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Following the cooler than expected CPI, US Producer Prices plunged in April, down 0.5% MoM (vs +0.2% MoM exp) - the biggest drop since April 2020 (but we note that last month's 0.4% MoM decline was revised up to unchanged). The headline print was dragged down to +2.4% YoY (the lowest since Sept 2024)...

Source: Bloomberg

Under the hood, Prices for final demand services moved down 0.7 percent in April, the largest decline since the index began in December 2009.

Source: Bloomberg

Core Producer Prices plunged by the most on record (back to 2010)...

Source: Bloomberg

PPI Final Demand Services

Prices for final demand services moved down 0.7 percent in April, the largest decline since the index began in December 2009. Over two-thirds of the broad-based decrease can be traced to margins for final demand trade services, which dropped 1.6 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand services less trade, transportation, and warehousing and for final demand transportation and warehousing services fell 0.3 percent and 0.4 percent, respectively.

• Product detail: Over 40 percent of the April decline in the index for final demand services is attributable to margins for machinery and vehicle wholesaling, which dropped 6.1 percent. The indexes for portfolio management, food and alcohol wholesaling, system software publishing, traveler accommodation services, and airline passenger services also fell. Conversely, prices for outpatient care (partial) advanced 0.3 percent. The indexes for furniture retailing and for inpatient care also moved up. (See table 2.)

PPI Final demand goods

Prices for final demand goods were unchanged in April following a 0.9-percent decrease in March. In April, the index for final demand goods less foods and energy increased 0.4 percent. In contrast, prices for final demand foods and for final demand energy declined 1.0 percent and 0.4 percent, respectively.

• Product detail: Among final demand goods in April, the index for general purpose machinery and equipment advanced 1.1 percent. Prices for residential electric power, fresh and dry vegetables, non-electronic cigarettes, and utility natural gas also moved up. Conversely, the index for chicken eggs dropped 39.4 percent. Prices for gasoline, gas fuels, diesel fuel, and primary basic organic chemicals also fell.

Margin pressure remains on American corporations...

Source: Bloomberg

It would appear that despite all the FUD, companies are soaking up any tariff price increases and NOT passing them on to customers.

Finally, energy prices are set to drag CPI and PPI even lower in the next month or so...

Source: Bloomberg

Goldman has lowered its PCE expectations: 

Based on the details in the PPI and CPI reports, we estimate that the core PCE price index rose 0.11% in April (vs. our expectation of 0.19% prior to today's PPI report), corresponding to a year-over-year rate of +2.46%.

Additionally, we expect that the headline PCE price index increased 0.10% in April, or increased 2.18% from a year earlier.

But, but, but... the PhDs said tariffs were inflationary!!

A team of Russian negotiators are in Istanbul on Thursday for the first direct peace talks with Ukraine in more than three years, with Russia's Foreign Ministry officials saying that the delegation is "ready for serious work".

President Putin, who as expected is not there in person, tapped his aide and former culture minister Vladimir Medinsky to lead the talks, which many Western analysts have claimed is an 'insult' given it's not someone more senior. Medinsky, it should be remembered, oversaw the failed 2022 peace talks with Kiev in the weeks after the February invasion.

Alongside Medinsky are Deputy Foreign Minister Mikhail Galuzin, Deputy Defense Minister Alexander Fomin and Igor Kostyukov, the head of Russia’s military intelligence agency (GRU).

Supporting these main negotiators are group of advisers, including senior officials from the Foreign and Defense Ministries, along with Putin aides. The Kremlin confirmed the identities of its negotiating team by releasing footage of Putin meeting with the negotiation group late Wednesday.

On Wednesday evening, Russian President Vladimir Putin held a meeting to discuss arrangements for talks with Ukraine, due to take place today in Istanbul, Kremlin Spokesman Dmitry Peskov told reporters:https://t.co/hRmXK7daoA

Video: Kremlin. ru pic.twitter.com/1e7DHMlFgv

Other top officials were seen present in the send-off meeting in Russia, among them Defense Minister Andrei Belousov, Russia’s chief of the General Staff Valery Gerasimov, Security Council Secretary Sergei Shoigu and Federal Security Service (FSB) Director Alexander Bortnikov - which perhaps underscores that Moscow is indeed taking the Istanbul talks very seriously.

But many are calling this a 'slap in the face' and insult to Trump who has strongly backed direct talks, and who even urged Putin to be there in person. 

Trump has warned that he is "always considering" additional sanctions against Russia if he believes Moscow is blocking or snubbing the peace process.

Putin sending the same people to Istanbul who, back in 2022, demanded Ukraine's surrender on his behalf is a slap in the face to the Trump administration’s efforts to end this war. The message is clear: fuck off — I have my own objectives, and they haven’t changed since 2022,… https://t.co/8Sj3mprJXe

As for Ukraine's President Zelensky, he's has for the past week been making a big show of how he's willing to be in Istanbul, and Putin is not. He's been repeatedly goading Putin to be there, saying that if he's not - it proves Moscow is not interested in the peace process. 

However, this has clearly been a performative effort more geared to show President Trump that Kiev is 'willing' - likely in hopes that Washington gives Zelensky stronger backing, and of course a steady supply of weapons and intelligence. To some degree, Zelensky's bellicose rhetoric may itself have sabotaged talks before they had even begun.

But Zelensky has shown up in Turkey, somewhat surprisingly. "I am here" - he has emphasized (in once again a bit of messaging primarily aimed at the White House). He's meeting with Erdogan, but apparently this is separate, and happening in Ankara. 

Zelensky to Putin from Ankara:

"I am here." pic.twitter.com/67RjF4QFqb

The Wall Street Journal's take is as follows:

"Ignoring Ukrainian President Volodymyr Zelensky’s call to meet for direct high-level talks in Turkey, Russian leader Vladimir Putin dispatched to Istanbul a team of junior officials, making it uncertain that negotiations between the warring nations would occur at all."

But Russia analyst and author of Forged In War: A Military History of Russia From its Beginnings To Today, Mark Geleotti, has a very different take, featured below [emphasis ZH]:

It’s easy (and not wholly untrue) to slam Vladimir Medinsky, leading the Russian delegation to Istanbul as a nobody, but perversely, although I think it monstrously unlikely anything meaningful will come from the talks, the composition of the delegation is encouraging.

Putin was never likely to attend, not least as he wasn’t going to allow it to look as if he had been manipulated and dared by Zelensky. Besides, sometimes it can help break a logjam (think Reagan/Gorbachev), but leaders usually turn up to seal the deal at the end of the process, after experts have done all the hard preparatory work away from the cameras.

Do we honestly think two men who so plainly loathe each other and who have been shamelessly posturing for Trump's benefit were going to reach some kind of meeting of minds? Possible, but unlikely.

Medinsky led the talks in 2022 that failed to reach a usable deal (we can discount the myth that Zelensky was about to agree to Russia's demands until Boris Johnson nixed it) so this is meant to signal continuity in process and demands.

Medinsky's very lack of personal authority isn’t a snub, so much as a sign that Putin wants to manage any process by remote control. He's a human drone, which at least means any positions he advances/agrees already have VVP's ok

The rest of the delegation likewise isn't showy (though the presence of military intel chief Kostyukov is interesting as they were key in POW swaps) but likewise meant to signal a willingness to do serious work. (Although this doesn’t necessarily mean make necessary compromises).

Of course, with no hint that Russia is about to relax its implausible and unfair demands, this may all be for show. It probably is, alas. But talking is always good as there is a *chance*, however minuscule, that talks can lead somewhere.

So although Medinsky is a shallow ideologist, and sending him is in a way a snub, a means for Putin to try and reject Zelensky's challenge while not looking wholly uncooperative in Trump's eyes.

…whereas before I was 99% pessimistic about the talks, now I’m only 98% so. That is as much room for optimism as there is, these days.

