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Pyongyang thinks a deal is possible that would end the standoff largely on its own terms.

The prophets of the extinction of states have been proved wrong. If anything, we are seeing a proliferation of states.

Despite the success of some midcaps, Italian capitalism has become smaller, more confused and therefore geopolitically weaker

France would like to revamp the empire to prevent its own decline

Both countries are, in different ways, challenging the status quo in Europe    

Direct intervention is not an appealing option for Trump, but the creation of uncertainty is  

Time for a modern Meiji Restoration  

Any thinking sovereignist knows that, in order to play a role, sovereignism needs to be embedded    

Why Japan will soon start the climb towards the summits of global power  

What has looked like recession in Japan is really steady growth in the presence of a stable money supply  

Both North Korea and the US are acting out of vulnerability but the US more so

Turkey, US, Russia, Iran, China and India look at Ethiopia's unrest and see an opportunity

In Europe we have managed to transform a religion into an ethnic group just as any person originating in a country identified as Muslim has been reduced to an Islamic dimension  

If Trump got his wish and turned the superpower into a conventional country, the US wouldn't be able to withstand such a reform

When will the president make a clear decision?

The Israelis are asking the Russians to strip Iran of what it had fought for in Syria

Perception matters when there aren’t many options.

The underlying fundamentals of the crisis on the Korean Peninsula have not changed

The Trimarium’s prism is key to explore power relations in the U.S.-Russian-German triangle

Machiavelli's prophecy, increased regionalism and unbreakable bureaucracy

A common enemy isn’t the basis for a stable, enduring partnership

Unlike past public debt’s peaks, Italy's current debt load is the long term consequence of a fiscal illusion

The impact of technology on geopolitics*

The two countries may have some shared interests, even though it doesn’t seem that way

Why the Catalan question won’t end any time soon.

A geopolitical answer: India’s discomfort with China's objective of dominating the world

Russia is hedging the bets it placed on Iran, while Teheran continues to reap what benefits it can from Moscow’s moves

Times are still not ripe for a truce, as one can glean by reading geopolitics leafs

An Asian NATO is still not in the cards, but Japan, India, Australia and the United States are destinted to join forces against China

Excited by an adolescent fervour, in the ongoing clash between North Korea and the US Kim Jong-un and Donald Trump could lose their heads in order to save face.

Since 2015 much has changed in the Middle East and the US needed to ruffle some feathers

The logic that bound the U.S. to Saudi Arabia and Pakistan no longer exists

Maybe the US will divide and conquer, economically speaking, both its North American partners but there are many reasons to believe Canada and Mexico will draw closer together

Only by persuading the most rebellious chicanos to embrace the American way of life the U.S. can thrive as the only superpower

Demographic changes - especially ageing populations  - are putting more pressure on public finances

Current lull in the bilateral competition will not last forever. And the rivalry will most likely resume in the Caribbean

The country has been able to withstand differences that would tear other countries apart

Most of the ongoing and planned E.U. efforts to tackle the problem focus on aspects physically closest to home, but to actually stem the flow Europe must prioritize actions closer to the sources of migration

Why Trump's former chief strategist's attempt to disband the US empire was doomed from the start

By urging its trade partners to dismiss discriminatory measures against US goods, Trump is showing that when it comes to protectionism Europe and China cannot take the moral high ground. And he's also setting the US and Germany on a geopolitical collision course.

European countries are on the defensive. They want to protect themselves from China’s acquisitions in advanced technological sectors, from America’s digital empires and from Brussels’ interventionist attitude. Why France's idea of protection is also linked to the balance of power among EU States.

Emmanuel Macron and Donald Trump couldn’t be any more different but now France and the US need each other.

Much to the pleasure of the hardliners, Trump could unilaterally withdraw from the nuclear deal. However, such a move would probably cause a significant split between the U.S. and the rest of the West (plus Russia) and prompt Iran to resume its nuclear activities.

