Here is a summary of important events that unfolded over the last month, and which may affect economic, financial, and geopolitical issues in the months ahead. Furthermore, we share our thoughts on the market implications of the reported developments.

North America

• Former US president and Republican candidate Donald Trump returned to campaigning on September 17th, just two days after an alleged second assassination attempt at his Florida golf course. His Democratic opponent, Vice President Kamala Harris, is also actively campaigning, with events in Pennsylvania as she focuses on key swing states crucial for the November 5th election. Trump, blaming the Biden-Harris administration’s rhetoric for inciting violence against him, has politicized the assassination attempt, further intensifying tensions. Both candidates are in a tight race, with a recent poll showing Harris leading Trump by a narrow margin in Pennsylvania after the first televised presidential debate between the two candidates. Vice President Harris has pushed for a second debate for October 23rd, to be hosted by CNN, but former President Donald Trump has yet to agree.
• Nippon Steel’s proposed $14.9 billion acquisition of US Steel has encountered significant political resistance in the United States. The Committee on Foreign Investment in the United States (CFIUS) has delayed its decision on the deal until after the November presidential election. This delay comes amid concerns about national security and the potential impact on the US steel supply chain. Both President Biden and Vice President Harris have expressed opposition to the acquisition, emphasizing the importance of keeping US Steel American-owned. Despite these challenges, Nippon Steel remains committed to the deal, highlighting its plans to invest billions in US Steel facilities.
• Prime Minister Justin Trudeau’s government may face an early election after the New Democratic Party (NDP), led by Jagmeet Singh, ended its support for the Liberals on September 4th. The agreement between the two parties, which had allowed Trudeau to maintain a majority in Parliament, was originally set to expire in June 2025 but was dissolved early due to rising tensions. Singh criticized Trudeau’s handling of issues such as corporate interests and a recent lockout of railway workers, while Trudeau’s popularity has declined, with polls showing the Conservatives, led by Pierre Poilievre, gaining significant ground. Although Singh ended the pact, he has not yet committed to joining Poilievre’s push for an immediate election. Although there are internal calls within the Liberal Party for him to step aside, the party’s structure lacks formal mechanisms to force him out, and Trudeau remains determined to press ahead despite the party’s dwindling support in key urban strongholds.
• This month, India joined the US in a partnership to strengthen the global semiconductor ecosystem, supported by the CHIPS Act and India’s Semiconductor Mission. This collaboration, part of the US-India Critical and Emerging Technology (ICET) partnership, aims to enhance semiconductor supply chains through joint technological initiatives and diversify production. Both governments have committed $1.2 million to support companies under the INDUS-X initiative, which will foster defense innovation and technology sharing. The initial phase will assess India’s semiconductor infrastructure and workforce needs, with future joint projects planned to advance the sector.
• Market Implications: Though markets rose following the Federal Reserve’s 50 basis point cut to interest rates on Wednesday, we expect markets to continue experiencing volatility due to the uncertainty and the issues at stake in the forthcoming elections, as well as due to the fact that investors need to assess the impact that a potential European or Chinese hard landing could have in the midst of a dovish Fed. We maintain our conservative stance amidst these uncertainties. We expect that a rally in US equities might materialize after mid-November.

