The Bid 246. A Macro and Geopolitical Outlook – Live from Davos
Web title: A Macro and Geopolitical Outlook – Live from Davos
Episode description:
Global markets are entering 2026 amid heightened geopolitical uncertainty, structural shifts in the global order, and rapid technological change. Recorded live from the World Economic Forum in Davos, this episode of The Bid examines the macroeconomic and geopolitical forces shaping the year ahead.
Host Oscar Pulido is joined by Philipp Hildebrand, Vice Chairman of BlackRock, and Tom Donilon, Vice Chairman of BlackRock and Chairman of the BlackRock Investment Institute. Drawing on conversations with political leaders, policymakers, and business executives in Davos, they reflect on an evolving geopolitical landscape and its implications for markets, governments, and global cooperation.
The discussion explores how shifts in U.S. policy are reshaping alliances — particularly between the United States and Europe — and why this period may mark a broader transition away from the post–World War II global framework. Philipp outlines the pressures facing Europe, while Tom examines how national security considerations are increasingly shaping economic policy, trade, and global investment flows.
Artificial intelligence emerges as a central theme, viewed both as an economic driver and a geopolitical force. The episode considers AI’s role in national security competition, the growing importance of data centers and energy infrastructure, and how concerns around sovereignty, critical minerals, and societal impact are elevating AI from a technological issue to a political one.
Key insights
How current geopolitical developments are reshaping the global outlook entering 2026
Why Davos remains a key forum for understanding policy and market sentiment
Mapping out Europe's main macroeconomic challenges and opportunities
How AI is increasingly intersecting with geopolitics and national security
What recent U.S.–Europe tensions reveal about future global cooperation
How investors and policymakers are interpreting uncertainty in today’s environment
Geopolitics, global macro outlook, Europe economy, World Economic Forum Davos, AI and geopolitics, global markets, policy uncertainty
Written Disclosures In Episode Description:
This content is for informational purposes only and is not an offer or a solicitation. Reliance upon information in this material is at the sole discretion of the listener. Reference to any company or investment strategy mentioned is for illustrative purposes only and not investment advice. For full disclosures, visit blackrock.com/corporate/compliance/bid-disclosures.
<<TRANSCRIPT>>
Oscar Pulido: Welcome to The Bid where we break down what's happening in the markets and explore the forces changing the economy and finance. I'm Oscar Pulido. Today we're bringing you a special episode. Recorded live from the World Economic Forum in Davos, Switzerland.
Joining me are Philipp Hildebrand, vice Chairman of BlackRock and Tom Donilon, vice Chairman of BlackRock and chairman of the BlackRock Investment Institute.
Philipp and Tom bring together extensive experience across financial markets, policymaking and geopolitics across the US and Europe. They've also spent the entire week in Davos engaging with governments and corporate leaders. Together we'll explore the rapidly evolving geopolitical environment, the centrality of AI to the global growth story and the investment themes they've been hearing about this week.
Philipp and Tom, thank you so much for joining us on The Bid.
Philipp Hildebrand: Hey, it's wonderful to be here. It's been a long week, so it's just a good way to close it.
Tom Donilon: Great to be here.
Oscar Pulido: Well, and welcome back. We're back in Davos. The three of us were here last year, at the World Economic Forum. And what I found really fascinating when I went back and listened to that conversation that we had last year is that.
So many of the themes that you talked about ended up being very persistent and important themes throughout 2025. So, I think there are a lot of people, myself included, that are waiting with great anticipation to hear about what was talked about this year at the World Economic Forum. So, Tom, maybe I'll start with you.
When we talk about geopolitics, it's certainly been a very eventful landscape over the past year and even just this year. How would you characterize the geopolitical environment as we go further into 2026?
Tom Donilon: Pretty extraordinary. But first of all, we are here at Davos. This has been an extraordinary meeting right there, if we look at some of the quantitative measures. 400 political leaders, 65 heads of state, at the session, 850 CEOs, a hundred leading tech pioneers, and more than 3000 participants from 130 countries. So it's been extraordinary gathering at Davos this year.