OBOR has been conceived to increase China’s exports but throughout history no world hegemon has ever been a net exporter

Influenced by Europeanist rhetoric  suggesting that it should cling to the Alps so as not to fall into Africa, over the years Italy has come to see the Mediterranean only as an element of vulnerability. In the meantime other powers have been dominating the Mare nostrum. It is only by rediscovering a Mediterranean vocation that Italy can pursue its strategic goals.

A trend we believe will continue to strengthen in the next years

Necessary maneuvers which would bring the US and North Korea closer to war

Pyongyang’s last ICBM test has turned attention away from Abe’s domestic troubles and drawn the U.S. into sharing the danger Japan faces every day from DPRK missile and nuclear capabilities. Why Abe will be one of the few leaders Trump will treat with respect at the forthcoming G20 summit.

Shinzo Abe has pursued the re-establishment of Japan as the leading power in Asia through economic growth and the buildup of military forces. However, his penchant for revisionism and nationalism could exacerbate tensions with China and South Korea, while also dragging the US into the fray.

Canada’s dependency on the US and internal divisions might reduce its leverage in any trade negotiations. But its interests being global in scope, the US cannot afford to spend much geopolitical capital haggling with Canada.

German-American relations have always been marked by inescapable hostility. Now Washington’s plot to prevent the creation of a German sphere of influence in the heart of Europe is bound to increase such hostility even more. Why Germany possibly allying with Russia (and China) is America’s main nightmare.

Why a new war is not near

Why Ankara’s acceptance of Washington getting cozy to the Kurds is a clear show of weakness

Coming from the end of the world but only wanting to generate beginnings, the pontiff doesn't focus on spatial geopolitics and rejects any final battle to defeat the ultimate enemy. Steve Bannon’s worldview versus Pope Francis’.

Imperial countries tend to overcome internal divisions if faced with an external enemy

Countries or entire regions tend to change dramatically soon after hosting major sports events like the Olympics or World Cup. What kind of change will the next Winter Olympics in Pyeongchang bring to the Korean peninsula?

Prime Minister Modi has long used his towering image abroad to mask India’s economic problems and the huge social unease his program to “Hindutvise” (or “saffronise”) the country is creating. Who is benefiting financially from the political entrenchment of India’s new elite?

Despite what Italian public and elites believe, Italy is necessary to prevent the peninsula from breaking up and becoming the theatre of the upcoming clash between Americans and Germans. Five reasons why Italy matters.

Having Trump under investigation for months is all US federal agencies might want and need

The energy transition we are witnessing today, from fossil fuels to renewables, is mandated by the tragedy of horizons, rather than by cost efficiency. Why to succeed it will need both public policies and private investments.

Lobbying can say much of how Washington works

Political instability is increasing in Albania, where the main opposition party is threatening not to participate in the June general election, and in Macedonia, where violent protesters have stormed into parliament. In both cases, political instability starts affecting economic activity.

By rejecting rigid interpretive mechanisms and by showing a commitment for the common good, Pope Francis has put mercy at the center of his diplomacy. The five traits of “open thought”.

Sino-Japanese relations are on the upswing. By favoring people-to-people exchanges and being less emphatic, Tokyo and Beijing are both unveiling a new approach to the bilateral relationship. Why no summit between Abe and Xi wouldn’t be a failure.

No matter the president's fate, Venezuela’s dependence on oil prices is bound to trigger more unrest and protests. Why chavistas possibly staging a coup are Maduro’s biggest concern.

Over the last three decades, China’s contribution to global growth tripled. The Communist Party of China (CPC) - the Republic’s founding-and-ruling political party - started reforming1 the economy in 1978.

The controversial outcome of Sunday’s referendum has paradoxically curtailed Erdogan’s power. But feeling squeezed between domestic oppositions and stalemate on the Syrian front, the sultan might adopt an even more antagonizing attitude toward the West.

Current crises in the Middle East are marked by the rise of militias with ethnic, sectarian, local, tribal or simply criminal identity. Being active in failed, failing or fragile States, those militias are successfully conquering or sharing power with the governments, thus asserting themselves as one of the main trends shaping the future order of the Middle East.

