by Patrick Fearon-Hernandez, CFA, and Thomas Wash

[Posted: 9:30 AM ET] | PDF

Our Comment opens with a discussion on the deepening relationship between Silicon Valley and Washington by examining recent political and economic developments. Additional key topics to review will include Stephen Miran’s Senate confirmation hearing, China’s new tariffs on EU pork imports, and escalating tensions between the US and Venezuela. We’ll also provide a summary of recent international and domestic economic data releases to give a complete picture of the current financial landscape.

United Chip Policy: The president hosted a dinner for Silicon Valley leaders in the White House Rose Garden on Thursday, where he called on them to increase their spending on AI. He also used the event to announce his intention to impose significant new tariffs on semiconductor chips. In a statement on Thursday, the president said the duties would be “fairly substantial” and that an official announcement with more details would be imminent.

• The dinner served as a clear signal of the government’s strategy to deepen its partnership with the private sector in the race for AI dominance. The United States views China as its principal rival and is relying on the expertise and financial strength of Silicon Valley to ensure that it maintains a technological edge, not just for the economy, but for military applications as well. This collaboration is a key component of the nation’s effort to secure its dominance in the global AI landscape.
• To enhance US capacity, the government has used its trade policy to incentivize foreign investment in American infrastructure. Most recently, the president finalized a deal with Japan through an executive order. This agreement commits Japan to invest $550 billion in exchange for a reduction in US tariffs, including a cut on autos tariffs from 25% to 15%. This deal operates under the condition that a failure by Japan to meet the investment goal would result in the re-imposition of higher tariffs.
• Spurred by this trend, a strategic push for supply chain sovereignty is taking shape through key industry partnerships. A prime example is the newly announced collaboration between OpenAI and US-based Broadcom to co-develop custom AI chips, creating a viable domestic alternative to Nvidia. This effort signals more than just competition; it underscores a fundamental shift in corporate strategy toward bolstering US self-sufficiency by prioritizing and nurturing local suppliers in critical technologies.
• The deepening collaboration between the public and private sectors will likely provide support for equities, particularly for large tech companies, as the government acts to mitigate systemic risks. While this environment should allow growth stocks to maintain their momentum, firms will also face new cost pressures as they adapt to this “new normal.” Consequently, we believe that complementing a growth strategy with a value approach will be beneficial for diversification.

Miran Confirmation Hearing: The White House’s nominee for the Federal Reserve Governor, Stephen Miran, testified before the Senate on Thursday, addressing concerns about the president’s potential influence. He pushed back against claims that the president would sway his policy decisions, but he also affirmed the president’s right to have an opinion. Markets reacted positively to his comments, seeming to grow confident that Miran would be confirmed and be a reliable vote for future rate cuts.

• He faced tough questions on his commitment to Fed independence, particularly in light of his past proposals to overhaul the central bank, which some viewed as undermining to the Fed’s autonomy. He also tackled concerns about a potential conflict of interest from his role as head of the Council of Economic Advisors, pledging to remain independent and to resign from the Council if his Fed term is renewed in January.
• Over the past week, growing expectations for a Federal Reserve rate cut have boosted both equity and bond prices. We anticipate this trend will continue, provided upcoming job market data justifies the need for easier monetary policy. A significant risk, however, would be if the Fed cuts rates despite an acceleration in economic growth. Such a scenario could lead to a pullback in long-duration US Treasurys, but it could be supportive of large cap US equities.

Peace Deal Near? French President Emmanuel Macron stated that the US is preparing post-war security guarantees for Ukraine, in a signal of confidence that the conflict is nearing its endgame. As part of this strategy, the US may cut funding for military training in nations bordering Russia to incentivize greater European defense spending. This prospect of resolution is a positive catalyst for European equities, which would benefit from reduced geopolitical and energy security risks.

