There are many tail risks policymakers and investors have to juggle at this moment. A big one is the arrival of a omni-financial crisis. A tech stock market crash in the US, a sovereign debt crisis in Europe, and a financial meltdown in China – all happening at the same time, feeding each other. 

Such a scenario is not implausible. We had a bit of a mini-wobble for tech stocks this week. Some of the valuations are clearly not sustainable. The difficulty for investors is to determine the exact sources of value in the tech sector. For global macro people like ourselves, it is easy to say that AI will have a massive impact on productivity in countries that participate in 21st century technologies. But there are no proprietary technologies. We could be a single algorithm away from a collapse in the Nvidia share price. If somebody manages to reduce the number of calculations in a deep learning model by a significant degree, we will no longer need those data gigafactories that everybody is building right now. OpenAI is still the global leader in large-language models, but as China’s Deepseek has shown us, this is not a monopoly, and it can be done at lower cost. It is possible to have an AI revolution and an AI bubble at the same time. The fall in the Bitcoin price from a peak of almost $125,000 to $90,000 now is perhaps a warning sign that investors are starting to pull out of risky assets.

No general asset class is probably riskier than those of European government bonds, because of a toxic interaction of debt dynamics, political unwillingness to reform and modernise, and low productivity growth. As the absurd political discussion in France demonstrate, there is no political majority for fiscal sustainability. The same is true in Germany too. The German coalition can only engage in these massive pork barrel spending projects after it ended its self-imposed debt rules. Military spending is now off-limits. And the German government is pushing current spending into a newly created investment vehicle. Bond markets usually do not react to such seismic political shifts quickly. European politics is surrounded by a lot of fog. When that fog lifts, Europe could be for a nasty surprise.

There is also a financial crisis brewing in China. The country’s former finance minister, Lou Jiwei, said China may have just averted an immediate crisis in its property sector, but property will continue to drag down the country’s economy. Michael Petis made an important point that one reason why China’s GDP growth is bloated is the reluctance by state-owned enterprises and local government to write off bad investments, and prefer to keep them as assets on their books. No accounting tricks, or innovative financial tricks, can ever turn an unsustainable situation into a sustainable one. 

The UN Security Council approved the US resolution on Gaza yesterday.

This resolution gives the green light for Donald Trump’s Board of Peace, and to deploy an international stabilisation force in Gaza under a unified command and in consultation and coordination with Egypt and Israel. The proposal allows the ISF to operate in Gaza until the end of 2027, to guard its borders, to oversee the disarmament of Hamas, to secure humanitarian corridors, and to provide relief and safety operations to Gazans.

In the UN Security Council, Russia and China abstained. They made it clear that they would have preferred an international force under UN command and an unequivocal endorsement of the two-state solution. Russia even submitted a counter-proposal to the Security Council a week ahead of the vote, with a clear commitment to the two-state solution and substantial changes to the US draft. In response Washington mobilised Arab and Muslim countries behind Trump’s peace plan to issue a joint declaration in support of the US draft, including another reference to a path towards Palestinian statehood. After the Arab and Muslim endorsement, the Palestinian Authority issued a statement to back the US initiative. This was one of the reasons cited by diplomats, why Russia did not veto the US initiative.

Both sides of the conflicts had their misgivings over this resolution. Hamas insisted that they will not disarm, which is already pitching them against the international stability force. They also reject putting Gaza under an international guardianship. Benjamin Netanyahu and his far-right ministers, for their part, insisted that they reject the two-state solution and did all they could to keep any reference to the two-state solution out of the proposal. The momentum went the other way.

The UN resolution comes just in time for Saudi crown prince, and de facto leader, Mohammed bin Salman’s red-carpet reception by Trump in the Oval office. Both men hope to make some major announcements together in Washington, similar to Trump’s visit in Saudi Arabia earlier this year. It will be a measurement of how much each side is willing to give up for the other. It is up to them to define what the crown jewels of their wonderful friendship will be. At this stage announcements do not have to match reality.

Saudi Arabia is key for Trump’s regional ambitions. Saudi Arabia has the money Trump needs to finance the reconstruction of Gaza and to invest into the US.