Spurred by international popularity and a large majority in parliament, for the past year and a half Canada’s prime minister Justin Trudeau has pursued a foreign policy not wholly beholden to the US. But Ottawa’s economic dependency on Washington will soon curtail his room for manoeuver.

In March 2017, the BOE voted 8-1 to keep the policy rate unchanged. In this paper we discuss what could be the next policy moves of the Bank, their timing and their implications for markets.

We are witnessing an escalation of threats of trade wars, currency wars and wars on cash. In this paper we discuss their main features and implications.

Just a week before the Constitutional referendum to provide the Turkish President with executive powers we discuss the likely outcome, and its implications for the political system, the macro-economy and financial markets.

CNB removes the floor for the Czech Krona against the EUR after inflation overshoots its target. We expect CZK tightening and a slow rate hiking cycle ahead.

We recently visited Germany – Berlin and Frankfurt – to assess the state of the economy, views concerning the EU and the Eurozone and the political outlook as a general election will be held this year in September. In this report we discuss how Germany is preparing to deal with all these issues on the various fronts.

China has been intensifying repression against ethnic Uyghurs as to pacify its westernmost region and prevent terrorism from interfering with the next Communist Party Congress. But such a crackdown could further ignite tensions and boost jihadist recruitment

The Western Balkans remain trapped in a vicious cycle of nationalist rhetoric undermining regional integration. In this paper, we discuss the economic and geopolitical implications of the ongoing tensions in the region.

The ECB has provided clear indications regarding its policy framework until the end of 2017. However, speculation is mounting about the Governing Council’s intentions to make changes. In particular, press reports suggest that the ECB is considering the idea of changing the sequence of its exit strategy (by raising rates before QE is finished) or, at least its plans for future guidance. In this paper we discuss what the ECB will likely do in coming weeks and months, on forward guidance, interest rates and QE.

I recently spent a few days in Beijing to attend – right after the National People’s Congress - the China Development Forum (CDF), the highest level meeting between senior Chinese policy makers and a delegation of foreign business leaders, academics, and international policy makers. In this report I discuss the expected path of reforms and their implications for key macro variables and markets.

In the past years the rise of Somali piracy, the need to control the strategic Bab-el-Mandeb Strait and to expand their own influence across Africa, have prompted the world’s major powers to establish permanent bases in Djibouti. As the U.S., China, Iran, Germany, Turkey, Japan, France, India, Russia and Italy check on each other, Djibouti’s inner fragility could further ignite tensions.

In the next years conflict between tech companies and traditional powers will spawn a non-neutral view of technology among Western populations. As much as they’re now resisting free trade, they will call for a technology recession. Why Peter Thiel, linked to U.S. defense apparatus, is destined to benefit from such a development.

Nouriel Roubini recently spent a few days in Washington, DC to understand the likely economic policies of the new Trump administration. In this paper he reports some of the key takeaways, some of which will be addressed in more detail in forthcoming research notes.

At first sight Abe and Trump seem to be on the same page, but Tokyo is terrified at the U.S. needing Japan more than the other way around. As so-called Japan hands swore allegiance to Hillary Clinton during last presidential campaign, Tokyo now lacks any understanding of what the Trump administration really wants.

Where to Invest in 2017? Geopolitical risks, lower expected returns and weak growth suggest greater exposure to alternative asset classes. This report initiates our Asset Allocation series, which will see two major publications per year (in December and June) and two quarterly updates (in March and September), highlighting what has changed compared to the scenario described in the previous quarter.

Major natural gas discoveries have occurred in recent years off the coasts of Israel, Cyprus and Egypt. This paper is aimed at answering the following question: Will economic opportunities be a boost to regional cooperation or will geopolitical constraints limit potential development?

France is experiencing the most bizarre presidential election of its entire history since 1848. In this report we discuss how this unusual election could play out and its consequences on the French political system.

