Trump has told us how fantastic the Beijing summit was – but what is the truth? China and the US agreeing on trade and growth over conflict is positive. They will remain polite to each other, but the struggle for hegemonic power will continue. Xi may be betting the state of the US economy, and the mistakes in Iran, means Trump will become less relevant from November.
The imminent departure of Sir Keir Starmer (it is a matter of when, not if) is bread and circuses. His defenestration will distract and amuse the chattering political classes and infuriate voters as yet more evidence of Broken Britain. But we need to be honest – it's not any single “leader’s” fault. 60 years of bad decisions piled on poor policies have landed the UK in the mire of the present. It can be fixed – but it will need a reset.
Trump is running out of options over Iran. Bluff and Bluster won’t fix it. When he visits Beijing this week, he will be up against Emperor Xi – who holds all the cards; sufficient oil reserves, dominance over global supply chains, and critically the ability to shut off the single most important commodity in the world today – Chips.
2 choices for markets this week. Worry about where politics are headed in DC and London, and where the Beijing summit will lead us. Or join the AI party, bet everything on the upcoming IPOs, and dance yourself dizzy before someone pulls the plug. Interesting days ahead.
Today is the 81st anniversary of VE Day – the end of the Second World War in Europe. Markets are fixated on rising stock prices and probably won’t notice. Complacency is the danger. The Wars in Ukraine and Iran highlight success and failure and point towards a very different future world than the expected one. There are massive implications for markets – but that’s a tomorrow problem for markets focused on “now”.
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Markets can’t wait for the Iran war to end – so they can get back to speculating trillions on the AI revolution. The hyperscalers expect to reap monopoly scale rents from owning AI closed-weight models and the digital infrastructure of datacentres and chips. But what if households can build their own AI capabilities cheaper and more effectively? Pop!
The UK is not about to disappear in a puff of smoke because the Gilts Market is having a minor tantrum. But there is a serious Political Competency premium on Gilts, which will rise when the scale of Labour’s defeat becomes apparent, and the Starmer premiership is up against the wall. Trouble ahead.
The War/Not War in the Gulf rambles on – and the consequences mount. Careless markets are becoming anesthetised to the news – raising the risks of a shock destabilisation. The big question is what will follow? Who will be the winners from Trump’s misbegotten war?
When staring down the abyss of looming stagflation, a bond market rout, and a reset on the global economy… let’s try to pretend it’s all something else. Christine Legarde would have made a great French President. Of course it’s not Stagflation... it’s just... Well? What is it?
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