Here’s a summary of last week’s global geopolitical events that inform us on regional happenings and are pertinent for investing. We read a lot, but must thank our strategic partners who curate so much information and provide a deeper context. We’re always watching. Our partners have been vetted for expertise and independence. Links to their sites are at the end of the post.
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Japan
Japan’s LDP losses majority for the first time in 15 years. Ruling Party Loses Majority
Japan restarts first nuclear power plant since the Tsunami of 2011 an the Fukushima disaster. Reactor Restart
China
Chinese industrial profits continue to plunge in September. Sep = biggest drop since the pandemic
Though profits are plunging, survey data shows manufacturing activity expands in October. MFG activity resumes expansion in Oct
Stimulus may be working and China planning further fiscal stimulus. $6T in new sovereign debt may come at the end of this week
Middle Corridor Asia – Elections
These areas are in a tug-o-war between Russia and the EU/Nato. These are geographically strategic regions for Russia. Many exist in important trade routs. There are ethnic Russians in these countries. And many of these countries have envious supplies of natural resources. There have been many claims of Russian disinformation/propaganda and election interference.
Georgia
Georgian President Zourabichvili said she does not recognize parliamentary election results saying the country fell victim to a “Russian special operation. The ruling Dream Party received 55% of the vote. The Dream Party claims to be pro-Europe, but their recent action and this election speak to them moving toward Russia. The President called for protests. Given the election environment was described as “divisive” and “marked by intimidation … and physical violence,” let’s hope this doesn’t degrade further. European officials and observers are calling for a full investigation. Georgia is a geographically strategic interest for Russia on its southern border in the narrow land gap between the Black and Caspian Seas. Georgian Elections
Moldova
In Moldova pro-Europe v pro-Russia is split down the middle. Elections to be held on Monday, 11/3. There have already been rumblings of Russian disinformation. Again, this a geographically strategic country of interest for Russia located just west of Ukraine near a small land gap between the Carpathian Mountains and the Black Sea. Like Georgia, there will certainly be colorful news coming early this week. The Black Sea region is getting more interesting. Moldovans split
Russia
Russian officials meet with Alexander Lukashenko and discuss a joint nuclear power plant project. They also discuss that Russia and Belarus need to become more independent and reach “almost complete import substitution.” Russia/Belarus: the world fracturing
Here are some of the causes and implications of Russia hiking their interest rate to 21%, a record high. This is to seek an inflation target of 4%. The concern is raising savings during wartime. The other concern is the excess liquidity which would be presumed caused by the government printing money to fight the war in Ukraine. Russia has budgeted a 25% increase in military spending for 2025. The reality, regular citizens pay the price. Citizens are delinquent on paying down credit and cannot get mortgages. At the same time, taxes on housing and utilities are going up. According to the Bank of Russia, bad debt in the system is 4.1% of total debt and the 7.6% of unsecured debt is delinquent. Head of the Central Bank addresses the State Duma, SberBank no longer accepting mortgage applications, Rising Delinquencies and Bad Debt, 2025 Russian Budget/rising taxes/the cost of war
The US announced more sanctions: These are targeting 400 or so companies and individuals in more than 17 countries the US says are supplying Russia with military equipment and technology, as well as helping them evade sanctions. Turkey, India, China, Uzbekistan, Kazakhstan, UAE are some of the noted countries targeted with the new round of sanctions. US sanctions against those working with Russia
Europe
Hungary and Slovakia to buy gas from Azerbaijan. “European Gas Prices Slide as Buyers Near Deal With Azerbaijan.”
German GDP keeps oscillating between positive and negative quarters, avoiding official “recession.” But the YoY numbers have been negative for over a year. Q3 GDP +.2 after Q2 was -.3%
VW prepares for labor negotiations and could close 3 factories, a result of slumping sales and 64% drop in profits. VW struggles
EU puts tariffs on Chinese EV’s. EU tariffs on Chinese EV’s
Middle East
US has shot off about $1.8B worth of interceptor missiles since the beginning of the conflict between Israel and Hamas. Officials are expressing concern that supplies of these standard missiles are running low. ““Those are really expensive munitions to shoot down crappy Houthi targets,” one congressional official said, “and every one they expend takes months to replace—and at high, high cost.”” RTX is the manufacturer. US missile stocks low — costs of war
The US wants no expanded ground war by Israel in Lebanon. They are supposedly offering to aid in land/air/sea embargo to prevent Hezbollah from re-arming. There may be a 60-day cease fire coming to negotiate. Mission Accomplished?
Iran says they will raise defense budget by 200% in the wake of Israeli attacks on their military infrastructure. Badly wounded — costs of war
Iran is reported to be planning a strike on Israel from Iraq. Reports of upcoming retaliatory attack. But Iran is badly wounded. Any retaliation would likely come from Iranian backed militia in Iraq to try to avoid further Israeli retaliation. Iran is certainly wounded and Netanyahu seemed very confident in a speech to the IDF that “…Israel has greater freedom of action in Iran today Iran than ever before. We can reach anywhere in Iran as needed.” One of Israel’s stated mission goals is the Iran will never attain a nuclear weapon. I’d tread lightly if I were Iran. Netanyahu speech to IDF
Trade wars
US drone manufacturer, Skydio, forced to ration products as Chinese government sanctions cause battery supply constraints. Batteries are a component they still source from China. Skydio ended up on the sanctions list for selling drones to the Taiwanese National Fire Agency. The CEO claims this is in order to advance Chinese drone industry. Sanctions as a strategic political tool
Boeing
Unions to vote on new contract on Monday.
Turkey
Turkey will build a gas trading center, wants to become an international gas hub.
Ukraine
Volodymyr Zelenskyy tells the Times of India that Indian PM Modi could “influence the end of the war” by stopping Indian purchases of Russian energy and ceasing defense industry relationships with Russia. Appeal to India
Afghanistan
The Taliban is losing power in Afghanistan. The rising group is the Islamic State. Competition and defectors
Strategic Partners
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