Geopolitical Concerns
Putin Played a Long Game. It’s Starting to Pay Off.
Matthew Luxmoore, Wall Street Journal
Trump’s Embrace of Russia Rocks NATO Alliance
Daniel Michaels, Wall Street Journal
The World Trump Wants: American Power in the New Age of Nationalism
Michael Kimmage, Foreign Affairs
President Vladimir Putin began laying the groundwork for a significant shift in global dynamics with a 2007 speech in Munich, where he voiced strong opposition to the expansion of the North Atlantic Treaty Organization into Eastern Europe and called for an end to what he perceived as the United States’ dominant role in world affairs. This long-term strategy involved a series of actions over the following years, including military interventions in Georgia in 2008, Syria in 2015, and Ukraine starting in 2014 with the seizure of Crimea and escalating with a full-scale invasion in 2022. Despite facing battlefield setbacks and economic pressure from Western sanctions, Putin persevered, aiming to fundamentally alter the world order, which he views as having emerged from the “greatest geopolitical catastrophe of the century”—the collapse of the Soviet Union in 1991. Based on recent months, this patient approach appeared to be yielding results, evidenced by a noticeable change in tone from the White House following President Trump’s return to office. Advisers close to Putin expressed surprise at the speed of this shift. Notably, the U.S. has paused military aid to Ukraine and begun to distance itself from traditional European allies. Following a U.S.-Russia meeting in Saudi Arabia, Putin informed his security services that Moscow and Washington were now ready to address “strategic problems in the architecture of the world”.
Meanwhile, President Trump’s foreign policy approach in his latest term marks a significant departure from previous administrations, characterized by a distinct warming of relations with Russia and a more critical stance towards traditional alliances, particularly NATO. This shift is rooted in a nationalist sentiment, encapsulated by his “America First” slogan, which echoes right-wing anti-communist movements of the 1950s that prioritized national interests and viewed liberal internationalism with suspicion. Trump has publicly questioned the value of NATO, with comments suggesting a prioritization of domestic issues over concerns about Russia and its actions. While affirming support for NATO’s Article 5 mutual defense clause at a press conference with British Prime Minister Keir Starmer, his overall enthusiasm for the alliance, especially concerning high-spending Baltic states, has been less consistent. This evolving stance has deeply unsettled European allies, who rely on NATO for their security. German Foreign Minister Annalena Baerbock, speaking in early March 2025, emphasized the need for Europe to take responsibility for its own security, reflecting concerns about the reliability of the trans-Atlantic partnership. European leaders convened in London to discuss strategies for supporting Ukraine and addressing the implications of the shifting U.S. position, with the U.K. and France taking a leading role in developing a “coalition of the willing” to secure a cease-fire in Ukraine. The potential long-term consequence of this realignment is a fundamental questioning of the post-World War II security order and a push for Europe to develop its own independent security capabilities.
Geoeconomics
How Uncertainty From Trump’s Tariffs Is Rippling Through the Economy
Konrad Putzier and Justin Lahart, Wall Street Journal
US Exceptionalism Trade Is Cracking as Bonds Beat Stocks
Ruth Carson and Phil Serafino, Bloomberg
How big is the stock market’s America bubble?
Stephanie Stacey and Mari Novik, The Financial Times
A Stock Market Rotation Is Underway. Will It Last?
Sarah Hansen, Morningstar
On Tuesday, March 4, the U.S. economy entered a new phase as President Trump’s tariffs on imports from Mexico and Canada took effect, ending decades of free trade between the three nations and carrying the potential to disrupt entire industries. These 25% tariffs, with the exception of a 10% levy on energy products, prompted immediate retaliatory actions from both Canada and Mexico. This escalation of trade tensions, described by Dartmouth economist Douglas Irwin as virtually unprecedented in U.S. history due to the large volume of imports and substantial tariff increases, added to an existing 20% tariff on China. Economists at Yale’s Budget Lab projected that if these tariffs remained and trading partners implemented matching tariffs, overall consumer prices would rise by 1.2% within a year, and GDP growth would be reduced by 0.6 percentage points in the current year. Concerns over this economic uncertainty led to a reversal in investor sentiment regarding American exceptionalism, a narrative that had driven markets for over a year. As the tariffs took effect, Treasury 10-year yields fell to a four-month low of 4.11%, signaling investor bets on slowing global growth due to the intensifying trade war. Simultaneously, the previous “Trump trade,” which saw stocks surge and Treasury yields rise, began to unwind, with bonds outperforming stocks since President Trump’s election.
This shift in U.S. economic policy coincided with a period where the U.S. stock market represented nearly two-thirds of the global investable market by March 2025, fueled by a significant rally in technology stocks, particularly those related to artificial intelligence. This concentration, highlighted by Paul Marsh of London Business School as a “huge bet on AI,” made global investors increasingly vulnerable. By February 27th, the Morningstar US Market Index had declined by 0.25% since the start of the year, with technology stocks being the primary drag after a strong performance in 2024. A stock market rotation was observed, with investors moving away from previously high-flying tech stocks into sectors like healthcare, basic materials, and financials, as well as international markets such as China and the UK. For instance, technology stocks were down almost 5% year-to-date, while basic materials were up 4.55%, and healthcare rose by 6.38% as of that date. While the Morningstar China Index surged by 16% in the same period, the sustainability of this rotation remained uncertain, with strategists like Adam Turnquist of LPL Financial suggesting potential temporary relief rallies rather than a lasting change. However, Michael Arone of State Street Global Advisors noted that broadening earnings growth beyond the largest tech companies could indicate a more durable shift.
