Macro Pulse for November 9: Geopolitics Around the World

• Q3 earnings season is wrapping up, showing strong and broad-based earnings growth of nearly 12% among S&P 500 companies. Among AI hyperscalers, we expect the market will reward the virtuous cycle of strong earnings growth and rising capex intentions. 
• The U.S. Supreme Court heard arguments around the use of the International Emergency Economic Powers Act (IEEPA) to impose reciprocal tariffs. We expect the effective tariff rate on U.S. imports to remain around its current level regardless of the ruling; the Trump administration has many more legal avenues to pursue, including asking Congress to enact select tariffs into law.
• Challenger data reported job cuts of over 150,000 in October. We do not believe these layoffs represent a canary in a coal mine. Similar job cuts were seen in spring 2025 and did not accelerate while the Fed was on hold. Today, both Fed easing and marginal liquidity support should cushion any acceleration in layoffs. 

In a big week for U.S. policy, we’re checking in on geopolitics. No matter where you look, industrial policy, security ties, and access to critical inputs are reshaping trade and investment.

The through line is a move from a unipolar world where the U.S. set global guidelines to a multipolar one of competing blocs. We’ve written about how the era of U.S.-led globalization is ending, giving way to a world defined by great power competition, economic nationalism, and rising conflict. That regime change is fundamentally reshaping the relationship between geopolitics and economies. It’s also changing how investors should manage their exposures and portfolios.

Below, we take a tour around the world, detailing how macro crosscurrents are creating market risks and opportunities. For a deeper dive, join our GMS webinar on Monday, November 17 with geopolitical strategist John Sitilides. Sign up here.

The United States

The U.S. government continues to steer outcomes. This week, the U.S. Supreme Court is hearing arguments about whether the use of emergency powers for broad tariff implementation was proper. In our view, investors should see this as a ruling on how tariffs are implemented, not whether they are implemented; the White House has contingency plans should some tariffs get struck down. At the same time the state is making big investments, with the Department of Defense partnering with MP Materials on rare earth magnets and Department of Energy funding new lithium supply. The upshot: policy is directing capex and supply chains and in a regime of economic nationalism markets are reacting. Investors should “follow the money” and get behind sectors seeing increased government support. 

Europe

Europe is caught between caution and revival. Germany is pressing ahead with a surge in investment in chips and energy as France’s political turmoil keeps a premium in French borrowing costs over Germany. In the UK, fiscal choices are in flux so sterling and gilts remain headline sensitive, and, across Europe, rising support for populist platforms leaves budgets and regulation less predictable. As the era of frictionless integration fades, Europe is leaning into industrial policy and rearmament, which creates opportunities (equity sectors: industrials, financials) but puts bond yields at center stage.

Japan

The United States and Japan set a framework to secure critical minerals and rare earths from mining through processing to support chips and batteries and reduce reliance on China supply. Japan’s new prime minister is pushing continuity on industrial policy and faster follow-through on semis, energy, and defense. Meanwhile, the Bank of Japan wants to keep normalizing policy – meaning modestly higher rates as growth and inflation remain sticky. But global dynamics, specifically currency and trade policy volatility, have been slowing that pace. As supply chains reorganize by region, Japan is becoming a key U.S. partner – there’s investment upside (for companies aligned with the deal: mining, energy, technology), but yen moves and Bank of Japan decisions will drive returns.

China

China is managing slower growth and a long property slump. Officials are supporting local finance and steering money toward factories, energy, and tech. Washington is signing trade deals with partners like Malaysia and Vietnam to shift parts of the supply chain out of China. As the world shifts from open trade to regional blocs China faces pressure on growth and more policy surprises. We think investors should hedge U.S.–China risk with sector and country diversification.

Emerging Markets

Regime change is playing out in broader emerging markets too. Mexico’s new president is implementing tax breaks and faster permitting to pull manufacturing north to meet U.S. demand (near shoring). India under Modi is using production-linked incentives and big infrastructure upgrades to pull electronics, batteries, and chip assembly onshore (onshoring). Argentina, on the other hand, and its rapid reforms face pushback and high inflation, keeping the path shaky and market volatility elevated. Geopolitics and policy are now deciding where things get made, and that is where capital follows and opportunities grow.

Portfolio Strategy

In a multipolar world, markets move less in lockstep. Policies, supply chains, and shocks are more local, so one country’s headlines do not drive everyone else the same way. When markets are less synchronized, diversification works better. Adding non-U.S. exposure reduces overall swings and creates more chances for country and sector winners to stand out.

The playbook:

• Ease home bias toward a more balanced global mix.
• Use a blend of hedged and unhedged international funds so currency can either dampen risk or add return when rate gaps are wide. 
• Add small, targeted positions where policy is a clear tailwind, such as nearshoring hubs, energy and materials tied to security of supply, and compute and semiconductors in Asia.
• Keep position sizes modest where rules are in flux and rebalance around known decision dates like tariffs, budgets, and elections.

Our rolling map supports this. The GMS team measured the correlation between the S&P 500 and foreign markets where data was available. The links between the S&P 500 and many foreign markets are weaker in 2025 than in 2015, which means the diversification dividend is higher today.