The more ideological wing of the Trump administration sees radical Islam as the number one global threat to America. The more realist faction in the Trump’s White House sees old enemy Iran as still the primary American nemesis in the Middle East. In this paper we discuss why U.S. President Trump would like for U.S.-Saudi relations to "go back to normal," and whether he can really ignore the "balance of power" Obama tried in the past years to establish in the region.

The Fed increase its policy rates as widely expected. In this report, we discuss the recent move by the Federal reserve and its implications for markets and the real economy.

Uncertainty surrounding America’s commitment to Europe, tension with Russia and the destabilisation in North Africa and the Middle East are now compelling theBundesrepublik to rethink its security strategy. In this paper we discuss what Germany might do in coming years to increase its military capacity.

In November 2016, OPEC member countries decided a 1.2 mb/d cut to production for the first six months of 2017. This was expected to reduce inventories and favour an increase in oil prices. In this paper, we discuss the level of compliance from OPEC members and how this can affect oil prices, going forward.

After the rate hike in December 2016, the Fed seems ready to increase rates again. In this report, we discuss what the Fed will do at the March FOMC meeting and its implications for markets.

Trump’s election is the by-product of America’s imperial fatigue. But will the U.S. resign from being the world’s only superpower? And are any of its competitors ready to take over?

Despite unprecedented cooperation between the two countries’ bureaucracies, Trump threatens to hit Mexico hard on security, immigration and trade. But Mexico can strike back in many ways

The EU is a potentially lethal mix of common complaints and national sins, all conspiring to tear down the Union. Such a conundrum is exposing Europe’s structural failures, and could trigger an overdue metamorphosis. This paper discusses the ingredients of this mix, and what could be its geopolitical, macroeconomic and market implications.

As the March's meeting of the ECB approaches, we discuss how the Governing Council can use its macroeconomic staff projections as an effective communication tool to indicate the future course of its policy stance.

At the beginning of the last century Europe dominated the world. In other words, the world was European. Nowadays, Europe is dominated by global geopolitical dynamics it can no longer control nor manage. The European Union is not the global player it promised to become. On the contrary, it has embarked upon gradual dis-integration. In this paper we discuss the geopolitical and macro-financial implications of this process, as well as what we believe will happen after that.

One of the most controversial aspects of the corporate tax reform proposed by Republicans in the US House of Representatives is the proposal for a border-adjustment tax. In this paper we discuss in detail the arguments against and in favour of such a tax and then assess whether it is likely to be implemented or not.

Our recent visit to London took place around the time the UK parliament approved the Brexit bill and the government presented the White Paper on the UK’s position ahead of the negotiations with the EU. In this article we discuss what are the risks for the UK stemming from these negotiations, and their implications for sterling.

Strains between the central government and the States have long affected India’s foreign policy. But Delhi’s drive to impose a particular brand of Hindu culture on the whole country is now causing widespread resistance. And might undermine India’s federal structure.

Europe faces a world in which America leans towards protectionism and unilateralism (and expresses mixed signals and effective scepticism about the European Union and NATO); Russia gains geopolitical influence over Europe and the Middle East; and the EU is still absorbing the shock of Brexit, while entering into a difficult electoral cycle. In this paper, we investigate what kind of future the European integration process can have and whether integration, as opposed to dis-integration forces, will have the upper hand.

Germany is entering 2017 with a number of unresolved issues. Domestically, the September 24th general election might see an important political shift should Chancellor Angela Merkel be forced to step down. Internationally, Germany must defend its dominant role within the EU and the EZ, which many countries are now beginning to resent. Furthermore, the country’s position is going to be decisive in upcoming negotiations on Brexit and Grexit. In this report, we discuss the impact of all these issues on macroeconomic, political and market developments.

Notwithstanding Trump's assertive posture, Xi Jinping won't compromise on China's core interests. As the next Communist Party Congress draws closer, Beijing might feel compelled to react forcefully to Washington's offensive on trade and the South China Sea. Why a U.S.-Russia thaw could be a game-changer.

Inflation seems on its way up internationally, with the deflation risk having seemingly disappeared from the radar screens. However, large differences exist in the inflation dynamics across the Atlantic, with the recent rise in EZ mostly driven by base effects. In this paper we discuss the implications of this diverging inflation trends for monetary policy and interest rate strategy.