ISM Services: The latest PMI data confirms the economy remains in expansion, rising from 50.1 to 52.0 in August. This increase above the 50.0 threshold indicates a return to growth and a gain in momentum from the previous month. However, the expansion is not without its headwinds; a sharp rise in business activity was accompanied by rising input prices and weak hiring. This combination of robust activity and rising costs presents a challenge for firms, leading us to maintain a cautiously optimistic outlook on the market.

EU-China Trade War: Beijing has implemented 62% tariffs on EU pork, citing anti-dumping violations. This move appears to be retaliation for recent EU tariffs on Chinese electric vehicles. While these tariffs will hurt European exporters, who were already seeing declining sales to China, they may ultimately push the EU to prioritize and develop new export markets, such as those in South America.

German Output: German factory orders unexpectedly fell 2.9% in July, sharply contrasting with forecasts of a 0.5% rise. The decline was driven by a lack of large-scale orders, signaling that firms may be postponing major investments. In response to the weak report, there have been calls for action to address structural challenges, including the country’s energy policy, high non-wage labor costs, and burdensome regulatory framework. Nevertheless, optimism about the broader economic outlook remains positive due to expectations for more government stimulus.

Venezuela-US Tensions: In a provocative move, two Venezuelan aircraft flew dangerously close to a US naval ship, according to the Department of Defense. This action is widely perceived as a retaliatory response to US military strikes against drug cartel ships in the Caribbean. Although the probability of a full-scale conflict between the US and Venezuela remains low, this incident marks a notable escalation of risk and regional instability.

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by Patrick Fearon-Hernandez, CFA, and Thomas Wash

[Posted: 9:30 AM ET] | PDF

Our Comment opens by analyzing the market’s growing anticipation of a rate cut at the upcoming FOMC meeting. We then pivot to critical global developments, including rising discontent within the EU Parliament over the US trade deal, the bond market’s concerns regarding the potential rollback of tariffs, and signals that China may intervene to cool its overheated equity market. We conclude with a briefing on other key factors influencing the global financial landscape.

Rate Cut Optimism: Equities received a boost on Wednesday as economic data and recent statements from Fed officials have fueled expectations of an interest rate cut, boosting market confidence. This shift in focus reflects the market’s pivot from trade policy concerns, such as tariffs, to the potential for monetary policy to stimulate investor and consumer sentiment. This is a direct reaction to the belief that a rate cut can more immediately and broadly impact economic activity and offset headwinds from tariffs.

• The latest JOLTS report signifies a cooling labor market, with unemployed workers now outnumbering job openings for the first time since 2021. This hiring slowdown aligns with unemployment insurance data, which shows modest initial claims but a steady rise in continuing claims. Together, these metrics suggest a cautious “slow-hire, slow-fire” environment where firms are neither aggressively recruiting nor conducting large-scale layoffs, opting instead to maintain their current workforce size.
• Furthermore, signs of economic pessimism are emerging. The Federal Reserve’s latest Beige Book reported stagnant or slightly negative economic activity across most districts. The primary concern cited was flat-to-declining consumer spending, as household wages failed to keep pace with rising prices. Notably, the report indicated that inflation pressures were now being felt more acutely by firms than by consumers.
• In response to this weakening trend, Fed Governor Christopher Waller has signaled openness to multiple rate cuts, while Atlanta Fed President Raphael Bostic and St. Louis Fed President Alberto Musalem have both advocated for at least one, possibly as soon as this fall.
• We maintain our view that the Federal Reserve perceives current inflationary impacts as transitory and will favor its maximum employment objective. Consequently, we anticipate impending rate cuts. Given the economy’s resilient position, further bolstered by increasingly clear trade policy, these cuts should provide a broad lift to equity markets. We expect this tailwind to benefit risk-sensitive assets most prominently, while also providing support to established large-cap names.

EU Friction: Opposition to the proposed EU-US trade deal is broadening within the European Parliament, with parties across the spectrum demanding changes like a sunset clause. While the deal is still expected to pass, its current criticism — from the left’s claim of “capitulation” to the far-right’s charge of weakness — highlights a lack of political enthusiasm. That said, time will tell if the White House is open to making more concessions.