On the geopolitical scene, right? As you said, just since January 1st, go through the list, US military operation, right? That resulted in Venezuelan leader Maduro's capture and transfer to the United States; a historic protest in Iran, and the prospect of US intervention following a regime crackdown, and a sharply escalated US rhetoric around acquiring Greenland. We'll talk about that, I'm sure during the course of our conversation today. And alongside that growing tensions between the United States and Europe, maybe historic levels of tension between the United States and Europe- Philipp can talk about that with greater authority than I can- capped off by the way, obviously with this striking speech by President Trump here at Davos this week. And I'll mention one which didn't get discussed, and I'll talk about. which is the extraordinary events expected in China this year as well, including the announcement that the Chinese export surplus was $1.2 trillion, globally, which is going to have, I think, a significant geopolitical impact.
So what's driving this? I think a couple of things, right? One is, the United States is seeking to fundamentally reshape its relationship geopolitically and economically with the world, put simply. The second Trump administration has approached trade and industrial policy and alliances In a way that marks a decisive break with what had been the operating principles, the structures, the mechanisms, organizations, institutions that we'd had over the last 80 years. We're seeing the upsetting, really, of the post-Cold War, era, and that is especially true for Europe, where we are obviously. The United States announced really from the beginning of the administration, if you look back to Vice President Vance's speech at the Munich Security Conference, this past February, it was clear that the United States was going to have a very different relationship, a very different attitude, towards Europe, right up including until obviously, the events of this week, including the effort by the United States, by President Trump personally, to acquire Greenland.
It reflects a foreign policy that we've seen over the last years in the Trump second term, that is highly personal, transactional, zero sum, dominance first. And this approach obviously has tensions with, alliance politics and alliance structures, generally. There are moments, in history that really do feel like hinge moments. and there have been a few of those dates, that are, that, stick with us since the end of World War II. 1945, obviously, the Arab oil embargo in 1973,1974, the fall of the Berlin Wall in 1989. The dissolution of the Soviet Union in 1991, I think 2025, 2026 is going to be one of those moments, a hinge point when really the tectonic plates geopolitically and in terms of economics really do change just a couple of our observations and then we'll turn it over to Philipp. But the, on the landscape generally.
First the US as I said, really is now the major disruptor, frankly, of the order that been in place since World War II. And I said, I think you can trace that from Liberation Day right through the announcements on Greenland.
Second is, I think, a characteristic of where we are today. And when we talk about this session we've had here, one of the things that was absent in this discussion was there very little discussion about China here with Philipp, I think this week. But that is really one of the most important things in the world, obviously right now, the structural competition between the United States and China remains central. Essentially, virtually every policy that the United States is pursuing, whether it be defense or trade or technology, cyber, you name it, it's especially true I think in AI. But this is, I think we're seeing in this year, is a competition with Trump characteristics.
President Trump has really focused on the commercial aspect, the economic aspect of the relationship between the United States and China. And is seeking in a is putting in place at this point a commercial detente of sorts between the United States and China. I think seeking to give at least a year of relief of the trade war and the other kind of economic competition between the United States and China.
That detente is narrow, fragile but nonetheless, I think his focus. Particularly focused on a specific date, which is his summit now scheduled, we think, in Beijing in April. So that's a second characteristic I think, of the world as it is today. The third is as this, these, the tectonic plates change, right? As the United States in particular, it's kind of relationship with the world changes. multilateral institutions and relationships are changing too, and I think you're seeing countries begin to manage that, begin to respond to that. And he saw that, I think especially in the speech this week given by, prime Minister Mark Carney from Canada, who talked about a world in which a middle power like Canada was no longer directly aligned with a major power and trying to, again, to look at a different geometry, if you will, of international relations. I think there's only been three standing ovations given it a speech in Davos. I think Mandela.
Philipp Hildebrand: I was here when Mandela had one and I can't remember one since.
Tom Donilon: I think it was Zelensky.
Philipp Hildebrand: Zelensky that of course, yes.
Tom Donilon: And now Mark Carney. Only three times here. So extraordinary speech about this issue, right? About this kind of rewiring, if you will of both the geopolitical and the economic, infrastructure of the world.
The fourth is I think that national security is really taking priority over market efficiency. We see that in economic relationships around the world. And finally, I'll mention, I think a trend that will continue this year and President Trump actually announced this in his speech and that's substantial increase in defense spending.
We see that China has been on a defense spending, trajectory, maybe as large as any in, in peace time. We've seen it all over the world, in Asia. We've seen it in the Middle East, and President Trump said in his speech, that the United States defense budget would be increased by 50% to 1.5 trillion dollars. So those are some of the major trends that I see. It's really an extraordinary moment to be studying these things and to be living in these things. As I said, I think we will look back and we'll say, 1945 and 1989 and 1991, and I think 2026 will be one of those years geopolitically that'll be that kind of change.