Since the beginning of 2017, the TRY has depreciated by 4.7% against the USD. In this paper, we discuss why we believe the TRY is set to weaken further, in the light of ongoing economic, political and geopolitical developments.

France's three main presidential candidates sport different worldviews. Marine Le Pen is a hardline nationalist, François Fillon a moderate gaullist, while Macron is running as the last globalist. Still, whoever wins will have to deal with France's insurmountable geopolitical constraints; above all a persistent economic weakness.

Xi and Trump share a desire to make their respective empires great again and seem willing to pursue such a goal to the detriment of the other. As Washington accuses China of manipulating its currency and Beijing threatens to dump a trillion dollars' worth of U.S. Treasury bonds, a military incident could well be the natural outcome of a looming trade war.

As Trump looks at the world only through commercial lenses, he seems willing to engage in diplomacy or to intervene abroad only if the U.S. can make a profit. To an empire, however, strategic goals should always be more relevant than commercial interests. Why America could stop being the world's only superpower.

Libya’s three governments and numerous militias have been vying for power and territory. However, they share an interest in increasing oil production and having money to spend. That’s why an economic deal among the country’s main factions could be the only way leading toward stabilisation.

Even if Da’esh may be bound to lose Mosul and Raqqah, it will most certainly adapt to the new reality and rise again. Unless Sunnis are granted an active role in Iraqi and Syrian state institutions, their surge will stay endemic. Why foreign fighters are destined to return home.

For the past 25 years the judiciary has been the only power to fill the vacuums created by legislative uncertainty and politicians’ inadequacy. And if politics doesn't step in, the future relevance of the courts rulings will only increase. Why robots won't replace judges.

The Korean peninsula is where a Third World War might probably erupt. A strategic theatre where the United States and China face each other, here exists the highest concentration of weapons in the world. While Trump’s asserted reluctance to protect Japan and South Korea from a Chinese nuclear attack could prompt Tōkyō and Seoul to go fully nuclear on their own.

Trump’s stated appreciation of Putin promises to change US-Russia relations for good. But US Congress and federal agencies will slowly continue building up pressure on Russia’s near abroad. That’s why “time” might turn out to be the only commodity Trump can offer Putin, while structural deficiencies will keep gnawing away at Russia’s geopolitical and economical foundations.

Germany reacted to Donald Trump’s election with dismay. In the next years Berlin might be inclined by Washington’s lower profile to dominate European affairs even more. As German-American disagreements caused by Trump’s coming to power might spawn a reluctant hegemon.

The president’s agenda will no doubt be drafted by himself and by his strategists. That said, it will, however, be rewritten by American counterpowers and bureaucracies. It will be redefined by the geopolitical, socioeconomic and cultural environment we are all engrossed in, including the White House. The rest is for the media.

The fortunes of Europe have always been intertwined with developments in the Balkans. The most famous episode (the killing of Archduke Franz Ferdinand of Austria-Hungary in Sarajevo, which triggered WWI) is just an example. Just as the European Union seems destined to dis-integration and the wider European geopolitical space to further fragmentation, observing developments in the Balkans seems imperative at this stage. In this piece of analysis we discuss the economic and geopolitical influence that Russia is exerting on the region, and its repercussions for the European integration process.

Russia’s economic, political and geopolitical future can appear different if seen from a short-term or a longer-term perspective. In this analysis we consider how Russia might evolve over the next 18-24 months, and discuss the medium-term economic outlook (beyond 2018), mostly determined by the link between economic performance and energy prices.

The FOMC increased the Fed funds target range, as widely expected, and for the first time in 18 months, it also raised the Fed funds rate expected in the "longer-run," in line with our preview. In this review, we discuss all the implications of the latest move by the Fed.

We attended the 171st-Meeting of the OPEC Conference in Vienna for what was shaping up to be the most significant meeting of the oil cartel in almost a decade. It did not disappoint. In this report we discuss the challenges relative to the implementation of the agreement, and its implications for oil prices and the energy industry.

