Welcome to another week! After last week’s busy schedule we are not slowing down. Plenty of events happened around the world, from the US to China. War topics are still running hot in what shapes up to be a volatile end to 2025.
With plenty of developments, especially on the Ukraine war, I am currently working on the article about its future. We are almost 4 years into the conflict so it’s high time to think about how it might end.
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Weekly Outlook
US Inc.
The Trump administration is focusing on the western hemisphere. It was announced that there was a second military attack on a Venezuelan drug trafficking boat. 3 people were killed. However, the overall odds of America-Venezuela confrontation remain low per Adjacent:
Besides striking boats, Trump was busy this week on the international stage - he visited Britain for a state visit and signing of $42 billion Tech Prosperity Deal, under which American companies will invest in British AI and data centers. Trump got a king’s welcome there.
Trump also called Xi to discuss American-Chinese relations. The call supposedly went great, they talked about the incoming TikTok deal as well as a possible face to face meeting between the leaders. Additionally, the members of the House of Representatives, led by Adam Smith, a Democrat, met Li Qiang, China’s prime minister today.
Moving to domestic, Trump is continuing his effort to bend the press to his will - he is suing the NYT and Penguin Random House for $15 billion alleging defamation. It’s about an article that appeared before the election that called him unfit for office as well as a book titled “Lucky Loser”.
On the migration front, Trump now introduced a $100,000 fee on H1-B applications. This specific move might have been made to counter rising unemployment as it is legal migration that is capped on annual basis. However, the unemployment issues are more structural than purely related to migrants.
Lastly, in the case of Charlie Kirk, Utah is seeking the death penalty for Tyler Robinson. He has also 6 other charges agains them, including witness tampering and committing a violent offense in front of a child. He definitely won’t get off easy.
The Americas
After Bolsonaro was sentenced to 27 years in jail for plotting a coup after losing reelection, he was taken to hospital. He has a string of health problems since 2018 stabbing. Looks like he might avoid jail for some time.
Down south, Argentina’s central bank has spend $1 billion over the past few days to shore up the peso. The currency showed weakness after a defeat of Milei’s party in a local election which came as a surprise. Not sure why they lost, may warrant some research once I’m done with Ukraine.
Asia & Australia
In Asia, China had another showdown with 10 Philippine ships on South China Sea. The contested waterway has seen multiple incidents this year as China is trying to flex and show regional dominance.
In Australia, besides the government recognizing Palestine (Britain and other countries did is as well, although its mostly theatrics), it also vowed to cut greenhouse gas emissions by 62-70% ahead of COP 30. The figure is slightly lower than 65-75% recommended, , but Australia is still one of only a handful of countries to committed to anything ahead of the summit.
Middle East & Africa
In the Middle East Israel is continuing its invasion of Gaza City amid increasing pressure calling the overall Gaza operation a genocide. Netanyahu is still committed to finishing the job, especially after ruining any ceasefire chances with Qatar strike.
Speaking of Qatar, after Arab nations met there to discuss the recent strike, Saudi Arabia signed a mutual-defense pact with Pakistan. Additionally it is engaged in talks with Iran around defense. One could say that SA no longer believes that the US will give it enough support in case things go south. We might see really interesting developments in the region in the coming months with Israel still on its war path and Arab countries having more and more incentives to burry the hatchet and join forces.
Europe
Only a week after we’ve seen Russian drones over Poland, Russian armed jets breached Estonian airspace and went over Polish offshore oil rig on the Baltic Sea. Estonia invoked article 4 of NATO. This comes after it was revealed that the US is looking to significantly reduce military aid to Baltics in order to focus on the western hemisphere. However, Trump later commented that the US is committed to military aid of Poland and the Baltics in case Russian provocations persist. I don’t see the US troops on the ground fighting for Estonia, but there would be no harm in giving equipment and helping with coordination if SHTF.
Staying on provocations, air travel in Europe was disrupted on Saturday after cyberattacks hit several airports. Flights were delayed and cancelled at London’s Heathrow, in Brussels and in Berlin. Hackers targeted check-in and boarding systems, forcing staff to process passengers manually.
In the meantime, the European Commission announced a proposal to suspend its free-trade agreement with Israel in a weak effort to pressure Israel to stop its Gaza genocide. It will also impose sanctions on extremist government ministers and violent settlers. Additionally they announced sanctions on ten Hamas leaders.
Lastly, after the government collapse in France, hundreds of thousands of workers took part in protests against budget cuts. Protesters want the new PM to withdraw the cuts introduced by he previous one. And so the government crisis in France continues as the society is more and more divided.
Business, Finance & Economics
In a (not so surprising) move the Fed cut interest rates by 25bps. Their rational was deteriorating labor market, however I found Powell to be unconvinced this was a good decision during his conference. Cutting rates into rising inflation may end very badly and I think he is extremely worried about another wave of inflation. However, the market is fairly convinced we will see 2 more cuts this year, despite inflation inching upwards:
In the meantime Trump is still trying to fire Lisa Cook. After an unsuccessful appeal, he now directed the case to the Supreme Court, where the judges will decide how much power he has to fire appointed FOMC members. It will be an extremely consequential ruling and I do hope they rule against Trump. More research is needed though.
Across the pond, Britain’s annual inflation in August was at 3.8%, well above target. However the Bank of England is expected to hold rates steady at the next meeting at 4% amid slow economy.
This week was also full of news around Nvidia. First the company was hurt by Chinese decision to ban domestic companies from buying their chips. Then it announced a series of investments in British startups as part of £2 billion commitment unveiled during Trump’s visit to Britain. Nvidia is reportedly in talks to invest $500m in Wayve, a self-driving car company, and plans to take a stake in Revolut. Additionally it pledged to invest $5 billion in Intel. Busy times.
Speaking of China, there is now supposedly a framework for the TikTok deal. Reportedly Americans (ie. Larry Ellison, Marc Andreessen as well as Michael Dell and Murdochs) will control six out of seven board seats. However the algorithm will remain in Chinese hands and will only be licensed to the American entity. The details here are still emerging and might change.
Lastly, as we have no tariff news this week, the market cap of Alphabet reached $3 trillion, joining Apple, Microsoft and Nvidia. The price was boosted by strong Q2 figures as well as a win in the antitrust case.
Wrap up
And that’s all for the week. We will see each other tomorrow for the Ukraine piece. In the meantime stay strong and remain in the green!
This is not official investment or life advice. Do your own research. This are only my opinions and I encourage anyone to do their own research before putting any money anywhere.