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On October 26, 2023, the CFA Society Chicago hosted their 36th Annual Dinner at the AON Grand Ballroom at Navy Pier. The guest speaker was Ian Bremmer, a noted political scientist, and President and Founder of Eurasia Group and GZERO Media.

Prior to the keynote speaker, a welcome was given by Chris Vincent, CFA, CEO of CFA Society Chicago. Chris thanked the event sponsors and also noted that the next CFA Institute Annual Conference will be held in 2025 in Chicago.  This will be the first Annual Conference since prior to the COVID-19 pandemic and will coincide with the CFA Society Chicago’s 100th anniversary in 2025. Chris congratulated the society’s new charterholders and thanked the 49 who were attending the event.

Gautam Dhingra, Ph.D., CFA, was awarded the Hortense Friedman, CFA, Award for Excellence. Dhingra is the founder and CEO of High Pointe Capital Management, LLC and his research includes key papers on ESG investing and valuation of intangible assets. Dhingra noted the importance of volunteering for the CFA institute and considered that one of his key priorities even as he was launching his company.

Ian Bremmer then started his presentation with comments surrounding the escalated conflict between Hamas and Israel. He compared the current situation, with Israel building up its intent to move into Gaza, to the Fall of 2022 before Russia had invaded Ukraine. In the Russia – Ukraine conflict, the U.S. knew in advance that Russia’s attack was a strong possibility but could not do much to stop it. By comparison, the U.S. has some influence on the situation with Israel, but likely not enough to prevent an invasion by Israel into Gaza.  Bremmer commented that the October 7 attack by Hamas was the most violent attack on Jews since the holocaust, and that the move by Israel into Gaza will be a material inflection point for the coming years in the Middle East.

An additional difference that Bremmer noted is that with the Ukraine invasion, the U.S. had been in lockstep with other allies, including sanctions against Russia and military coordination.  Russia’s invasion of Ukraine made NATO stronger. In the current Middle East conflict, the U.S. has strongly supported Israel publicly, but the UK response has been less strong, and France has condemned the disproportionate use of force by Israel. Allies in the region want to stay out of a war and offer more support from afar. Bremmer noted that the probability that Iran’s involvement in the conflict is of significance would be low – perhaps under 20% – but not zero.  Bremmer noted that Israeli Prime Minister Benjamin Netanyahu’s responses had not been well received, as Netanyahu told Ukraine President Volodymyr Zelenskyy to not visit after the October 7 attack, but then took a call from Russia’s President Vladimir Putin. Saudi Arabia has condemned both Israel and Hamas for their actions, and there would be a preference among the Gulf States to have Netanyahu be removed as the Israeli leader. The security and intelligence failures leading up to the October 7 attack have been a key reason for some citizens and Middle East leaders to call for new Israeli leadership.

Bremmer gave some additional insights on other recent world conflicts, especially with the current state of Russia and Ukraine. He noted that it would be likely that Russia will continue to hold the 18% of Ukraine it has taken for the foreseeable future. Bremmer quipped that the world has become a little more adept at things once thought to be “inconceivable” … North Korea has nuclear weapons, the Taliban lead Afghanistan, and Ukraine has been partitioned by Russia.

Some good news was presented by Bremmer, in contrast to the bad news of the events in the Middle East.  First and foremost, he sees the U.S. and China relationships stabilizing.  Biden and Xi will meet in San Francisco in November 2023 to reach accords on topics like artificial intelligence (AI), helping reduce access to fentanyl, and potentially agreeing to some joint climate principles in advance of COP 28 in Dubai in November. Bremmer believes China is not looking for any new trouble given the slowdown of its economy and doesn’t believe that a conflict in Taiwan is a current focus on mainland China.  India is becoming the true leader of the new Global South and looking to improve its economy. Japan, the U.S. and the E.U. are all looking to build more bridges with India.

Bremmer notes than Mexico will move from Andrés Manuel López Obrador (“AMLO”) as its current president to Claudia Sheinbaum Pardo who is the current mayor of Mexico City. She is an active part of the Mexico City business community. Bremmer noted that Mexico’s trade just with the state of Texas is more than the Mexico has with the rest of Latin America. Bremmer expects that Mexico’s economy will accelerate under Sheinbaum’s leadership. Bremmer believes that the E.U. has been growing stronger politically, with Italy and Poland becoming increasingly involved with the E.U.

Bremmer believes that the growth of populism in the U.S. is still a bad look for Washington D.C., but that politics is much better at the state and local level. The U.S. appears to be heading more towards an E.U.-like arrangement with strong local states that may have different preferences and rules, but also benefit from a combined federal system for international involvement.  Different areas of the U.S. are becoming leaders at different industries; the Bay Area for AI, New York City drawing top international talent; Florida attracting mobile workers with low tax rates; Texas focusing on the transition from old to new renewable energy industries.  Companies and individuals can make decisions on where the better entrepreneurship economies may be. Bremmer noted that California may the “nanny state” where more oversight and government exists, and Texas has less government and less rules. Bremmer noted that one step the U.S. should take overall is to make social media illegal for everyone under age 16. He believes social media companies should be responsible when their platforms cause harm. China has taken this step and Bremmer believes eventually the U.S. crisis will get big enough to get to these types of decisions.