Welcome to another week! It was a tense week. We are back to strikes in the Persian Gulf while the NATO summit in Ankara saw the continuation of the American soft-exit from the alliance. We also had a Chinese missile test and a surprising twist in the Ukraine war.
Domestically in the US, not only did Graham Platner dropped off the Senate race, but we also saw Lindsey Graham pass away. May the perpetual war hawk finally find some peace.
What can I say, there’s no rest in global affairs. Let’s take a look at the markets and make sense of the world.
Weekly Outlook
US Inc.
Trump criticized European allies and revived his demand for Greenland at NATO summit in Turkey. He also said that both Russia and Ukraine want to make a deal to end the war.
Comment: let’s unpack it. Greenland is crucial for a comprehensive defense of the Western Hemisphere. It is also an important entry/exit from the North Pole. The deal on new bases and American military presence is coming, to be determined if this year. When it comes to Russia and Ukraine it’s true. Both sides want to make a deal. But a different one. While Putin is obviously in a worse position than a year ago, the summer offensive is not yet here and it can change the calculus. We now need to wait and see.
America will grant Ukraine the right to make Patriots.
Comment: I just said to not trust peace rumors. Here you have another confirmation. Ramping up production takes time, it’s a long-term deal.
Lindsey Graham died aged 71, probably from a cardiac arrest. His office said it was a brief and sudden illness. He had recently returned from a trip to Ukraine.
Comment: maybe now he will know peace. Also, there’s nothing conspiratorial about his death.
Graham Platner dropped out of the race for a Senate seat in Maine. His campaign was riddled by controversies, but sexual assault allegations were the final straw. While he denies any wrongdoing, Democrats will have to find a new candidate now.
Comment: Democrats hope to win Maine as they are trying really hard to flip the Senate. Platner drama is quite a big bump on that road. While they are still the slight favorites, a lot will depend on the choice of the next candidate.
The 21st Century Road to Housing Act became law on Saturday. Trump refused to either veto or sign it, allowing it to automatically become law after 10 working days. It’s the first time in nearly a decade that legislation has passed without a presidential signature.
Comment: Trump wanted to tie the approval of the act with the SAVE America Act. However, he couldn’t be seen vetoing a housing-related act considering the dire state of the housing market. He chose a wrong battle.
Kevin Warsh named academics, business leaders and former central bankers to lead new task forces. His picks include Raj Chetty, a Harvard economist, Marc Andreessen, a venture capitalist, and Mervyn King, a former governor of the Bank of England. The groups will examine how policymakers approach data and analyze the drivers of inflation.
Comment: traders seem confident that we will get a rate hike by September with the market going slightly up on the news.
Apple sued OpenAI for stealing trade secrets. The lawsuit aims to show how former Apple employee that is now the chief of hardware in OpenAI has orchestrated a data-stealing scheme that run for months and involved OpenAI employees on every level.
Comment: corporate espionage is real. At first glance it looks like a big lawsuit that could have massive consequences for OpenAI. I’ll be following it closely.
Meta unveiled Muse Spark 1.1, a significant upgrade to its original AI model. The model is closer to frontier models in terms of performance, especially around coding.
Comment: by all accounts, Anthropic is still king. However, Meta, OpenAI and xAI are all closer than before.
Blue Origin, a SpaceX competitor run by Jeff Bezos, is looking to raise $10 billion in VC funding at $130 billion valuation. Blue Origin hopes to deploy a satellite internet service, akin to SpaceX’s Starlink, and beat Mr Musk to his latest moonshot: space-based AI data centers.
Comment: the battle of the tech elites. But in all seriousness, while Bezos is now well behind Musk, the gap will be closed eventually. And competition is always good in frontier tech.
The Americas
Cuba’s national electric grid collapsed. Some generators have been restarted, but the country has been struggling with daily blackouts for months now. Energy minister recently warned that the grid was in a critical state.
Comment: the American pressure continues, however I’ll stop before calling any developments imminent. The country has been in crisis mode for months now. But neither blockades nor air strikes can fully topple a regime. If anything, we should expect a Venezuela model here—meaning a soft regime change. Probably some administration officials are already talking with the Cuban version of Delcy Rodriguez.