More US Troops in Poland?: The US is considering increasing its troop presence in Poland to help secure the country’s defense. This decision follows meetings between the White House and Polish leaders to discuss assurances of support, likely anticipating a wind-down of Russia’s war in Ukraine. Notably, these assurances may be driven by Poland’s aggressive pursuit of its defense spending targets, signaling that the US is more willing to bolster nations that commit to developing their own military capabilities.

Tariff Fight: The White House has asked the Supreme Court to intervene to maintain a broad set of tariffs that a lower court ruled illegal. This move underscores the crucial importance of this revenue stream for debt reduction, particularly during a period of heightened fiscal spending. Consequently, a ruling against the government could introduce fresh volatility and contribute to ongoing turmoil in the bond market.

China Stock Rally? Chinese regulators are growing concerned about the resurgence in domestic equities. Much of this rise in valuations appears to be driven by speculation from retail investors and hedge funds, rather than a fundamental rebound in economic activity. These investors, seeking higher returns from abroad, have been drawn to the market by relatively lower interest rates elsewhere. This has led to speculation that regulators may intervene to cool the rally to prevent a speculative bubble from forming.

Macron Under Pressure: French President Emmanuel Macron will resist calls for a snap election if his prime minister loses a no-confidence vote next week, an outcome that is widely expected. The potential appointment of a fifth prime minister since 2024 could be interpreted as a sign of declining confidence in his leadership. Macron’s hesitation to call for new elections stems from the political pressure he faces to implement unpopular budget cuts, as he works to stabilize the country’s finances.

Abraham Accords: The United Arab Emirates has warned the White House that Israel’s planned annexation of the West Bank could jeopardize the Abraham Accords. This marks a new diplomatic phase, as the UAE, a key participant to the accords, has linked its future cooperation to Israel’s policies toward Palestinians. This warning, which follows renewed Israeli statements on annexation, suggests that Israel’s actions could undermine US relationships with its allies, potentially creating an opening for rivals such as China.

Silicon Valley to Capitol Hill: A consortium of top tech executives will meet at the White House for an AI summit, reflecting the sector’s deep integration into US efforts to maintain a competitive edge against China. This gathering is the latest example of a broader, enduring shift towards public-private cooperation, which is moving away from an adversarial dynamic and toward a collaborative model for tackling complex issues. We believe companies that support national security goals will be well-positioned to thrive in this new era of cooperation.

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by Patrick Fearon-Hernandez, CFA, and Thomas Wash

[Posted: 9:30 AM ET] | PDF

Our Comment opens with our analysis of China’s recent military parade and its implications. We then turn to pivotal global developments, such as the ongoing global bond sell-off, the potential digitization of gold, and Moody’s optimistic outlook on Europe’s private credit markets. Finally, we conclude with an overview of other essential factors shaping the global financial landscape.

China Parade: During its military parade, Beijing unveiled a new arsenal of domestically developed weapons designed to project power and signal its military readiness. The display was a clear signal to the world that China believes it can fend off any attack and possesses the capability to take Taiwan by force if necessary. However, while the technological advancements were impressive, many analysts remain unconvinced of China’s overall military capabilities. During the parade there was a sell-off in Chinese defense stocks.

