Weekly PROPHET NOTES 11/25/24

Global Outlook: new Russian missiles, the WWIII that never was and new ATHs on BTC

Welcome to another weekly global outlook. The last week was pretty eventful, especially in the war department, but also in the American affairs, be it political or other. We are in an interesting period now as the US is in the transition period and many internal and external affairs are developing without much needed clarity from the world’s hegemon.

Many (including me) are trying to predict what will happen out of this build up. Incoming Trump administration will have many issues to tackle - from internal issues like the border and cost of living crisis to external issues like the Ukrainian or Middle Eastern war or the growing position of China on the international scene.

The plethora of issues, both new and dragged from the past, converging with a most likely volatile reign of Trump creates an interesting mix of events to analyze. Currently both foreign and domestic actors adjust their actions and plans to align with incoming administration’s strategy and I am here to figure it out before the storm hits. If you still have not, subscribe below and let’s see what is brewing in the world.

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Weekly Recap

This past week passed under the signs of nominations to Trump administration, new war developments and global elections of varying importance.

US Politics

The first major news from US politics is the completion of Trump’s administration. Trump has decided on a mix of loyalists, campaign closed-door promises and usual political figures, going in part against the will of the vocal people on X. Having experienced the first Trump reign I did not expect him to “drain the swamp” and I was right in thinking so.

Many are disillusioned now, but hopes are still high on Department of Government Efficiency, pardons and declassifications. I am sorry to be the bearer of bad news, but:

• DOGE is just an advisory body that will not achieve anything without aligned Congress,

• Ross Ulbricht was hiring hitmen, not a good look to free him and others have way lower chances,

• Declassifications are often promised and rarely fulfilled, one with any real chance is JFK thanks to RFK being in the cabinet.

I believe that many more will join the ranks of disillusioned in the coming months, seeing how all the good promises are forgotten. That is the reality of politics - campaign promises are made to be broken and Trump is no different.

Wars

In the meantime, the war department is getting ready for the new normal. While in the Middle East it means that the war effort is to be continued, as Trump is expected to double down on the support to Israel, the perception on Ukrainian war is different.

Trump is an outspoken critic of the Ukrainian war efforts and is expected to try and deliver peace to the region. The exact terms of any peace deal are unknown and that gives both sides plenty of room to act. Both Russia and Ukraine want to be in the best position possible before any negotiations take place and we can see they are trying. Whether Trump will succeed is another question, I believe that for now people put too much faith in it.

Ukraine was finally allowed to strike deep into Russia and did not waste any time to start. At the same time Russia is doubling down with both North Korean troops and new missiles in response to the Western escalation.

While many are crying WWIII, I would not go that far. Both sides are aware that a change in policy is coming soon. Both sides are thus stretching the ultimate red line, but neither will cross it. If we see chaos, it will be after failed peace negotiations, not before, but still chances there are low.

Sleep steady for now my European friends, the war is not here yet, but I cannot promise what will happen in four months.

Global elections

This Sunday, we had two presidential elections taking place - Romanian and Uruguayan. While the Uruguayan election went just as expected with the leading candidate winning the vote, in Romania we have probably a scandal of a century.

This is the opinion polling that shows top candidates from different polls, all directionally consistent:

Meanwhile these are the actual results:

Calin Georgescu, who was not even mentioned in any of the polling, won the first round with over 2 million votes. And while I mentioned that Romanian polls are not very accurate, at least in the past they showed a correct direction - the party / candidate leading in the polls was also the winner of elections.

This time I am pretty sure they were either bribed or were fortune telling from tea leaves. It is simply impossible to miss 2 million people in sampling. They would have been better off with monkeys predicting the order of candidates.

Anyway, the predicted direction from my side was at least good. While I wrote that Romania should move to the right and Calin is a right wing candidate, even more extreme than AUR, I had my money on George Simon. Lesson learned ahead of the parliamentary elections that Romanian polls are worthless.

Finance

Last week was also historic for the crypto industry. Bitcoin went just short of reaching $100,000 price thanks to increasing optimism of crypto investors around the new administration.

Favorable regulation along with promised Bitcoin Strategic Reserve will provide plenty of new liquidity for decentralized assets and many are predicting a historic bull run. If the reserve really happens, we are definitely in for a major bull run. This would be a direct market intervention of the federal government that trumps any stimulus that we had. This is just short of the Fed buying equities.

That should pretty much keep the markets at new and new all time highs for the first half of 2025 at least, probably with aftereffects until at least end of 2025.

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Global Outlook

After a major election upset in Romania, I expect that this week’s parliamentary election are nothing but a big unknown. That being said, I will try to write a deep dive on it, taking into consideration the results of the first presidential round. General direction is to the right though, that was clear two weeks ago and is even more clear now.

Besides global elections, I expect to hear new developments on the Ukrainian front. Considering the escalation cycle we are in now, we should expect some more scary messages along with increased intensity of fighting, but nothing that should change our lives. The tit for tat should continue up until the inauguration after which we will have to rely on Trump’s volatile style of communication.

In the Middle East I expect the ceasefire talks to fail as Israel has not reached any of its objectives with Hezbollah. Just as with Gaza, there is often a lot of talks about a ceasefire, but making it a reality is a different thing. Back in the beginning of the year Biden was also promising an imminent ceasefire there and eventually it failed to happen.

Now, let’s look at some ending and new markets on key events to see where the world is going.

Markets ending this week