Oscar Pulido: Well, just listening to the breadth of what you covered, I think, gives people an appreciation for just how much is going on in the geopolitical landscape.
And in fact, when you were talking, I wrote down that. term, the hinge moments, that we're living through, history and you've been involved in the geopolitical, landscape for many years. So the fact that you're calling it out is pretty powerful. Philipp, this has been an eventful week in Davos just listening to Tom. We saw some sharp moves in markets, given some of the events in Davos. What were some of the topics that were front and center in the conversations that you were having?
Philipp Hildebrand: I think the big theme when Tom went through it is a change in the global order, right? If you look at history, no global order has lasted forever. all things come to an end. if you look at recent history, pre-World War I lasted 40 years. Then you had the interwar period was short, 20 years essentially. And then we've had a very long. international order since World War ii. and I think as Tom has laid out, that order is evolving. It's coming to an end, it's been broken, whatever. Depending on how dramatic you want to be, you can use different verbs. But essentially, I think we're seeing exactly this hinge moment where the global order passes from one equilibrium to a new one.
What we don't know yet at this stage, none of us do really is where we'll end up. Where does this settle? How do we end up in a new, hopefully stable equilibrium that, again, can set us off to a kind of multi-decade long, hopefully order of relative stability that is not clear at the moment. and you mentioned market reactions and I think it's a very important point to raise because what depending on where we'll end up, and this may take, it may take years, Tom, before we know where we end up, I think probably quite likely you would agree with that, right? Yeah. So this is a kind of an interregnum period, a, a transition period between world orders and of course what we already see sometimes in intraday or short-term market moves, depending where we end up in this transition can make a very big difference in terms of economic outcomes, but also in terms of market outcomes naturally. And then, you lay on top of that the tremendous technological changes that are underway. And this of course, was the other big theme of the last few days and how that will impact both the global order itself, but also how it impacts domestic politics, how it impacts, labor markets, how it impacts ultimately human beings, our children. There were some very interesting discussions on AI and what it does to us as human beings. I was fascinated to hear one of the really lead, thinkers and developers in AI talking about what does this mean for us as human beings? So you have these vast structural changes layered one on top of the other, the geopolitics, the changes in the global order.
And then on top of it, this tremendous technological change, which perhaps is again one of those clear hinge moments in terms of, technological development. Somebody compared it to that the only other time that is as significant as this is when man took control of fire, which was about by latest estimates I understand, about 400,000 years ago. I don't know whether that's the right analogy, but it gives you a sense of these multiple layers of very important changes that are occurring at the same time. And how they interact is going to be critical. And of course, the, in a sense, much like during the financial crisis, systems get disturbed the most when the disturbance comes from the core of the system.
This was what made the great financial crisis so terrible that it emanated in the United States. It came from the United States. That's why it was much more severe than the Asian crisis, which started in Asia or that the Euro crisis, which you know, came from Europe. And this is a similar story. this change in the global order, in a sense, has been triggered, has been initiated by a fundamental change as we heard from Tom coming from the us.
And that by definition, has vast. Repercussions. And on top of that, you have the technology changes. So this is a, I couldn't agree more with Tom that it is quite likely, that we will look back at this in five, 10, maybe even 20 years as indeed a hinge moment.
Oscar Pulido: Oftentimes we talk about mega forces, which, Tom as the chairman of the BlackRock Investment Institute, that geopolitical fragmentation and artificial intelligence, we talk about these long-term structural trends and the fact that they're happening simultaneously has big impact on the global economy.
I'd like to stick with you, Philipp, for a second because we're in Europe, obviously, and in we're in your home country of Switzerland. I know you, you spend a lot of time thinking about. Region, the continent. And we've recently spoken to Roloff Solomons and Helen Jewel about the investment opportunities in the continent. But I'm curious, what are some of the emerging, if any investment opportunities that you see in Europe?
Philipp Hildebrand: Well first to state the obvious, this is an uncomfortable moment for Europe and nothing can symbolize that more than, being in the audience that was sitting in the second row during the President speech.
