Good morning.

Monday through Thursday, we cover each region with the stability situation and regional news but Fridays are when we take a deeper dive into an issue and give you a rundown of the baseline stability ratings for each country.

Today's deep dive is a look at what the second Trump term means on a geopolitical basis.

Two quick pieces of news worth mentioning first.

• On Thursday, the GOP officially retained control of the House, meaning Republicans will hold the Presidency, Senate, and House and have a right-leaning Supreme Court [SOURCE - Politico].

• A Pentagon official warned that the Houthis have access to increasingly sophisticated weaponry via Iran [SOURCE - Axios]. Comment - I've written before that there is no incentive for the Houthis to stop interdicting Res Sea shipping traffic but access to more sophisticated missiles and their increasing drone capability is making a previously domestic group a much more influential regional actor.

Commodity and Rate Snapshot

_{As at Nov 15, 06:00ET -Data is illustrative, not for decision-making.}

Financial data via Bloomberg, Freightos and AlphaVantage

President Trump 2.0 Comes into Focus: So What?

In 2016, Peter Thiel complained that the press took Trump 'literally but not seriously, whereas his [Trump's] voters took him seriously but not literally'. [CNBC] 

Fast forward to 2024, and better advice seems to be to take Trump both seriously and literally: what nominee Trump said on the campaign trail seems to be what President-elect Trump is putting into action. Picking Stephen Millar as Deputy Chief of Staff and Tom Homan as Border czar lines up 100% with the hard line he promised to take on immigration.

So, this analysis takes President-elect Trump seriously and literally, reviewing what he's said he will do in his second term.

The silver lining here is that this reduces the possibility of surprises and allows some time to prepare for what a second Trump term might mean.

So, what can we expect at the geopolitical level? Here are five scenarios to prepare for.

The US will impose tariffs on a wide range of imports

Trump has floated a 60% tariff on goods from China and 10% on all other imports. This complicates supply lines and increases the cost of goods for US consumers and manufacturers.

• So what? Trump may be able to settle more favorable terms for US trade on the basis of these tariffs but, to begin with, the pain is likely to be felt by the US consumer and seen in rising US inflation. Retaliatory tariffs are also a possibility, complicating things for US exporters.

Ukraine will be forced to trade land for peace 

This does not mean that Vladimir Putin will get everything he wants but Ukraine will be forced to make a bad deal. And, if Zelensky refuses to make a deal, the US will cut off aid, meaning Ukraine would be left even more vulnerable, likely losing more territory in the process. This will also be seen by Putin as his second successful land grab after Crimea in 2016, meaning a near-term Russian incursion into Estonia or Poland becomes much more likely. That’s unless Trump is willing to inflict real pain on Moscow as part of the Ukraine deal which seems unlikely.

• So What? This won't affect many Americans or US businesses directly, and an end to conflict in Ukraine would ease pressure on grain and natural gas prices, but it will leave Europe weaker and much less trusting of the US.

The Middle East will become more unstable

Trump has encouraged Israel to 'finish the job' in Gaza, supports increased settlement building in the West Bank, and would likely be supportive of a partial reoccupation of Gaza. Meanwhile, Iran will come under increased pressure up to and possibly including military strikes on its nuclear program*. In addition to the potential for a wider regional conflict, this places enormous strain on regional leaders who are expected to ally with an increasingly unpopular US.

• So What? Americans living and working in the Middle East and US businesses can expect increased hostility and the region will be a much less welcoming place, more akin to the early 2000s and the height of the Iraq war.

*Note recent reports are that Israel hit a nuclear facility as part of her retaliatory strike on Iran in late October [SOURCE - AXIOS]

Oil prices will whipsaw and US producers may come under increased pressure.

Tension in the Gulf drives up oil prices while a 'drill baby drill' policy puts more US inventory into an already oversupplied market, driving prices down. Most US producers need oil to remain around $50-60 per barrel to break even, meaning that increased production would hurt the US more than, say, Saudi, which has a production break even in the $10-15 range.

• So What? Expect significant fluctuations in oil prices, but $100 barrels seem less likely, given the amount of US production that could be released. (Although with oil prices being so irrational, the best prediction is often  ¯\_(ツ)_/¯)

The final scenario is the most serious, albeit long-term, issue.

US influence declines

In an interview prior to the British election, the former head of MI6 noted that in his opinion, the Brexit vote made the UK irrelevant internationally.

Similarly, there is a very high chance that the US could be in a similar position after four more years of uncertainty caused by a second Trump administration.

Ambiguity over NATO's Article 5, the seeming abandonment of Ukraine, the potential politicization of the Federal Reserve and manipulation of the dollar, and a more mercurial, transactional foreign policy would leave many countries less willing to rely on the US. America First, easily becomes America alone.

• So What? America won't become irrelevant but will become less relevant, be taken much less seriously, and be seen as unreliable. This change in perception and prestige throws up significant barriers for US firms -- and America as a whole -- internationally.

There’s a raft of other issues that will arise from a second Trump term, particularly domestically, but these five seem most likely and are of particular geopolitical consequence.

The only silver lining is that President-elect Trump has been clear in what he plans to do, and there is some time to prepare.

On to the stability ratings.

Country Stability Ratings - Nov 14 24

Here are the complete stability ratings for all countries covered by Decis.

(Missing somewhere? Hit reply and let me know.)

Final Factoid

We’ll see the last supermoon of the year this weekend when the Beaver Supermoon appears on Friday and Saturday nights. Read more 

Have a great weekend and we’ll see you again on Monday.

Carpe tomorrow!