US equity futures are lower as investors take profits on Thursday and tech stocks fell as investors worried about an economic slowdown after Steve Cohen warned the chance of a recession is 45% and today’s retail sales numbers are expected to be a miss. As of 8:00am ET, S&P futures are down 0.4%, rebounding from session lows after Walmart reported solid earnings; Nasdaq futures dropped 0.5% with Nvidia, Palantir and Tesla falling about 2% in early trading.  On Wednesday, the S&P failed at 5,900 for the second consecutive day. The silver lining according to JPM is that yesterday, NVDA turned positive on the year, joining META and MSFT; if the remaining members follow suit, there is another ~10% upside to the index assuming positive members are flat. YTD, AMZN is -4.2%, GOOG -12.6%, TSLA -13.9%, and AAPL -15.2%. In trade news, China removed curbs on rare earth exports to the US. Trump says India is willing to drop is tariffs on US goods. Brent sank below $64, down more than 3% after President Donald Trump said the US is getting closer to a deal on Iran’s nuclear program, fueling concern that additional oil supply may pressure the market. Bond yields and the USD are lower. Today’s macro data focus is on Retail Sales which are expected to remain unchanged in April (versus 1.5% prior); PPI, Jobless Claims, Philly Fed and Empire Manufacturing numbers are due at 8:30 am in New York, while Industrial Production prints at 9:15am. Also, traders are looking ahead to a speech by Federal Reserve Chair Jerome Powell.

In premarket trading, UnitedHealth shares sank after the WSJ reported it’s under criminal investigation for possible Medicare fraud. Walmart delivered another quarter of solid sales and earnings growth, and cautioned that tariffs and increasing economic turbulence means even the world’s largest retailer can’t hold off on price increases forever. Shares gained 2.4% premarket. Magnificent Seven stocks are lower as risk appetite falters (Tesla -1.8%, Apple -1%, Meta Platforms -1%, Amazon -0.8%, Alphabet -0.7%, Nvidia -0.6%, Microsoft -0.5%). Here are some other notable premarket movers:

• Alibaba ADRs (BABA) decline 5.6% after reporting revenue that missed estimates, dragged by a slowing international e-commerce arm and its Cainiao logistics business that’s under restructuring.
• Boot Barn (BOOT) rises 13% after the retailer of western wear gave a forecast for 1Q same-store sales growth that surpassed Wall Street estimates, despite an expected hit from tariffs.
• Cisco Systems (CSCO) rises 3.3% after the company gave a solid forecast for revenue in the current quarter, a sign the largest seller of networking gear is benefiting from demand for systems using AI technology.
• CoreWeave (CRWV) shares fall 6.6% after the cloud-computing provider’s quarterly profit forecast missed estimates due to some spending being brought forward.
• Crowdstrike Holdings (CRWD) shares are down 2.4% in premarket trading, after Mizuho Securities downgraded the software company to neutral from outperform.
• DXC Technology (DXC) shares are down 14% after the company reported forecast adjusted earnings per share for the first quarter and 2026 full-year guidance that missed the average analyst estimate.
• Dlocal (DLO) shares gain 21% after the financial technology company beat earnings expectations and unveiled plans for a special dividend.
• Foot Locker (FL) is up 84% with Dick’s Sporting Goods to buy it in a cash or stock deal implying an equity value of about $2.4 billion and an enterprise value of about $2.5 billion.
• JetBlue (JBLU) falls 1.6% after Raymond James downgraded the airline company to market perform from outperform, citing a more balanced risk-reward amid an improvement in sentiment.
• Luminar (LAZR) drops 13% after the automotive technology company’s CEO Austin Russell resigned as CEO, overshadowing better-than-expected first-quarter sales.
• NetEase ADRs (NTES) are up 6.7% after the China-based video-game company reported first-quarter results that beat expectations.
• New Fortress Energy (NFE) shares slump 38% after the energy infrastructure firm saw adj. Ebitda plunge in the first quarter, with analysts flagging that the sale of its Jamaican assets will dent cash flow.

There’s also some big company news to digest. Trump wants Apple to stop moving iPhone production to India, while Starbucks is said to be considering options to revamp its China business, including a possible stake sale.

Economic forecasters this week have said that while the Trump administration’s temporary trade deal with China has reduced the risk of a recession, the overall economy is likely to slow. “There’s definitely more clarity than a few weeks ago,” Dubravko Lakos-Bujas, chief of global markets strategy at JPMorgan Chase & Co., said in a Bloomberg Television interview. “Some of the uncertainty around trade, tariffs, policy started to get reined in.”

“The market is globally priced for perfection,” said Michael Nizard, head of multi-asset at Edmond de Rothschild Asset Management. “The retail sales figures should reveal that consumer is already depressed in terms of business confidence.”  

Meanwhile, billionaire Steve Cohen, speaking at the Sohn Investment Conference on Wednesday, put the chances of a US recession at about 45%. Cohen, the founder of hedge fund Point72 Asset Management, said he doesn’t expect the Federal Reserve to cut rates right away, because “they are going to be worried about inflation from tariffs.” He said he expects US economic growth next year to slow to 1.5% or less, “which is OK but not phenomenal.”

Looking at today's macro data, Retail sales are expected to rise by a tepid 0.1% in April (versus 1.5% prior) according to Bloomberg economists, while a survey of economists is pointing to flat month-on-month sales. PPI and Empire Manufacturing numbers are due at 8:30 am in New York. Traders were looking ahead to a speech by Federal Reserve Chair Jerome Powell, as well as data on manufacturing and retail sales, for the next readout on US growth and inflation. Economists are expecting no growth in retail sales in April as consumers cut back on some purchases. 

European stocks retreat for a second day. Energy stocks lead declines, driven by a fall in oil prices following a report that Iran is willing to forgo nuclear weapons in a deal with the US, while utilities and food and beverage stocks outperform. Among individual stocks, insurance firm Allianz drops after disappointing results. Stoxx 600 falls 0.2% to 542.88 with 327 members down, 263 up, and 10 little changed. Here are the biggest European movers:

• KBC shares rise as much as 2.6% after the Belgian lender reported earnings that analysts said were roughly in line with expectations, and saw a boost from increased insurance revenues.
• Engie shares gain as much as 2.2% after the utility produced what analysts said were strong results that should provide further comfort around full-year guidance and the dividend.
• Serco shares rise as much as 6.9% after the outsourcing-services company announced the award of three contracts with a combined value of more than £1b to provide maritime services for the Royal Navy.
• Watches of Switzerland shares rise as much as 6.7% after the watch seller’s update showed no deterioration in trends in either the UK or US, providing some relief to investors.
• Energy stocks are the worst-performing sector as oil falls following a report that Iran is willing to forgo nuclear weapons in a deal with the US in exchange for sanctions relief.
• Allianz shares fall as much as 3.9% after the German insurer reported earnings that analysts called disappointing.
• 3i shares drop as much as 8.1% following the private equity firm’s full-year results, with net asset value per share coming in marginally below analyst expectations.
• Deutsche Telekom shares decline as much as 1.2% after the telecom operator reported mixed trends in its home market Germany.
• Thyssenkrupp shares fall as much as 14% after the German firm reported what Morgan Stanley called a substantial miss. Analysts see challenges reaching full-year guidance.
• Orsted shares drop as much as 4.7%, to the lowest since December 2016, after Berenberg analysts cut their rating on the stock to hold from buy.
• Siemens shares fall as much as 4.4% after the German industrial group reported a solid set of second-quarter earnings, with analysts noting continued improvement for the key Digital Industries division.
• CVC Capital shares fall as much as 3.2%, with analyst saying that the buyout firm’s fee paying AUM for the first quarter disappointed as some funds reached the end of their fee-paying periods.