And I can assure you that was a very uncomfortable moment for European leaders and frankly for any European in the room. These changes that we talked about have a kind of particular focus at the moment on Europe, it's by no means the only place that is affected, by them by definition. But there is a particular European dimension to this and the pressure on Europe now in terms of coming up with a response of adjusting. to the world as it is. Mark Carney, prime Minister Carney talked about we have to take the world as it is, not as we would want it to be. And I think that encapsulates perfectly the problem in Canada, but also very much so in Europe.
So the struggle forward in a sense for Europe's leaders is how to respond to this moment that I've called as a kind of an existential pressure moment. We will see what comes out of this. And the implications again on how Europe responds to this moment are very significant. Whether it's in terms of economic outcomes, in terms of political outcomes, and ultimately in terms of investment opportunities.
If we want stay with a constructive, optimistic mindset, what we can tell from history is that Europe is a complicated structure. It was designed to put an end to two terrible wars that were fought, on European soil with enormous human cost, physical cost. So we have to always keep in mind what was the purpose of the European Union. It was to put this legacy, this terrible legacy behind us. Europe has succeeded in doing that. However in order to do it, it had to build a very complicated, cumbersome structure.
And so the question here is, how does it respond? If we look at the big crises in the history of the European Union, we can also see that Europe tends to act when the pressure is highest. We saw this in COVID,we saw it after the collapse of the Soviet Union. This is something we talked about last year here, when the Euro was created. I think the optimism here, the constructive view would come from a perspective that something similar will happen now, and that in that sense, this is very controversial, Tom, what I'm going to say, but in that sense, it may well be that this pressure coming from this kind of revolutionary approach to the global order that Tom talked about from the president himself- top down in a way- may well turn out to be the kind of moment of reckoning that Europe needs to address some of the longer term challenges around competitiveness, around growth, around capital markets, many of the things that Mario Draghi has laid out in his report.
So I think there is a, certainly a story to be told that one should not write off Europe, that although it looks very cumbersome, very complicated, that when this pressure comes and exerts itself at a maximum level, and certainly I can tell you two days ago in the audience during that speech, that's very much what it felt like. Those are moments when Europe finds ways out of this complicated construct, find appropriate answers.
Tom Donilon: Yeah, it's interesting. I mean that, you can clearly feel that being in Europe and it's, the recognition seems to be there, Philipp. In all our conversations with European leaders, both geo, both political and economic leaders, there's certainly a recognition of the challenges. if you think about the relationship of the United States, and we were talking about the various historic points, This is one of the more difficult periods, If you go back through the other crises that we've had from Suez and France’s withdrawal from NATO, to Iraq, the Iraq War of Vietnam. The deployment of nuclear missiles in Europe, which result in a massive protest in Europe. This feels different,
Philipp Hildebrand: Yeah. And it will not be, let's be clear. This week the Mercosur free trade agreement was rejected by the European Parliament. So this is a perfect example of how complicated the European construct this, and this may well delay this accord by year, perhaps even more than that. And it's a perfect example of a design that is historically, understandably in a sense, but is very complicated. So when I say optimism, don't expect this to be smooth sailing and some magical European council meeting, emergency council meeting will come up and solve all these problems.
It's going to be a constant back and forth that will take time. But I do not remember, in my time at least, a moment where there is that much pressure on Europe. Again, I think there are similar moments, in history, but this feels extreme and that gives me, in a sense, paradoxically, some optimism.
A former leader of a European country told me, I think this year, maybe it was last year, that one day perhaps, the president of the United States will receive the Charlemagne prize for European integration. That's the kind of the idea here, that these are pressures that really are such that Europe will have to respond.
Oscar Pulido: Tom, let's talk about AI, and Philipp alluded to it a little bit as well as, conversations that were had about AI and perhaps, some very philosophical discussions about AI and the impact on humans and the labor market. but more specifically, one of the things that you raised last year, Tom, was the growing national security and geopolitical issues that are related to the AI build out. What's changed since, that conversation? I know Philipp has also just mentioned the need for more defense spending, which I think also then, somewhat relates to the AI theme. So curious, what has changed in that from that geopolitical lens?
