In a special Sunday edition of Signal, we take stock of the geopolitical situation halfway through one of the most tumultuous years in recent memory. Russia’s invasion of Ukraine boosted Euro-Atlantic unity but deepened fault lines between the “West” and powerful emerging markets. A global food crisis still looms, and later this year we’ll see pivotal and extremely contentious elections in Brazil and the United States.

If the last six months are any indication, you’ll want to buckle up for the second half of the year.

-The Signal team

Resilience in an era of crisis

Willis Sparks

We live in an era of emergency. Since 2008, we’ve seen a global financial crisis, a sovereign debt crisis in Europe, and a wave of unrest that sparked political turmoil across North Africa and the Middle East. Civil wars in Syria and Libya helped trigger a migrant crisis that upended European politics. Then came Britain’s exit from the EU, the surprise election of a US president who upended the most basic assumptions about America’s role in the post-war world, and a political crisis in the wake of his defeat. Next came a global pandemic that has killed millions and continues to inflict human, economic, and political damage in every region of the world. Now we have Russia’s war on Ukraine, millions more refugees, and a global food emergency that has only just begun. All of that has happened in the past 14 years.

Given all that, it’s obvious that deeper investment is needed in resilience at every level of government, commerce, and society. In a world of shocks, we need good shock absorbers. Political and business leaders now face a basic choice. They can build networks of trade and political alliances with only like-minded partners – those with similar political systems, cultures, or overlapping interests – to ensure competitors and potential enemies can’t gain strategic advantages by exploiting weaknesses like monopolies on needed resources or supply-chain vulnerabilities. Or they can diversify their partnerships to build relationships where they make the most sense for economic value and the common good. It’s possible that governments will now use sanctions, tariffs, export bans, subsidies, and other forms of protectionism as everyday weapons to build resilience by enhancing security. Others will continue to seek resilience through a broader diversification of their partnerships.

This choice will be most obvious in relations between China and the West. Will the US and EU begin to treat China primarily as a political and economic opportunity or mainly as a security risk? Will China seek a more confrontational role toward the West and the international institutions where it has outsized power, or will it continue to define its security through the dynamism of its global trade and investment relationships?

These are the questions most likely to determine how well the global economy and current international system absorb the next generation of shocks.

The Graphic Truth

Beatrice Catena

Prices at the pump are soaring. Since Russia’s invasion of Ukraine, much of the world has been affected by the economic impact of sanctions, higher inflation, constrained supply, and overall uncertainty. In the G20 economies, consumers tend to complain most about the price of unleaded gas, which is affecting their ability to get around town and go on holiday. We look at how far north the G20’s gas prices have been driven.

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Big bad bear market

Carlos Santamaria

If you're an American worker with a 401(k), you're probably worried about being in the claws of a certain furry animal everyone seems to be talking about these days.

We're referring to a bear market, a Wall Street term for when the value of stock indices like the Dow Jones Industrial or the S&P 500 fall under 20% or more from a recent peak for a sustained period of time. Since bears hibernate, it’s investor-speak for a market in retreat.


On June 13, the S&P 500 officially entered bear market territory — with big implications for both investors and people who are indirect participants in the stock market through their 401(k), America's most popular company-sponsored retirement account. Simply put, since your 401(k) is likely invested in stocks, the longer the current slump lasts, the less money you'll have for retirement.

But that's only true if the bear market is still ongoing when you retire.

In other words, if you can afford to wait it out, odds are that the bear will eventually be followed by a bull (market) — aka a cycle of expansion — once the current economic turmoil subsides. Still, you might have a problem if you're a baby boomer with only a few years left to reach retirement age, in which case you'll have to crunch the numbers to decide whether it's best to cash out now — with less money, and pay taxes on what you withdraw — or pin your hopes on a swift recovery.

The thing is, no one knows how long bear markets last. The average historical duration is about a year, but in the early 1970s the bear stayed in its cave for almost two years, the S&P 500 lost half its value, and the US economy took a whopping 69 months to completely recover.

During the 2007-2008 Great Recession, the S&P 500 decline was even sharper (57%) and the market only recovered after 49 months.

Will the bear be followed by an even scarier recession? Maybe, but it's not guaranteed.

One key difference between the current US bear market and previous ones that preceded recessions is that unemployment is still very low at 3.6%. When Americans start losing their jobs at a higher rate, though, that's likely a sign that a recession is on the way.

What’s more, with the Fed getting tough on interest rates to tame sky-high inflation, it’s certainly possible that the US economy won’t hit the Goldilocks “soft landing” of bringing inflation down to about 2% while avoiding a recession (two consecutive quarters of negative GDP growth).

Regardless, “making any prediction is unusually fraught” now due to an unprecedented set of shocks, including COVID and the war in Ukraine, says Robert Kahn, Eurasia Group's director of Global Macro-Geoeconomics.

Still, he adds, a recession seems more likely than not. It'll be painful, but not necessarily a catastrophe.

“Recessions can be moderate in tone,” Kahn explains. And whether or not we get one, “we’re going to have tremendous uncertainty heading into this slowdown period about how that plays out.”

What We’re Watching: US and China's rocky marriage and India’s unlikely success

China-US: Bad politics, good economics

President Joe Biden is a very different president than his predecessor, Donald Trump. But on some foreign policy issues – notably managing relations with China – the two are kindred spirits. US-China relations crashed under Trump, and Biden has kept the relationship on a mostly combative footing, leaving Trump-era tariffs on some Chinese goods in place. Still, while the White House talks tough about isolating China geopolitically, speculation of a US-China “decoupling” is misplaced. Beijing and Washington need each other because their economies are closely intertwined. The US is China’s biggest trading partner, with Americans importing a whopping $541.5 billion worth of Chinese imports in 2021. Even in 2020 – a slower trading year amid the pandemic – China and the US traded $559.2 billion worth of goods. What’s more, two-way foreign direct investment, which is more resistant to economic shocks, has ballooned in recent years (Chinese FDI in the US increased 61% between 2015 and 2020). The resilience of the bilateral economic relationship is also reflected in the fact that China is the third-largest export market for American goods (behind Mexico and Canada). Support for a tough-on-China stance gets rare bipartisan support in Washington these days, so political ties between Beijing and Washington will likely remain rocky. Still, with their economic fortunes so closely linked, China and the US are in this marriage for the long haul.


How is India doing so well?

On the surface, India seems to be having a moment. With record-breaking monthly exports and a post-pandemic bounce-back of 8.7% GDP growth pushing the size of its economy to $3.3 trillion, Prime Minister Narendra Modi seems well on his way to meeting his goal of making the country a $5 trillion economy before long. Meanwhile, both Russia and the West are courting Delhi as a key ally these days. But beneath the surface, not all is well. Despite Modi’s ambitious economic reforms, inequality remains stubbornly high, and the war in Ukraine has worsened inflation. Unemployment, meanwhile, is at 7.8%. In a country with 360 million people under age 15, that’s a big long-term problem. Meanwhile, Modi’s move to ban wheat exports has angered its Western partners, while the anti-Muslim bent of Modi’s ruling BJP party has antagonized Delhi’s Gulf partners. And of course relations with China, the other billion-strong Asian heavyweight, are strained. Modi looks secure at home, with no real opposition and a compliant media, but things aren’t getting easier for the world’s most populous democracy.

​Podcast: Could today’s crisis lead to future growth?

If you’re peeking out from under the duvet, wondering how to make it to 2023, be sure to listen up. In our latest “Living Beyond Borders” podcast from Citi Private Bank and GZERO Media, we examine the global risks setting the world on edge at the halfway point of 2022.

New COVID strains, supply chain issues, Russia’s war in Ukraine, climate change, soaring inflation, geopolitical decouplings — these are just a handful of the bubbling crises roiling the markets and the international order.

To delve into what’s happening in the markets and the future of financial growth and globalization, Eurasia Group’s Managing Director for Climate and Sustainability Shari Friedman speaks with David Bailin, chief investment officer and global head of investments at Citi Global Wealth, and Ian Bremmer, president of Eurasia Group and GZERO Media. Listen to their discussion here.

Hard Numbers: Global malnutrition alert, Europeans’ bleak view of economy, South Korea’s export crunch, Xi’s confidence

Gabrielle Debinski

8 million: Global food prices have risen amid the war in Ukraine, but it is particularly bad for emerging-market economies. UNICEF now says that up to 8 million children under the age of 5 could die from severe malnutrition in the coming months. The organization listed nearly two dozen “high risk” countries and urged developed states to step up and help.


