market day in and day out. These disruptors can be very tempting to think a lot about. But really, what it comes down to for investors is focusing on action, not distraction." ~ Lauren Goodwin

[26:26] - "When you think about the most complex global supply chains like technology, energy, and even global finance, no one country is going to be self-sufficient in these major opportunity sets. We'll always have to work together or rely on one another in some form or fashion." ~ Lauren Goodwin

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3133-OAT-11/17/2023