Earlier in the session, Asian stocks slipped, poised to snap a four-day win streak, as the rally fueled in part by reduced fear over US tariffs fizzled. The MSCI Asia Pacific Index fell as much as 0.5%, with Toyota, and Sony among the biggest drags, as a stronger yen weighed on Japanese equities. Key gauges fell more than 1% each in Thailand and the Philippines. Tencent dipped despite upbeat earnings, weighing on key Hong Kong gauges, as investors await Alibaba’s results later Thursday. The market had been looking for major Chinese tech reports to provide the next catalyst. Despite the muted response to the US-China trade truce, some market watchers are turning more positive on Chinese stocks. Strategists at Goldman Sachs have raised their Chinese stocks index targets. Morgan Stanley said MSCI China’s onshore stocks saw “meaningful improvement” in the first quarter results over the previous three months, marking the first in-line outcome after 14 quarters of misses.

In FX, the Bloomberg Dollar Spot Index declines 0.3%.  The pound adds 0.2% with little reaction seen after UK GDP in the first quarter topped estimates as the period precedes a sharp rise in US tariffs.

In rates, treasuries are slightly richer across the curve with gains led by front end and belly, unwinding a portion of Wednesday’s selloff when Fed-policy pricing saw a hawkish shift. US yields are 2bp-3bp lower across maturities led by 5-year sector with 10-year near 4.51%. European government bonds also gain: bunds and gilts outperform, supporting Treasuries, following wave of European data including UK GDP and industrial production and French CPI. Slide in oil futures also supports Treasuries. US session includes April retail sales data and remarks by Fed Chair Powell on the central bank’s monetary policy framework review (text release expected at 8:40am New York time).

In commodities, WTI crude oil futures have pared a 4.2% drop to about 3.7%, extending losses for a second day after US President Trump said an agreement to curb Iran’s nuclear program is closer. Spot gold falls $11 to around $3,167/oz having pared an earlier fall.

US economic data calendar includes May Empire manufacturing, April retail sales, PPI, weekly jobless claims, May Philadelphia Fed business outlook (8:30am), April industrial production (9:15am), March business inventories, May NAHB housing market index (10am). Fed speaker slate includes Powell (8:40am) and Barr (2:05pm)

Market Snapshot

• S&P 500 mini -0.4%
• Nasdaq 100 mini -0.6%
• Russell 2000 mini -0.2%
• Stoxx Europe 600 -0.2%
• DAX -0.3%
• CAC 40 -0.2%
• 10-year Treasury yield -3 basis points at 4.5%
• VIX +0.6 points at 19.2
• Bloomberg Dollar Index -0.3% at 1229.3
• euro +0.3% at $1.1208
• WTI crude -4.1% at $60.55/barrel

Top Overnight News

• U.S. President Donald Trump said on Thursday that the United States was getting very close to securing a nuclear deal with Iran, and Tehran had "sort of" agreed to the terms. The agreement would see the country foreswear highly enriched uranium in exchange for an easing of economic sanctions. RTRS
• U.S. President Donald Trump said on Thursday that India had offered a trade deal that proposed "no tariffs" for American goods, while expressing his dissatisfaction with Apple's  plans to invest in India. New Delhi is seeking to clinch a trade deal with the U.S. within the 90-day pause announced by Trump on April 9 on tariff hikes for major trading partners. RTRS
• US officials seeking to negotiate trade deals around the world are not working to include currency policy pledges in the agreements, according to a person familiar with the matter. Foreign-exchange markets are on edge over concerns President Donald Trump’s administration is seeking a weaker greenback and might use trade bargaining to achieve that goal. BBG
• Trump asked Apple’s Tim Cook to stop plans to move iPhone output to India. The president said Apple will increase production in the US as a result of their discussion. BBG
• US authorities are preparing to announce one of the biggest cuts in banks’ capital requirements for more than a decade, marking the latest sign of deregulation agenda for the Trump administration. FT
• Trump says the US will upgrade the F-35 to an F-55; will do an F-22 super, an upgrade on the F-22.
• UnitedHealth shares dropped premarket after the WSJ reported it’s under criminal investigation for possible Medicare fraud. The company said it hasn’t been notified by the DOJ. BBG
• Japan's top trade negotiator, Ryosei Akazawa, could travel to Washington as soon as next week for a third round of trade talks with the U.S., two sources with knowledge of the plans told Reuters on Thursday. RTRS
• Ignoring Ukrainian President Volodymyr Zelensky’s call to meet for direct high-level talks in Turkey, Russian leader Vladimir Putin dispatched to Istanbul a team of junior officials, making it uncertain that negotiations between the warring nations would occur at all. WSJ
• Oil demand growth to slow according to the latest IEA report – “Global oil demand growth is projected to slow from 990 kb/d in 1Q25 to 650 kb/d for the remainder of the year as economic headwinds and record EV sales curb use.” IEA

Tariffs/Trade

• EU Trade Commissioner Sefcovic says the US and EU have agreed to intensify trade talk contacts.
• WTO chief warned that US bilateral tariff deals could put trade principles at risk and said global trade was in a crisis despite the recent de-escalation of the US-China tariff war, according to FT.
• US Treasury secretary Bessent says they can accomplish "a lot" over the next 90 days; will have a series of negotiations to prevent escalation with China again.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were predominantly lower following the mixed handover from Wall St, where the major indices were somewhat choppy and small caps underperformed as yields edged higher. ASX 200 traded indecisively but eventually eked mild gains in the aftermath of the stronger-than-expected jobs data from Australia. Nikkei 225 underperformed following recent currency strength and as earnings results remained in the spotlight in Japan. Hang Seng and Shanghai Comp were lacklustre amid little in the way of fresh catalysts to spur momentum, while Tencent shares traded indecisively post-earnings and Alibaba results are scheduled for release today.

Top Asian News

• Chinese President Xi hopes the Danish Chamber of Commerce in China and member companies will continue to role as a bridge between China and Denmark and between China and Europe, according to Xinhua.
• PBoC Governor Pan said China welcomes more outstanding Latin American market players to issue Panda bonds in China and share market development opportunities, while he added that China and Latin America should promote financial cooperation in a wider range of fields and a deeper level.

Subdued sentiment across Europe after the predominantly lower APAC handover, and following the mixed handover from Wall St, where the major indices were somewhat choppy and small caps underperformed as yields edged higher. Newsflow this morning has been light but earnings picked up, whilst current focus remains on geopolitical ongoings with US President Trump in the Middle East, consolatory language from Iran, and a likely no-show from Russia President Putin in Russia-Ukraine peace talks in Turkey. Sectors are mostly a defensive bias and in line with the cautious mood across the markets.

Top European News

• Plans for a reset of UK-EU relations hit trouble due to fishing rights and youth mobility as EU member states demanded further concessions from the UK, according to the FT.

FX

• DXY subdued and contained within Wednesday's confines amid a lack of fresh catalysts overnight, n a 100.58-101.05 range at the time of writing, within yesterday's 100.27-101.14 parameter.
• EUR ekes mild gains and trades on either side of the 1.1200 level after recent fluctuations, and with ECB speakers scheduled later, although data and speakers today are not likely to shift the dial much.
• GBP is slightly firmer following better-than-expected UK GDP data; GBP/USD resides within yesterday's 1.3250-1.3360 range.
• USD/JPY retreated overnight as the underperformance in Japanese stocks spurred some haven flows into the yen.
• Antipodeans are subdued in-fitting with the broader risk tone; mild support was seen in AUD/USD following the stronger-than-expected employment data from Australia.
• PBoC set USD/CNY mid-point at 7.1963 vs exp. 7.2217 (Prev. 7.1956).