In this paper, we focus our attention on medium-to long-term forecasts of univariate macrofinancial variables, which likely incorporate long-term trends deriving from geopolitics (including political and policy cycles), demographics and technology. In order to take into account the uncertainty that these factors inherently carry, we provide range forecasts (as opposed to point forecasts). The estimate of these confidence intervals (with different probabilities) better reflects the possible distribution of events around their central tendency. Using the latest econometric techniques to measure uncertainty, we estimate medium- to long-term range forecasts for GDP per capita, inflation, real 10-year yield and spot FX rates for the U.S., Japan, Germany and the UK, 6, 8, 10 and 25 years out, with a confidence of 50%, 70% and 90%.

OPEC represents a complex version of the classic game theory problem; the prisoner’s dilemma. To optimise collective value creation, OPEC members should increase production when prices are high, to gain market share, and reduce production when prices are low, to support price recovery. Consistent with other prisoner’s dilemma problems, research proves that each OPEC member is instead individually incentivised to increase production whether prices are low or high. This has been the behaviour exhibited by most OPEC members throughout the cartel’s history.

Venezuela’s ongoing economic, financial and political crisis can be considered a variant of what economists sometimes call Dutch disease, i.e. the apparent causal relationship between the increase in the economic development of a specific sector of a country and a decline in other sectors. In Venezuela, unsurprisingly, the culprit is the oil sector, which represents 96% of the country’s exports and is estimated to provide more than 50% of government revenue.

Turkey’s president Recep Erdogan has a grand vision for the country and for his own future. According to his plan, by 2023 Turkey should be a presidential republic. It should also be the greatest power in the Islamic world, permanently ranked among the top ten world economies. Ankara would resolve the Kurdish issue by wiping out the PKK and by integrating those Kurds who want to be full-fledged citizens of the new country. Erdogan would gain enough freedom of manoeuvre to independently pursue Turkey’s goals without leaving NATO. Several former provinces and cities of the Ottoman Empire would return to Turkey, either by annexation or by informal control. There is little to no threat to Erdogan’s rule over the next 10 years, but the president might be unable to deliver his grand vision, due to lack of his and the country’s resources as well as international interference.

On December 4th, 2016 Italian voters will be asked to approve or reject a series of amendments to Italy’s constitution, approved by parliament in April 2016. In addition to its specific legal meaning, the referendum has overtime acquired wide-ranging political implications on both the domestic and international front.

In the aftermath of the election of Donald Trump as U.S. President, uncertainty abounds as to what kind of president (as opposed to candidate) he will be. In this article, we shed some light on some of the key current unknowns and identify some of the critical uncertainties surrounding the U.S. in the next few years.

We recently visited Italy to assess the country’s conjunctural, structural and political developments in a crucial period of its recent history, with a constitutional referendum looming large (and considered to be another “make-it or break-it” moments for the EU, very much like Brexit), in the middle of the always-tense negotiations between Rome and Brussels on the budget for 2017 and future years, and just before the series of catastrophic earthquakes that have shaken the country, with hundreds of victims and enormous damages to Italy’s residential and commercial real estate, infrastructure, and historical monuments.

On October 25th, the Board of Directors of the European Stability Mechanism (ESM) authorised the disbursement of €2.8 billion to Greece, hence what remained of the second tranche of ESM financial assistance, as part of the third aid programme for Greece launched in August 2015, for a total volume of € 86bn. The release of this last tranche of funds (which takes the total ESM disbursement to Greece under its current program to €31.7bn) follows the successful completion of the first review of the program since the government completed the agreed “key milestones” related to pension reform, bank governance, the energy sector and revenue collection, while also making further progress towards making the new privatisation and investment fund operational.

In this note, we want to discuss reasons for holding a negative-yielding bond. Intuitively, one would imagine that investors have the option of holding cash instead of a negative yielding-bond. However, cash is not always an option. So, we investigate the factors affecting demand for bonds beyond their price (or yield).