The meeting has been well prepared with agreements more or less ready to be signed including a US-Saudi defence pact and a massive sale of weapons including the F-35 fighter jets. It is less clear that Saudi Arabia will sign off on the normalisation with Israel, one of the crown jewels. US officials believe that its UN resolution adequately met Saudi Arabia’s conditions for normalisation, but bin Salman may choose to wait and see.

Germany, meanwhile, has shown a strange sense of timing. They announced that Germany will resume weapons sales to Israel just ahead of the UN resolution vote. As if an official ceasefire is all what is needed. The situation on the ground is still fragile and the political fractures in Israel and in the Westbank are heating up. If Germany is indeed in favour of a two-state solution, why do they waste their diplomatic assets?

Friedrich Merz showed a moment of courage when he announced in August the partial suspension of weapons delivery in response to Israel’s plans to expand operations in Gaza. Berlin now wants to lift this suspension order on 24 November and return to a case-by-case review on the basis of maintaining the ceasefire. The spokesperson for the German government said that they will condition their decision on humanitarian aid provided on a large scale and in an orderly manner. With the resumption of the arms delivery Merz is now back in sync with his party and the German establishment.

One of the most significant developments in modern warfare so far has been the various different uses of unmanned drones. Nowhere has this been the case more than in the Ukraine war. Russia and Ukraine have both used drones to significant effect, and are constantly innovating in how they use them. Russia’s latest advances in eastern Ukraine are a case in point. They have started using drones more in an operational capacity, to hit Ukraine’s ability to reinforce and resupply their front-line troops, as well as their drone operator teams.

Both have also used drones as a relatively cheap, 21st century form of strategic bombing. Russia will launch massed attacks at Ukrainian energy infrastructure. Ukraine, with its more constrained number of drones, is more precise, but still uses its own arsenal to significant effect. It primarily targets Russia’s oil refining, transport, and export infrastructure. The aim is threefold: to try and reduce the supplies Russia has for its war effort, deny the Kremlin oil export revenues, and convince Russia that there are tangible costs to the war.

As the situation on the front-line has slowly turned worse for Ukraine, it has significantly ramped up its attacks on Russian oil infrastructure. Ukrainian drone strikes had reportedly hit more than half of Russia’s oil refining capacity by late last month. This Friday, Ukraine launched the most significant strike yet. It hit the Novorossiysk port in the Black Sea, one of Russia’s biggest oil export facilities. That attack temporarily knocked the port out and it suspended its exports. Novorossiysk sends out around 2.2m barrels per day of oil typically, or about 2% of the world’s oil supply.

The attack produced the Ukrainian drone campaign’s first noticeable impact on crude oil prices. Both the Brent and West Texas Intermediate benchmarks rose by more than 2% on Friday in response to Novorossiysk going offline. The port resumed exports on Sunday, and prices are now coming back down a bit. Although Russia was able to bring the port back online quicker than expected, we probably shouldn’t expect this to be the last strike of this kind.

Ukrainian drone attacks are having a more marked impact on how much refined oil products cost relative to crude oil, however. Russia has significant refining capacity, coming to around 6.6m barrels per day. Normally, the country doesn’t use its full capacity, but might be dipping into some of the spare capacity it does have. Even with this, the country’s refinery run rates are noticeably down on the last few years. As of the beginning of this month, they were putting out 5m barrels per day of refined products, versus 5.4m last year, and a five-year average of 5.5m.

When you combine that with other outages elsewhere, the result is refining margins that are markedly higher than they were last year, across a number of different benchmarks. That adds a new strategic dilemma for the Trump administration. Because of this, diesel prices in the US have gone up since Donald Trump took office earlier this year, and petrol prices haven’t gone down with crude oil prices.

Should this continue, the US may feel the pressure between Trump’s desire to end the war in Ukraine quickly, and the impact of the strikes on politically sensitive fuel prices. Aiding Ukraine so it can carry out the strikes is a relatively low-cost and low-effort way to keep its own war effort viable, and bring pressure on the Kremlin to negotiate. But it has its own drawbacks, if Russian drivers aren’t the only ones feeling the strikes’ effects.

