Weekly PROPHET NOTES 1/27/25
Global Outlook: Polymarket vs regulators and a flurry of executive orders
January is coming to an end and so is Polymarket in some countries. This month another set of countries got scared of prediction markets, including Thailand, Singapore and Poland.
Most of the countries are using their anti-gambling regulations to ban Polymarket despite the platform not being a bookmaker. That being said a challenge to these bans would be time consuming and costly.
General direction that the countries want to take is now clear. Ban any platform that they cannot control. Long-term outlook for Polymarket is bad, unless they really start to work with regulators around the globe. However, prediction markets in general are here to stay and in case of Polymarket regulatory blunder, there will be Kalshi and other regulated competitors.
Of course these bans are extremely easy to bypass with a simple VPN (not legal or investment advice), but it does not change the above. Stay safe there and save your private keys in case other countries start to implement bans. Now let’s move to the weekly outlook.
Weekly Outlook
The week went under the headline of Trump executive orders. From LGBT to foreign aid, nothing was spared by the new president.
United States
Personally, I am a bit surprised by the initial tempo of the president. Among some obvious executive orders like withdrawal from Paris climate agreement and WHO or ending woke policy across federal agencies or regarding illegal immigration, some of the orders are more extreme.
Pause and review of all foreign aid, including Ukraine is one example. A comprehensive review of US global support network suggests sweeping changes to general foreign policy. The pause is supposed to last 90 days, after which the Trump administration will announce new policy. Regional and country focus will be a great telltale of admin’s actions in the next four years.
I am eagerly awaiting the results of this, in the meantime I forecast that the focus will be on the Middle East, Indo-Pacific and Africa while the burden of Ukraine will go to Europe.
Staying with geopolitics, Trump has also announced national energy emergency, revoking most of the Biden’s green energy orders and pushing for deregulation to unlock US resources in eg. Alaska. Trump is betting on energy independence and export in the face of global turmoils.
Lastly, Trump has issued some pardons, mainly for J6ers and Ross Ulbricht which came as a bit of a shock to me as the guy besides having a drug platform online (which in principle I have nothing against, but Trump probably has) had ordered several kills. A gesture of good will towards libertarians I guess.
The Americas
The Americas will get busy in the next several months as Trump’s deportation plan is being implemented and planes with immigrants started flying out to the countries. On of such countries is Colombia, which initially refused to accept the plane.
Trump has threatened tariffs and today morning Colombia changed the course and agreed to take the planes. With recent turmoil around cartel-controlled regions, where close to 32,000 people were displaced and scores were killed as National Liberation Army clashed with Revolutionary Armed Forces of Colombia, the government may want to avoid other problems.
Asia
Staying on the American topic in the global context, after Donald Trump said that Taiwan needs to spend more on defense, the Taiwanese opposition-controlled government voted to freeze parts of the country’s defense budget. Donald Trump surely will not be happy about that, but it seems like a simple situation that one threat of dropping security guarantees can fix.
Meanwhile in another important to the US country - South Korea - Yoon has defended his decision in front of the Constitutional Court, while the anti-corruption agency is pressuring to indict him with insurrection. This case will take months, but I expect the president to end up in prison somewhere towards the end of the year. In the meantime the government will be under opposition’s control and we all know they favor good relations with North Korea. Trump definitely has a pickle there to resolve.
Lastly, a case that shocked the world. A judge in Kolkata handed a life sentence to a man convicted of raping and murdering the doctor in India. Expected, but in the grand scheme of things, rather inconsequential.
Middle East & Africa
Middle East is busy enforcing ceasefire deals across the region. Firstly, the Lebanese deal was extended till 18th of February as up until now the Lebanese citizens were still not allowed to return to their homes south. Israel is still present in Lebanon and I expect them to remain there for the time being.
Meanwhile in Gaza, the ceasefire is in and both the hostages are exchanged and Palestinians are being allowed to return north to their settlements. However, Israel has launched a major operation in West Bank. My expectation is still that the wars will not end and soon we will see the restart of hostilities. Nothing changed since my analysis of the Gaza ceasefire deal that you can read.
Staying in Israel, Lieutenant General Herzi Halevi decided to resign as chief of staff of the Israel Defence Forces. Interesting development, but I am yet to have a strong opinion on it.
Moving to Africa, as the region is poised to gain in geopolitical importance in the next four years, after death of 78 illegal miners in South Africa, Ghana has its own tragedy, where nine people were shot dead by soldiers at a gold mine. Army is saying that the illegal miners were carrying weapons and started shooting on security personnel. African mining operations are something worth watching closely as the region is generally in a political turmoil and rich in resources.
Europe
Moving to the old continent, in Europe we had the annual WEF meeting in Davos. Half empty conference rooms and over 60% drop in high-end escort demand define the decline of the institution. Despite its fall, the conference was attended by Volodymyr Zelenskyy who during his speech encouraged Europe to be more decisive and take more burden of aiding war. Sign of things to come if you ask me.
The other party to the conflict, Russia, has meanwhile imprisoned Navalny’s lawyers for supporting extremism. You can say what you want, but Putin deals with opposition ruthlessly and swiftly.
Business, Finance & Economics
Tariffs. Trump is pushing them hard, reviewing trade agreements with every country and threatening them left and right. Be it Columbia briefly, Mexico and Canada, EU or now China, if they fail to sell TikTok. Prime weapon of Trump’s economic policy. However, they can also be a double-edged sword - too much of them and the US will be the one left hurting. I believe that at least partly they are just a negotiation tool and I expect several of the previously mentioned countries to reach an agreement and avoid the tax.
While pushing taxes externally, Trump is busy securing investments domestically, where a $500 billion deal to invest in AI was announced by the man himself, Sam Altman, Larry Ellison and Son Masayoshi, under a name Stargate. I wonder what will happen with the project after the Chinese DeepSeek model launch, which supposedly was trained on a fraction of this budget and performs on par with prime American models. In my 10 predictions for 2025 I expected a slowdown in AI development. What I might have missed is the Chinese announcing an innovation so quickly - for now finally the investors started to think about capital efficiency and this morning NASDAQ is 3.6% down on the open.
Lastly, despite Musk being close to administration, the FAA has ordered SpaceX to suspend further Starship launches, as the last one exploded jut minutes after the launch and the falling debris caused dozens of airline flights to be delayed or diverted. Short-term issue that I expect to be quickly resolved.
Markets ending this week
Moving on to the markets, there are quite a few interesting ones, worth a closer look.
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