-23.6: European confidence in the economy is going from bad to worse. The EU’s consumer confidence indicator for the eurozone plunged to -23.6 this month, the lowest it’s been since the peak of the pandemic in April 2020. Fears are mounting that the continent will soon fall into a recession as Russia tightens its grip on gas exports.

13: South Korean exports in the first 10 days of this month dropped 13% from the same period in 2021, a dramatic change from earlier this year when the country experienced an export boom amid the global post-pandemic recovery. The shift highlights the ongoing challenge for export-reliant economies amid the global inflation storm.

5.5: China’s economy has been pummeled by Beijing’s strict zero-COVID policy and a weakening housing market. But President Xi Jinping says his country is still on track to meet its 5.5% GDP growth goal this year. Economists, however, are skeptical and suggest it will be closer to 4%.

This edition of Signal was written by Beatrice Catena, Gabrielle Debinski, Alex Kliment, Willis Sparks, and Carlos Santamaria. Edited by Tracy Moran. Graphic by Ari Winkleman, art by Paige Fusco.

Today, in a special edition of Signal, we look at how water scarcity is driving both conflict and progress. In the end, is the glass half empty or half full?

This edition is part of the “Living Beyond Borders” series presented by GZERO and Citi Private Bank.

Thank you for reading. Please tell your friends to subscribe here.

- The Signal team

An increasingly thirsty planet

A boy drinks from a water pump in a village outside Sanaa, Yemen.

REUTERS/Khaled Abdullah

The amount of water on Earth has been more or less the same for the past 4.5 billion years. But today, a growing number of the world’s people don’t have access to enough of it. In fact, nearly half of the world's population lives in places that face water scarcity for at least one month every year. And more than 1.2 billion people lack regular access to clean water altogether.

For many of them, the situation is getting worse by the day, as climate change causes more frequent droughts or conflicts prevent people from getting to freshwater sources. The lack of access to clean water for drinking, cooking, and crops can cause illness, starvation, and death.

Small wonder, then, that water scarcity is one factor behind some of the world’s most intractable conflicts: Israel-Palestine, India-Pakistan, and now Russia-Ukraine.

The desperate search for water also has millions on the move. The UN warns that water scarcity could force some 700 million people from their homes in the coming years, in mass migrations that will test governments, humanitarian organizations, and societies alike.

But it’s not all parched earth, thirst, and conflict. Water scarcity can also give rise to spectacular practical and technological innovations, as the examples of water management in the arid landscapes of Israel, Nevada, and South Africa show.

In this special edition of Signal, we’ll look at how the world is coping with water scarcity and what’s at stake for an increasingly thirsty planet.

What We’re Watching: Water wars vs. cooperation

Gabrielle Debinski

Water wars?

Hundreds of millions of both Indians and Pakistanis depend on water from the Indus River for drinking, farming, and hydropower. The Indus Waters Treaty, signed by India’s prime minister and Pakistan’s president in 1960, guarantees how water from the river and its tributaries will be shared. This was put at risk in February 2019, when a suicide car bomb killed more than 40 Indian soldiers in the Indian-controlled sector of Kashmir. India’s transport minister responded with plans to “stop our share of water which used to flow to Pakistan.” The Pakistani government then warned it would treat any stoppage of water as an “act of war.” A treaty loses its values if one side decides not to honor it. Though tensions cooled in this case, the risk of a water war remains, because it’s simply too dangerous for these nuclear-armed and bitter rivals to fight a war with conventional weapons, and water will only become a more precious resource in coming years. Global warming could shrink the Himalayan glaciers that feed the river by more than a third in coming decades and make rainfall patterns more erratic, even as Indian and Pakistan water demand increases with population growth.


India and Pakistan are not the only rivals to successfully share water despite bitter differences on other questions. The five former Soviet Republics in Central Asia have not fought over access to the Aral Sea. Jordan and Israel haven’t waged war over the waters of the Jordan River. Threats over access to the Nile have not yet provoked war among Ethiopia, Sudan, and Egypt. A dispute over the Mekong River between China and its Southeast Asian neighbors has generated tensions but not widespread violence. Turkey and Armenia, neighbors with no diplomatic relations who have argued for decades over charges of genocide, have continued to share water from the Arpacay River, which forms the border between them. The two countries continued to honor the Soviet-era treaty that set water-use terms even while the two have fought on opposing sides of a war in 2020.

But successfully managed disputes of the past don’t guarantee a peaceful future, so these and other potential water-based confrontations are worth watching.

Can water cooperation bring peace to the Middle East?

Water scarcity is one of the biggest crises emanating from climate change. If current trends continue, the UN warns that 5 billion people — more than two-thirds of the global population — could be living in areas grappling with extreme water scarcity by 2050. Long dealing with irregular rainfall, increasingly arid conditions, and a growing population, Israel has emerged as a global leader in clean water solutions. Israel, a tech hub, recognized early the importance of treating wastewater to meet growing domestic needs and to leverage it as a tool for international cooperation. In 2000, Israel, which straddles the Sea of Galilee and the extremely salty (and undrinkable) Dead Sea, revamped its water management system by building a slew of desalination plants. It has also revolutionized water recycling, treating wastewater effluent to make the liquid ready for human consumption and irrigation. The country currently recycles about 86% of water, using much of it for agricultural purposes in the arid Negev Desert.

This innovation has also presented opportunities for “drought diplomacy.” Last year, Israel and Jordan, who have long enjoyed a frosty peace, outlined a water-for-energy deal that will see Amman exchange solar energy capacity for much-needed desalinated water. Meanwhile, Israel has also partnered with Arab states, Egypt, and Bahrain on water-management approaches and equipment to mitigate shortages at home.

Innovative solutions to water scarcity problems can be found globally. The US state of Nevada recently inked a deal with California’s government, whereby Nevada will dole out cash to help the Golden State develop new water treatment facilities in exchange for increased access to Lake Mead. Similarly, drought-stricken South Africa, once facing Day Zero – whereby taps were slated to be turned off in major cities like Cape Town because of water shortages – has successfully found a slate of tech-based solutions, particularly for the robust agriculture sector.

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Join us each week on Thursday at 11:30 am EDT for a conversation with senior investment professionals and external thought leaders on timely market events and ask your most pressing questions.

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The Graphic Truth

Gabrielle Debinski

In many low- and middle-income countries, the availability of safe, drinkable water remains scarce. Though access has improved significantly in many places over the past two decades — by 152% in Afghanistan, for instance — the very low baseline means that still only 28% of that population has access to high-quality drinking water. Meanwhile, countries like the Central African Republic, Zambia, Nepal, and Pakistan saw their access reduced over the past two decades. Here’s a snapshot of the relative change in access to safe drinking water around the world from 2000 to 2020.

​Podcast: Saving the world’s water supply

In our latest “Living Beyond Borders” podcast from Citi Private Bank and GZERO Media, we examine the global risks related to the depletion of a vital ingredient needed for everything in life: water.

Severe weather events and climate change are causing an urgent water crisis. By changing our natural world, through both big and small disasters, water scarcity is disastrously on the rise worldwide.

To delve into this immediate threat, Eurasia Group’s Director of Energy, Climate & Resources Mikaela McQuade talks to Franck Gbaguidi, senior analyst of energy, climate & resources at Eurasia Group, and Harlin Singh, global head of sustainable investing at Citi Global Wealth.

Listen to their discussion here.

Hard Numbers: India’s record drought, privatized waterways, dripping wet smartphones, big oil meets little water

Carlos Santamaria

669: Already sweltering amid a heatwave, the capital of India now faces water shortages with the level at Delhi's biggest reservoir dropping to 669 feet, a record low. The city’s government, run by the anti-corruption AAP party, accuses the BJP-ruled Haryana state of deliberately withholding water from the Yamuna River, which it denies.


454 billion: Private corporations control 454 billion cubic meters of water around the world, about 5% of the global supply. This water-grabbing is a major problem in Africa, where China, India, Saudi Arabia, and the UAE are investing big in water-intensive agriculture projects.

3,190: That smartphone in your hand is soaking wet – maybe (hopefully!) not literally, but it took 3,190 gallons of water to manufacture it. The production of chips and semiconductors – which are what make smartphones smart – is one of the world’s most water-intensive industries.

15.5 billion: Global fossil fuel, electric, and mining companies stand to lose up to $15.5 billion in the coming years due to water scarcity, according to a new report. Projects at high risk include the Keystone oil pipeline in Canada, the Pascua-Lama gold mine on the Chile-Argentina border, the Carmichael coal mine in Australia, and the Oyster Creek nuclear facility in the US.

