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Weekly Macro Summary
There have been quite a few interesting events to analyze this week, and below I list the most noteworthy news. Let’s get started:
The war with Iran is entering a more delicate and, above all, more binary phase. Pete Hegseth made it clear that the coming days will be decisive, combining the usual offer of a “deal” with an explicit threat of escalation if Tehran does not yield. In other words, Washington is still trying to present the diplomatic path as open, but the real message is that it is negotiating from a position of strength and with very little interest in concealing it. On the other side, Iran responded by widening the perimeter of the conflict, not only on the military front but also on the economic one, by threatening major U.S. corporations with a presence in the region. That list, which includes companies ranging from Microsoft and Google to Boeing and Tesla, is aimed at raising the perceived cost of the war and reminding everyone that the conflict is no longer limited to bases, militias, or energy facilities.
The Strait of Hormuz remains the true center of gravity of the conflict, because it turns a regional war into a global energy shock, and the solutions now being discussed, which involve Iran establishing a permanent toll, would amount to a constant Sword of Damocles hanging over the energy market, which would therefore deserve a geopolitical premium. Trump’s speech on Wednesday did nothing to calm tensions, and it already seems quite clear that there is no real plan and that nothing will return to the way it was before.
That shock is already beginning to filter into the real economy. In the United States, gasoline has risen above $4 per gallon for the first time in more than three years, which creates a first-order political problem for Trump and the Republicans ahead of the midterms, which are already being written off here, with expectations of a blue wave both in those elections and in the 2028 presidential race. Some conflicts are fought on the military front, while others are fought in the voter’s wallet; this one threatens to do both at once. That is why the White House insists on projecting military resolve while still leaving the door open to a negotiated exit. It needs to project strength, but it also needs to avoid higher energy costs damaging consumption, confidence, and ultimately the economic cycle. Internationally, visible cracks are also beginning to emerge. France and Italy have expressed reservations about parts of the military operations, the Pope has openly called for a way out, and China and Pakistan are pressing for an immediate ceasefire. In other words, the longer the war drags on, the harder it will be to maintain a coherent political coalition around Washington and Tel Aviv. The problem with long wars is not just their material cost, but that they gradually erode the legitimacy of those who sustain them. And that now seems to be starting to happen. In that scenario, energy once again moves to the center of the board. And, as so often happens, when geopolitics comes in through the door, market complacency goes out the window.
Quality investing has come into fashion on the back of a fantastic decade, but it contains far more problems than might initially be assumed. Nike remains stuck in a restructuring that is moving more slowly than the market had expected. Although third-quarter figures came in somewhat better than feared — with revenue flat at $11.28 billion and EPS of $0.35, beating estimates — guidance for the fourth quarter was clearly disappointing, with sales expected to decline by 2% to 4%, versus the slight growth the consensus had been pricing in. The underlying problem has not changed. China continues to be the main drag, not only because of weak demand and competitive pressure from local brands such as Anta and Li Ning, but also because Nike is still digesting operational mistakes and excess inventory; in fact, the company itself is forecasting a 20% collapse in sales in the region next quarter. The recent improvement there, after falling “only” 10% compared with the previous -16%, is real, but still far from sufficient.
The other major bottleneck is inventory. Nike is still relying on promotions to clear older product, especially in Europe and in its digital channel, which inevitably erodes margins. It is therefore no surprise that gross margin has contracted again for the sixth consecutive quarter, falling 130 basis points to 40.2%, with the impact of tariffs adding further pressure. The problem is that the market is beginning to wonder how much longer this cleanup can last, especially when Nike has spent several quarters promising progress without fully normalizing the business. As noted at the beginning, this is a world-leading brand, with products at the technological frontier, yet whose stock market performance has been, at the very least, disappointing. Price is always the most important thing, and drifting away from that discipline has damaging consequences.