Nobody can ever excuse us of excessive kindness to Angela Merkel during her long reign as German chancellor. We recall that there was a lot of uncritical support for her, especially from the European centre-left, the same group that is now most virulent in its support of Ukraine and the condemnation of her policies.

It is most definitely too early for a historic evaluation of the period from 2014 until 2022, the time between Russia's annexation of Crimea and the full-scale invasion of Ukraine. What we note is that there is now, almost four years after the start of the war, a concerted push-back by her and her senior team against prevailing narratives. They could have done this earlier, but waited until now, a moment where public opinion in Europe is no longer as charged as it was in the last three years.

In a recent interview with the Hungarian online service "Partizán", Merkel said that Poland and the Baltic Republics rejected her plan for a successor agreement to the failed Minsk agreement. If you read the interview and the relevant passage, you will struggle to find corroboration for the claim that she blamed Poland and the Baltic Republics for the war. This week, Sigmar Gabriel, a former SPD leader and foreign minister, doubled down in support of her position. There is one specific claim he made that Team Merkel is pushing very hard: 

“History shows that because negotiations did not take place, the great war came afterwards. Historical developments did not lead to the great war breaking out during Angela Merkel's time and during the period when she wanted to negotiate – but afterwards.”

It is trivially true that war did not break out under her watch because she had left office by then. The question is really what role diplomacy played in the interwar period 2014-2022, to which extent the breakdown in diplomacy contributed directly to the war and whether a new diplomatic initiative could have succeeded. This is the one part of the Merkel/Gabriel narrative we cannot dismiss out of hand. The EU has put itself in a position where it no longer has high-level diplomatic channels with Putin. In doing so, the EU has taken itself out of the process to negotiate a post-war settlement.

Where Gabriel is undoubtedly right is in his assertion that Germany and the rest of the EU are not in a position on their own to support Ukraine, and they will depend on continued US support. On this critical point, we see no shift in position by the Trump administration.

After the first visit of a Syrian president with a US president in the Oval office in Washington, another first of its kind happened in the Elysee palace in Paris, where Emmanuel Macron welcomed Mahmoud Abbas officially as the president of Palestine.

This is shift that became possible after France recognised the Palestinian state in September this year. Together, Macron and Abbas agreed to set up a joint panel to consolidate the State of Palestine and drafting a Palestinian constitution. The work is to cover all legal aspects of statehood including constitutional, institutional and organisational.

France remains firmly committed to the two-state solution and is with Spain one of the only two large EU countries to recognise Palestinian statehood. The Trump peace plan remains deliberately vague on this issue and was agreed without involving the Palestinians. The Trump plan is, however, the operational blueprint that Israel and Muslim States signed up for. The process is still in phase one, with difficult negotiations on moving to the next phase. Will it ever get to phase two? The situation on the ground suggests that Hamas resumed control over half of Gaza while Israel is proceeding to annex further land in the West Bank. Violence and destruction is continuing despite the ceasefire.

In this context, the move of Macron and Abbas brings no guarantee that their work will ever be implemented. They proceed, nevertheless. The Trump plan is in favour of a technocratic Palestinian government, supervised by an international task force and Trump himself. But without a Palestinian partner, this plan cannot take off. France’s position has been that despite its weakness, the Palestinian Authority is the only possible partner but neither Israel nor the US administration are in favour.

The meeting between Macron and Abbas was an act of defiance against side-lining the PLO in the peace plan in the hope that Washington will one day see that there is no other way out of the impasse. This is Macron’s foreign policy gamble, and a daring one too without the means to impose it. The work will require patience, preparing for a day when the world would be ready to receive it or offer a better alternative.

Ahmed al-Sharaa is the first Syrian president ever to visit the US president in the oval office. It is a risky bet by Donald Trump, who counts Syria as one of his key successes in the region. Donald Trump hailed Al-Sharaa as a tough guy coming from a tough region.