This edition of Signal was written by Gabrielle Debinski, Alex Kliment, Carlos Santamaria, and Willis Sparks. Edited by Tracy Moran. Graphic by Ari Winkleman. Art by Luisa Vieira.

In this special edition of Signal, we look at how the global economy is really doing, the inflationary pressures from Russia’s war in Ukraine, how developing countries are bearing the brunt, and how fried chicken is helping the Japanese yen. This edition is part of the “Living Beyond Borders” series, presented by GZERO and Citi Private Bank.

Thank you for reading. Please tell your friends to subscribe here.

- The Signal team

Read NowShow less

Today, we’ll bring you new angles on Russia’s invasion of Ukraine, track the war’s impact on election-year politics in France, Hungary, Brazil, and the US, and walk to the brink with Pakistan’s Imran Khan.

We’ve also got your Hump Day recs! Thank you very much for reading Signal. Please tell your friends to sign up here.

Willis Sparks

What We're Watching: Ukraine war bulletin, Hong Kong vs COVID, Pakistan's PM on the ropes

Carlos Santamaria

Oil ban, Churchill, Polish MiGs, Putin's fixes

Biden bans Russian oil, alone. The US president banned imports of Russian oil on Tuesday in a bid to increase economic pressure on the Kremlin. It’s not clear how effective this will be, given that the US accounts for less than 10% of Russia’s daily exports. Meanwhile, Europe, which slurps up almost half of those exports, has refused to join the oil ban for now, and there is virtually no chance of major customers like China or India turning down Russian crude. Meanwhile, Biden’s move carries political risks at home, as average national gas prices have already hit a record high of $4.17 per gallon. Taking more oil off the market could push prices even higher. As we head toward the midterms, how much economic pain will Americans take on behalf of Ukraine?


Zelensky plays Churchill. In a video address to a packed House of Commons on Tuesday, Ukraine’s embattled President Volodymyr Zelensky invoked two famous English wordsmiths — William Shakespeare and Winston Churchill — in an impassioned plea for more sanctions against Russia and the imposition of a no-fly zone over Ukraine. “We will fight in the forests, in the fields, on the shores, in the streets,” he said, adapting Churchill’s Dunkirk speech to his own country’s struggle against the Russian war machine. Zelensky received a standing ovation, but there is still little appetite among Western countries to risk direct combat with Russia by enforcing a no-fly zone.

Poland pledges jets to Ukraine … sort of. Warsaw has been firm that it won't transfer any of its MiG-29 jets to Ukraine directly, but it pledged on Tuesday to put them all at Washington’s disposal for onward transfer to Kyiv if America so chooses. US officials said, however, that the offer was likely untenable, citing logistical concerns and questioning the rationale. Ukrainians want the Polish MiGs because they are based on Soviet-era planes that Ukrainian pilots are familiar with and will thus require minimal training.

Putin tries to blunt the pain. With sanctions increasing and Western firms exiting from Russia, Putin on Tuesday signed a package of economic support measures for Russian people and businesses. The package boosts benefits for pensioners, slashes red tape for businesses, and eases the import and purchase of pharmaceuticals. Over the past two weeks, the Russian ruble has lost nearly a third of its value against the dollar amid the worst economic crisis Russians have faced in a generation.

Pakistani PM in trouble

Pakistan’s embattled Prime Minister Imran Khan will soon face a no-confidence vote. A motion was filed on Tuesday by 100 opposition lawmakers who blame him for the country’s ailing economy and high inflation. After the motion was accepted, opposition supporters took to the streets of the capital, Islamabad, and other cities to demand Khan step down within 24 hours. Khan, for his part, remained defiant, insisting that he'll survive all attempts to unseat him — as he did exactly one year ago. To stay in power, Khan needs 172 votes in the 342-seat assembly, where the ruling Tehreek-e-Insaf Party and its allies have a slim majority. However, eight members of Khan's party have threatened to withdraw their support, so the PM is on very shaky ground. The no-confidence vote could take weeks to schedule. Meanwhile, all eyes will be on Pakistan’s powerful army, which officially says it stays out of politics but has a long history of doing the opposite in the nuclear-armed nation.

Hong Kong’s COVID apocalypse

Two years in, Hong Kong now has the world’s highest daily per capita death rate from the COVID-19 virus. The 7.5-million-strong city-state has closely followed China’s zero-COVID policy and shunned mRNA vaccines, which means few people were exposed to the virus and developed antibodies before the latest variant hit. The COVID crisis has already delayed Hong Kong’s chief executive “election” by six weeks. Carrie Lam — the current leader, who has yet to say whether she’ll run for reelection — initially wanted to test the entire population, but powerful business leaders pushed back amid fears of a total lockdown. Hong Kong must now decide whether to relax its zero-COVID approach despite rising deaths, or risk more businesses relocating to its longtime competitor Singapore.

The Graphic Truth

Carlos Santamaria

The Biden administration on Tuesday banned US oil imports from Russia to punish its invasion of Ukraine. Although the US — the world's second-largest producer of crude — is a net exporter of black gold and far less dependent on Russian oil than European countries, the move will likely still hurt Americans via higher gas prices until other US oil suppliers ramp up production to fill the void. We take a look at where the US buys its crude from.

Putin invades the year’s big elections

Willis Sparks

Russia’s invasion of Ukraine is shifting politics inside every major country in the world. Here are four countries holding big elections this year — with details on how Vladimir Putin’s war is making a difference in Hungary, France, Brazil, and the United States.


Hungary — parliamentary elections on April 3

No EU head of government has friendlier ties with Putin than Hungary’s Prime Minister Viktor Orbán. But Russia’s invasion, says Mujtaba Rahman, head of Eurasia Group’s Europe desk, “is politically problematic for Orbán because it rekindles memories of the 1956 Soviet invasion for both pro- and anti-Orbán voters.” On the eve of what’s expected to be a close election, Hungary’s prime minister has had to strike a delicate balance on the war.

On the one hand, despite Hungary’s energy dependence on Russia, Orbán decided quickly after the invasion to back EU sanctions on Russia. On the other, fear of losing crucial pro-Russia voters to far-right election rivals encouraged him to oppose some EU plans, such as shipments of European weapons to Ukraine’s army.

In the end, Orbán’s dexterity in managing this crisis may boost his party’s chances next month.

France — presidential election on April 10 and April 24

Putin has done France’s President Emmanuel Macron an enormous favor. By starting a war during France’s six-month presidency of the Council of the European Union, he’s handed Macron the chance to play crucial European statesman rather than presidential candidate urgently hustling for votes.

The war has also sucked oxygen from the campaign of his rival, far-right favorite Marine Le Pen, who has “an embarrassing history of admiration for Vladimir Putin,” according to Rahman. In fact, her party courted controversy by borrowing money from a Russian-owned bank in 2014, when the National Rally Party was opposing Western sanctions against Russia over its seizure of Crimea.

Macron has now become a strong favorite to win a second-round victory on April 24.

Brazil — general election on October 2

Further afield, the war in Ukraine creates risks for Brazil’s President Jair Bolsonaro. Problem one is that he made a considerable show of visiting Putin in Moscow just days before the invasion to express “solidarity with Russia.” For some Brazilian voters, that’s an embarrassing reminder of Bolsonaro’s own controversial military background and hyper-macho political rhetoric. After the invasion, the president insisted that Brazil would remain “neutral,” alienating some voters on both sides.

But the Russian invasion’s biggest impact on Brazilian politics this year will be economic. In presidential polls, Bolsonaro now trails his main rival, former president Luis Inácio Lula da Silva, in part because high inflation (10% in 2021) has taken a toll on the purchasing power of millions of voters. A lasting global inflation shock, exacerbated by the Russia-Ukraine war, will undermine his chances of catching up.

US — midterm elections on November 6 and the 2024 presidential election

A recent poll found that 74% of American respondents said Russia’s invasion was unjustified, and 76% expressed a negative personal view of Vladimir Putin. But this is a question on which Democrats are far more united than Republicans, casting a shadow over GOP expectations of victory in November.

That vote is still eight months away, and President Biden’s relative unpopularity probably will deliver Congress to the GOP. By summer, Russia’s role in high gasoline prices will matter less than it does today to frustrated consumers.

But what about the 2024 presidential election? Just 3% of that poll’s respondents who voted for Donald Trump in 2020 were willing to say Biden is “doing a better job leading his country” than Putin is. If Trump runs again, his continuing public admiration for Putin — the former president called the Ukraine invasion “genius” — could cost him considerable support. After all, 58% of Republican voters back Ukraine at the moment.