Fixed Income

• Another contained start for fixed income with USTs marginally in the green while peers across the pond resided slightly in the red in the early morning.
• USTs at a 109-26 peak with gains of a handful of ticks. While firmer, the benchmark remains markedly shy of peaks from the last three sessions at 110-09+, 110-15 and 110-19+ respectively.
• Bunds find themselves attempting to make a footing above the break-even mark at the top-end of a 129.13 to 129.47 band.
• Gilts gapped higher by 17 ticks, before then slipping to a shortlived 91.02 low given the readacross from EGBs at the time. Currently, at the mid-point of a 91.02-22 band.
• UK sells (via tender) GBP 2.0bln 0.125% 2028 Gilt: b/c 3.52x, average yield 3.768% & tail 0.7bps

Commodities

• WTI and Brent are suffering losses of USD 2/bbl, with commentary surrounding Iran applying steady pressure overnight and through the morning so far. US President Trump said the US is getting close to a deal with Iran, and they are in serious peace negotiations, adding that Iran has "sort of" agreed to the terms of a deal. This constructive commentary surrounding the nation pushed benchmarks to fresh session lows, adding to overnight losses. Losses overnight also stemmed from geopolitics, following a report that Iran is ready to sign an agreement with certain conditions in exchange for the lifting of sanctions and would commit to never making nuclear weapons and getting rid of its stockpiles of highly enriched uranium. The aforementioned lows for WTI and Brent are currently USD 60.65 and 63.63/bbl.
• Spot Gold is extending on recent losses with demand subdued as it sits below the USD 3,200/oz mark. The trend seen for most of this week remains intact, with the metal continuing to be hit by higher yields, particularly on the short end.
• Copper Futures are lower by a percent, mostly owing to a downbeat risk sentiment in APAC hours. It currently trades towards session lows of USD 9,467/t, after being modestly pressured around the time of Trump commentary.
• IEA lifts 2025 average oil demand growth forecast by 20k BPD to 740k BPD on upward revision to GDP growth forecast and lower oil prices; sees global oil demand growth dropping to 650k BPD for remainder of 2025, from 990k BPD in Q1. “Increased trade uncertainty is expected to weigh on the world economy and by extension oil demand,”. IEA sees oil inventories rising by around 720k BPD in 2025 as global supply rises expected to considerably outpace demand growth. IEA hikes 2025 global supply growth forecast to 1.6mln BPD, up by 380k BPD from previous month's report on higher Saudi production outlook. IEA raises 2026 average oil demand growth forecast to 760k BPD (prev forecast 690k BPD).

Geopolitics: Ukraine

• Russian President Putin was not on a list of negotiators the Kremlin published for talks with Ukraine in Istanbul on Thursday
• Russian Kremlin spokesperson Peskov says no chance Russian President Putin will take part in Turkey talks, according to Ria.
• US President Trump says he will go to the Russia-Ukraine talks if appropriate.

Geopolitics: Middle East

• Qatar's PM said Israeli attacks in Gaza this week send a signal that they are not interested in negotiating a ceasefire, while he added that a US humanitarian plan for Gaza is not necessary and the UN should be allowed to deliver aid, according to CNN.
• Gaza Humanitarian Foundation announced it will launch operations in the Gaza Strip before the end of the month and stated that Israel has agreed to expand the number of distribution sites to serve the entire population of Gaza.
• US President Trump said Qatar is working with the US on negotiating an Iran deal and he wants to see Iran thrive.
• Iranian President Pezeshkian said Iran will not bow to any bullying from US President Trump who he suggested thinks that he can come to the region, chant slogans, and scare them.
• Iran is ready to sign an agreement with certain conditions in exchange for the lifting of sanctions and would commit to never making nuclear weapons, as well as getting rid of its stockpiles of highly enriched uranium, according to a top advisor to the Supreme Leader cited by NBC News.- US President Trump says the US getting close to doing a deal with Iran; in serious negotiations to achieve peace; don't want to take a second step and threaten Iran. Want to end Iran in an intelligent way, not destructive

Geopolitics: Other

• China's Hainan Maritime Safety Administration warned of military training taking place in an area of the South China Sea from May 15th to 16th and prohibited entry, while it noted there were some drills near Vietnam and China's Hainan.
• Russia sent a fighter jet to "check the situation" as Estonia was attempting to detain a Russian shadow fleet tanker, according to the Estonian Foreign Minister; jet violated NATO territory for "around a minute".

US Event Calendar

• 8:30 am: May Empire Manufacturing, est. -8, prior -8.1
• 8:30 am: Apr Retail Sales Advance MoM, est. 0%, prior 1.4%, revised 1.45%
• 8:30 am: Apr Retail Sales Ex Auto and Gas, est. 0.3%, prior 0.8%, revised 0.86%
• 8:30 am: Apr Retail Sales Ex Auto MoM, est. 0.3%, prior 0.5%, revised 0.56%
• 8:30 am: Apr PPI Final Demand MoM, est. 0.2%, prior -0.4%
• 8:30 am: Apr PPI Ex Food and Energy MoM, est. 0.3%, prior -0.1%
• 8:30 am: Apr PPI Final Demand YoY, est. 2.5%, prior 2.7%
• 8:30 am: Apr PPI Ex Food and Energy YoY, est. 3.1%, prior 3.3%
• 8:30 am: May 10 Initial Jobless Claims, est. 227.5k, prior 228k
• 8:30 am: May 3 Continuing Claims, est. 1890k, prior 1879k
• 8:30 am: May Philadelphia Fed Business Outlook, est. -11, prior -26.4
• 9:15 am: Apr Industrial Production MoM, est. 0.1%, prior -0.3%
• 9:15 am: Apr Capacity Utilization, est. 77.8%, prior 77.8%
• 10:00 am: Mar Business Inventories, est. 0.2%, prior 0.2%
• 10:00 am: May NAHB Housing Market Index, est. 40, prior 40

Central bank speakers

• 5:00 am: 2nd Thomas Laubach Research Conference
• 8:40 am: Fed’s Powell Speaks on Framework Review
• 2:05 pm: Fed’s Barr Gives Opening Remarks

DB's Jim Reid concludes the overnight wrap

The strong recent equity rally showed some signs of exhaustion over the past 24 hours, even though gains for the tech mega caps helped the S&P 500 (+0.10%) extend its gains since the closing low on April 7 to +18.26%. On the other hand, Treasuries came under renewed pressure with the 10yr yield (+7.1bps) closing above 4.5% for the first time since February as investors continued to price out Fed rate cuts and increased their focus on the US fiscal outlook. The moves added to the mixed performance across US asset classes since early April, with the S&P 500 now +3.91% above the pre-Liberation Day levels but 10yr Treasuries (+40bps) and the dollar index (-2.67%) having lost considerable ground.

Trump’s Middle East tour continued to generate headlines yesterday, but their market impact was narrower in comparison to Tuesday’s rally. One notable beneficiary was Nvidia (+4.16%), which moved back into the green YTD after the oil giant Saudi Aramco signed agreements of as much as $90bn with a slew of US companies, including with Nvidia on AI infrastructure. That helped the Magnificent 7 rise +1.75% on the day, while the NASDAQ was +0.72% higher. Elsewhere, more than $243bn of deals were announced during Trump’s visit to Qatar, with the White House saying this would lay the groundwork for a bigger $1.2trn economic pledge. This included a $96bn deal to buy up to 210 Boeing aircraft. Boeing’s shares closed +0.64% on the day, having been +3% intra-day after Trump announced the deal. The president is in the UAE today, so expect more announcements.

Outside of tech the equity mood was actually pretty weak, as the equal-weighted version of the S&P 500 (-0.62%) and the small-cap Russell 2000 (-0.88%) posted visible declines. This weaker performance was also visible in Europe as the STOXX 600 (-0.24%) ended its four-day winning streak, with the DAX (-0.47%) and CAC (-0.47%) leading the decline. Among the reasons for a stalling of the equity rally was a relative absence of trade headlines, although Bloomberg reported that India’s trade minister is set to visit the US this week to discuss tariffs.

