UK Defence Minister John Healey’s resignation over the dearth of defence funding this morning will throw UK defence into turmoil and further undermine the flolloping Starmer Government. Gilts spiked higher on the news.

The UK’s Defence Investment Plan has been delayed yet again, mired in cabinet warfare on spending. The DIP will focus on big projects like a new fighter-jet but will make a nod to the lessons learnt in Ukraine. The big issue is how the defence industry will evolve away from Defence Primes towards financing the start-ups that can change the battlespace with new tech that is adaptable, available now, cheap and good-enough.

You can’t keep a good market down. New record US levels seem to occur daily. But, why? The underlying picture of the US economy is not weak, but the political structures around it seem to be fraying. What might give and trigger the kind of reversal many expect, or might we get a more fundamental reassessment of what the USA will look like post-Trump?

The Pope has published an Encyclical warning on the risks of an ill-considered rush towards AI. It comes at a time when AI is driving the markets, and AI leaders are whispering in Trump’s ear that regulation will destroy America’s lead. It’s not just the risk we will be turned to grey gloop by AI overlords, but how jobs, the economy, inequality and social equality are at all in play.

I know I should be talking about bond yields and inflation risks, but sometimes we have to stop and listen to the noise. When our idols say, do and enact stupid things there are always consequences. I know I should be talking about bond yields and inflation risks, but sometimes we have to stop and listen to the noise. Trump, Musk and Bill Winters. When our idols say, do and enact stupid things there are always consequences. This is a market perhaps too focused on the personalities, and not enough on the realities.

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”.