Even if Trump settles for the role of GOP kingmaker, his support of Putin could divide both Republican leaders and voters — and alienate some GOP-leaning independents. Especially in the highly likely event that Russia features prominently in election-year headlines.

US ban on Russian oil imports not coordinated with NATO allies

What are the ramifications of the US ban on Russian oil imports? For Ian Bremmer, it’s not clear yet, but it could make Western allies look weaker because the US didn’t coordinate with them.

Any surprises on Russia’s list of unfriendly countries? Monaco and Switzerland, where Russians do a lot of business.

Is Xi Jinping facing a hard wartime choice for China? Not in his view. Ian believes that the Chinese want to avoid another Cold War, but if it happens, it’s very clear whose side they'll be on. Hint: not Biden’s.

Watch this week’s World In 60 Secondshere.

Hard Numbers: Golden Arches close in Russia, Kremlin lists its enemies, nickel blows up, North Korean nuclear program stirs

Tracy Moran

850: McDonalds will temporarily close its 850 restaurants in Russia in response to Putin’s invasion of Ukraine. The 62,000 people it employs there will, however, stay on payroll. The opening of the first McDonalds in the Soviet Union, in 1990, was a historic and optimistic moment during the Cold War.


48: On Tuesday, the Kremlin published a list of 48 countries and territories deemed “unfriendly” to Russia. The US, EU, and, oddly, Taiwan are all on it. A recent Kremlin decree permits Russians to repay any foreign currency debts to these “unfriendlies” in rubles. However, the decree does not oblige creditors to accept the nearly worthless Russian currency.

100,000: The London Metal Exchange suspended trading of nickel on Tuesday after prices more than doubled to over $100,000 per metric ton. Russia is the world’s third-largest nickel producer, and the war in Ukraine is fueling concern about the supply of the metal, which is used to make stainless steel and EV batteries.

4: Roughly four years since North Korea officially shuttered its Punggye-ri nuclear testing site, experts have detected “very early signs of activity” there. Analysts believe the Hermit Kingdom may be gearing up to resume nuclear and long-range missile testing. Not now, North Korea!

Humpday recommendations: Odessa, posh French real estate biz, Polish vodka

Read: Odessa: Genius and Death in a City of Dreams — by Charles King. Here is the tragic and triumphant biography of one of the world’s most fascinating cities. It’s a place where history, poetry, commerce, humor, and violence have collided for centuries. Sadly, this great place is making news this week for all the wrong reasons. — Willis

Watch: The Parisian Agency — Comment dit-on “super posh”? If you dream of buying a luxury home with a stunning view of the Eiffel Tower or Notre Dame, you need to check out The Parisian Agency. This Netflix series (Season 2 just dropped) follows a family-run real estate business that sells increasingly posh digs in the French capital to an increasingly wealthy clientele. You’ll come away practicing your pronunciation of “luxe” and “tip-top” while salivating over decors ranging from Versailles-style opulence to Creole-chic cabins. — Tracy

Drink: Zubrowka — Now that many Western retailers are boycotting Russian vodka, and some US states are even banning it, try this Polish brand, my favorite. It’s lightly flavored with a blade of bison grass — which it’s named after — in each bottle. Best served neat or on the rocks, but it also goes well with a splash of apple juice. — Carlos

Words of wisdom

“Why bother remembering a past that cannot be made into a present?”

— Søren Kierkegaard

This edition of Signal was written by Willis Sparks, Carlos Santamaria and Alex Kliment. Edited by Tracy Moran. Graphic by Paige Fusco. Spiritual counsel from Gabrielle Debinski and Frozen stars singing for Ukraine.

In this special edition of Signal, we'll look at how to transform the Great Resignation into the Great Return. We track the future of work and workplace culture, a cautionary tale from Germany, and the 1.1 million women in the US whom employers need to woo back into the workforce. This edition is part of the “Living Beyond Borders” series, presented by GZERO and Citi Private Bank.

Thank you for reading — please tell your friends to subscribe here.

- The Signal team

Getting from the Great Resignation to the Great Return

Carlos Santamaria

It’s a job seeker’s market.

Over 47 million Americans voluntarily left their jobs last year, almost 13% more than in 2019. That was before the pandemic, which has upended the relationship between workers and employers as much as it has disrupted all our lives.


It’s not just a US phenomenon. High turnover rates extend across comparable OECD economies. Nearly a quarter of Brits and a third of Australians plan on switching jobs in the next several months.

The picture is somewhat different in the developing world. Hundreds of millions of people who lost their jobs during the pandemic — mostly in the informal economy — still can't find work because COVID obliterated entire industries such as tourism. Chinese companies, meanwhile, are struggling to retain young employees who are fed up with low pay and long hours.

The Great Resignation is thus a global problem, in varying ways, as will be the Great Return. With the omicron scare easing in the West, many companies there have begun trying to figure out how to woo millions of now-remote (or recently resigned) employees back to the office — precisely at a time when it’s gotten harder to find and retain talent.

Here are three ways employers might have success.

The most obvious fix is to raise salaries. That’s already happening for some. US wages grew on average 4.5% last year, the highest annual rate in almost 40 years. But with US inflation currently at 7.5%, that annual bump is actually a pay cut in real terms, and higher salaries won’t entice everyone.

What’s more, upward pressure on salaries is likely to contribute to even higher inflation.

Another option is additional benefits for employees, especially those who feel more productive working from home and see little upside to returning to the office. Many companies have already adopted permanent hybrid schedules, with workers coming in twice a week.

But some CEOs want everyone in the office five days a week. They just don't get it, US organizational psychologist Adam Grant toldGZERO World. Grant argues that worker productivity “is about the purpose and the process that you bring to your job (...) not about the place you happen to be doing it in.”

Apart from going hybrid, governments are increasingly backing experiments such as four-day workweeks to deliver more work-life balance. This approach has already been tested — with varying degrees of success — in Iceland, Spain, and it will soon be trialed in England.

Finally, companies that struggle to find talent where they’re based might opt to find it elsewhere, including overseas. That means more people working remotely from other US states or even abroad, which could have big political implications.

Imagine all those American manufacturing jobs that went to Mexico thanks to NAFTA, or to China after Beijing joined the WTO. This time, though, US labor outsourcing would hit the laptop class — the one that has benefited the most from globalization and a digital-first world.

As Eurasia Group CCO Alex Kazan points out on the Living Beyond Borders podcast, a post-pandemic hiring spree of remote labor from low-income countries could be politically toxic amid the surge of nationalism and protectionism we've seen in places around the world. But if done right, it could also be viewed as an expansion of a flexible gig economy that can spur greater inclusion in a global workforce.

“We're still a long way away from a global labor pool, but certainly the normalization and acceptance of technologies that enable remote work make that a more plausible future,” Kazan says.

Meanwhile, WFH is not going away. If companies in advanced economies want to lure their employees back to the office, most firms will need to reshape workplace culture to embrace remote working and hybrid models.

The Graphic Truth

The pandemic has enabled some professionals to work remotely from home — or anywhere. Digital nomads wander the world in search of the perfect place to hunker down with their laptops, prompting some countries to offer them special visas. Where should you go if you can work from anywhere?

CIO Strategy Webcast Series

Citi Private Bank

Join us each week on Thursday at 11:30am EST for a conversation with senior investment professionals and external thought leaders on timely market events and ask your most pressing questions.

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What We're Watching: Gorillas in the gig economy & work struggles for the "sandwich generation"

Gabrielle Debinski

Gorilla unicorn to gig goat: a cautionary tale. Last year, a new Berlin-based food delivery company called Gorillas was going bananas. With its minimal branding, pro-biker vibes, and good service, the company became the first German tech “unicorn,” meaning it raised enough capital to be valued at more than a $1 billion dollars. But then the wheels came off as its gig workers, angry about late payments and poor working conditions, tried to organize in protest, and hundreds were fired. The company continues to function, but it recently set up its holding company in the Netherlands. The tale of Gorillas is both an inspiring and cautionary one. Over the past 10 years, gig work, facilitated by new technology platforms — think Uber, Seamless, Fiver, etc — has grown rapidly. Close to 30 million Europeans secure work through digital platforms, and the EU says that could rise to 43 million by 2025. In the US, one in 10 American adults relied primarily on “on demand” work as of 2020. This has vastly expanded opportunities for employment and broadened companies’ ability to source talent and skills on demand. But that flexibility comes at a cost for employees, who lack the workplace protections and benefits normally associated with full- or part-time work. Policymakers are still trying to balance the pros of flexibility with the cons of “precarity.” The EU is leading the legislative charge on this, with a sweeping set of reforms that would force gig platforms to classify their workers as employees and give them more bargaining rights. Supporters say it will boost the gig economy to a fairer footing, while critics worry it will make them less efficient and more expensive.


