Today’s top stories:

1. Winners and losers from the US election

2. Economists express concerns about Trump’s policies.

3. AI model improvements hit speed bump as OpenAI shifts strategy.

4. Bitcoin surges to $81,000 due to Trump win.

5. Price levels 30% higher than pre-Covid fuel voter anger despite cooling inflation.

Markets Snapshot - Top 5 Economies

Economic Calendar

Today’s top stories

1. Winners and losers from the US election that could impact the US economy.

Winners:

(i) Benjamin Netanyahu (Israel): Having had a tense relationship with outgoing President Joe Biden, Netanyahu will welcome back his longtime ally. Trump will likely reinforce US support for Israel and could empathize Netanyahu’s insistence on a war against Iran’s proxies despite risks.

(ii) Narendra Modi (India): A welcome boost for Modi, who faced scrutiny for Hindu nationalist policies in India and extra-judicial killings in Canada recently. Trump’s friendship with Putin could also provide the space for Modi to maintain close ties with Russia.

(iii) Vladimir Putin (Russia): Trump’s return to the White House could be an opportunity for Putin to exploit divisions in the US and gain an advantage in the Ukraine invasion. There is an expectation of strained unity in the NATO alliance and could jeopardize future aid to Ukraine by the US.

(iv) MBS (Saudi): Mohammed Bin Salman has an opportunity to revive stalled efforts regarding the Abraham Accords that started diplomatic ties between Israel and several Arab states. This could allow a peace treaty with the Kingdom and provide political backing from the US that will allow it to focus on expanding its economy and ease threats from Iran.

(v) Giorgia Meloni (Italy): A hard right politician, Meloni vowed to work with anyone in the White House and her friendship with Elon Musk could favor support from Trump. Her office has taken the stance of Italy being part of the West and not a bridge between US and China.

(vi) Tayyip Erdogan (Turkey): Tayyip addressing Trump as ‘my friend’ and Trump’s focus on trade could work in Edogan’s favor but his anti-Israel rhetoric and recent efforts to cooperate with China could strain ties.

(vii) Kim Jong Un (North Korea): Kim has played hard with all American outreaches since Trump’s last presidency. With Trump’s return, he will look for the opportunity to reduce American military in the region and try to weaken military tries between the US, Japan and South Korea.

(viii) Viktor Orban (Hungary): Orban praised Trump during the president-elect’s criminal prosecutions and Trump praised him for his strongman-style leadership. Orban is positioning himself as Trump’s ally and is hoping his personal ties will strengthen his standing in the EU, where he’s been considered a black sheep for his autocratic position.

(ix) Javier Milei (Argentina): Milei had publicly praised Trump on being ‘a very great president’ and hopes for the scales to tip in favor of Argentina at the IMF as the country seeks a new deal to replace the $44 billion program currently in place.

Losers:

(i) Volodymyr Zelenskiy (Ukraine): He congratulated Trump immediately after the election but is anxious at a Republican victory. Ukraine fears the US could pressurize it to give up land in peace talks with Russia and cut back financial and military support.

(ii) Masoud Pezeshkian (Iran): Iran publicly shrugged off the impact of another Trump presidency but that could cut off the path to diplomacy over its nuclear program. Trump’s close ties with Israel could also threaten Iran in the midst of the ongoing conflict.

(iii) Xi Jinping (China): Trump’s threats of a 60% blanket tariff would destroy trade with the US, taking out the only pillar of support holding China’s economy. However, Musk, who has extensive business interests in China, has shown he has Trump’s ear. There was recent news of Putin talking to Musk on behalf of Xi, which could translate to some favors being done for the Chinese leader.

(iv) Shigeru Ishiba (Japan): Trump has repeatedly cited Japan’s trade surplus with the US as a problem and called for island country to pay premiums for US military presence. Japan could also face pressure from Trump for its exports of chip making to China.

(v) Claudia Shienbaum (Mexico): Apart from the immigration issue, where Trump has threatened to put financial pressure on Mexico, he will carry out his tariffs plan which could reduce exports between the countries.

(vi) Keir Starmer (Britain): Starmer had rebuked the storming of the US Capitol on 6 Jan 2021 calling it a ‘direct attack on democracy’ while his foreign secretary David Lammy called Trump a ‘woman-hating, neo-Nazi-sympathizing sociopath’ in 2017. Lammy also got into a public feud with Musk.

(vii) Olaf Scholz (Germany): Trump’s dislike of Angela Merkel put a huge strain on US-German ties and Scholz was her finance minister and successor so it will be hard for him to shake off that connection.

2. Economists challenge Trump's inflation claims as tariffs and deportations raise price concerns 🚨

Pandemic-induced inflation under the Biden presidency

Key takeaways:

• Trump's campaign promises include "vanishing inflation, skyrocketing incomes, contradicting economists' predictions.

• Proposed policies include up to 20% tariffs on all imports and 60% on Chinese goods, and a large-scale deportation program.

• Tax cuts for wealthy and corporations would add $5.8 trillion to deficit over next decade according to Penn Wharton Budget Model.

• Current economy shows positive signs: inflation dropping near Fed's 2% target, strong job market, low layoffs.

• Immigration restrictions could shrink labor force, potentially forcing up wages and countering recent inflation progress.