Al-Sharaa's visit would have been impossible without his backers: Turkey, Saudi Arabia, the UAE, and Qatar. They will be responsible for making sure that Trump’s bet pays off and that Al-Sharaa succeeds to unite and rebuild Syria after 13 years of civil war and join the anti-terrorism alliance. Can these states succeed to establish stability in Syria? The experiences in Iraq, Yemen, Sudan or Libya are cautionary tales for the critics.

The Trump administration had hoped to present a security deal between Syria and Israel during the meeting. Trump’s dream is that eventually Syria would be integrated into the Abraham accords. The next steps will be crucial to define how this can be achieved.

Al-Sharaa insists on one independent nation. But what exactly does this mean? Syria is a historic, multi-ethnic and multi-religious society, bordering with Lebanon in the west and Iraq in the east and Turkey to the north. Al-Sharaa depends on Turkey and US for delivering on his security pledges. A one-nation approach needs internal integration. Whether the Kurds can be integrated into the Syrian Army will be key to its success, as well as what will happen to the regions of Suweyda and Daraa in the south. Israeli troops consider them to be a buffer zone, and as a guaranteed access to the minority Druze community that Israel seeks to protect.

Syrian and US forces have already carried out five joint operations against ISIS terrorist groups with some success, according to Haaretz. Yet for Syria to take over control, it needs to build up its military leadership, prevent extremist infiltration, and show its capacity to rein in militias. There are reports of renewed ISIS activity with some thousand fighters. This front will continue to be a threat to Al-Sharaa and his vision for Syria.

The security arrangements with Israel could not be finalised during Al-Sharaa’s meeting with Trump. There were suggestions that the US could establish a military base near Damascus to oversee the implementation of a demilitarisation zone in the south of the capital and along Syria’s borders towards Lebanon in the West and Jordan in the South. Damascus denied these reports, but even if true, it is not clear how to address Israel’s relationship with the Druzes. Another crucial point for Israel is for Al-Sharaa to prevent Hezbollah in Lebanon from getting their weapons through Syria, the only route there is from Iran.

The challenge to rebuild this war torn country is massive. The World Bank estimates that it will cost $300bn to rebuild. Currently there are pledges of some $28bn from Saudi Arabia, Qatar and Turkey. But that money will only flow once the US sanctions are lifted. This applies in particular to the sanctions under the Caesar act, which prohibits any aid or investment in Syria. The US Senate already voted to repeal the Act, but the House of Representatives still needs to approve. Syria not only needs money, but also legislation that adhere to international standards to allow more investment to flow into Syria.

Somewhere between the dream of independence and this reality lies al-Sharaa’s path. But there is also an understanding that Syria cannot be allowed to fail. Hence the collective efforts to turn this into a success story.

Here at Eurointelligence, we have often used the expression: from complacency to panic. Complacency is the defining characteristic of many European politicians, and almost a prerequisite for political success in some European countries. The story gets interesting when that complacency hits limits of reality and logic. It is happening in Germany right now.

Frank-Walter Steinmeier, the German president, has effectively called for a ban of the AfD. His old party, the SPD, is in terminal decline. Its decline is easy to see in electoral results, but in the centres of power in Berlin, it has been overshadowed by the party's relative success. It had two chancellors in the last 25 years, and has been part of coalition government every year since 1998, except for four. The party is polling at 15%. It is the party of pensioners and welfare recipients. It is hard to see why it is declining. 

The German establishment is not used to losing. What bad losers with a low IQ do everywhere is start to point fingers. The polls have the AfD at a firm level of 26%, up from 22% in the last elections. There are signs of a cyclical economic upswing, but none that will bring lasting joy.

The most likely consequence of Steinmeier’s comments is to drive more voters into the hands of the AfD. Once you go after your opponents through the legal system, this is when you start to lose. It happened in the US. It is happening in France. Vladimir Putin is a politician who bans opposition parties. But he controls the legal system. If you are trying to play this game in a country like Germany, you will fail.

A political ban is hard to do in Germany. The Constitutional Court only ever banned two parties: the Sozialistische Reichspartei Deutschlands in 1952, a Nazi party, and the Communist Party in 1956. In both of those cases the constitutional argument was clear cut. These were parties that would not have allowed free elections had they won power. The procedure to ban the far-right NPD failed, despite the fact that this party was de facto a neo-Nazi party. The AfD also has members with far-right views, but it does not meet the criteria for a ban. It's not even close. The German constitutions sets a high bar. It is not enough to conclude that certain policies may violate the Constitution. What matters is that the party, once in power, respects constitutional rule.

