Welcome to the new week. Coming to you from a new location, I found some time in between apartment search to deliver you the usual weekly global outlook. With so much happening around the world it couldn’t be any other way ;).
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Weekly Outlook
US Inc.
The US is busy on both domestic and international front. Internally, we have the first government shutdown in nearly 7 years as Democrats and Republicans failed to align on the budget in the Senate. Amid the usual blame shifting we learned that the Trump administration is looking to use the opportunity to lay off more federal workers.
While the government is shut down, hundreds of thousands of workers are currently furloughed, economic data releases are postponed and now seemingly people will also be fired permanently. Democrats are trying to push in their agenda while the White House in relentless and is looking to cut even more projects (mostly related to clean energy) to force the Democrats hand.
However, looking at the Adjacent aggregate, we are in for a long one - traders feel confident that we will see at least 10 days of shutdown with nearly 30% chance for over 30 days!
The next vote on the budget is expected this week, but seemingly no one expects it to pass as healthcare remains the main issue to resolve.
Last week Trump with Hegseth gathered all the top military people in Virginia to talk about wokeness in the military and suggest that the National Guard will be deployed in more American cities. However we do not know what was said behind closed doors, as I doubt that all of them were gathered only for a speech that could have been an email. If I were to speculate, they were talking about the domestic deployment as well as Venezuela.
Speaking of Venezuela, another drug boat was bombed last week, the fourth attack since last month. For now these actions are irrelevant, but we may be looking at a wider deployment to Venezuela as Trump administration tries to focus on the Western hemisphere.
And speaking of the National Guard, Trump authorized the deployment of 300 troops to Illinois. JB Pritzker, the Democratic governor, described the move as outrageous while a similar deployment to Portland was temporarily blocked by a federal judge.
Lastly, Sean “Diddy” Combs was sentenced to more than 4 years in prison on the prostitution-related charges. However, he was acquitted of sex-trafficking and racketeering. Diddy apologized for his actions and his lawyers said he would appeal the sentence.
The Americas
The UN Security Council backed a proposal by the US and Panama to deploy more forces in Haiti to fight local gangs. Since the assassination of the president in 2021 the capital (and the whole country to be honest) was taken over by the local gangs with surrounding countries mostly uninterested to intervene.
Down south, the Argentinian peso continues to feel the pressure as the central bank was forced to stabilize its price once again last week. Investors are worried about the election results as well as an overall US willingness to continue to support the currency.
Asia
South Korea is looking to increase its defense spending by 8.2%, reaching 2.3% of GDP next year. It comes after the president announced that the country reached an agreement with the US on security. In the meantime the trade deal between the countries is set to require more time to finalize.
In Japan, Takaichi Sanae won the contest to lead Liberal Democratic Party and be the prime minister. She is set to be appointed as the first woman prime minister on October 15th, after a parliamentary vote.
Sticking to Japan, the country is experiencing a beer shortage, as Asahi Super Dry’s breweries were targeted in a cyber-attack. The production was only restarted today.
Lastly, a 6.9 magnitude earthquake hit Cebu, Philippines, where at least 20 people were killed and 37 were injured.
Middle East & Africa
The Trump show continues on the foreign affairs front. After presenting his 20-point plan to the world, Hamas has responded somewhat positively, agreeing essentially to 7 out of 20 points. Despite Netanyahu’s cool response, Trump touted it as a victory and pushed ahead. Israeli and Hamas negotiators are set to have talks in Egypt this week, with Steve Witkoff and Jared Kushner joining them later this week.
Trump, as a good salesman he supposedly is, is perpetually bullish on any endeavor he undertakes, but I have serious doubts about the success of his “peace” mission - you can read my take here:
For now Israel tries to play along the narrative though and scaled back its Gaza operation. Netanyahu is also using the opportunity to do some political PR, saying he hopes to bring back all the hostages soon (contingent on Hamas agreeing to surrender of course).
On the other front, “The Global Sumud Flotilla”, encompassing over 500 people on 40 civilian boats is trying to get to Gaza to deliver aid. However, last week Italy withdrew its support to it, saying that it might jeopardize Trump’s “peace” plan. At the same time, Israel intercepted more than a dozen of the boats and arrested several activists on board. We can expect more developments soon as other boats are approaching Gaza.
In Afghanistan, a nationwide telecom blackout began after the Taliban dismantled fiber-optic connections in parts of the country, supposedly to prevent immorality (I suppose too many Afghans were watching porn).
Moving to Africa, there are protests in Morocco that have now spread to several cities. Mostly young people, inspired by similar protests in Asia, are demanding better education and healthcare. At least 2 people were killed and hundreds were injured after several nights of protests that were organized through social media.
Meanwhile, after similar protests in Madagascar, the president dissolved his government.
Europe
Europe continues to struggle with drones across the continent. Flights were suspended at Munich airport after drones were spotted there on Thursday - suspension lasted till Friday night. Additionally balloons smuggling cigarettes were spotted in Lithuania on Sunday, which disrupted flights in and around the country.
Meanwhile Putin said that Europeans are hysterical around the drones and threatened to respond significantly to Europe’s militarization (including threatening to strike Ukrainian nuclear power plants).
In France, Sébastien Lecornu is trying to push the budget by including a new tax (sic!) on people earning over €250,000 ($294,000), to get the support from the Socialist Party.
Lastly, Andrej Babis, a former prime minister, won the Czech Republic general election. ANO (his party) finished with 35% support. Babis calls himself a Trumpist and aims to reduce the foreign aid (especially to Ukraine). However, he now needs to form a coalition to govern.
Business, Finance & Economics
OPEC+ once again decided to increase output by 137,000 barrels a day in November. The group, despite some western media claiming it is pressured by Trump, is doing this to prevent American oil from taking over the market. The price fell to $65 after the announcement and new US oil developments are only breakeven at $50-60 per barrel.
In eurozone, annual inflation in September rose to 2.2% from 2% in August. It is now slightly above the 2% target, fueled by stubborn energy prices and services, but the ECB is expected to hold the rates on the next meeting.
OpenAI launched Sora 2, able to create hyper-realistic videos. It is now only available via invitation in North America. Along it, a Sora app was released - it resembles TikTok and allows users to upload and view AI-generated videos. Additionally we learned that OpenAI is now valued at $500 billion, after Bloomberg reported a secondary share sale, making it the most valuable private company, beating SpaceX.
Lastly, Warren Buffet, who is set to retire after this year from Berkshire Hathaway, bought OxyChem from Occidental Petroleum for $9.7 billion. One of the biggest oil & gas producer in the US is struggling under a burden of high debt after a series of acquisitions - the deal is supposed to relieve some of this pressure.
Wrap up
And that’s all for the week. While I search for a more permanent place to stay in the new location I may be less active, but I’ll make sure to keep an eye on major developments (especially Gaza) and do a new deep dive in the end of the week.
In the meantime, stay strong and see you soon!
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.