U.S. Debt Burden To Top WW2 Peak
My View
The U.S. federal debt burden is set to surpass the peak of WW2 in the coming years. Trump has given tech billionaire, Musk, the job of finding $2 trillion in federal spending cuts, by the middle of next year. The U.S. is forecast to have reached an all time high in 2029, as seen on the diagram
“ Pose significant risks to the fiscal and economic outlook ”
– CBO, Congressional Budget Office
The U.S. will have to put up higher interest rates, a contractionary monetary policy, reducing spending and consumption and as a result reducing AD – shrinking the economy. If investors lose confidence in the US$, then that would have great impact as its status would drop insanely and no longer be seen as the most reliable currency in the world. Higher inflation rates and interest also means loans like tuition fees for students and mortgages get more expensive and also cause more taxation burdens
Deutsche Bank Cuts 2000 More Jobs
My View
Deutsche Bank to axe 2000 more jobs this year in its retail division as they struggle to boost profitability. Last year, the bank cut 1300 jobs to focus on generating revenue from front-office roles
“ scaling back its branch network, having closed 757 branches – equivalent to one third of its global network ”
– Financial Times
Germany’s largest lenders focus on front office roles displays their focus on high margin activity, such as Wealth Management, Investment Banking, Trading etc. Investors might see it as an opportunity – the job cuts need to be made to restructure the bank for long term profitability,
Heathrow Airport Shut
My View
Air travellers faced days of disruption at London’s busiest airport, leading to the cancellation of 1300 flights, due to a fire that started in a nearby electrical substation – 70 firefighters at the infernos peak and it ignited 25,000 litres of cooling oil
“ Significant redundancy built into the energy infrastructure surrounding the airport ”
– Michael Shanks, Energy Minister
The government may face pressure, to improve critical infrastructure as Heathrow is a national asset and should take priority. “ we cannot guard ourselves 100% against every contingency ”. Passengers and Business suffered financial losses as customers may have had to pay for accommodation and businesses may have had to delay their high value and time sensitive cargo ( pharmaceuticals, electronics etc ). Could this happen again ? Should we questions Heathrow’s reliability or is it just a one off ?
NATO Replace the U.S.
My View
Europe’s biggest military powers are drawing up plans to take up greater responsibilities for the continents defence from the U.S. However America is indispensable to European powers and security as they spend more on defence than all other NATO allies combined ! Would take about 5 – 10 years
“ were seeing it right now [ European reassurance for war in Ukraine ] … without the Americans ”
– 3rd Senior Western Official
NATO structure heavily depends on U.S. funding and shifting away from there will increase the investment in European defence companies ( as I is 15% of AD, it will increase and shift rightward ) boosting GDP growth, however this may also mean more tax to help fund it and / or budget reallocations
Tesla Shares Plunge
My View
Hedge Fund short-sellers have made $ 16.2 bn betting AGAINST Tesla’s shares as the value of the company has halved over the past 3 months, dating back to his activism ( See Feb 1 )
“ it’s not people with cowboy boots that buy Teslas ”
– Managing Partner at Clean Energy ( $ 1.5bn hedge fund )
Musks focus on AI and X, have worried investors confidence in the company ; Shifting dominance to other global competitors. Yes, short sellers won big, but Tesla’s long term employees are suffering
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