Global Outlook: The Ceasefires That Never Were
Weekly PROPHET NOTES 5/19/25
You’d think I will be detached from global events after a week on a remote island, but in this line of work I can’t afford to cut out the world completely. So while I was writing and posting less, I have been spending my evenings sipping Madeiran wine and updating myself on the main events.
However, I’ve been subconsciously longing for such a retreat. After living in a bustling city for years, an island life hits you different. Calm, chill and leisure in nature provide a much needed change in perspective. When I’m here all the problems the world grapples with seem distant and irrelevant.
I smile when I check my portfolio from time to time and see 10% swings just because another Gaza ceasefire headline drops. I just buy more when price is low. Life is good here. And power struggles are power struggles - ever-present, but far away now.
Despite my serene moment, we’ve got a lot to unpack here today so subscribe below and let’s go.
Weekly Outlook
This week, as most recently, was packed with war news with a now classic tariff mix. On top of the usual suspects we also got three European elections and a bit of a financial revelation!
US Inc.
Let’s start with some good news! After several now rounds of negotiations, Trump has indicated that US Inc. and Iran are now close to a deal. Of course the announcement was followed by a strong rebuttal by Iran, but the two countries are still in the process and all signs point to a deal being done sooner than later. Some traders were spooked by Iran’s rejection, but the overall odds still favor the deal being done:
To give you some insight here, Trump has been elected on a peace platform. This means that he will be extremely cautious to endorse any new aggression against Iran, especially as a first mover. He is though very likely to accept even a mediocre deal as long as it fulfills his main purpose - Iran not having nuclear weapons. And this is quite an easy task as no one wants Iran to have nukes.
As you will see, the Middle East will take much of this update. As next up in the US Inc. affairs we have the Trump trip to the Arab nations. After a week of gifts and revelations, we learned that Saudi Arabia, Qatar and UAE welcomed Trump as king and showered him with money. Thing is that all the extravagant sums we heard are hardly likely to materialize in the near future.
It almost seemed as if the nations were racing to beat each other in terms of offered money. Truth is somewhere in the middle - all the announced billions and trillions of dollars are multi-year investments and some of them involve domestic data centers. Anyway, it’s a good diplomatic trip for the Trump administration, strengthening ties with Arab nations and expanding the influence beyond Israel in the region.
More on US Inc. in Business and Finance section!
The Americas
Speaking of influence, China also scored a minor victory in this area. Colombia has announced that it will join the Belt and Road Initiative. Long story short, Colombia will now be involved in Chinese infrastructure financing that is nothing else than expanding Chinese soft power throughout the globe.
It’s hardly shocking as most of the Latin America is already in, but surely Trump won’t be happy about it. Especially since the Monroe Doctrine is very much alive in the administration.
Asia
Coming back to war topics as a prelude to the Middle East & Africa section, the ceasefire between India and Pakistan seems to hold steady. I believe that for the near and not so near future the show is over. Posturing is over and now we can get back to the status quo.
Middle East & Africa
Well, it’s a wild west in the Middle East:
Only last week we saw ceasefire odds reach 70%, only to retrace back to 30%, then shoot up to almost 60% and now being back at 37%. But what happened?
Well, there were negotiations in Doha and Israel… didn’t fade them. They engaged, talked and eventually went back today with no ceasefire agreed. When you don’t have any understanding of the underlying issues, it all may seem as plausible movement. But the reality is that for Israel it doesn’t make sense to ceasefire for some hostages.
It’s a cat and mouse game where Hamas will drag out the war to destroy Israel’s reputation and hurt their diplomatic efforts as long as they can. It’s heartless, but from power perspective best course of action for Israel is just taking total control of Gaza, simply because they can. And the faster they do it, the better long-term for them.
In the end, that’s what they are doing right now. Operation Gideon Chariot has started and it’s aim is total control of Gaza. Usually such plans were followed by a humanitarian backlash and some form of retreat / ceasefire, but this time Israel will allow aid to Gaza. In my opinion they are going all in and won’t stop unless there is unconditional surrender (very unlikely, 1% chance as there is zero historical precedent for it).