Tom Donilon: Yeah. I think Philipp's exactly right, the increase in defense and infrastructure spending in Europe is pretty important for reindustrialization and technology progress in, in Europe. On, on, on artificial intelligence generally, from a, from a technical perspective, but from a geopolitical and security perspective, I'd say just three or four quick things. Number one, it remains at the white-hot center of the competition between the United States and China. this is, there's obviously competition to, to win the race, between companies, to win the technical race, if you will.
but the, that's also propelled, I think the levels of, ex, high levels of spending, obviously, right? maybe a level of capital expenditures we haven't seen, in a long time, In the world. but that is really, I think, results from, the, in part from the competition in the United States and China because both sides are convinced, the country that gets the strongest advantage with respect to artificial intelligence will garner economic advantages, but also military and security advantages. And I think that really is at the, the core of the core of the competition. the second thing, then we've discussed it here with clients is the data centers, right? Which are obviously the target of so much investment, in the United States, in particular also around the world. Has become, critical infrastructure from a security perspective. So there are cybersecurity issues that, that, the data centers face, and there's been a lot of work obviously done on that. They're also physical security issues. I think increasingly for data centers, they're becoming like the, they're massive and they really are the symbol, if you will.
The kind of the economic knowledge of industry pro, prowess of countries. I think in that ca in that, and from that perspective become targets from a security perspective, particularly, with respect to drones, and drones as a weapon, which obviously we, it's come to the fore in a very big way out of the war in Ukraine.
But you've seen some of the operations that have been done around the world, particularly at the Ukraine operation in. Or into Russia, the drone operation, which thousands of miles from the Russian border were able to go and destroy it with relatively inexpensive drones, very expensive strategic bombers of the Russians.
The third is energy, and that was a big discussion here, the need for energy because the demand. As in our discussions, the demand for artificial intelligence for the production of artificial intelligence seems to be very strong going forward. The other thing I focused on here though, and had discussions with folks here about is also the need for critical minerals. That doesn't get as much attention as the pure energy, the energy requirements. but behind the AI infrastructure, the hardware layer requires a set of critical infrastructure and other commodities that, we in some respects have to rely on China for as a processing center in the world.
The fourth is sovereignty concerns. As the countries become reliant on, on, on these technologies, they're going to want to have some understandings, guarantees that'll be reliable, for them going forward. And the last things that Philipp mentioned is, it's not a security concern in particular, but it is, a social concern. It's a governmental concern. It's a societal concern, And we had a lot of discussion about that, at our sessions with our clients. And that is the. Impact. Let's go beyond the technical impact, right? Which we can talk about, right? And the economic impact, but the societal impact, the impact on jobs, the impact on energies.
We were just talking about, the impact on privacy and the impact on society generally. And we saw some of the leaders here, the CEO of, anthropic for example, made some very stark right and provocative statements about what his concerns are. About AI in terms of an impact, right? In terms of inequality, in terms of a split between capital, capital and, and labor, In terms of job loss, and its impact on society. And was making a pitch for both companies and governments right to start to focus on these problems. Now, I thought those discussions were really interesting, Philipp, and they were across the board here again, beyond the, and we do a lot of obviously investing in technical conversation with, hyperscalers and energy providers, And other kind of tech and other tech companies. But it was interesting, those discussions went beyond those technical aspects.
Philipp Hildebrand: And I think in compared to last year, where, again, AI was a huge theme, you started to look at how does it diffuse itself into the economy? Who are the beneficiaries? What does it do to employment, therefore to politics? And ultimately for the first time, really, what does it do to human nature,
Oscar Pulido: Right. It sounds like the AI discussion is evolving.
Philipp Hildebrand: It is evolving, absolutely.
Tom Donilon: And there was very frank discussion, this year. I think a recognition that as a result of these societal impacts that are coming down, the, coming down the road here, that it's, artificial intelligence, data centers and everything around, it's going to become increasingly political issues. and we can see that already in the United States where it's particularly focused on affordability, electricity, affordability.
The impact of data centers on that. and I think you'll see that discussion build. You've seen a lot of the companies, talk about the need for them to, pay for, provide for, their energy sources. we had some of the, really prominent, US energy providers here discuss the fact that, that data centers and energy technology companies, right, artificial intelligence companies are going to have to pay their way here, and not, not cause these utilities in the United States to have to increased dramatically, electricity cost for consumers. This is, these are all developing. David Plouffe, who was the, the architect, one of the architects of the 2008 Obama successful presidential campaign, did a piece in the New York Times last week, where he said, that his view, artificial intelligence and data centers and artificial intelligence infrastructure could be one of the prime issues in the 2028 presidential election.
Oscar Pulido: So, there it is, the intersection of these two mega forces, AI and geopolitics and gentlemen, as I listened to you, I'm just thinking back to some of the things you said about this, these hinge moments and history that we're living through.