So if you want to beat the AfD, you will have to do this yourself in elections. Politicians like Steinmeier do not know how to do this, and in their desperation end up driving more voters away.

Will Alexis Tsipras and Antonis Samaras launch a comeback to politics with their own parties? In Greek politics it is an unspoken rule that former prime ministers do not comment on current politics. But Tsipras and Samaras defied this rule and are now openly flirting with the idea of forming new parties.

Both men were leading figures during the bailout years of the Greek debt crisis. Samaras was prime minister between 2012 and 2015, Tsipras directly after him between 2015 and 2019. Both experienced a meteoric rise to power, followed by a period of political decline. Both are now considering a return to frontline politics.

In the case of Tsipras, this is also a story of the demise of Syriza. The left-wing party has gone from being Greece's main opposition force to sitting at only 4% in the polls after dramatic infighting and split-offs when Stefanos Kasselakis, an outsider from Florida, won the leadership elections in 2023. Eventually Kasselakis left the party to form his own. There are now four main split-off parties that stem from disagreements with Syriza's leadership since 2015.

Tsipras recently confirmed rumours that he intends to form a new party. He announced his resignation from Syriza in October and told the left-wing newspaper Efimerida ton Syntakton that he wants a reorganisation of a progressive opposition. Is this just another party in the already fragmented political landscape? This is perhaps more than just that. Tsipras could garner 20% on the left, a recent poll suggests.

Tsipras is now openly breaking the silence with a new biography to be launched this month. According to the Deutsche Welle, he has a lot to say about Angela Merkel in this book. He also started to comment on current Greek politics.

Samaras has a an altogether different story. His former party, New Democracy, is still leading in the polls under Kyriakos Mitsotakis, despite the many misgivings there are. Samaras has been a notorious critic of the party and was expelled in late 2024 by Mitsotakis. Since then Samaras doubled down on his fundamental criticism and in favour of a patriotic party under his own leadership. These pressures are building up, and suggest that it is not a question of whether but when he will form this new party. In a recent interview with ANT1, Samaras said that he is considering calmly the idea insisting that the country needs a new beginning with a new national vision and a battle of ideas not management. Could Samaras unite the right to hard-right on nationalist issues? Would he lure votes away from New Democracy? Not clear. But a new party further to the right means more pressure on Mitsotakis’s government.

If those two leaders from the bailout years were to succeed with their comeback, we expect the re-emergence of some of the divisive points during their premiership to re-emerge too, be it on Turkey or troika austerity. 

The ultra fast-fashion retailer platform Shein is a showcase for how tensions can quickly escalate between Europe and China. Shein, originally from Guangzhou but operating from Singapore, has been in the crosshairs of the French authorities after the discovery of sex dolls representing little girls and firearms on their platform.

Shein has since removed those products from its website, now showing only its own brand rather than the vast marketplace for toys, homeware and gadgets that it increasingly made money with. Its CEO assured that they will fully cooperate. The timing is quite remarkable, the story hit the news cycle just when Shein opened its first department store in Paris. It also comes amid tensions over anti-dumping and anti-subsidy investigations between China and the EU.

The French government’s response was heavy-handed. Yesterday, they launched a large scale inspection operation of packages arriving at Paris airports and initiated several proceedings against Shein. The first was giving the online retailers 48 hours to comply with regulations. The retailer has to comply with the L521-3 of the  Commercial Code and Art. 6-3 of the law for confidence in the digital economy to operate in France. Under these procedures, the worst that can happen is that Shein is delisted. This means in practice that the site’s pages won’t appear in online searches on Google or other search engines. But access is still available by typing in their URL. A parallel procedure was launched by the interior ministry with a threat to block the site for serious damage to public order. This goes further and would require internet service providers to block access to the site almost immediately.