With the recent surge driven by US-China trade discussions waning, Asian equity markets are also losing momentum this morning. Across the region, the Nikkei (-0.98%) is the biggest laggard, with the KOSPI (-0.43%) also in the red. In China, the CSI (-0.58%) and the Shanghai Composite (-0.42%) and Hang Seng (-0.25%) are moderately lower. The S&P/ASX 200 (+0.27%) is an exception in the region, trading higher. In the US, S&P 500 futures are -0.18% lower while those on the NASDAQ are near flat.

Yesterday’s more notable market milestones came for Treasuries, with 2yr (+5.1bps to 4.05%) and 10yr (+7.1bps to 4.54%) yields both closing at their highest levels since February. And the 30yr yield rose +6.7bps to 4.97%, its highest close since January and within touching distance of the 5% level it briefly breached on the evening of April 8, the night before Trump announced a 90 day delay to the reciprocal tariffs. So we are now reaching yield levels that previously seemed to trigger sensitivity from the US administration, though the recent moves are much more orderly than they were in early April.

The bond sell-off came amid an ongoing reversal in Fed rate cut expectations, with fed funds futures moving to price less than two cuts by year-end for the first time since February (-3.9bps to 49bps). That came as Fed speakers struck a measured tone, with San Francisco Fed President Daly saying that “the word of the day is patience” while Chicago Fed President Goolsbee said that a “solid hard data economy is still there” beneath the recent noise.

Meanwhile on the US fiscal side, the Republicans’ planned economic package continued to take shape, with the House Ways and Means Committee advancing the proposed tax portion that included an extension of 2017 tax cuts, eliminating taxes on tips and overtime pay and creating some new tax deductions, although some key issues such as the state and local tax deduction remain unresolved. The total of those planned tax cuts are well above the spending cuts that have been approved by other House Committees, so as things stands it looks improbable that the eventual package will deliver any meaningful reduction of the elevated US fiscal deficit.

The above rates moves come ahead of a slew of US data today, including the April PPI, where after Tuesday’s April CPI miss, we’ll be monitoring the categories that feed through into core PCE, while also watching for any evidence of tariff pass through into producer prices. Meanwhile, the April retail sales print will be watched for possible signs of pull-forward demand in response to tariffs, with April industrial production also due. Recall that while US sentiment surveys have seen a sharp weakening over the past few months, hard data have so far held up quite well.

The other notable market story yesterday were moves in the US dollar. The dollar index fell by as much as -0.72% intra-day following reporting that US and South Korea officials had discussed exchange rate policies at a meeting in early May. However, it recovered back to little changed (+0.04%) by the close following a Bloomberg report that US officials were not seeking currency pledges as part of ongoing trade negotiations. Still, there were notable gains against the dollar for the East Asian currencies, including the South Korean won (+0.88%) and Japanese yen (+0.50%). The won and yen are another +0.60% and +0.47% higher this morning. At a minimum, there is a sense that these countries may become more reticent to push back against their currencies appreciating than they have been in the past.

Turning back to Trump’s visit in the Middle East, yesterday the president said that Iran must “permanently and verifiably cease” its pursuit of nuclear weapons if it wanted to strike a deal with the US, while NBC reported that Iran is ready to sign an agreement with certain conditions. Brent crude was down -0.81% to $66.09/bbl on the back of ameliorating tensions, while gold fell -2.25% to $3,177/oz, leaving the precious metal on course for its biggest weekly decline since November.

Geopolitics will stay in focus today with Russia-Ukraine talks expected in Istanbul. The nature of any talks remains uncertain, with Ukraine’s President Zelensky calling for an in-person meeting with Russia’s Putin, but Moscow last night announcing a delegation headed by Vladimir Medinsky, a former Minister of Culture who led Russia’s talks with Ukraine back in 2022. Should the talks deliver little, a key question will be whether the US might join in announcing new sanctions against Russia which have been advocated by European leaders.

In terms of the day ahead, in the US we have the April PPI report, retail sales, industrial production, May Philadelphia Fed business outlook, Empire manufacturing index, initial jobless claims and more. We’ll also see the UK release its Q1 GDP numbers, with our UK economist expecting growth to have jumped in Q1 before reversing in Q2 (see preview here). Other data releases include March trade balances in Italy and the Eurozone. Central bank speakers include Fed’s Barkin, ECB’s Lane and BoE’s Lombardelli. The European Commission is also set to release their Spring Economic Forecasts.

By ReMix News

In many ways, Germany’s wind power revolution has been a success, with wind power serving as the country’s largest source of electricity. However, the current wind lull over the last three months has led to an extreme dip in energy production, which is costing firms millions in losses.

The wind speed average has dropped below less than 5.5 meters per second in the first quarter of 2025, according to German Meteorological Service (DWD). The last time the country saw such low speeds was in 1972 and 1973, and before that, in 1963.

Wind energy producers have been hit hard. For example, PNE, a wind farm operator in Coxhaven, showed revenue dropped to €27.9 million from €31.4 million the previous year, but perhaps more importantly, it went from an operating profit of €1.1 million in the first quarter to a loss of €7.1 million, according to Welt.

The company indicated that there was 31 percent less electricity generated nationwide in the first quarter of the year than in the same period last year, according to data from the German Energy and Water Industry Association (BDEW).

However, it should be noted that April 2024 and 2022 saw much higher wind speeds than previous years, so comparing 2024 to 2025 makes this drop look even more extreme. Experts say there is no evidence of climate change being at work, noting that previous decades have had similar lulls in wind speed.

Germany experienced so-called “dark lulls” over the winter, featuring little sunlight and low wind speed, which led to extremely high prices. Germany imported energy from neighboring countries and turned to conventional power plants in response.

Former Economic Minister Robert Habeck of the Greens had already planned to provide incentives to build 40 large gas-fired plants by 2030 to deal with fluctuations in wind and solar energy. These gas plants had a number of climate protections allegedly built in, such as being able to be switched to hydrogen at some point in the future.

The grid is also at risk due to renewable energy in some instances, especially during holidays when there is less power demand. Solar power cannot be regulated by grid operators, which means that when there is too much electricity and not enough sources that need it, the grid is pushed to its limit. The previous German government, at the urging of grid operators, implemented the PV Peak Act to deal with surplus solar power production.

The average share of solar power energy in 2023 was 31.5 percent, with coal-fired plants in second, at 22.5 percent.

Renewables make up an increasingly large share of Germany’s energy profile, which supporters say reduces reliance on foreign countries such as Russia while also reducing carbon emissions. Critics, on the other hand, say wind power has harmed energy security and also presents a number of environmental risks to wildlife and even forests.

However, it is not just countries like Germany turning to renewables. Conservative governments, including Hungary’s, are also increasingly shifting to wind and especially solar, where it is one of Europe’s leaders.

Via City AM,

• A recent trade deal between the UK and the US has led to the removal of tariffs on American bioethanol, which British farmers fear will undermine their domestic market.

• Concerns exist among beef farmers that the deal will result in increased American beef imports, leading to unfair competition and impacting their livelihoods.

• The trade agreement has sparked widespread scepticism among British farmers regarding the government’s commitment to protecting their interests and the future of the agricultural sector.

Ministers and commentators heralded the UK’s trade deal with the United States as a political coup that will save thousands of jobs at British automakers. But changes to beef and bioethanol trade rules have left an already bruised agricultural sector fearing the worst, writes Ali Lyon.

When he’s not slavishly editing clips for the hundreds of thousands of people that subscribe to his Youtube channel, Olly Harrison has the not insignificant job of running 1,500 acres of farmland.

But as his impressively regular feed of videos illustrates, tending to that land – and trying to eke out a semblance of profit from it – has become a difficult, bordering on impossible task, as headwind after headwind hit his arable holding near Liverpool.

“It’s been rubbish,” he tells City AM, still dealing with the aftermath of what was England’s driest April on record. 

“We’ve had extremes of weather, which has been very wet or – like now – very dry.”

