Morgan Stanley's 3 Conclusions From Escalating Global Conflicfts

While the market continues to focus on the daily zigzags by central bankers, the flood of corporate earnings, and the coming avalanche of elections this year, Morgan Stanley's Global Head of Fixed Income and Thematic Research, Michael Zezas, writes in the bank's latest Sunday Start weekly note that it's time to start paying attention to geopolitics again.

Below we excerpt from his latest note (full report available to pro subscribers in the usual place).

Geopolitical conflict, and the pain and suffering it inflicts on people, is certainly not new to the world. But because financial markets and economies around the world have become more interconnected, we think such conflicts matter more for investors’ outlooks. The backdrop, in our view, is the ongoing transition to a multipolar world, where competition for global power is increasingly leading countries to protect their military and economic interests by erecting new barriers to cross-border commerce in key industries. As we've argued extensively over the past five years, this rewiring of the global economy will drive secular investment trends, with some sectors and regions incurring fresh costs to invest in new supply chain and end-market strategies, while others benefit from those investments.