Geopolitical volatility is reshaping the global economic landscape, influencing everything from energy markets and trade flows to technological innovation and security strategies. As events in Iran, Ukraine and China drive profound shifts across markets, investors are challenged to adapt to a world where resilience and strategic foresight are more critical than ever. Heightened defense spending, evolving supply chains, and new approaches to international cooperation are redefining opportunities and risks, demanding a sophisticated understanding of the forces at play. In this episode, Gabriela Santos, Chief Market Strategist for the Americas at J.P. Morgan Asset Management, is joined by Derek Chollet, Head of the JPMorganChase Center for Geopolitics, to share his perspectives on the geopolitical forces shaping today’s markets and tomorrow’s investment decisions. Watch the video version on YouTube. Subscribe to the Notes on the Week Ahead podcast for more insights from Dr. David Kelly: Apple Podcasts | Spotify

Making sense of geopolitical risk

Insights Now

# Full Transcript

**Podcast:** Insights Now

## Transcript

Welcome back to Insights Now. I'm your host, Gabriela Santos, the chief market strategist for the Americas here at J.P. Morgan Asset Management. It's become more than clear that we're living in an era of geopolitical volatility and that geopolitics needs to play a central role in how we think about the macroeconomic and investment outlook.

I'm very excited to be joined today by Derek Chalet, the head of J.P. Morgan's Center for Geopolitics, to discuss this year's top-of-mind topics such as the Iran War, as well as this decade's rewiring of economic competition, trade, technology, capital flows, energy and security. Over his three-decade career, Derek has held various roles in government and has done prominent foreign affairs analysis.

So he's the perfect person to speak to about how investors should understand the big geopolitical questions of our time. Welcome, Derek. Great to be here. So there's so much to talk about right now, so I'll just dive right in to all this year's hot topics. Of course, we're still here in the midst of the Iran War and the lack of a resolution so far. So what is currently your base case about how this all plays out?

Well, we're about where I expected us to be in the sense of we're in this extended and fragile truce period. I mean, the original truce is supposed to end in late April. Here we are in early June, and it's still a truce, even though the terms of the truce are not clearly laid out. And right now they're trying to negotiate an extension of the truce.

And even if there is a negotiated extension of the truce, which the U.S. is driving hard to try to get done, I do foresee that we're going to be wrapped up in the drama of Iran for quite some time. I mean, even the best case scenario is it's going to take weeks and really months for the Strait of Hormuz to get back open, even in a partial way. And so I expect, and our colleagues who've studied energy and commodities here at J.P. Morgan will say,

we're looking at $4 to $5 gas prices per gallon for the rest of the year. And even if the best case scenario comes through, we're going to see a 30 percent opening of the Straits in the next few weeks. But that's the best case scenario. There's a likelihood this could go on still for a while. I mean, the one thing the Iranians are quite adept at is stringing out negotiations, right? And you've seen the U.S. and the president get frustrated by that.

And so they're going to play this out, I think, for quite some time. So, I mean, my base case in the near term is we're going to see, we've seen an Iranian regime that's hardened, that's smaller, right? It's somewhat weaker because, of course, it took a pretty severe pounding by the U.S. and the Israelis in this air campaign. But it's got some tools that it's playing. It's got some leverage that it is using. And so in the near term, I think we need to expect a hardened regime and a pretty defiant regime.

The qu...

Making sense of geopolitical risk

Transcript

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Every day you wait, your competitors are finding
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Making sense of geopolitical risk

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.