In our latest episode, the Confluence Macroeconomic Team breaks down the six geopolitical trends that we believe will shape the international landscape in the second half of 2026. From the disruptions in the Strait of Hormuz and the future of the dollar&#x27;s reserve currency status, to the government&#x27;s growing role in AI and the rise of quantum computing, the conversation covers the issues most likely to move markets in the months ahead.

Confluence of Ideas - The Mid-Year Geopolitical Outlook

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**Podcast:** Confluence Podcasts

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Welcome to the Confluence of Ideas, a Confluence Investment Management Podcast focusing on major geopolitical and economic trends and their investment implications. I'm Phil Adler. In its Mid-Year 2026 Geopolitical Outlook report, Confluence identifies six big picture trends to help guide investment recommendations for the rest of the year.

And joining us today to discuss where we stand geopolitically at Mid-Year 2026 are Confluence Advisory Director Bill O'Grady, Chief Market Strategist Patrick Ferran Hernandez, and Associate Market Strategist and Certified Business Economist Thomas Wash. Bill, first on this list, which is not meant to be exhaustive, is the issue of sea lanes and hegemony.

The closure of the Strait of Hormuz by Iran in the first part of the year does seem to demonstrate that the U.S. acting alone no longer has the capability or the willingness to ensure that this crucial route remains open for free passage of goods or for general use. What does this portend for other critical trade routes and sea lanes around the world?

Well, thanks, Phil. One of the key roles of a global hedgeman is the fostering of international trade. Although the role of international trade in maintaining peace is often overstated, there is evidence to argue that nations engaged in trade with each other do take that into account if they are considering war. By maintaining open sea lanes, the cost of trade is lowered.

Without this global public good, merchant ships would need to be armed to thwart piracy and would be required to make payments to nations that put up tollbooths. The British supported open trade via international treaties. In fact, about the only area where they gave some leeway was for Turkey in its control of the Dardanelles. And even there, the payments for passage were framed as recompense for navigation support. What Iran has shown is it can interfere with shipping.

It wasn't that this factor wasn't known, it's just that the assumption was that the Strait of Hormuz was so important that the world would move to reopen it. But that was also assuming the Strait would be blocked by vessels and mines. Drones were not part of that assumption. That's what's changed. Is the U.S. capable of re-establishing hegemony? Yes. But one of the points that we have been making for some time is that American hegemony isn't under stress just due to other nations' activities.

It's also due to domestic political concerns. The feeling is that the costs and benefits of hegemony have not been equally distributed across the economy. It's a bit like parts of society benefit from having a global platform in which to operate and expand their talents, while others lose their careers to foreign trade or go fight in foreign conflicts. The problem is that fewer Americans see the benefits from hegemony. In my opinion, the issue is that the political class has been unable to craft a domestic coalition t...

Confluence of Ideas - The Mid-Year Geopolitical Outlook

Transcript

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Confluence of Ideas - The Mid-Year Geopolitical Outlook

Transcript

Built for investment professionals

Every day you wait, your competitors are findingedge in conversations you're not hearing.

Every day you wait, your competitors are finding
edge in conversations you're not hearing.