Philipp, you talked about it's this transformational period that, that we're living through that could play out over many years. And even though we're talking about what's gone on here this week, if you're an investor and you're listening to the reflections from the World Economic Forum and you're thinking about your portfolios, what should they have in mind as we continue ahead in 2026? Maybe Philipp, I'll start with you.
Philipp Hildebrand: Sure. first you have to take a view, and again, this week was very interesting in this regard. Can we go through this transition period without major conflict? I think that's a critical question. We know from tom's work, and we've looked at this very carefully over many years. That the sort of standard geopolitical event tends not to have a lot of impact on markets or if so very short term, but major disruptions, wars, of course, can have very significant and lasting impact. So I think, as we saw this week, the mere threat of the use of force, towards, in this case, a NATO ally. Really rattled the markets. Now, admittedly, it was one day then it was at least for now resolved. But you can see that this is the sort of first challenge that we'll face. And I think as an investor you have to take a view on this, or at least have to be aware of the fact that we are at times on thin ice.
this transition period is likely to be a relatively risky period until we end up in some kind of new equilibrium. I think in history, you can see this. Secondly, I think a very big question is, do we believe, do we have the evidence that this extraordinary investment boom that has been launched around the AI complex, and it's not just ai, it's Tom referred to it, it's data centers, it's the infrastructure to build them.
It's the energy that feeds them. Will this investment, boom, continue? and the evidence, certainly all the discussions we had here would suggest it will, that the investment needs basically are vast, right? This is one of the things I take away from the people who actually do this, that there's just so much need for more data centers, more energy, more infrastructure, more, grid enhancement. That very likely we're going to see a continued sort of spending feature of the economy. Right now, if you look at GDP, it's very investment heavy. if you look at last year in the US close to 50% of GDP was essentially spending on broadly speaking, ai. if this continues, this will continue to boost growth, right? This will continue to build the potential for future productivity. Pick up and productivity growth, which can then in return, push up growth. And that's the kind of final view you have to take as an investor. Do we have a view that this can actually, in a sustainable way, put us on a more promising growth path?
And I think that's critical because at the end of the day, if you look at the, one of the big risks we face is too much debt. And how do you work off the debt? we're going to need this investment, boom, plus ultimately the effect on productivity and growth to last. And then you could have a very favorable outcome on investments, generally speaking, if you have the view that these things will break down because of conflict or because somehow this investment boom turns out to be not as strong as we anticipate right now, you end up in a very different macroeconomic scenario and therefore with a very different outlook, in terms of asset allocation. So I think that, those questions will be front and center of every investor, and you have to take a view on this at the moment. I would say if I kind summarize the takeaway here, most people would agree that we're likely going to continue to see, very strong spending, lots of investment. There's lots of reasons to believe that these investments will bring breakthrough in technology, therefore should be positive on productivity. And then hopefully this can, get us to a place where we have higher growth rates going forward. And that's the way we'll be able to deal with the debt problem over time.
Oscar Pulido: And I also hear in your response, perhaps more the front end of your response, which. For portfolios to also have a plan b and to be very intelligent about diversifying across .
Philipp Hildebrand: - and the reason for that is because if one of these factors that I tried to lay it out, turns in the other direction, that can have major repercussions on markets on the global economy, which is why we're seeing these moments of, quite pronounced volatility. Even though if you look back, the bond market is a perfect example. If you look back over the last 18 months, there's almost no change. But in between, of course, you had periods where we had, very significant volatility. And I think that's a feature of this transition period.
And at some level, the uncertainty as to whether these major structural forces that I described. Whether they can be sustained for long enough to have to generate the positive economic outcome.
Oscar Pulido: Tom, what about from your standpoint for an investor thinking about their portfolio and listening to all of the structural transformations going on in the world, what do you say to them?
Tom Donilon: I say two or three things. Number one is I think exact is exactly right and, but what has happened of course over the last year or so is that. A number of the conflict situations, geopolitical conflict situations were either contained or didn't go to worst case scenarios. and of course that was part of the reaction to President Trump's speech yesterday when he talked about taking force off the table with respect to the US interest in Greenland had a big impact.
But we've gone through a period where those conflicts have been, again, either contained or didn't go to worst case scenarios. I think that's where we are right now. Going forward, one thing that we've been looking at, is, a change in certainly US policy, since the beginning of the Trump administration, and that is much more government intervention into the private markets, and to the public and to the, into the business, sector.