Is the “sandwich generation” being frozen out? The pandemic has been difficult for people of all demographics, but the costs – and disruptions – have been particularly severe for the “sandwich generation.” Those include people in their 30s, 40s, and early 50s who are trying to balance careers along with caregiving responsibilities for young children and parents. This burden is disproportionately felt by women, who make up 60% of this demographic in the US, according to Pew. Anecdotal evidence in the US, UK, and parts of the European Union, suggests that the pandemic has forced these already-stretched individuals to give up jobs and shed work hours in order to take on the added burden of helping with home-schooling and elder-care responsibilities. There are signs that many of these women have not made their way back into the labor force. While men have mostly recouped their pandemic job losses in the US, women are lagging far behind: there were at least 1 million fewer women in the workforce in January 2022 than two years earlier, according to the Bureau of Labor Statistics. Some experts warn that things are still taxing for older members of the “sandwich generation” because young adults, whose education and work life have been disrupted for the past two years, are becoming more dependent on their parents for housing and other support. Many businesses are ramping up “return-to-work” programs to help lure women back to work after long absences. But these programs are often limited in scope, and being out of work for extended periods can make it more difficult to secure desirable roles.

Hard Numbers: India needs non-agri investment, American women lag behind, WFH forever, Iranian job woes

Gabrielle Debinski

90: India will need to create 90 million new non-agricultural jobs by 2030 to reach its economic potential, according to McKinsey. The pandemic drove tens of millions out of cities to work in farming back in their villages, but economists now say that the government needs to boost urban production to maximize growth.


63: The US economy has shed millions of jobs since March 2020, with female workers accounting for 63% of the lost gigs, according to the National Women’s Law Center.

91: A whopping 91% of Iranians surveyed say they feel negative about their local job markets. The Iranian labor market continues to be strangled by tough economic sanctions, but if a nuclear deal is reached in the near term, employment opportunities and industry will expand significantly, experts say.

59: Two years into the pandemic, 59% of Americans who can work from home say they are doing so all or most of the time. Before the pandemic, 23% said they worked from home frequently.

Podcast: Living Beyond Borders 

GZERO Media and Citi Private Bank teamed up to produce a special-edition podcast series called “Living Beyond Borders.” The segments focus on everything from pandemic lessons and what to expect at work in 2022 to China’s changing trade priorities and the importance of biodiversity to the global economy.

Listen to the series here.

This edition of Signal was written by Gabrielle Debinski, Alex Kliment, and Carlos Santamaria. Edited by Tracy Moran. Graphic by Ari Winkleman, art by Annie Gugliotta.

In this special edition of Signal, we'll look at why there will be no US-China Cold War (yet), track declining population growth in both countries, and fight business culture wars over Xinjiang. This edition is part of the "Living Beyond Borders" series, presented by GZERO and Citi Private Bank.

Thank you for reading — while you're at it, please tell your friends to subscribe here.

— The Signalistas

The US and China are too busy to fight

Willis Sparks

At the dawn of the US civil rights movement, Atlanta mayors William Hartsfield and his successor Ivan Allen promoted Georgia’s capital as “the city too busy to hate.” Whatever the reality of race relations at the time, both men wanted Atlanta to avoid the confrontations plaguing other southern US cities, and to open their city as the commercial hub of the “new South.”

In recent decades, US and Chinese leaders have relied on a similar approach to relations between the two countries. The risk of conflict was obvious, given differences in their interests and political ideologies, but there was much money to be made and stability to be gained as long as they protected their mutually profitable business opportunities.

But over the past five years, US and Chinese words and deeds have taken on a harder edge. As US post-Cold War dominance of the international system has eroded, and as Xi Jinping has more explicitly offered China’s leadership as an alternative to the West’s global rule-setting, Washington and Beijing have seemed headed toward a digital-age Cold War. Former US President Donald Trump pushed for a more open confrontation between the two powers, and current President Joe Biden has done little to change course.

There is good news, however, for those who believe that a US-China Cold War would be catastrophic for both countries and the world. In reality, both countries are far too busy to transform rivalry into hate. But it isn’t just business opportunities that now preoccupy them. It’s also major domestic challenges and distractions, particularly for China, that demand something close to their full attention.


Troubles at home

One year into the job, Biden knows the success of his presidency will depend on helping to end the pandemic, revive the US economy, and deliver on more of his legislative promises. With midterm elections in November, his need to focus on these priorities is increasingly obvious. Fights with China won’t help, because they undermine investor confidence in the country’s immediate and longer-term future and distract from the issues his voters care more about.

Xi faces an even longer list of domestic problems. In a year in which he wants a smooth path toward a third term as China’s leader, and the indefinite extension of his power, he’s coping with both urgent and longer-term challenges for China.

First, China is days away from hosting the Beijing Winter Olympic Games in the middle of a public health emergency — and Xi is well aware that the credibility of his government’s COVID response is very much on the line. From the beginning of the pandemic, China has enforced a zero-COVID policy, imposing large-scale lockdowns in response to small numbers of infected people.

Now, with the Games about to begin, the much more transmissible omicron variant has appeared inside multiple Chinese cities, and more than 20 million people have been locked down in response. An added complication: it will be months before China can roll out an mRNA vaccine that’s more effective than currently available Chinese vaccines.

This problem arrives at a moment when China’s economy was already cooling off — and this slowdown creates a more urgent worry in China than a temporarily stalled economy in the US or Europe. China is still a middle-income country. To reach Western levels of prosperity, it needs growth above 6 percent for another generation, according to Eurasia Group estimates.

But in a world where factories’ production depends less heavily on cheap labor and more on robots, that’s a serious concern for China’s future. The country’s changing demographics — fewer workers and more retirees as birth rates remain low — compounds that problem.

Then there’s China’s debt problem. For decades, the state has boosted growth by encouraging Chinese lenders, some of them state-owned, to finance real estate and other speculative projects with little worry over the financial wisdom of each investment. When big companies have struggled to repay, the state has subsidized repayment to avoid a systemic financial crisis.

But when borrowers believe that government will prevent default, they take on even more risk, including by borrowing more from foreign lenders, creating a debt bubble. In recent years, China has tried to allow some companies to default and fail. But reform comes with risks that demand careful attention.

Bottom line: Biden and Xi have good political reasons to talk tough, and to challenge one another at the margins. But both leaders have bigger worries to manage, and the two countries still need strong economic ties to address their own problems.

The Graphic Truth

Gabrielle Debinski

For decades, the Chinese Communist Party was worried about overpopulation. In 1978 it told Chinese families they could only have one kid to contain the ballooning population size. But after years of restricting the number of births, China's population is now shrinking — fast. This demographic trend is a massive problem for China, currently vying to overtake the US as the world's largest economy. Meanwhile, the US population has also started to decline over the past decade. We compare their population growth rates from 1961-2020.

The expansion will endure: Seeking sustained returns

Citi Private Bank

The economic recovery and bull market are maturing, with moderate growth expected ahead. We believe portfolios should evolve to provide exposure to more defensive sectors, quality firms and dividend growth strategies. In Outlook 2022 we highlight asset classes and regions that may lead the way in 2022 and beyond.

You can click here to read the full report, learn more about key themes in the report, and view related videos.

What We’re Watching: COVID Olympics, US-China business dilemma, China and the US midterms

Gabrielle Debinski

COVID at the Games. The Beijing Winter Olympics, which begin on Friday, will be the most serious test to date of China's zero-COVID policy. President Xi Jinping wants to make a big international splash with the Games, as his predecessor did with the Beijing Summer Olympics in 2008. That'll be tough with stadiums only half-full with domestic spectators pre-screened by the Communist Party, and no foreign fans allowed to attend at all. To avoid an outbreak at the Olympic Village, China initially imposed strict testing and quarantine policies for everyone attending the Games. But it’s possible that the CCP is having at least some doubts about this policy's ability to contain the omicron variant: Only days out from the inauguration ceremony, authorities have relaxed testing and isolation guidelines, signaling a slight pivot in China's pandemic management strategy. Does this mean the Olympics will be the beginning of the end of zero COVID? China's economy — and the world's — would surely benefit from a transition to living with the virus. Beijing says it is developing its own mRNA vaccines to achieve this, but that could still be many months away.