Europe

• On September 10^th, Ukraine launched its largest drone attack to date on Moscow, killing at least one woman and damaging dozens of homes. Around 50 flights were diverted as three of Moscow’s four airports were shut down for over six hours. Russia’s defense ministry reported intercepting 144 Ukrainian drones across multiple regions, including 20 targeting Moscow. The attacks are part of Ukraine’s ongoing drone strategy aimed at weakening Russia’s military, while Moscow has vowed to respond, labeling the strikes as acts of terrorism against civilian infrastructure. Meanwhile, the European Union announced a $39 billion loan for Ukraine as part of an arrangement in which G7 countries will raise money using the proceeds from seized Russian assets.
• In the September 1st, state elections in Thuringia and Saxony, Germany’s far-right Alternative for Germany (AfD) secured significant wins, with 33.2% in Thuringia, while the leftist Sahra Wagenknecht Alliance (BSW) also made strong gains. These results further weakened Chancellor Olaf Scholz’s coalition government, which saw all its parties lose support, raising concerns about coalition instability and tougher stances on immigration and Ukraine. Scholz now faces increased pressure on his government’s policies, with tensions between the Greens, Free Democrats (FDP), and his Social Democrats (SPD). The rise of anti-establishment parties could complicate forming coalitions at both state and federal levels, potentially impacting Germany’s support for Ukraine.
• President Emmanuel Macron of France appointed Michel Barnier, a 73-year-old veteran politician from the Republicans, France’s main conservative party, as prime minister after an extraordinary delay of over 50 days. Barnier’s appointment followed inconclusive parliamentary elections in July, where no party secured a governing majority, leaving Macron’s centrist alliance with only 166 seats and prompting criticism from the left, particularly the New Popular Front. Barnier will face significant challenges, including managing tensions with the far-right National Rally, negotiating a budget, and addressing France’s financial issues with the EU. His appointment angered left-wing leaders, like Jean-Luc Mélenchon, who accused Macron of undermining democratic processes.
• European Commission President Ursula von der Leyen recently unveiled a comprehensive plan aimed at boosting the EU’s competitiveness and accelerating decarbonization efforts. The initiative, part of her broader Green Deal Industrial Plan, focuses on creating quality jobs in the clean tech sector and enhancing the EU’s industrial innovation. Key elements include simplifying regulations, improving access to funding, and fostering skills development to support the transition to a net-zero economy. Von der Leyen emphasized the need for speed and ambition to maintain the EU’s industrial lead in the global market.
• Market Implications: As expected, the ECB cut rates again this month and hinted at further reductions ahead due to slowing inflation and weak economic growth in the Eurozone. European markets rose on the news of the Fed’s rate cut and the Euro strengthened against the US dollar. We recommend some caution in European markets given the rising risks in that region.

Asia, Eurasia, & the Pacific

• Sri Lanka’s 2024 presidential election, the first since protests over a severe economic crisis ousted President Gotabaya Rajapaksa in July 2022, has resulted in a win for Marxist lawmaker Anura Kumara Dissanayake. Dissanayake is popular among the country’s youth, due to his pro-working class and anti-political elite campaign. Current President Ranil Wickremesinghe, opposition leader Sajith Premadasa, and Dissanayake, and Namal Rajapaksa, son of former President Mahinda Rajapaksa, were the key candidates. Dissanayake’s victory is particularly striking, as he won only about 3% of the votes in 2019’s presidential election. Today, Dissanayake dissolved parliament and called for snap general elections on November 14th, nearly a year ahead of schedule.
• US officials announced plans to engage with Bangladesh’s interim government, led by Nobel Peace laureate Muhammad Yunus, to discuss economic support and development. The interim government was established following the ouster of Prime Minister Sheikh Hasina amid violent protests, with Yunus sworn in as the head on August 8th. The US delegation, including Donald Lu from the State Department and representatives from Treasury, USAID, and the Office of the U. Trade Representative, will meet with key Bangladeshi officials to explore support for Bangladesh’s $450-billion economy, which has been strained by the global increase in fuel and food prices. The discussions aim to address economic vulnerabilities and promote growth, following a $4.7-billion IMF bailout secured last year.
• Typhoon Yagi, which struck Southeast Asia in mid-September, has caused severe flooding and landslides, leading to over 500 deaths across the region, with at least 226 casualties reported in Myanmar. The storm also impacted Vietnam, Thailand, Laos, and the Philippines, contributing to nearly 300 deaths in Vietnam and other fatalities in the region. In Myanmar, over 160,000 homes have been damaged, and more than 240,000 people have been displaced, with significant damage to infrastructure including government buildings, schools, and power structures. Relief efforts are challenging due to blocked roads, damaged bridges, and ongoing conflicts, but international aid is expected to help address urgent needs.
• India has announced a significant milestone in its green transition, securing a combined $386 billion in investments from financial institutions to bolster its renewable energy sector. This funding aims to help India achieve its ambitious targets of 500 GW of fossil fuel-free generating capacity by 2030 and net-zero carbon emissions by 2070. Prime Minister Narendra Modi has emphasized the importance of this transition, inviting global investors to participate in India’s journey towards a sustainable future.
• Market Implications: Asian central banks refrain from cutting rates with the exception of China which is trying to stimulate its economy. China continues to report weaker-than-expected economic data, pointing to a slowdown in GDP growth which has raised concerns that the country will not be able to meet its 5% growth target for 2024. We continue to have caution.

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