It’s not inflation. It’s not interest rates. And it’s not even local economic growth. According to Besa Deda, Chief Economist at William Buck, the biggest threat to equity markets right now is growing geopolitical uncertainty — particularly from the United States — and the way it’s reshaping the global trade and fiscal landscape.

Speaking on Switzer Investing TV this week, Deda said that investors and analysts alike are having to move beyond traditional tools like technical and fundamental analysis and now factor in something broader: scenario analysis.

“They are having to focus more on scenario analysis,” she said, “because different scenarios may transpire given the high levels of uncertainty and unpredictability.”

In other words, there’s no single base case to model anymore. The risk environment is being shaped by multiple unknowns — including US tariffs, global trade fragmentation, and fiscal stress in the world’s largest economy — all of which can feed into long-term volatility in equity markets.

And it's not just escalating rivalry between the US and China we have to watch now. It's the prolonged war in Ukraine; renewed conflict in Gaza and rising tensions between Iran and Israel (just to mention a few). Retail and institutional investors alike are grappling with a world where risk is no longer confined to economic data or central bank decisions.

Markets have already shown sensitivity to these shocks. Risk-off reactions to headlines out of Eastern Europe or the Middle East have triggered sudden pullbacks, while defensive assets like gold and US Treasuries have seen renewed buying interest. For equity investors, it adds a new layer of complexity — one where even strong fundamentals may be overridden by fears of geopolitical fallout.

Deda cited comments from local Treasury Secretary Steven Kennedy, who recently addressed the Australian Business Economists Conference, noting that the old rules of global trade are being rewritten — and not in a way that necessarily favours markets.

“The trading rules and norms are changing,” Deda said. “That had already started, but it’s being accelerated since Trump’s inauguration.”

“The US no longer sees those old trading norms as in their self-interest… and that has implications for defence spending, fiscal balances, and the long end of the yield curve.”

It’s that last point that may worry investors most. Long-term US bond yields — especially 10- and 30-year Treasuries — have been rising sharply. Deda says that’s due in part to investor concern over the sustainability of the US fiscal deficit, especially following legislation to extend the 2017 Trump tax cuts.

“The bond vigilantes are back,” she warned. “That rise in long-end bond yields does have an impact — not just on borrowing costs in the US, but for other markets too.”

And while stock indices in Australia and the US are hovering near record highs, Deda cautioned that we may be entering a new phase where higher-for-longer yields become a drag on equity performance — especially if earnings falter or growth stalls.

“Markets sold off on April 2, when reciprocal tariffs were announced,” she said. “Then Trump hit pause, and markets rallied again. But it shows how fragile sentiment is.”

“I do wonder how long the share market can really hold at around these levels.”

Deda isn’t just any economist — she was formerly Chief Economist at St George Bank, giving her decades of experience in connecting macroeconomic shifts with market performance. And when someone like that says we’re entering an environment that can’t be explained by charts or historical patterns alone, it’s worth listening.

As global risks mount and traditional signals become less reliable, Deda’s advice is clear: scenario planning isn’t optional anymore. It’s the baseline for any investor serious about what’s coming next.

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You know the story. You have a fight with your partner and suddenly it comes to a head and you’re on a break. But then, you’re talking again and you may just reconcile after all. 

Such is the case for the Liberal-National Coalition, who have paused their public break-up two days after it was announced.

How did we get here?

Tuesday of this very week brought us the news that the Nats’ leader David Littleproud would not sign the party on to a new agreement for a coalition with the Liberal party.

This was after days of tense negotiations with newly-crowned Liberal leader Sussan Ley. 

Littleproud in a press conference cited several reasons for the breakup. He said the pair of leaders could not come together on the use of nuclear power in Australia’s future energy grid; the supermarket divestiture laws aimed at punishing Coles and Woolies for bad business behaviour, and the $20 billion regional “future fund”.

The Nats’ leader added in his comments that he would never enter into an agreement with a party that supported a ban on live animal export.

Absence makes the heart grow fonder?

Following Tuesday’s announcement, the remaining Libs seem to have rushed to their phones, texting their now-former colleagues from the Nationals to see if the news could be reversed.

And reverse gear was indeed found.

Sussan Ley has reportedly met with David Littleproud this morning, and the plan was reportedly halted temporarily.

Littleproud has said today that he will give Ley and her party “additional time” to discuss the policies put forward by the Nationals before proceeding to either split or get back together.

Ley will now reconvene the Liberal party room to discuss the Nationals’ policy requests. Sky News now reports that - along with telecommunications service quality in rural and regional Australia.

Interestingly, this has delayed the announcement of a shadow cabinet while the two attempt to negotiate through this impasse. 

The Nationals had been but hours away from announcing their own appointees to a separate Shadow Cabinet when Ley and the Liberals sent their meeting invite to Littleproud. The creation of a Shadow Cabinet makes the breakup somewhat more permanent. Like signing a lease on a new apartment by yourself after a fight with your partner.

Nationals MPs have now reportedly left Canberra in a sign that they intend to give the Liberal Party MPs a chance to talk for real about the issues before they make a decision on the Coalition’s future.