How it could impact you:

• Higher prices due to import tariffs on everyday items from groceries to electronics

• Labor shortages from deportations could mean higher wages but also increased costs for services.

• Tax cuts might provide short-term relief but could lead to reduced government services.

What this could mean for US economic policy:

Picture trying to fix inflation by implementing policies that economists say could actually increase prices - it's like trying to put out a fire with sparklers. The proposed combination of trade restrictions, immigration limits, and fiscal expansion has created what economists call a "policy paradox," but what most of us would call a "hold-my-beer" moment in economic planning 🤔.

The best way to understand this situation is to imagine running a household budget where you're simultaneously planning a luxury vacation while your roof is leaking - sure, the vacation photos will look great, but eventually, that roof situation needs addressing ☔️.

3. AI model improvements hit speed bump as OpenAI shifts strategy 🐌

Key takeaways:

• OpenAI's new Orion model shows smaller quality improvements compared to previous GPT versions.

• High-quality training data is becoming scarce, forcing companies to use AI-generated content.

• OpenAI's new reasoning model "o1" offers better responses but costs 6x more than standard models.

• Companies are shifting focus to post-training improvements rather than relying solely on larger models.

• Industry leaders suggest current AI technology remains viable for product development despite slowdown.

What this could mean for the AI industry: 

• The AI gold rush might need to swap its pickaxes for precision tools. 🔍

• Looks like we're moving from "bigger is better" to "work smarter, not harder" as companies realize throwing more GPUs at the problem isn't the answer anymore.

4. Bitcoin surges to $81,000 as Trump's crypto love ignites markets 🚀

Key takeaways:

• Bitcoin reached an all-time high of $81,497, rising 6.1% after Trump's election victory.

• Crypto industry invested over $100 million in backing crypto-friendly candidates.

• Bitcoin has gained 93% in 2024, outperforming stocks and gold.

• US Bitcoin ETFs saw record $1.4 billion daily inflow following the election.

• Trump plans to create a strategic Bitcoin stockpile and appoint pro-crypto regulators.

How it could impact you:

• Your existing crypto investments might see significant gains as institutional money flows in.

• Easier access to crypto investments through ETFs.

• Better protection for retail investors with clearer regulations.

• Time to dust off that old crypto wallet you forgot about in 2022 - your forgotten tokens might be worth something again! 😅

• Watching your non-crypto friends suddenly become crypto experts again... here we go! 🎢

What this could mean for cryptocurrency in the US economy:

The crypto sector appears poised for a significant transformation under Trump's leadership. With promised regulatory support and institutional backing, we might see crypto moving from the financial world's rebel child to a more mainstream asset class 🎓.

Though remember, just like your high school reunion, sometimes the popular kids aren't always the most reliable ones! 😏

5. Price levels 30% higher than pre-Covid fuel voter anger despite cooling inflation 😤

US consumer confidence still low compared to pre-pandemic levels

Key takeaways:

• Average prices across OECD nations are 30% higher than in December 2019.

• Food costs have surged 50% since pre-Covid, outpacing wage growth in half of OECD countries.

• Consumer confidence remains 1.7% below pre-pandemic levels despite inflation cooling to 2%.

• High prices played key role in recent US elections, including Trump's victory over Harris.

• German anti-establishment parties poised to win 25% of votes - highest since 1920s - by exploiting this consumer sentiment.

• 90% of Britons cite cost of living as UK's most important issue despite 1.7% inflation.

Inflation has outpaced wage growth in many countries with the gap closing only recently

How it could impact you:

• Your salary might look bigger on paper, but buying power hasn't caught up with 2019 levels.

• That "pre-pandemic prices" sale at the grocery store? Still 30% higher than actual pre-pandemic prices. 🏷️

What this could mean for consumer spending in the OECD economies:

• The persistent gap between wages and prices is reshaping consumer behavior across developed nations.

• While inflation numbers look better on paper, the lingering effects of price hikes continue to influence spending patterns 📊.

• Remember when we thought $5 coffee was expensive? Now it's like remembering when gas was under $2 - those were the days! ⛽️ 

Other reads

AI

Amazon mulls new multi-billion dollar investment in Anthropic.

Andrew Ng’s Deep Learning AI launches course on agent memory.

OpenAI purchases chat.com domain from Hubspot co-founder Dharmesh Shah.

Tech

Apple Intelligence features like ChatGPT available in iOS 18.2 beta.

Google’s Gemini could have a standalone app on iPhones.

Mozilla plans how to improve market share on Firefox’s 20th anniversary.

Startup

Open source projects attract equity-free funding from VCs and corporates.

GemaTEG invents new way to cool data centers.

Impact investor takes aim at Agritech startups with $1.5B.

Business

Apple warns investors that iPhone profitability may never be matched by its new products.

TSMC halts shipments of advanced chips to Chinese companies.

Buffett’s Apple stake reduction creates $97B cash surge for Berkshire Hathaway.

US Politics

Republicans closing in on unified power in the US.

Trump wins all seven battleground states by closing out Arizona.

Top 5 economies in the world (non-US)

China stimulus disappointment drops Asian stocks while Bitcoin rallies further.

BOJ unsure of timing on rate hike.

German political crisis engulfs industry.

Trump' victory provides confidence to Indian economy.

Fascinating

Podcast statistics from the US election

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