Xinjiang business culture wars. The Beijing Winter Olympics will also pose a big test for multinational corporations that will try to attract business in China despite the CCP’s ongoing human rights violations. US firms will worry about American consumer boycotts if they source products from Xinjiang, where some Chinese manufacturers rely on Uyghur forced labor. (Elon Musk recently came under fire for opening a Tesla showroom in the region.) But if US corporations take a firm stand on Xinjiang and other politically-sensitive issues in China, they risk a similar backlash from Chinese consumers. Last year, a vocal online movement in China called for the boycott of Nike after the multinational corporation criticized abuses in Xinjiang. Indeed, the CCP is more game to stoke nationalist fervor at the expense of business opportunities than the US government, which is reluctant to support consumer-led boycotts that hurt US businesses. Now, American corporations will face a very tough choice between drawing the potential ire of the US public or nationalist Chinese consumers.

China enters US midterms campaign. Republicans and Democrats in the US Congress don’t agree on much these days, but they do find much common ground on China — specifically, the need to counter Beijing’s growing economic and diplomatic clout. This “tough-on-China'' competition will surely intensify in the lead-up to the November midterm elections. Last summer, the Senate passed a bill to augment the US’ tech capabilities and “global competitiveness” – for instance by producing more US-made semiconductors instead of relying on Chinese chips. Tellingly, the legislation explicitly refers to China as the "greatest geopolitical and geoeconomic threat" to US foreign policy. The House of Representatives, meanwhile, passed two separate research and development bills, with some Democrats saying the Senate bill was too focused on countering China. In the months ahead, expect Republicans to jump at the opportunity to cast the Democratic party — and President Biden — as weak on China. Senator Marco Rubio from Florida, who is up for re-election, has previously sent out campaign emails with the subject line "Dems <3 China.” This could prove to be a decisive electoral strategy considering that most Americans have a negative view of China, and support a more assertive stance towards its government.

Podcast: The US and China

This two-part instalment of Living Beyond Borders, a special podcast series from GZERO and Citi Private Bank, focuses on the relationship between the US and China. Moderated by Caitlin Dean, head of the Geostrategy Practice at Eurasia Group, the two episodes feature David Bailin; Chief Investment Officer and head of Investments for Citi Global Wealth; Steven Lo, co-head Citi Global Wealth for Asia-Pacific; and Ian Bremmer, President at Eurasia Group and GZERO Media. Watch part I (Tariffs, tutors, and tension) here and part II (Common prosperity, coal, and competitiveness) here.

Quiz: Nixon goes to China

Carlos Santamaria

February 21 is the 50th anniversary of Richard Nixon's historic visit to China, which began the normalization of US relations with the world's most populous Communist state — instantly shifting the Cold War balance of power. This bold move by a US president who had made his political reputation as an anti-Communist crusader shocked many at the time, but it helped set the stage for deeper ties between what are now the world's two most powerful nations and largest economies.

How well do you know the details of Nixon's week-long trip? Take our quiz to find out.


1. How did Nixon refer to National Security Adviser Henry Kissinger during his meeting with Mao?

A. A foreign policy genius

B. A ladies' man

C. A doctor of brains

2. The leader of which Asian country brokered Kissinger's secret 1971 visit to China that paved the way for Nixon's trip?

A. Yahya Khan, Pakistan

B. Indira Gandhi, India

C. Suharto, Indonesia

3. What did Nixon say while touring the Great Wall?

A. How long is it?

B. This is a great wall.

C. Who built it?

Hard Numbers: GDP wars, WTO rules in Beijing’s favor, Africans support Chinese engagement, China winning 5G battle

Gabrielle Debinski

5.9: China’s GDP could grow on average 5.9 percent per year until 2025, according to the Center for Economics and Business Research, which predicts that China will overtake the US as the world’s largest economy by the end of the decade. The Chinese economy was worth $18 trillion in 2021, compared to America’s $23 trillion.


645 million: Amid an ongoing trade war between the world’s top two economies, the World Trade Organization ruled last week that Beijing can slap $645 million worth of tariffs on US goods. A decade ago, the US placed tariffs on some Chinese products, including steel pipes and solar panels, saying that Beijing was giving unfair subsidies to state-owned companies.

59: The US has been trying to discredit China’s growing influence in Africa, but it’s not working: 59 percent of Africans view China’s economic and political clout favorably. Almost exactly the same number — 58 percent — feel the same about the US.

90: More than 90 countries have signed up to use 5G networks made by the Chinese telecom giant Huawei. Meanwhile, only eight nations have so far agreed to join the US ban on Huawei. Why? Many analysts say it’s because China offers way superior 5G infrastructure.

Answers

1. C — According to the now-declassified transcript of their conversation, when Mao asked Nixon about Kissinger's PhD, the US president responded that his national security adviser was a "doctor of brains." Mao was however also very interested in Kissinger's playboy reputation, which Nixon acknowledged and joked about.

2. A — Soon after taking office in early 1969, the Nixon administration put out feelers to China through Pakistan, whose dictator personally delivered a message for China’s PM Zhou Enlai to relay to Mao. Mao agreed to start a dialogue — under the condition that the US withdraw all its forces from Taiwan. When Zhou finally met Kissinger in Beijing, the Chinese kept their promise to the US of total secrecy.

3. B — On the fourth day of his visit, Nixon took a road trip outside Beijing to check out China's most famous monument. After admiring the centuries-old structure, he famously quipped to the American media: "I think that you would have to conclude that this is a great wall." (The original quote is much longer.)

This edition of Signal was written by Gabrielle Debinski, Carlos Santamaria, and Willis Sparks. Art by Jess Frampton, graphic by Ari Winkleman.

Welcome to this special edition of Signal, our first on a Sunday, in which we'll look ahead to what could make the world notrecover from COVID in 2022, track inflation globally, and look back to political stories we followed this year — and will continue watching next year. This edition is part of "Living Beyond Borders," presented by GZERO and Citi Private Bank.

Thank you for reading — while you're at it, please tell your friends to subscribe here.

Carlos Santamaria

Will we finally ditch COVID in 2022?

Carlos Santamaria

Many of us, at least in the advanced economies, thought the pandemic would be over sometime in 2021. Vaccines worked, and a lot of people got them. Restrictions were relaxed, and things started to return to normal. But then came the virus variants, which threw a wrench into hopes of a speedy recovery. What'll happen next year?

Here are three things that could threaten the global post-COVID comeback.


The first major problem is more COVID variants, and how countries react to them.

Everyone's panicking now about omicron, which so far seems to be more contagious and more overpowering to vaccines than previous variants. It also seems, at least for now, to be less deadly – though if it spreads widely that could still mean a lot of deaths. Travel bans are back. Lockdowns could follow. Vaccine mandates will likely expand.

All of this is starting to feel like the darkest days of 2020 all over again — though the vaccines are likely to prevent similarly high death rates.

And even after omicron passes, we don't know what the next letter in the Greek alphabet will do. It’s possible that omicron could spread widely enough that it becomes the final big wave of the pandemic. But with nearly half the world still unvaccinated — and clear evidence that the disease can infect even the vaccinated — it’s also possible that new variants will emerge that pose fresh threats to the vaccinated and the unvaccinated alike.

That will raise, yet again, the thorny political questions about lockdowns, border closures, mandates, and remote learning. But after two years of first lockdowns and then vaccination campaigns, followed by fitful returns to normalcy later imperiled by new variants, the political backlash against fresh restrictions is sure to be even higher. How do we deal with another year of this?

The second big problem, a result of the first, is that COVID-related economic disruptions will continue.

The pandemic messed up global supply chains, which are still struggling to keep up with high demand. Delivery delays, higher shipping costs, and shortages of just about everything have become a huge headache for consumers and for governments, which can do little to fix the problem.

Supply-chain disruptions are the main factor driving soaring inflation around the world. Rising prices will make leaders in countries where inflation is going through the roof, like Brazil or Turkey, walk a tightrope between encouraging economic recovery and taking unpopular measures — like spending cuts or interest rate hikes — to fight inflation.

That economic frustration could, in turn, lead to anti-incumbent and anti-establishment rage at the ballot box. There are several big elections coming up next year where those in power will not be able to tell voters, “you're better off than before you elected me.”

Finally, there are two long-simmering geopolitical conflicts that got hotter this year, and could boil over in 2022.

First, Ukraine. Vladimir Putin has amassed 100,000 troops at the Ukrainian border because he doesn't want NATO to expand further into former Soviet territory. Putin has little to gain and much to lose from an actual invasion, but the risk of one is higher than it's been in at least seven years — that is, since the last time Putin invaded Ukraine.