Asia
China’s navy said it fired a ballistic missile into the Pacific Ocean as part of routine training. The missile landed in the South Pacific Nuclear Free Zone, an area covering Australia, New Zealand and South Pacific islands.
Comment: it’s most likely a test of a new missile. China is not North Korea, it does not need to show strength in that way.
Factory-gate prices in China rose by 4.1% y/y in June, the biggest increase in nearly four years.
Comment: it’s an early sign of struggle in the economy caused by the Iran war. Traders still see inflation lower than 4.5% this year, but the next few months can really change the outlook. It all depends on how much they will massage the data in the coming months.
Australia will export uranium to India for use in its nuclear-energy industry. Modi visited Australia recently to seal the deal. The two countries also agreed to further cooperation on defense.
Comment: Team West is looking to integrate India in its broad structures. It’s yet another sign that this relationship is progressing.
Middle East & Africa
This week we saw massive escalation in the Middle East. After a promising upsurge in the Strait of Hormuz traffic, Iran struck two ships trying to cross the strait, beginning the whole confrontation.
The US targeted various sites across the country in response. The exchange of fire lasted pretty much the whole week, escalating with each round of strikes. Iran targeted military bases across the region, while Americans have reportedly struck energy infra in Iran.
Trump declared the ceasefire effectively over during the NATO summit. Tensions continue to hold as I write this article.
Comment: surprisingly I had no long-form content on the Iran war last week! But to give you a small update, this is a direct result of the Lebanon framework. The Strait of Hormuz was partially open on the understanding that Lebanon would be left alone. Since it wasn’t, Iran responded in kind.
I expect the Lebanon issue to escalate post the diplomatic meeting this week (with a possible action post Lebanon White House meeting on the 21st of July). If it happens, the MoU is dead and the reinstatement of the US blockade becomes even more likely:
Israel dismissed Hamas’s announcement that it would hand over some of its powers to run Gaza to an American-backed body. However, it didn’t commit to disarmament—they said that Israel controls too much territory of Gaza to allow for that to happen.
Comment: as long as there’s no resolution to the Iran war, the Gaza deal will not progress.
Europe
Several European countries launched a $50 billion project to develop long-range missiles over the next decade without American involvement. Most of the key European countries are involved, however Poland is a surprising miss considering its position.
Comment: Europeans are at least a decade late. While the European industry is more than capable of developing a high-end ballistic missile, at this point they should tap into the Ukrainian expertise to streamline the project. Until it happens, it’s just a nice headline, something European elites mastered to perfection.
Germany agreed to buy American Tomahawk missiles. Additionally, it seems that Germany is looking to lead NATO in the midst of the US soft-exit from the alliance.
Comment: since the US cannot formally exit NATO without a Congressional approval, the Trump admin is doing everything it can to lessen its involvement in the alliance. With the power vacuum present, Germany, France and the UK will fight to lead the alliance. But it does seem that Germany is the designated successor when it comes to the NATO structures.
A French appeals court upheld Marine Le Pen’s conviction for misappropriating European Parliament funds. However, it reduced her sentence to three years in prison, with two suspended and one under house arrest with an electronic ankle monitor. That allows her to stand in next year’s presidential election, which she confirmed she is doing, sending waves across the French political scene.
Comment: with Bardella no more, Marine Le Pen is now the favorite to win the upcoming French presidential election. However, she did promise that Bardella will be the prime minister under her.
Under mounting investigations, Nigel Farage resigned as an MP, only to win it back in the by-election. He said the election would cast the people versus the establishment. However, other parties refused to take part in this farce.
Comment: it’s more of a media happening than a real election.
Other
Nothing to report.
Wrap up
That’s all for today! I hope to have a deep dive for you this week along with a video on some of the latest developments.
Stay strong and see you soon!
This is not official investment or life advice. Do your own research. These are only my opinions and I encourage anyone to do their own research before putting any money anywhere.