Each year, Eurasia Group publishes its annual Top Risks report, highlighting the ten biggest geopolitical threats to the world in the coming year. Coming in at No. 8 is persistent inflation and high interest rates, and the company predicts these factors will continue to be a political and economic drag in 2024. Ian Bremmer, president and founder of Eurasia Group, joined TheStreet to discuss How investors can prepare.
Full video transcript below:
SARA SILVERSTEIN: One of its main risks is high inflation-driven rates, which not everyone expects, which could make it more dangerous. Can you talk a little bit about that and what investors can do?
IAN BREMMER: It is a relatively low risk because we are not talking about a recessive environment. We're talking about inflation remaining higher for longer than markets are currently pricing in. There is enormous expectation on the part of the markets that interest rates are falling dramatically. The Federal Reserve will make a lot of cuts throughout 2024. We think it's too much. We believe it will be less than what the markets expect.
And much of the reason is the level of geopolitical uncertainty and the implications for markets. Supply chain challenges as the Middle East war amplifies challenges in energy markets, for example when Ukraine begins to increasingly hit critical energy infrastructure in Russia because there is no way to reclaim land, but they are being becoming more desperate and I have the drones and the missiles. That kind of things. Not to mention the child. And once again, the warmest year on record with economic and insurance implications, as all that climate change and high-impact climate stress events play out in countries around the world, those things are not taken into account when you look how much the markets expect. That interest rates fall, that is a consequence, as a consequence, a risk for the market.