Russia, the US, and Europe are playing a dangerous game of cat and mouse. If Putin overplays his hand, America could shut Russia out of the SWIFT, the cross-border payment network used by most banks worldwide. The Europeans, for their part, could cancel Russia’s Nordstream 2 pipeline, which would carry Russian gas that Europe depends upon keep homes warm.

Second, Taiwan. Xi Jinping has long aimed to “reincorporate” the self-governing island into the People’s Republic, but throughout 2021 China has been amping up the pressure by taunting the Taiwanese by air and sea. Meanwhile, the Biden administration has signaled that, after decades of deliberate ambiguity, it might in fact be prepared to actually defend Taiwan.

So, will China invade Taiwan next year? Almost surely not. Despite China’s growing military power, it would be a risky and immensely costly undertaking, particularly if the US does intervene, and it would almost certainly lead to crippling economic sanctions.

Still, Xi is keen to play up the nationalist card by talking big about Taiwan. With US-China relations quite frosty these days, and the Americans snooping around Taiwan as well, there’s always the risk of a miscalculation that blows up fast.

The Graphic Truth

Carlos Santamaria

It started growing in the spring, crept up in the summer, and exploded in the fall. Inflation now dominates the political conversation in many countries. COVID-related disruptions to supply chains are considered the primary cause, but economists also argue about other factors like too much stimulus spending. What to do about it? The classic recipe is cutting interest rates, which will make borrowing more expensive, and risks slowing down the economic recovery everyone’s been dreaming of for two years. We take a look at how prices have risen in a few key places around the world.

The expansion will endure: Seeking sustained returns

Citi Private Bank

The economic recovery and bull market are maturing, with moderate growth expected ahead. We believe portfolios should evolve to provide exposure to more defensive sectors, quality firms, and dividend growth strategies. In Outlook 2022 we highlight asset classes and regions that may lead the way in 2022 and beyond.

You can click here to read the full report, learn more about key themes in the report, and view related videos.

What We’ll Keep Watching in 2022: The authoritarian plague, climate vs energy crisis, US politics in Georgia

Alex Kliment

COVID & authoritarianism. Around the world, the pandemic has given national governments vastly greater mandates to manage how their societies and economies work. That has, among other things, created room for authoritarianism to grow and flourish. But there are different views on how that’s happened, and where. On the one hand, undemocratic or illiberal governments used pandemic restrictions to suppress anti-government protests or muzzle critics. Think of China using COVID restrictions to stop the burgeoning Hong Kong protests, or Russia doing the same to crack down on opposition rallies. Freedom House reported this year that the pandemic had contributed to democratic backsliding in 73 countries, the most since 2005. But there are also those who see authoritarian shadows in what democratic governments have done: imposing vaccine mandates, continued lockdowns, and school closures. In the US, a backlash against this has boosted Republicans ahead of next year’s midterms, while fresh lockdowns and mandates have also provoked fierce protests in Europe. There is also the thorny and unresolved question of how to police misinformation. Some Americans think social media platforms are erring on the side of too much content moderation as they struggle with the difficult problem of weeding out dangerous pandemic fake news. Overall, the question of what governments did during the pandemic, and whether it exceeded their mandates, will affect politics and geopolitics deep into 2022.

Going green without blackouts. This year at COP26, global leaders agreed to major climate pledges. As of now, some 90 percent of the global economy is committed to net-zero goals. That’s good news. But translating those promises into action is going to be a major political challenge in 2022. For one thing, new commitments to phase out fossil fuels are coming right as the world struggles with an energy crisis — shortages of natural gas and coal are driving up fuel and electricity prices around the globe. What's more, climate policies will figure in two major 2022 elections. One is in France, where it was barely two years ago that fuel taxes provoked the massive “yellow vest” protests which almost derailed Emmanuel Macron’s presidency. The other is the US midterms, where the climate aspects of Joe Biden’s Build Back Better plan will be a major point of disagreement between Republicans and Democrats.

Georgia 2022. As we move into an election year in the United States, we’ll be closely watching political dynamics in Georgia, a state that has emerged as a fascinating microcosm of several important trends in American politics. First, Georgia offered a vivid example of how the swing of suburban voters — in this case, in and around the state capital of Atlanta — tipped the 2020 presidential and congressional elections toward Democrats. Second, the January 2021 surprise elections of Jon Ossoff and Raphael Warnock to the US Senate gave the Democrats majority control of the upper house. Anything Democrats accomplish in Biden’s first two years as president is possible only because both Democrats won in Georgia. Third, Georgia is a central battlefield in fights over the counting of votes in 2020 and for voting rules for future elections. Fourth, Biden’s sagging approval ratings in Georgia underline the strong national momentum that Republicans now enjoy. And lastly, Donald Trump is actively backing Senate and gubernatorial candidates in Georgia who are challenging the state Republican establishment — and potentially dividing Republican voters. Republicans dominated Georgia’s politics for a quarter-century until Democrats broke through in 2020-21 by the slimmest of margins. No state will provide a better bellwether for US political trends in 2022.

Podcast — COVID Continued: What the world will look like in 2022

The latest episode of Living Beyond Borders, a special podcast series from GZERO brought to you by Citi Private Bank, looks at what we learned this past year, and what we can expect in the year ahead. Moderated by Caitlin Dean, Head of the Geostrategy Practice at Eurasia Group, this episode features David Bailin, Chief Investment Officer and Global Head of Investments at Citi Global Wealth and Ian Bremmer, President at Eurasia Group and GZERO Media.

Hard Numbers: Global vaccine good news, rampant ransomware, 5G growing fast, Spanish wind power

Carlos Santamaria

56.8: As of December 18, 56.8 percent of the global population has received at least one COVID vaccine shot. We sometimes don't realize how big of an achievement this is from just a year ago, when frontline health workers were the first to get jabs.


11: A ransomware attack occurred every 11 seconds in 2021, according to one estimate. Earlier this year, hackers carried out their most famous attack to date against Colonial Pipeline, which supplies almost half of the oil and gas consumed in the US Eastern Seaboard.

540 million: Global 5G connections are expected to reach 540 million by the end of the year, according to a new report. That's more than double the amount in all of 2020.

23.1: Wind became Spain's top energy source this year, overtaking nuclear for the first time. Half of the country's energy now comes from renewable sources, which the government hopes will help bring down sky-high power prices in 2021.

Top Risks for 2022

Today's edition looks ahead to the big challenges of 2022. For more on the risks that await us in the year ahead, keep an eye out for the first Signal edition of 2022, which will feature the annual Top Risks report by our parent country, Eurasia Group. You'll be able to read the report and join a special livestream conversation that day with Ian Bremmer. In the meantime check out our summary of 2021 Top Risks — how'd we do?

This edition of Signal was written by Alex Kliment, Carlos Santamaria, and Willis Sparks. Art by Annie Gugliotta and Paige Fusco, graphic by Paige Fusco.

Welcome to this special edition of Signal, in which we'll look at why everything is getting more expensive these days, how inflation is affecting other global issues, and what — if anything — can be done about rising prices while the pandemic keeps raging. This edition is part of a joint project between GZERO Media and Citi Private Bank called "Living Beyond Borders."

Thank you for reading.

The Signalistas

How long will COVID-fueled inflation last?

Carlos Santamaria

Everybody's talking about inflation these days. Rising prices are affecting people from all walks of life, all around the world.

In the US, buying a used car now costs on average 45 percent more than it did in January. Europeans are bracing for a tough winter with soaring natural gas prices that come at the worst possible time.

Asian investors mentioned the word "inflation" on calls this quarter the most times since 2003, when the SARS epidemic battered China's economy. In Lebanon, whose annual rate of inflation is now the world's highest, surpassing Venezuela and Zimbabwe, most people buy local not to support local businesses but rather because they can't afford imports.

Inflation, however, isn't always bad, and is actually a sign of a healthy economy as long as it stays around an annual 1.5-2 percent. But now in most countries it's creeping up too much due to the economic fallout from the ongoing pandemic.


Eighteen months later, demand is booming. Consumers have a lot more cash burning in their wallets than a year ago because they didn't spend much at all in 2020. Businesses too are humming again, and need energy and raw materials to keep their plants running and products delivered on time.

But the real problem is on the supply side. Persistent COVID-related disruptions to supply chains mean there's simply not enough stuff, or you can't get it as fast as you'd like. When you can, it's gotten more expensive, and as the added costs get tacked on, the price of everything goes up.

For instance, a new car has become a luxury all around the world due to a global shortage of semiconductors. If you're in the market for a new house or want to build a factory, prices are going through the roof and projects are getting delayed because building materials — particularly those sourced from overseas, which is the case for most countries — are scarce and will take longer to acquire.