And you've seen that obviously we're, the president has structured a number of ownership stakes right? In US companies, There was an interesting report that the Caden Institute put out, in November, saying that during the past year, the United States, I want to get the statistics right. Had taken a stake in 14 healthy US businesses. Okay. The number of times that had happened since World War, other than last year, since World War ii. Over the last 75 years. Since World War II is zero. So, this is a pronounced change in approach, by the government, into the private sector. And so there can be sectoral impacts for investors that have to be carefully look at, there may be opportunities as well. And there have been in some of these interventions. that's different for United States government, obviously given those numbers. and something that we certainly at our, in our shop, we're watching very carefully. And it's not just in the United States, it's around the world as well.
Philipp Hildebrand: In a way, investors have to take the same approach as, policymakers. Prime Minister Carney said, we have to take the world as it is, and in a sense, you plan for the worst. So security's the perfect example. in his speech, he said, our first response has to be to ensure security. He said this with reference to the Arctic, but that's very much true. In a general sense. Investors will have to take a basic view, but they also have to recognize that, as Tom says, if we go to one of these worst case scenarios, or if the investments boom suddenly comes to an end, you end up in a very different box than the matrix, In terms of economic impact and in terms of asset allocation, and that's what's going to be I think, a feature for quite a long time to come. Very different from the great moderation, very different from this, think about the long trend when you could just be long bonds over decades basically, and have a kind continuous, steady return shaped by this, convergence worldwide in terms of interest rates coming down that shaped the great moderation. So this nimbleness in portfolio is something we spend a lot of time on at, BII. I think will remain a feature even though some of these forces, these structural forces are very much in play.
Tom Donilon: I agree totally with that. And the other thing it's the longer term trend impact of these of different things, right?
So, although you have a geopolitical story doesn't have a lasting impact typically. That's what the, that's what the, that's what the analysis of show you. but they do have an impact over time with expect to structurally changing the world. And that's another thing that we keep a close eye on, for example, there's been a lot of conversation about deglobalization, the world's not deglobalization on a macro basis, but it is rewiring, and understanding those relationships and the long term, changes I think is important as well. We work a lot on that, that's important for an investor, obviously. That's a kind of specific focus on the changes that are taking place over time. There, the relationship again, between the United States and China, for example, it has changed. if you're a tech investor, right? that relationship hasn't changed, there has been some level of decoupling and that trend is underway, not a, not something that happens in one day. So we also try to keep our eye on the longer term trends as well.
Oscar Pulido: And the two of you have, extensive experience, both of you individually and collectively? I'd get the number wrong in terms of the number of years that both of you have worked in, capital markets and in the geopolitical sphere -
Tom Donilon: I bring the average up by the way!
Philipp Hildebrand: My years are starting to go up, my first Davos was in 1988!
Oscar Pulido: Well, you both have great perspective and you're commenting on how we're living through historical times, and I think that need to be nimble in portfolios, which you touched on Philipp, is, has been a common theme with many of the guests that, that we've spoken to. Philipp, you mentioned you had a, it wasn't a front row seat, I think you said a second row seat when the president spoke. I've had a front row seat today being in Davos at the intensity of both of your schedules, what it takes to be on the ground in Davos and keep up the pace. And I'm just curious, what do you do at the end of this long week when it's all over? what does the weekend look like?
Philipp Hildebrand: We'll have a drink first, Tom, right? Or a pizza. I'll try to get some sleep. there has not been a lot of sleep. It's, it's a short period. I think one of the reasons why Davos is so productive, it's short, it's very intense. You don't sleep much, but it's actually quite short.
And then, If the weather's good, I will try to get a couple of hours of skiing in tomorrow morning and then go pick up my kids after school. So that's my plan for tomorrow.
Tom Donilon: Phil's much more ambitious than I am. I'm going to, I'm going to fly back to Washington and hope to do, and hope not to leave my living room during the NFL Playoff games, on Sunday.
Oscar Pulido: Before everything got shut down before you, you took that rest and that well deserved time with your family. We appreciate you, sitting down with us to talk about what happened at the World Economic Forum this year, and thank you for doing it with us here on The Bid.
Tom Donilon: Thanks.
Philipp Hildebrand: It's great to be here again. Let's do it. Let's do it again next year, Tom.
Oscar Pulido: Let's make it an annual thing!
Philipp Hildebrand: Thank you.
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