Welcome to another week. Last one was filled with Iran news and Epstein files repercussions. But the real shockers came on the weekend in Asia, where we had 2 very unexpected election results. Compared even to 2025, we are in a really hectic environment this year and volatility on prediction markets only proves that.
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Weekly Outlook
US Inc.
A busy week in the US, both on the domestic and international front.
The State Department accused China of secretly conducting nuclear tests, most recent one in 2020.
Comment: the US is pressuring China to join the new nuclear treaty between the US and Russia. Since China’s arsenal is ever-increasing, the US (and Russia) must feel that any agreement without China is in fact favoring it.
The partial shutdown ended after House of Representatives narrowly passed the bill. But the most pressing issue of funding the DHS is postponed only till February 13th.
Comment: and the partisan fight continues.
Bill and Hillary Clinton agreed to testify in a congressional investigation into Jeffrey Epstein. They initially refused, but lawmakers planned to hold them in contempt of Congress if they didn’t cooperate.
Comment: I doubt we will hear anything groundbreaking, especially since the pair now pushes for a public hearing.
The Trump admin said it would withdraw about 700 ICE officers from Minnesota, but still 2,000 agents will remain in the state, up from 100-150 previously.
Comment: whatever happens here now will happen in relation to the DHS funding negotiations. Also future deployments are probably at stake.
Artemis II failed a wet dress rehearsal (something to do with fueling equipment), pushing the launch date from February to March the earliest.
Comment: we all are waiting for Artemis III anyway.
The Americas
A quiet week in the Americas.
The US said it had killed two suspected drug smugglers in a strike on a boat in the eastern Pacific. The total death toll of the strike campaign is now at least 128.
Comment: Trump needs domestic policy wins so we can expect more strikes to highlight his war on fentanyl.
Asia
An eventful week in Asia with surprising election results and trade deals.
Takaichi Sanae won a landslide in Japanese snap election. In a gamble, she went from having a minority government to securing a 2/3 supermajority that allows her to even change the constitution.
Comment: sometimes a gamble pays off. Now, since Takaichi is on friendly terms with Trump, we can expect a lot of cooperation between the two countries.
Anutin Charnvirakul, Thailand’s prime minister, declared victory in election for his conservative Bhumjaithai Party. It’s a major upset for Thai People’s Party that was looking to win the election.
Comment: looks like Thais got tired of trying to change anything by voting for the reformist People’s Party. No shocker since the party was already twice prevented from forming a government.
The US and India unveiled an interim trade framework ahead of the broader deal they want to sign in March. India supposedly agreed to eliminate or reduce tariffs on American industrial goods while committing to spend $500 billion on American products over the next 5 years. The US will apply a tariff of 18% on Indian imports.
Comment: this deal has 2 consequences. First, it undermines a bit a deal between India and the EU, but second, and more importantly, it puts India on the path to choose team west over team east.
At least 31 people were killed in a suicide bomb attack on a Shia mosque in Islamabad, Pakistan. Around 170 people were injured.
Comment: Shia muslims have been targeted before in Pakistan… but optics are interesting here.
Middle East & Africa
The Middle East continues to be defined by the Iranian situation this year and last week was no different.
We started the week with American navy shooting down an Iranian drone that approached the USS Abraham Lincoln, an aircraft carrier. After a series of threats, US and Iranian officials met in Oman on Friday for talks. Both sides commented on them being positive, but no breakthrough was achieved. More meetings are expected.
Between the comments, both countries continue to maintain a strong posture.
Comment: you can read my thesis on the talks here.
Saudi Arabia and Syria signed an investment deal that will involve the two countries working together to create a low cost airline and a new airport in Aleppo.
Comment: after initial Turkish success, other countries are looking to benefit from Syria’s reconstruction. It’s only fitting to see Saudi Arabia doing investment deals here.
Seif al-Islam Qaddafi, the son of Libya’s former dictator Muammar Qaddafi was reportedly killed. The situation is unclear, but his lawyer said he was assassinated at home by unknown assailants.
Comment: and so the dynasty is over. Not that it matters, since the country is divided since 2014.
Europe
And also a busy week in Europe as Ukraine talks are intensifying. But even outside of war, there is a looming crisis in the UK politics and other minor stuff worth commenting on.
Russia started to strike energy infra again, ending the pause on such attacks due to cold weather. In the meantime Ukrainians shot and injured Vladimir Alexeyev, a senior Russian general and deputy head of military intelligence in Moscow.
But when it comes to peace, the EU proposed a ban on all services provided to Russian oil tankers, to force the Kremlin back to negotiations to end the war in Ukraine. This comes when Trump said he is looking to get the peace deal by June and offered to host the next round of talks in Miami.
Comment: looks like I need to focus on Ukraine again. At the end of the year I said I see the path towards peace. The question is though if all parties manage to go on that path. Expect a deep dive soon.
Keir Starmer is in trouble as the British PM faces backlash over his appointment of Lord Mandelson as an ambassador to the US, after Lord’s close friendship came to the surface with the release of Epstein files. Starmer denies knowledge of the extent of the friendship, but it didn’t stop McSweeney’s resignation (his top aide and political advisor, who pushed for Mandelson’s appointment).
Comment: Starmer has already been unpopular. Now he faces even more backlash as his party is looking at another set of defeats in the coming byelecitons and council elections. His days might be numbered:
Spanish prime minister Pedro Sanchez said his government is looking to ban social media for under 16s.
Comment: after Australia, here comes Europe, replicating the worst legislations from around the world. There is no argument to ban social media for young, other than the laziness of the parents. Rather it is an opening to strictly regulate online presence. I would go to protests if I were a Spaniard.
Norway’s police launched a corruption investigation into Thorbjorn Jagland, a former prime minister and chair of the Nobel committee, over his links to Epstein.
Comment: another European who is having troubles because of Epstein while Americans walk without issues. At least Trump must be ecstatic now since he was not awarded the Nobel Peace Prize.
Business, Finance & Economics
Tech stocks fell this week after Anthropic released it’s newest Claude LLM. It can code better, but also do some legal nad analytical work, which pushed software companies down. However, the market did rebound on Friday.
Comment: AI is good for some companies and bad for other. Claude 4.6 is nowhere close to even being a remote coder and my understanding is that we are still years away from such a model.
Rio Tinto and Glencore abandoned plans for a merger that would have created the world’s largest mining company. Both parties could agree on respective party valuation.
Comment: I don’t think it has any major implication for team west (or team east) supply chains.
Bitcoin fell below $70,000 for the first time since November 2024, giving back all the gains since Trump wont the election.
Comment: crypto winter is here… it’s good to be on prediction markets vs crypto.
Wrap up
And that’s all for the week. I will be working on the Ukraine deep dive with publish date TBD.
Stay strong and see you soon!