Added to recent years’ inhospitable climes, are the input costs for producing the wheat his family has grown for five generations. They have, he says, remained at the elevated prices sparked by Russia’s invasion of Ukraine. At the same time, the price he is able to secure for his end product has fallen by as much as 40 per cent since those 2022 supply-constraint-induced highs.

But it is another, more recent, external shock that has Harrison especially worried. One that, while niche and esoteric, could kibosh the safety net he and his fellow British arable farmers have traditionally fallen back on when the wholesale wheat price drops too low.

Bioethanol: The little-known safety net of arable farmers

“The bioethanol market in the UK – for wheat – is quite big,” Harrison says.

“It’s basically the floor in the market.”

Opening up the UK and US’s agricultural markets to more trade was a key football in the frenzied negotiations that helped the Starmer administration become the first country in the world to secure a trade deal with America since 2 April’s ‘Liberation Day’.

And to spur the States’ capricious President into bringing down painful tariffs on Britain’s export industries like automakers and plane parts, the government agreed to lower its own levies on a selection of American agriculture products; namely beef and the fuel.

The beef tariffs were reduced only on imports that subscribed to the UK’s world-leading food standards, leading some in the farming community to breathe a partial sigh of relief. But the bioethanol concessions – which saw the UK’s 19 per cent tariff abolished completely – contained no such caveats to protect our sizeable domestic industry. That decision has already sparked warnings from key figures involved in domestic bioethanol production that their sector could be facing extinction.

“Bioethanol, for me, is the watch area,” Tom Bradshaw, president of the National Farmers’ Union (NFU) tells City AM.

“I have been speaking to the bioethanol manufacturing sector… and we think [these changes] probably make it unviable.”

The prognosis from Bradshaw – whose assiduous campaigning around the recent inheritance tax reforms has already made him a regular thorn in the government’s side – was echoed by the UK’s two largest bioethanol producers over the weekend.

The chief executive of London-listed AB Foods’ sugar division, Paul Kenward, and Grand Pearson, the chairman of Ensus, both warned in a joint intervention their “strategically essential sector” was under an “existential threat”.

All of which has left Harrison worried about what it will do to demand for his product. “If they can now bring it [ethanol] in from the States – using wheat that’s grown a lot cheaper than we can because they get a lot more support off their government, using technologies that we can’t, from farms that have got scale that we haven’t – then that’s seriously undermining a sector that’s already on its knees,” he says.

A hollowed out bioethanol sector also poses the risk of some unsavoury knock-on effects for livestock farmers, the very area of agriculture that the government sought to protect during its negotiations.

Because just as Unilever sources its ingredients for Marmite from breweries – and the byproducts produced in the fermenting process – bioethanol producers sell one of their own high-protein outputs as feed for cows.

As Bradshaw summarises: “If they’re not making bioethanol, we won’t get that animal feed.”

Yet more farmer beef

The feed supply issue is just one of several fears that Joe Seels, a Yorkshire-based beef farmer, has for his livelihood as the dust settles on the trade deal.

The NFU’s Bradshaw went to lengths to praise the government for maintaining standards in the face of US pressure. But for Seels, who documented his attendance at the string of protests in London around the changes to inheritance tax on his own Youtube channel, the deal represents yet another example of British agriculture being the fall industry to fix problems elsewhere in the economy.

His primary concern is that there will now be a glut of beef supply in the UK, without the same opportunities to export to the US. Because while the deal ostensibly brings down barriers to trade both ways – both countries agreed to accept 13,000 metric tonnes of beef imports each other each year tariff free – Seels can’t imagine a world in which American food producers buy British.

“I’m really sceptical that it will open up new export avenues,” he says. 

“Being American is eating American beef, they won’t accept ours which will be at a premium to [the hormone-aided beef] in their market.”

While the challenging trade environment in the US will persist, British farmers, he adds, will now face stiff competition from the low-cost American beef that will now be available at home.

Consumers and supermarkets are likely to continue to prefer domestically produced beef. Despite other large beef producing nations having access to the UK market, shoppers overwhelmingly prefer meat produced domestically or in Ireland. Senior figures in retail believe that the ubiquity and salience of farm labelling – from the ‘red tractor’ signifier of food standards to the regular sight of union-jack adorned packaging – mean shoppers are unlikely to find American meat in supermarket aisles.

Where Seels and Bradshaw imagine the influx of American beef will be felt, however, is catering and hospitality, where choice is constricted and labelling is less prominent.

“They [the US] have got less red tape, fewer planning restrictions, and their farming operations are just on a huge scale, which all leads to being able to create a product that’s much cheaper,” says Seels.

“We won’t see that on shelves,” he adds, “but where this beef might have a market is food services.”

Ministers have been at pains to trumpet the deal’s positive impact on livestock farmers, many of whom have long feared the spectre of chlorinated chicken and hormone beef being a concession in wider UK-US trade talks. But years of feeling let down by successive governments, mean farmers remain fearful of what the future holds.

“I have no faith whatsoever that the government will protect our interests in future negotiations,” says Harrison. 

"They’re just giving us another kick every time, and not realising how vulnerable the farming sector is.”

That scepticism is shared by Seels, who like Harrison is also a popular farming video blogger and has previous in using his channels to vent at political decision making.

“This government has said things to us in the past that it wasn’t going to do then it’s turned around and changed its mind,” he says.

If it does so again, ministers can expect the vitriolic response comprising more than just a few fiercely worded Youtube videos.

A new Gaza-related spat is now raging between the leaders of France and Israel, amid new reports that famine is hitting the Palestinian population, which is said to be impacting 500,000 people.

French President Emmanuel Macron has called the military policies of Israeli Prime Minister Benjamin Netanyahu "shameful" and "unacceptable" in a fresh interview with a national broadcaster. 

"What the government of Benjamin Netanyahu is doing is unacceptable," Macron began in a Gaza segment of the interview. "There is no water, no medicine, the wounded cannot get out, the doctors cannot get in. What he is doing is shameful," he continued.

Via Associated Press

He then interestingly appeared to leverage recent reports saying that Trump-Netanyahu relations have reached a low point, and that the White House is fed up with Bib.

"We need the United States. President Trump has the levers. I have had tough words with Prime Minister Netanyahu. I got angry, but they [Israel] don't depend on us, they depend on American weapons," Macron said. 

Macron here seemed to be calling on Washington to essentially put the Netanyahu government in its place, as Trump has sidelined Tel Aviv on everything from the Houthi ceasefire to gaining the freedom of Israeli-American hostage Edan Alexander. And more:

"My job is to do everything I can to make it stop," Macron said, adding that the possibility of revisiting the EU trade cooperation agreements with Israel is on the table.

Never one to back down from a diplomatic war of words, Netanyahu hit back on Wednesday, going so far as to say that Macron stands with Hamas.

"Macron has once again chosen to stand with a murderous terrorist organization and echo its despicable propaganda, accusing Israel of blood libels," a statement from the Israeli prime minister's office said.

"Instead of supporting the Western democratic camp fighting the Islamist terrorist organizations and calling for the release of the hostages, Macron is once again demanding that Israel surrender and reward terrorism," the blistering Netanyahu statement added.

The NY Times has issued an alarming report this week which said "Some Israeli military officials have privately concluded that Palestinians in Gaza face widespread starvation unless aid deliveries are restored within weeks, according to three Israeli defense officials familiar with conditions in the enclave."

The report continued by saying "Israeli military officers who monitor humanitarian conditions in Gaza have warned their commanders in recent days that unless the blockade is lifted quickly, many areas of the enclave will likely run out of enough food to meet minimum daily nutritional needs, according to the defense officials."

Shocking statement from French President Macron: Netanyahu’s blocking of aid to Gaza is shameful. • What is happening in Gaza is an unacceptable and horrific humanitarian tragedy that must be stopped. • Pressure must be put on Israel pic.twitter.com/D4efgGNWAu

Currently a US-backed aid plan is being worked on, which is said to be 'independent' amid accusations that Hamas has been stealing and reselling inbound aid. Others have accused Israel of blocking it, in pursuit of a total siege policy.

