Weekly PROPHET NOTES 1/13/25
Global Outlook: California on fire, developments in Gaza, Mark Zuckerberg takes the red pill
Blue Monday is around the corner, but the world is burning red hot. Reference to the LA fires, but that is not the only thing developing fast. 2025 is not disappointing and as expected is shaping up to be a monumental year in global affairs.
This week was ripe with developments and foreign policy indications for the next months. Additionally, we have only one week left till Trump takes office. And if you have been around politics in 2017, you know that the world is in for a volatile ride.
Do not get me wrong, the guy is not stupid, but his conduct is chaotic. Quite fitting that he will be inaugurated on a blue Monday.
Enough of an introduction, subscribe below if you did not yet and let’s see what the people in power cooked up for us this week.
Weekly Recap
As usual, the news from the US are on the top, but other regions did not disappoint with developments.
United States
Starting with the headline photo, California is burning. With the biggest fire recorded, this time the wealthy neighborhoods were hit - Malibu Beach and Pacific Palisades are completely burned down. Besides the wealthy, the others are suffering as well with a total of over 100,000 home burned down.
The event caused massive outrage thanks to two factors:
Donald Trump highlighting problems with California water retention infrastructure during his campaign.
Insurance companies quietly stopping to cover fire damage in their home insurance policies a few months ago.
Bad start of the year for Gavin Newsom - the combination of the two above put his potential presidential campaign at risk.
Besides the California fire, Trump has also made repeated headlines when he doubled down on territorial expansion. Full coverage of the situation and implications in the last week’s deep dive:
Lastly, Biden in one of his moves banned offshore drilling, but Trump is expected to cancel the ban in the first few days of presidency.
The Americas
Announced just as last week’s global outlook went out, Justin Trudeau has officially resigned from being prime minister and the leader of his party. New leader and the interim PM is expected to be announced this week. However, with elections coming and minority government, the interim PM is expected to serve shortly, being in place mostly to organize the new election and possibly push it forward.
From other news, Edmundo Gonzales, the real winner of the Venezuelan election has met with both Biden and Mike Walz, Trump’s national security adviser. Interesting development that suggests that the US administration might want to take some actions against Venezuela.
Asia
In Asia, besides the South Korean president Yoon hiding in his residence to avoid arresting, there was a 7.1 magnitude earthquake in Tibet, wrecking havoc and killing at least 126 people. Rescue operations are ongoing in the freezing cold of 0 Fahrenheit (-18 Celsius).
From political news, Indonesia has officially joined BRICS, expanding the organization that aims to challenge the economic dominance of G7. BRICS is no military alliance, but its scale showcases the multipolar world order we are entering.
Middle East & Africa
I am hearing some good news from Gaza. Supposedly there was a breakthrough on the ceasefire negotiations and the final draft of the deal is now being circulated among the parties. Seems like I might have underestimated Hamas and Israel’ willingness to have a deal. We are yet to see if the deal goes through, as we have already been there, but there are positive signs.
Europe
In Europe we heard back from former French president who is on another trial for alleged illegal campaign funding from Muammar Qaddafi. It has been years since he has been president, yet the stench drags to this day.
Staying with governments, in Austria the right has got the mandate to try and form the government after previous attempts by other party had failed.
And lastly, on Ukraine war, there is a renewed Kursk offensive, but for now neither side has managed to get any significant gains.
Business, Finance & Economics
In business we had a shocking development at Meta - Mark Zuckerberg has announced that he is letting go of all fact checkers and implementing community notes style solution for misinformation. Sneaky guy, hard to trust him when he goes wherever the current government likes.
We also had CES 2025 last week, where among others, Nvidia has announced some product and plans and a partnership with Toyota on autonomous vehicles.
Lastly on finance - the stock market is diving off its highs while the bond yields surge, worrying some analysts of a recession. For now though the situation remains fairly stable.
Global Outlook
Despite the burning hot, the global outlook remains stable and greenish.
United States
In the US fires are still ravaging California and current outlook is grim with weeks expected before the fire is contained.
However, the overall situation remains stable and the bird flu spread seems contained for the time being.
Next week we will get the new Trump presidency and see how his Cabinet will turn out to look like.
The Americas
Stable outlook for the Americas for now, with news on Canadian government future expected soon.
Asia
In Asia, besides the eventual arrest of South Korean president Yoon, the outlook remains stable. Some are pointing to China getting ready to invade Taiwan, thanks to new shots of military equipment developed for landing troops.
From my perspective, a lot more needs to happen for the invasion to be considered imminent. First is major troops movement, as we have seen in the case of Ukrainian war, months ahead of the invasion. Second is the increase of blood donations as China is known for having constantly low reserves due to cultural reasons.
However, the development in building the military equipment suggests that we are closer than further from it. My initial assessment - 2026 the earliest.
Middle East & Africa
Here my eyes are towards Gaza in the short term and Lebanon and Syria in the medium-term.
Currently traders give 71% chance of a ceasefire in January, highest to date. As they say: if there is a will, there is a way.
In the medium term though the situation remains unclear. Lebanon with a new leadership is looking to fix ties with Syria, while Syria itself is in a bit of a pickle as the US is bound to tackle with Turkey over Kurds.
Europe
In Europe the situation remains stable, but at the edge. We shall see the full extent of Elon Musk’s influence during the upcoming German election and eventual run off of the Romanian presidential election.
In the meantime on the Ukrainian war, both sides are struggling to improve their position ahead of the negotiations.
Business, Finance & Economics
In the business world all eyes are on bonds. It seems for now that the Fed is losing control of the long end of the yield curve. For now the data on the overall economy looks promising, but we shall see how the CPI print will affect both the markets and the Fed decision on the next rate cut.
Markets ending this week
I shy away from Cabinet confirmation markets for now, but still in the ending markets section, there is an interesting play on the Trump inauguration speech.
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