Global Junctions
Germany’s Merz vows to do ‘whatever it takes’ in terms of defense
Le Monde
EU chief unveils €800 billion plan to ‘rearm’ Europe
Le Monde
European defence shares jump as blistering rally gathers pace
Mari Novik, Sylvia Pfeifer and Ian Smith, Financial Times
Following recent German elections, Friedrich Merz is positioned as the likely next chancellor of Germany, and his incoming government is set to propose a significant shift in the nation’s approach to defense. Recognizing perceived threats to European peace and security, Merz stated his commitment to do “whatever it takes” in terms of defense. A key element of this new direction is a planned €500 billion economic development and defense fund over the next 10 years. Furthermore, proposals will be brought to parliament to exempt more defense spending from Germany’s constitutional “debt brake,” specifically when it exceeds 1% of GDP, which currently equates to €45 billion. This urgency is partly driven by concerns over shifts in US foreign policy and the need for Europe to shoulder more responsibility for its own security. Current Defense Minister Boris Pistorius has hailed these plans as a “historic day for the army and for Germany,” suggesting they will enable Germany to play a “leading role” in European security. However, these ambitious spending plans will require parliamentary approval, where the support of parties beyond the likely coalition may be necessary, and some factions are emphasizing the need to balance defense with other priorities like climate protection.
In parallel, European Commission President Ursula von der Leyen unveiled a comprehensive five-part plan to “rearm” Europe, mobilizing approximately €800 billion to bolster the continent’s defense capabilities and provide immediate support to Ukraine. Presented on Tuesday, this initiative aims to address the “clear and present danger” facing Europe. The plan includes proposing the suspension of strict EU budget rules to allow increased defense spending by member states and a new “instrument” providing €150 billion in loans for defense investment, focusing on pan-European capabilities. Additionally, it envisions redirecting existing EU budget funds, including “cohesion” funds, towards defense-related investments and engaging the European Investment Bank to ease lending limits for defense firms. This move comes as European leaders contemplate a future with potentially reduced US security guarantees. The announcement of these plans coincided with a substantial rally in European defense sector stocks. On a single Monday, the Stoxx Europe aerospace and defence index surged by 8%, marking its largest one-day gain since November 2020. Individual companies like Rheinmetall (up 15%), Leonardo (up 17.3%), and Thales (up 16.7%) saw significant gains on Monday. This investor enthusiasm reflects a growing conviction that “Europe has little choice but to increase defence spending” in the current geopolitical climate. This surge builds upon a pre-existing trend, as the order books of European defense contractors had already reached record highs following the full-scale invasion of Ukraine in 2022. In contrast, US defense stocks showed more modest gains on the same day, indicating a specific European market reaction to the continent’s changing security landscape.
Global Trajectories
CRISPR could yet save millions of lives. Here’s how
The Economist
Trump’s freewheeling disruption could extend to the dollar
Katie Martin, The Financial Times
The Coming Showdown in Trumpworld
Dani Rodrik, Project Syndicate
Michael Albertus, Foreign Affairs
CRISPR, a gene-editing technology adapted from a natural bacterial defense system discovered in bacteria like Streptococcus thermophilus in the early 2000s and later engineered for precise genome modification by Emmanuelle Charpentier and Jennifer Doudna in 2012, holds immense future potential beyond its initial challenging applications like the $2.2 million Casgevy therapy approved in 2023 for sickle-cell disease. The development of in vivo treatments, which aim to edit genes directly within the body using delivery systems like lipid nanoparticles (LNPs), could significantly lower costs and broaden the applicability of gene editing to more common ailments, moving beyond gruelling bone-marrow transplants. Companies like Verve Therapeutics, which had a trial paused in 2024 due to an adverse reaction to LNPs but is continuing with a different formulation, are pioneering this approach for diseases like premature coronary artery disease and familial hypercholesterolemia, conditions affecting millions globally. Furthermore, the emergence of more precise gene-editing tools, such as base editing, which entered human trials in 2022, and prime editing, which began human trials in 2024, offers the ability to correct genetic mutations with greater accuracy. Meanwhile, should Donald Trump’s administration pursue its conviction that a strong US dollar puts trading partners at an unfair advantage, as indicated by advisors in early 2025, unorthodox measures to weaken the dollar could be implemented. Despite investors, in the recent month, being seemingly unfazed by potential disruptions, the long-term effects of policies aimed at devaluing the dollar could reshape global financial dynamics.
Looking ahead, President Trump’s support base, an uneasy alliance marked by sharp divisions between economic nationalists like Steve Bannon and the techno-right represented by Elon Musk, is likely to experience increasing internal friction due to their fundamentally different visions for the United States. While economic nationalists advocate a return to industrial prominence, the techno-right prioritizes a technologically advanced future— a divergence that could ultimately fracture the coalition. Simultaneously, the impacts of climate change are projected to intensify the global competition for land and resources. As seen with President Trump’s interest in acquiring Greenland in early 2025 due to its strategic location and potential resources unlocked by melting ice, territories with newly accessible resources or improved habitability, such as parts of Canada and Russia which could see significant increases in arable land by 2080, will become focal points of geopolitical tension. The scramble for vital minerals needed for renewable energy technologies, exemplified by conflicts in regions like the Democratic Republic of Congo, and the strategic acquisition of agricultural land, as seen in Russia’s actions in Ukraine, indicate a future where climate change acts as a major driver of territorial disputes and resource-based conflicts across the globe.