Meanwhile, inflation is fast becoming a global political headache.

Most Brazilians blame President Jair Bolsonaro for the rise in their cost of living. In Turkey, President Recep Tayyip Erdogan has already fired two central bank governors since the pandemic began because they opposed the big stimulus spending he needs to stay popular while the country's currency plummets and inflation remains sky-high. Tunisia's President Kais Saied is also feeling the heat after having had little success persuading businesses to lower their surging prices.

US President Joe Biden's ambitious plans to expand the country's social safety net could get tanked by moderate Democrats who fear investing $3.5 trillion now will spur more inflation just as the economy is stabilizing, and have Republicans on their side. But there's also a bipartisan generational divide: a survey commissioned by the Federal Reserve shows that retiring boomers — many still traumatized by the 1970s "stagflation" period of low economic growth coupled with double-digit inflation — are a lot more worried about inflation than younger Americans.

Still, there's little that can be done right now to fix the problem from the supply side. Central banks raising interest rates could temper demand, removing some of the pressure on prices, but it won't move the needle on inflation from messed-up supply chains while COVID lingers.

Moreover, when governments do intervene on supply by restricting exports that other countries need, for instance Argentinian beef or Russian wheat, it makes things worse because such distortions may provide some short-term relief but in the long term only further increase demand — and therefore costs for everyone. (This, along with several climate-related droughts, explains why global food prices are now rising at the highest pace since 2007, when food riots sparked a wave of social unrest across parts of Africa and Asia.)

Inflation clearly wasn't a blip, but most economists say we shouldn't panic (yet). Inflation, they say, will likely return to target levels once the pandemic is behind us. But as long as COVID stays, so will its disruptor effect on all economies. So perhaps the way out of today's inflation is to get vaccines everywhere.

The Graphic Truth

Gabrielle Debinski

The pandemic brought the global economy to its knees, disrupting supply chains and causing a surge in unemployment. The economic volatility also sent many major currencies into a tailspin. While already-weak economies have been hit hardest by inflation, many medium and high-income countries have also seen their currencies depreciate over the past 18 months amid protracted lockdowns, border closures and supply chain constraints. We take a look at which major currencies have depreciated the most in 2021 when measured against the US dollar.

CIO Strategy Webcast Series

Citi Private Bank

Join us each week on Thursday at 11:30am EST for a conversation with senior investment professionals and external thought leaders on timely market events and ask your most pressing questions.

Register now.

What We're Watching: Inflation's impact on energy, climate, and… pasta

GZERO Media

Energy price surge + winter = ? Natural gas prices are at all-time highs in Europe. In the US, they've gone to a 14-year peak. With demand from post-COVID economies outstripping supply, and winter coming, bills for heating and electricity could soar — and drive up inflation on both continents. Fears about natural gas have, in turn, caused a run in oil markets, driving crude prices to three-year highs as well. Meanwhile, restrictions on using coal have contributed to blackouts in China, causing some exporting factories there to slow production just ahead of Christmas season, when demand for Chinese-made consumer goods soars. More holiday demand chasing fewer gadgets and clothes would mean higher prices. And then of course there's the question of how to tackle inflation while promoting climate change policies that are meant to reduce emissions…


Will inflation affect climate goals? In the lead-up to COP26, a big UN climate summit, governments and corporations are questioning whether a hasty transition to green policies might further increase prices of things like air travel, contributing to the inflation problem. The European Central Bank says that slashing carbon emissions to net zero by 2050 could have unpredictable impacts on inflation, but ECB President Christine Lagarde says it's "the least of our worries, " and will allow inflation to rise beyond its usual 2 percent target while the bloc meets its climate goals. After all, inflation is not the only cause of the current spike in food prices, which are also driven by climate-change induced bad weather destroying farmers' crops in many places. But as governments push for decarbonization, many industries will have to change how they make things, likely driving up costs. Still, large economies like the US, the UK, and China seem committed to the move to a more sustainable world, saying that boosting energy efficiency could lower household heating bills, while more fuel-efficient vehicles could cut consumer costs in the long term.

Do you like pasta? We like it too, and we're not alone. It's hugely popular around the world – from Brazil and Chile to the Philippines, to South Africa and Tunisia, as well as across Europe and the US. Its popularity isn't a mystery. It's easy to find, easy to make, goes with lots of other types of food, and is (usually) inexpensive. But to prepare all that pasta, we need semolina, the flour most often used to make many forms of noodles. And to make semolina, we need durum wheat. But extremely hot and dry weather will cut the export of durum wheat from Canada, the world's lead supplier, by almost a third. Add a lousy wheat crop in Italy, where the consumption of pasta is not unknown, and you've got supply cuts, and therefore higher prices, for one of the world's most popular foods and a dish that low-income people can usually afford. The price of durum wheat is now up 90 percent.

The Graphic Truth

Carlos Santamaria

Global food prices have jumped by one-third since a year ago, as a result of pandemic- and climate-related supply chain disruptions as well as export restrictions. While the situation isn't (yet) as bad as in 2007-2008, when sharp increases in food prices triggered civil unrest across many parts of the world, the trend isn't a good one. Food price inflation and, in more extreme cases, the risk of famine will only exacerbate the challenges of economic collapse and mass unemployment left behind by COVID. We take a look at how the global prices of five key food products have changed since the pandemic began.

Podcast: Inflation, interest rates, and economic recovery

When the pandemic hit in full force in the US, the government had to act quickly to keep the economy afloat. One major thing that the Federal Reserve did was lower interest rates to zero. That helped money keep flowing and borrowing rates low on things like mortgages, cars, and other things Americans needed. The danger in juicing the economy this way, however, is that inflation could go up, and higher consumer prices could end up hurting our wallets. How does the government strike the right balance? Listen to more about the US recovery, the international picture, and what could come next in this podcast featuring Robert Kahn, director of Global Strategy and Global Macro at Eurasia Group; David Bailin, CIO and Global Head of Investments at Citi Global Wealth; and Steven Wieting, Chief Investment Strategist and Chief Economist at Citi Global Wealth. Moderated by Caitlin Dean, head of Geostrategy at Eurasia Group.

Inflation quiz!

1. Which European country experienced the highest recorded rate of hyperinflation?

A. Hungary

B. Poland

C. Germany

2. A loaf of bread cost how many Zimbabwean dollars in 2009?

A. One billion

B. One trillion

C. One quatrillion

3. In 1949, US President Harry Truman was feeling the pinch of post-war inflation. What did he do about it?

A. Made the Fed raise interest rates

B. Cut spending

C. Bumped his salary up

Hard Numbers: ECB remains calm for now, Nigerians in poverty, Brazilian instability, Japanese deflation

Gabrielle Debinski

10: Inflation in the European Union reached a 10-year high in recent weeks, fueled largely by rising energy costs. While some observers are sounding the alarm, the European Central Bank has remained calm(ish), saying that inflation will likely taper off early next year as production bottlenecks stabilize and the pandemic (here's hoping) recedes for good.


45.2: The World Bank predicts that by next year, 45.2 percent of Nigerians (more than 95 million people) will be living in poverty as a result of inflation caused by supply chain disruptions and food price rises fueled by the pandemic. That's a jump of five percentage points from 2019 levels.

4: Brazil's central bank has raised its reference interest rate four times since March in a bid to curb rising inflation, which reached 10 percent annually last month. In a region traumatized by years of financial volatility, President Jair Bolsonaro is already facing political backlash and a tough reelection bid next year.

-0.3: Japan is the only major economy to have experienced deflation during the pandemic, with prices dropping 0.3 percent from the previous year in recent months. Tokyo has long been trying to boost consumer spending and demand, which have lagged in part because of Japan's aging population.

Answers

1. A — Toward the middle of 1947, Hungary's inflation rate had reached, we kid you not, 13 quatrillion percent. That meant prices doubled every 16 hours, and the central bank even printed a one hundred quintillion (16 zeros) pengo bill that was worth a lot less by the time it left the mint.

2. B — Everyone was a trillionaire in Zimbabwe those days, except that it didn't buy you much, since the economy was a shambles because Robert Mugabe kept printing money like there was no tomorrow.

3. C — Four years after World War II, Truman was still making only $75,000 per year, the set pay rate for US presidents since 1909. During his second term, he convinced Congress to raise it to $100,000 (now it's $400,000).

This edition of Signal was written by Gabrielle Debinski, Alex Kliment, Carlos Santamaria, and Willis Sparks. Art by Jess Frampton and Paige Fusco, graphics by Gabriella Turrisi.

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03/09/2022