Pam Bondi’s dismissal is a fairly revealing signal of how this White House understands loyalty and the political usefulness of institutions. Bondi is not being removed because she was somehow outside the Trump orbit. Quite the opposite: she had been one of his most reliable allies, both during the 2020 impeachment and in defending the subsequent electoral narrative. Precisely for that reason, her departure carries greater political weight, because it shows that in this environment not even loyalty guarantees survival if it ceases to be functional. The immediate trigger appears to have been the handling of the Epstein case, which has become a growing source of noise within the Republican bloc itself. The delay in releasing documents, the errors in the redactions, and the accidental exposure of victims’ names have given ammunition both to the opposition and to sectors of Trump’s own base. The subpoena from the oversight committee led by Republicans was already a clear sign that Bondi was starting to become a liability.
But limiting the interpretation to the Epstein case would fall short. Bondi was also under pressure for not having carried out aggressively enough the other major function Trump expects from his justice apparatus: going after political enemies. That is the real substance of the matter. In Trump’s universe, as in any banana republic, the Department of Justice is not merely a state institution, but a tool of power. It is not enough to want to fight the battle; it has to be done effectively. The choice of Todd Blanche as interim replacement fits perfectly with that logic. A man with a direct personal link to Trump and a far more combative profile when dealing with judges, career prosecutors, and internal checks. It is a move that will likely intensify the politicization of the DoJ rather than correct it. The market or institutional reading here is clear: Trump’s second term continues to consolidate an increasingly personalist model of power, in which job security depends less on technical performance than on the ability to execute the president’s political agenda without creating excessive collateral costs.
The saga and hype around SpaceX’s potential IPO continues to build, and it would be far more than just another major tech listing. It could become the defining financial event of the cycle. If a valuation above $1.75 trillion and a capital raise of more than $50 billion are ultimately confirmed, we would be talking not only about the largest IPO in history, but also about the arrival in public markets of one of the most coveted private assets in the world. In any case, the key is not so much the rockets as Starlink — which is precisely why this matters so much for ASTS. The epic narrative of colonizing Mars, returning to the Moon, or putting data centers into orbit helps sustain the story, but the part that truly makes a valuation of this magnitude defensible is the recurring satellite connectivity business. That is where the market may begin to see a very unusual and difficult-to-replicate combination: critical infrastructure with growth, defense contracts, geopolitical exposure, and a proprietary network already deployed on a global scale. The “Musk dream” adds to the appeal, but the potential cash generation is explained above all by Starlink.
That said, the deal would also open a very interesting Pandora’s box. A publicly listed SpaceX would force the market to price what could be called the “Muskonomy” far more rigorously — that increasingly intertwined ecosystem made up of Tesla, xAI, X, SpaceX, and the rest of his assets. So far, much of that value has moved in private markets, with less transparency and far more room for narrative permissiveness. Going public would imply much greater scrutiny of corporate governance, capital allocation, control structures, and above all the extent to which a single individual can continue simultaneously running several enormous companies without real frictions emerging. That is probably the main perception risk. SpaceX may be an extraordinary asset, but it would also come to market carrying an enormous narrative premium. And when a company goes public wrapped in an almost mythical story, the margin for disappointment narrows. It would not be surprising to see a valuation heavily dependent on the market’s faith in Musk, more akin to Tesla than to a traditional aerospace company. That can work strongly in its favor at the debut, but it also implies considerable potential volatility once the market starts separating fantasy, optionality, and tangible profits.
We have passed the point of no return in the global oil market. After a month of war, with disruptions affecting roughly 20 Mb/d transiting through the Strait, the loss of inventories is already enormous and will have long-term consequences for the crude market.
The market, including what is often referred to as smart money, still seems oblivious to this structural shift and continues to operate with a buy-the-dip mentality and first-order thinking, going short oil while waiting for the longed-for TACO headline.
The Trump administration is reportedly considering a long-term solution based on an Iranian toll on cargoes transiting the Strait. On paper, it sounds workable, since it would only raise cargo costs by around 1%, but in practice it is unviable because it would alter the balance of power among the Gulf countries and leave the rest under a constant threat. More specifically, it is highly unlikely that either Saudi Arabia or the UAE would accept such an arrangement, as it would leave them hostage to Persian leverage. As a result, it is likely that they will begin using their substantial influence in Washington to block such a resolution. Past this point of no return, the only sector that still looks clearly attractive is energy, and the broader market, both the indices and the rest of the sectors, is likely to wake up to a harsh reality in the coming weeks.
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