What's clear is that Netanyahu is increasingly in the political hotseat not just at home, but on the international stage as well - where his closest ally the United States has appeared to grow somewhat cool on the previously enthusiastic support and relationship.

Authored by S.L. Nelson via RealClearWire (emphasis ours),

Commentary

“Adapt or die.” This isn’t just a cliché; it’s a fundamental truth of human survival. Security—the psychological need for stability and protection—is second only to food and water in Maslow’s hierarchy. War directly threatens this security, so understanding war is essential for preserving peace.

One of the oldest tools for grasping the nature of war is wargaming. It is, in essence, a rehearsal—an intellectual simulation that helps leaders make sense of complex, high-stakes decisions before lives and national resources are on the line. But while its utility has persisted, its form has not evolved fast enough to meet the demands of the modern battlefield.

The Problem With Today’s Wargaming

Wargaming is indispensable, but too often, it’s outdated, misused, or misunderstood. In some defense circles, it functions as little more than a stage for confirmation bias, where senior leaders seek validation for preconceived notions rather than insight into novel threats. Worse, wargames frequently remain trapped in analog formats: players huddle around maps, move tokens, make subjective choices, and imagine the rest.

This traditional model assumes that human decisions lie at the heart of conflict. That remains true. But the battlefield is rapidly changing—and the human element is no longer acting alone. As militaries increasingly rely on uncrewed systems, autonomous platforms, and AI-driven operations, our method of simulating war must evolve accordingly.

To prepare for war in 2030, NATO and its allies cannot afford to rely on wargaming methods from 1980. The urgency of modernizing wargaming is not a choice but a necessity for our collective security.

The Rise of Algorithmic Warfare

Consider this: some forecasts suggest that by the 2030s, one-third of militaries could consist of robotic systems. In Ukraine, drone production is trending toward over 2.5 million units annually. This isn’t speculation—it’s already reshaping how war is fought.

In such a world, the idea of a wargame that exclusively simulates human decision-making is dangerously incomplete. Swarms of autonomous drones executing algorithm-driven tactics change not only the character of war but also the speed, scale, and unpredictability of combat. Abstracting these developments away misses the point entirely. A game without machines is a game divorced from reality.

Critically, decision-making itself is changing. While senior leaders continue to anchor their intuition in past experiences, research shows that overconfidence increases in situations involving more chance and ambiguity. Gut instinct, seasoned though it may be, will not suffice when confronted with system-level interactions between thousands of autonomous platforms and sensors.

Technology as a Catalyst, Not a Crutch

The tools to modernize wargaming already exist. Digital environments can now simulate everything from force placement to logistics flows to legal compliance, with users interacting via natural language, voice, or keyboard. This technological advancement offers a beacon of hope for the future of wargaming, allowing commanders to stress-test strategies in real time and track every decision across a replicable digital thread.

This is not science fiction. It is an underused science fact.

Yet many in the defense establishment cling to narrow definitions of wargaming. A leading DoD-affiliated practitioner recently declared, “If the players or sponsors are better equipped at the end of the wargame to do the things they need to do, then there is value. Nothing else matters.” Another dismissed the importance of outcomes altogether, stating that “wargames are about ideas, not facts.”

That’s a dangerous mindset. Strategy may be rooted in ideas, but execution lives in facts. As Churchill famously warned, “However beautiful the strategy, you should occasionally look at the results.”

Toward a New Definition of Wargaming

Commanders’ expectations have evolved, even if the tools haven’t. In 1945, General Eisenhower might have asked his staff for a logistics overlay of the European theater—delivered with pen, paper, and pins. In 2025, General Cavoli might make the same request—but with the expectation of a digital interface offering dynamic updates, AI-enhanced forecasting, and real-time operational feedback.

Unfortunately, EUCOM and NATO commanders still rely too heavily on analog tools. What they need are decision-support systems embedded in the planning process—not adjuncts or afterthoughts.

This calls for a redefinition of wargaming.

A New Definition

Wargaming must be understood not as a parlor game of human strategy but as a rigorous, replicable method of exploring conflict at the strategic, operational, and tactical levels. This includes human decisions and system-level interactions conducted in a synthetic digital environment.

A proposed new definition: “Wargames represent human actions and system-level interactions of conflict or competition in a synthetic environment from the strategic to the tactical level.”

This definition bridges the gap between cognition and computation, people and platforms, gut instinct and algorithmic feedback. It accounts for the growing role of autonomy and artificial intelligence without excluding the indispensable human element.

The Stakes

Wargames must evolve not only because they can but because they must. Definitions matter. The current models fall short of providing leaders with the clarity they need to design force structures that are effective, affordable, and aligned with future threats.

Failure to modernize wargaming risks misinforming critical decisions, wasting resources, and, worst of all, misjudging the very nature of the next fight. The stakes are high, and the battlefield of 2030 will not wait for the analog mind to catch up.

To prepare, we must simulate what war has been and what war is becoming.

The newly installed Pope Leo XIV is making clear that he's preparing to go on a peacekeeping blitz at a moment of several hotspots and major war zones across the globe.

Leo this week quoted the late Pope Francis in denouncing the multiple raging conflicts, from Ukraine to Gaza to Yemen to India-Pakistan to Syria to Sudan to Ethiopia to Libya, saying it was a "third world war in pieces." He's already been making phone calls to Kiev and Gaza.

"I carry in my heart the sufferings of the beloved Ukrainian people," he said. "Let everything possible be done to achieve genuine, just and lasting peace as soon as possible," he added, just ahead of Russia-Ukraine peace talks set for Thursday. President Trump is not expected attend these negotiations in person, despite earlier teasing the idea.

Getty Images

In a fresh message this week, the Pope has also called for the release of all prisoners of war (POWs) and further praised the ceasefire between India and Pakistan, reportedly brokered by President Trump, it should be noted.

“I, too, address the world's great powers by repeating the ever-present call ‘never again war,’” Leo had also said starting Sunday.

President Zelensky has invited the new Pope to visit Ukraine and see the war-ravaged country in person. Currently, the Pope is preparing to travel to Turkey at a later date, to mark the 1,700th anniversary of the First Council of Nicaea (in Asia Minor).

In Wednesday audience remarks, Leo also highlighted the plight of the suffering Christians of Syria, Lebanon, Iraq, Egypt, and elsewhere in the Middle East.

He acknowledged that that the region's ancient Christian populations have been forced to flee their homelands because of "war and persecution, instability and poverty."

"It was a reference to the exodus of Christians from the Middle East, Iraq and Syria especially, where entire communities have been displaced by years of Islamic extremist violence," The Associated Press writes. "Many of these communities in northern Iraq were some of the oldest of the faith, where the dialects of Aramaic – the language of Jesus – are still spoken."

The newly installed pontiff said he is ready to "help bring enemies together, face to face" as a peacemaker.

"Who better than you can sing a song of hope even amid the abyss of violence?" he declared. "From the Holy Land to Ukraine, from Lebanon to Syria, from the Middle East to Tigray and the Caucasus, how much violence do we see!"

Trump putting the world on notice that the new leadership and alliances will be based on friendship and commerce; “not chaos.” The Saudi Crown Prince with a smile in agreement and appreciation.pic.twitter.com/koZ9MFh0H2

Interestingly, Trump too has begun to present himself as a 'peacemaker' - and his message to the Middle East this week has been one of 'deal-making, not chaos' - and so the timing of this dual messaging from the Vatican as well as Washington could make for better chances at peace in the various conflict zones. However, it remains that Trump has been in the Gulf overseeing hundreds of billions of dollars in new weapons sales... so there's that.