Party elders on both sides have shared their views on the split. Most recently, Former Prime Minister Tony Abbott said that the two parties "win together and fail separately":

"I deeply regret the Coalition split and hope that it can be re-formed as soon as possible. History shows that the Liberals and the Nationals win together and fail separately. What’s needed right now is a strong critique of a deeply underwhelming government and the development of a clear policy alternative. That’s much more likely with a functioning coalition than with two opposition parties competing with each other rather than with Labor."

We’ll keep an eye on things down at the Canberra circus to see how this develops.

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US President Donald Trump’s recent announcement of a plan to impose a 100% tariff on movies “produced in foreign lands” could have a massive impact on the global entertainment industry.

Film and television production is increasingly part of an interconnected global system. Hollywood’s major studios and global streaming giants use a diverse range of locations around the world, sometimes working across multiple countries for a single project.

Doing so allows them to leverage production incentives and tax shelters offered by different countries, take advantage of exchange rates to lower their production costs, and more.

They also film offshore, for example in China, as strategic co-productions and feature iconic locations and local actors to appeal to audiences in that specific national market.

Many countries have become important hubs in this global system of production. Australia is a significant player. So, how exactly might Trump’s tariffs work? And why is so much Hollywood film made internationally in the first place?

‘Movies made in America’

Trump made the announcement in a post on the social media network Truth Social. But his original statement is vague and lacks crucial detail.

Based on his post, this proposal could include any foreign movie imported into the United States. More likely, though, it refers to US movies filmed (in part or wholly) overseas.

Trump’s statement only singles out movies. He doesn’t mention television series for broadcasters, or specifically film and television programs made for streaming platforms.

This suggests a focus on movies made by Hollywood studios. It may or may not include content made by streamers such as Netflix.

Tariffs on tickets?

Movies are a kind of intellectual property. They’re intangible products or services, not physical goods. If a tariff was applied to movies, they’d become the first service in the current trade war to receive one.

So what tariffs or regulations could be applied?

One option would be a levy on distributors releasing US movies made overseas. Another option would be to adapt the French TSA model, which levies a tax on all cinema tickets. In France, this money is reinvested into the local industry. The US could impose such a tax on tickets for films with production components overseas.

Both options would pass the costs on to consumers. A drop in already fragile cinema attendance or revenues could simply cause studios to reduce the number of movies made for theatrical release.

Studios might instead concentrate on making movies and television series for their own streaming platforms, such as Disney+ and Paramount+.

Taxing production

Could the tax be imposed in other ways? Many US studio movies, and television programs, are at least partly, if not wholly, filmed internationally. But they are still US-controlled movies and still dominate the box office in many countries worldwide.

Could the revenue of Godzilla x Kong: The New Empire (2024), filmed on the Gold Coast in Australia, specifically be targeted and taxed for being made overseas, in contrast to a Hollywood movie made completely at home?

Would there be a sliding scale based on how much of a film is shot overseas? Would the tax apply to post-production or only production? The process of reviewing and enforcing this would be complex.

Another option may be taxing the portion of a movie’s production budget obtained from foreign tax incentives.

Major blockbusters filming in Australia are eligible for tax rebates and incentives, which can equate to almost half, or more, of the money they spend in Australia. But exactly how the US would review and regulate such a tax is again unclear.

Australia’s film industry

International film and television production expenditure in Australia now averages A$880 million each year. International movies alone account for about half of that figure.

And the number of movies and television series being filmed in Australia has increased dramatically since the outbreak of COVID.

Production expenditure here on both local and international productions jumped from just over $1 billion in 2019–20 to about $2.4 billion in 2022–23.

There are numerous reasons for this. Australia became a more popular international production hub after serving as a “production bubble” during the pandemic, as restrictions forced filming to shut down in many other countries. Relationships were forged between local producers, crews, film agencies and studios.

The reputation of places like the Gold Coast, known for talented crews and stunning filming locations, has also played an important role in continually luring studios back.

The biggest draw card

But the major reason is the strong pull of Australia’s tax incentives for filming content here.

In Australia, international film and television programs are eligible for a 30% “location offset” on eligible production expenditures. If a project qualifies, producers will receive a provisional certificate, and they can claim a fixed 30% rebate for expenses in an income tax return for the relevant year.

There’s also a 30% offset on eligible post-production and visual effects work. And these incentives can be “stacked” on top of an extra 10–15% in incentives from state screen agencies (such as Screen QLD).

Some combined federal and state-based production offsets amount to rebates of 50%, or more, of a project’s production spend in Australia.

Why Australia is worried

International productions, which are quite different to local film and television programs, generate employment for many local actors and technical professionals. The loss of this film production would dramatically reduce employment for local professionals.

If these levies are imposed only on movies that screen theatrically, then television series and streaming films and series could continue to film in Australia unaffected. That would lessen the impact on local industries. If the definition includes both, the impact could be dramatic.

Mark David Ryan, Professor, Film, Screen, Animation, Queensland University of Technology

This article is republished from The Conversation under a Creative Commons license. Read the original article.