Staying on war topics, the killing of a militia leader in Libya started a brief fighting in Tripoli. Libya is torn by war and split into two regions after 2011 Arab Spring events and despite truce being in place since 2020, the country is still unstable. I’m not that much into the internal affairs there, but for now the situation seems to have stabilized.
Lastly on the peace note, the Kurdistan Party in Turkey has officially disbanded making Erdogan happy. We will see how the future will unfold, I expect that most of the militia will go to Syria and make problems there.
Europe
Another continent, another war. This week was ripe with meaningless developments on the Ukrainian war. After the Kiev photo-op and sanctions blackmail on 30 days unconditional ceasefire, Putin has proposed direct talks in Turkey.
Zelensky went for it and later it turned out that Putin will only send a B-team there. No shocker, Russian demands remain the same and they feel very confident that in the war of attrition they can prevail. So the meeting yielded nothing, but a priosner exchange and now we are back to square one.
With one minor update - Trump will call Putin today to “end the bloodbath”. But realistically, they will talk for an hour, agree that killing is bad and talk some on economic cooperation. Putin as an ex-KGB is pretty good at the game of leading by the nose. And Trump doesn’t really care that much as long as US Inc. is paid. Not even ceasefire bulls have hope, price barley moved on call announcement:
Finally out of war topics. We had three elections this week in Europe, with pretty interesting results. First one - in Romania Nicusor Dan has surprisingly won with George Simion:
Despite the results, George Simion took example of Trump and proclaimed that the election was rigged:
Anyway, chances of him getting the top spots are slim to none. From my POV, the results seems strange as getting only additional 5 p.p. in the second round is dubious, especially considering that the Romanian society seems strongly aligned towards the right.
In the meantime, Polish election has surprised everyone but me. Karol Nawrocki has surpassed expectations, while Rafał Nawrocki has underperformed in the first round. The election odds adjusted accordingly:
While I expected overperformance from Nawrocki, I didn’t expect either Mentzen or Braun to get so much support:
I will post my takes on the second round soon!
Lastly on elections, in Portugal the center-right ruling party won once again in the snap elections, but fell short of majority. Surprises are in the second and third place, where the previously second in power Socialist Party lost some seats to “far-right” Chega that is gaining popularity on the wave of anti-immigration sentiment.
Anti-immigration sentiment is generally strong across the continent. Even Starmer, Britain’s prime minister, proposed a tougher policy on immigration. Changes include raising skill requirements for work, reducing the length of student work visas and extending settlement requirements from five to ten years. All immigrants, including spouses, will need to speak basic English. Well, the tide is turning as I’ve been saying for quite some time now.
Business, Finance & Economics
Seems like a week of bad news overall. If it isn’t war, it is economic turmoil. In a not so surprising move (as it was the last agency to do so), Moody’s has downgraded America’s AAA credit rating to Aa1. The market reacted accordingly, but weakly:
No shocker, Moody’s being last doesn’t change much. And if America doesn’t have triple-A, then no one has it - after all US Inc. is still the most trustworthy creditor.
Tariffs
And my “favorite, tariffs… After “negotiations” that yielded, well, nothing concrete, Trump said that US Inc. will announce new tariffs in the next two to three weeks. Countries should expect letters telling them what they’ll be paying to do business in the US. LOL. This is shaping up to be yet another shitshow with markets going lower once again and yields getting even higher.
The master plan of lowering rates has clearly failed and now the problem is even worse. In my opinion the only thing that can now bring yields lower is a combination of fiscal austerity with a small market crash. Brace yourselves and remember that prediction markets are recession-proof ;)
Wrap up
And that’s all for the week. The last two weeks were slower on the article front as I was traveling and enjoying some nature, but tomorrow I’m back so expect two more articles this week!
In the meantime stay strong and fade the headlines. Neither ceasefire is coming soon and deep down you know it!
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.