On Iran, Trump said at a state dinner in Doha to his Qatari hosts on Wednesday, "You’re also working with us very closely, with respect to negotiating a deal with Iran, which is the far friendlier course that you would see."

"I mean, two courses, there’s only two courses. There aren’t three or four or five, there’s two. There’s a friendly and a non-friendly, and non-friendly is a violent course, and I don’t want that. I’ll say it up front. I don’t want that, but they have to get moving," the president added, as he attempts to forge ahead on a new nuclear agreement with Tehran.

Goldman analysts point to a bullish supply-side inflection point in the heavy machinery market, emphasizing that shrinking used equipment inventories have historically led to price increases in used machinery within 6–9 months and in new equipment within roughly 12 months. This inflection point suggests that a strategic window to purchase used heavy machinery has likely opened.

Goldman's Jerry Revich and Clay Williams reiterated their "Buy" ratings on Deere (DE), Caterpillar (CAT), and United Rentals (URI), citing a bullish supply-side inflection point in the machinery cycle. According to their Machinery Supply tracker, declining used equipment inventories—a leading indicator—signal tightening supply and a capital stock drawdown for the first time in three years.

Here are the key highlights of the note:

• Shifts in used equipment inventories lead used values by ~6-9 months, new equipment production by ~12 months, with coincident performance vs. stocks. Jerry makes a purely supply-side call that points to upside beyond the economic cycle; he sees (i) declining capital stock for the first time in three years, (ii) under-production over the past year amid dealer inventory destocking, (iii) estimates that embed full tariff headwinds, and (iv) valuation upside on mid-cycle earnings.

• Previously in 2016, the used market inflection marked the start of a multi-year recovery in ag equipment demand despite relatively soft farmer incomes. We are now seeing used inventories declining on a year-over-year basis for consecutive months which supports jerry's bullish DE view. Used values have historically been coincident wih DE stock price and histroically lead used equipment values by 6 to 9 months.

Our focus is less on individual names like DE, CAT, and URI and more on the underlying equipment used and new values charted by Goldman analysts, which points to a clear supply-side inflection point in the heavy machinery market.

The analysts show tightening inventories of used construction equipment, with used values appearing to bottom out and begin an upward trend.

"As the inflation environment has normalized, we believe the relationship will revert to past cycles," the analysts said. 

Exhibit 17 illustrates the full history of supply imbalances in the heavy machinery market—highlighting how periods of under- and oversupply have consistently driven pricing trends in the secondary market.

Similar dynamics are underway for the used ag equipment market. 

Is a 2016-like reversal ahead for the 100 horsepower used tractor market?

Ag used inventories vs Deere dealer inventories...

This insight is particularly valuable for business owners and operators weighing the decision to purchase used or new heavy machinery or ag equipment, offering a clearer view of where prices are likely headed in the quarters ahead.

And the hits just keep on coming...

UNH shares are plunging after hours (down 6% and back below $300 for the first time since September 2020) following a report from The Wall Street Journal that, according to people familiar with the matter, the DOJ is investigating UnitedHealth Group for possible criminal Medicare fraud related to its Medicare Advantage business.

While the exact nature of the potential criminal allegations against UnitedHealth is unclear, the people said the federal investigation is focusing on the company’s Medicare Advantage business practices.

The Justice Department’s criminal healthcare fraud unit focuses on crimes such as kickbacks that trigger higher Medicare and Medicare payments.

UnitedHealth’s latest annual securities filing says the company “has been involved or is currently involved in various governmental investigations, audits and reviews,” and flags involved agencies including the Justice Department.

It doesn’t specifically mention the criminal, civil and antitrust probes the Journal has reported.

The probe adds to a list of government inquiries into the company, including investigations of potential antitrust violations and a civil investigation of its Medicare billing practices, including at its doctors offices.

All of this comes as the Trump administration and Congress look to cut federal health spending, a key source of UnitedHealth’s success.

Five years ago, the Covid-19 pandemic marked a dramatic shift in workplace dynamics, as working from home suddenly became the norm for millions of workers in the United States and across the globe. 

This transformation offered employees newfound flexibility, enabling them to manage their time more effectively, eliminate commutes, facilitate childcare and often achieve a better work-life balance. 

Remote work also allowed for a customized work environment, fostering comfort and productivity for many.

However, as Statista's Felix Richter notes, traditional office settings continue to hold unique advantages, which is why more and more employers have started to call their workers back to offices for most days of the week. 

Offices facilitate in-person collaboration, spontaneous brainstorming and social interaction, all of which are challenging to replicate virtually. 

Additionally, the structured environment of an office can provide clearer boundaries between work and personal life, reducing distractions and helping employees switch off when at home.

In many cases, hybrid models combining the benefits of both setups have emerged, catering to diverse employee preferences and living situations and striking a balance between the benefits and disadvantages of both working from home and in the office. 

You will find more infographics at Statista

According to Statista Consumer Insights, 1 in 5 American employees currently work from home regularly, while 40 percent of respondents regularly work in a company office.

Authored by Steve Watson via Modernity.news,

Undisclosed communication devices reportedly discovered in Chinese-manufactured solar panels and related equipment have sparked concerns among U.S. officials about the vulnerability of the nation’s power grid, according to a Reuters report. 

These “rogue” devices, found over the past nine months, could potentially destabilize energy infrastructure and trigger widespread blackouts, sources familiar with the matter told the outlet.

The undocumented devices, including cellular radios, were identified in solar power inverters, batteries, electric vehicle chargers, and heat pumps produced by several Chinese suppliers. 

BREAKING:

The U.S. has found Trojan horse communication devices in Chinese-made solar power inverters. They are used to connect solar panels to electricity grids.

The devices could be turned out remotely to destabilize energy grids, potentially leading to massive blackouts like… pic.twitter.com/mShdpVD4oD

U.S. experts uncovered the components during security inspections of renewable energy equipment, prompting a reevaluation of the risks posed by these products. 

Inverters, critical for connecting solar panels and wind turbines to the power grid, are predominantly manufactured in China, amplifying concerns about their security.

“We know that China believes there is value in placing at least some elements of our core infrastructure at risk of destruction or disruption,” said Mike Rogers, former director of the U.S. National Security Agency.

“I think that the Chinese are, in part, hoping that the widespread use of inverters limits the options that the West has to deal with the security issue,” Roger’s further urged.

Experts warn that these rogue devices could bypass firewalls, allowing remote manipulation of inverter settings or even complete shutdowns. 

Such actions could disrupt power grids, damage energy infrastructure, and cause blackouts. 

“That effectively means there is a built-in way to physically destroy the grid,” another source told Reuters.

The discovery adds to long-standing warnings from energy and security experts about the risks of relying on Chinese-made green energy products. 

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Concerns over espionage and sabotage have grown as the U.S. continues to integrate these technologies into its energy systems.

In December 2023, Republican officials, including former Wisconsin Rep. Mike Gallagher and then-Senator Marco Rubio, urged Duke Energy to discontinue using Chinese-manufactured CATL batteries at Camp Lejeune, North Carolina, citing surveillance risks. 

“Directly following our inquiry, Duke disconnected the Chinese-manufactured systems from the grid,” Gallagher and Rubio stated in a February 2024 press release. 

“Others that continue to work with CATL, and other companies under the control of the CCP, should take note,” they added.

The Department of Energy (DOE) acknowledged the issue, with a spokesperson telling Reuters that the department continuously assesses risks associated with new technologies. 

“While this functionality may not have malicious intent, it is critical for those procuring to have a full understanding of the capabilities of the products received,” the spokesperson said. 

The DOE is working to strengthen domestic supply chains and improve transparency through initiatives like the “Software Bill of Materials,” which inventories all components in software applications.

A spokesperson for the Chinese embassy in Washington rejected the allegations, stating, “We oppose the generalisation [sic] of the concept of national security, distorting and smearing China’s infrastructure achievements.”

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