At the European level, the French launched a third procedure, asking the European Commission to investigate Shein’s compliance with the Digital Services Act. A European investigation would be more serious with penalties that could reach up to 6% of global turnover. It could allow EU member states to block the platform if a systemic risk was identified.

Shein has become a symbol of China’s aggressive export strategies. With nearly 146m of monthly users in the EU according to its latest DSA report, the retailer is swamping the European market with cheap products arriving in millions of small parcels. Shein and other platforms benefit from the EU waiver exempting parcels below €150 in value from customs duties.

Not adhering to the EU’s regulatory standards also helps lower the price. Germany's Stiftung Warentest found that 110 out of 162 tested items from Shein and Temu did not meet EU standards, citing unsafe toys and toxic jewellery. The Commission asked Shein earlier this year to document on risks linked to illegal goods and content on its market place. Separately it is investigating Temu for not doing enough to prevent sale of illegal products.

As for politics, Shein and Temu are relatively unknown in China. They are tailored exclusively for export markets. So far it does not seem to be much of a news story there. But it was picked up by a few influencers on social media. Nicolas Forissier, France’s trade minister, raised the possibility of Shein’s suspension during his meeting with Chinese authorities. The minister was in Shanghai this week to support about 120 French companies at China’s International Import Exo in Shanghai. The Shein affair also comes after China retaliated against EU tariffs on Chinese electric vehicles by launching three anti-dumping and anti-subsidy investigations into cognac, French pork, and milk.

Shein and Temu represent a changing world. Those ultra-fast fashion platforms are to the French fashion world what electric cars are to the German car industry. They threaten a symbol of cultural identity as we know it. And for France, nothing gets more personal for the fashion world than Shein opening a department store in Paris. It was boycotted by incumbent retailers but cheered by those looking fo luxury fashion at a cheap price. In that sense, Shein already succeeded where Chinese cars still have to convince European consumers.

One side of the anti-green agenda backlash in the EU is pressure from abroad, especially but not exclusively from the US. See our separate story on how the German government is responding to US and Qatari threats over the EU’s supply chain law. But another is fear from within the EU itself, and its businesses and politicians, about their ramifications. A wholesale reversal of the agenda may be a bit far-fetched. But an incremental rollback is entirely feasible.

We can see that in part from how the EU’s 2040 climate target negotiations went. The EU Council does finally have a deal ahead of a leaders’ summit for the COP30 climate conference that is supposed to kick off today. EU countries can use foreign carbon credits, essentially bought from decarbonising developing countries, to cover 5% of the 90% emission reductions target compared to 1990 levels. This is more than the 3% that the European Commission initially pencilled in. It also contains an option for an additional 5% which can be accounted for by foreign carbon credits. A 90% target has, in effect, become an 80% target.

But that wasn’t the only change the EU countries agreed on. One of the next potential green agenda battlegrounds is an upcoming carbon price for road transport and building emissions. It was initially supposed to come into effect in 2027. The compromise agreed to get the 2040 climate targets through is that the start date will be knocked back by a year, to 2028.

The Commission has already proposed toughening up measures that are designed to keep carbon prices under the scheme at relatively low levels of €45-55 per metric ton of carbon emissions. This would happen by beefing up the so-called Market Stability Reserve for the scheme. We do not expect this to be the last we will hear of the so-called ETS2 either. Even if the scheme comes into effect, we would not be surprised to see these price limits extended further. In the original agreement, they were supposed to go from 2030 onwards.

The Council’s deal on the 2040 target also touched on another carbon market hot potato: what will happen to free allowances under the current carbon pricing regime for industrial emissions. The idea is that with the phase-in of new carbon tariffs, the so-called carbon border adjustment mechanism, or CBAM, free allowances for emissions will gradually be phased out through to 2034. According to the Council’s position statement, it wants the Commission to consider a slower phase-out from 2028 onwards. That would also presumably mean a slower CBAM phase-in.

At the same time, the EU’s biggest emissions targets are not changing. We are still supposed to reach net-zero by 2050, and 55% emissions reductions versus 1990 levels by 2030. But the intermediate targets and carbon pricing mechanisms to get there are being watered down. This has a certain Augustinian quality to it. How long this contradiction can continue for remains to be seen.