• The exhibition demonstrated key breakthroughs in Chinese military tech, particularly in unmanned platforms such as robotic ground vehicles, four-legged drones, and uncrewed naval and aerial vehicles, though it is uncertain how many are fully operational. The display also served to flex China’s advanced capabilities in other domains, including air defense systems, directed-energy weapons (lasers), and its world-leading hypersonic missile program.
• Of the five key categories in which China would need to demonstrate military superiority — long-range strikes, air dominance, amphibious operations, joint-force coordination, and space/counterspace — China leads the US in only two: long-range strikes and space/counterspace. While China could still inflict serious damage in a conflict, the balance of power suggests the US would likely prevail in a direct confrontation.
• The parade also served as a powerful demonstration of China’s growing network of strategic partnerships. The presence of Russian President Vladimir Putin and North Korean leader Kim Jong Un alongside Chinese President Xi Jinping was a striking visual symbol. This show of unity signals a deepening alignment among the three countries, which has been particularly apparent in the context of the war in Ukraine, where North Korea has provided military aid to Russia, and China has offered crucial economic support.
• Although we do not view a military conflict between the US and China as imminent, the significant posturing between the two nations creates a tangible risk of escalation. As this strategic competition intensifies (both militarily and economically), we anticipate that companies aligned with national priorities (e.g., defense, semiconductors, AI, and cybersecurity) will be key beneficiaries. Concurrently, this elevated geopolitical friction is likely to bolster demand for traditional safe-haven assets, such as gold.

Long Bond Sell-Off: A significant long bond sell-off is underway, causing global bond yields to rise as markets begin to price in the dual risks of elevated government debt and potential stagflation. This upward pressure is primarily driven by a fundamental shift in supply and demand, where central banks are actively reducing their bond holdings through quantitative tightening (QT) just as governments are significantly increasing debt issuance to fund fiscal deficits.

• Rising bond yields are crippling tech stocks by dramatically increasing their cost of capital. These companies have been rewarded by the market for their potential to generate substantial future profits. However, they are now under scrutiny for the immense scale of their capital expenditures, which threaten to diminish future investor returns. This problem is most acute for companies funding massive data center builds for AI and cloud services.
• We are seeing early signs of a shift toward a regime of fiscal dominance, where central banks may be forced to take a more active role in bond markets to keep government borrowing costs manageable. The primary risk of this policy is that it could require central banks to subordinate their inflation mandates. While this would likely be negative for long-duration bonds, it could simultaneously provide a source of increased demand for short and intermediate-term government securities.

Digital Gold: Efforts are underway to create digital gold. This initiative, often referred to as “pooled gold interest,” would enable banks and investors to buy and sell fractional ownership of physical gold, a significant move toward greater accessibility and liquidity. This push for modernization comes as past efforts to create gold-backed stablecoins have failed to gain widespread adoption. That said, new innovations in digital gold ownership are a response to the persistent demand for the asset.

Chrome Stays: A judge ruled against potentially breaking up Google, arguing that the rise of generative AI has weakened the case regarding the company’s monopoly power. Prior to the ruling, regulators had considered forcing a sale of Google’s Chrome browser business due to concerns over its market dominance. The decision highlights how emerging technologies like AI are rapidly reshaping competitive landscapes, challenging traditional antitrust assumptions, and potentially protecting incumbent tech giants from government intervention.

European Credit Markets: Moody’s predicts that the European Union’s private credit markets are on track to rival those of the US. In a new report, the agency states that the EU’s push for strategic autonomy in a fragmenting global economy is a key growth driver. This potential, however, is currently constrained by persistent regulatory and legal challenges. The analysis adds to a growing body of evidence that the rising investor appetite for European assets is not solely a function of a weakening US dollar.

EU-Mercosur: European Union officials are seeking to reassure farmers that they will not be adversely affected by a new trade deal with South American partners. The agreement, announced earlier today, is designed to help the EU reduce its reliance on the United States as an export destination and broaden its overall trade reach. Estimates indicate that the deal could absorb approximately one-third of the export volume the EU is forecast to lose following its separate trade agreement with the US.

Retailers Report: Recent earnings reports from Macy’s and Dollar Tree provide a nuanced view of the American consumer. Both companies posted strong earnings but offered a cautious, mixed outlook on future consumer spending. Macy’s cited headwinds from new tariffs and expressed wariness about the fickle nature of shoppers, though it expressed confidence in its ability to manage these risks. Similarly, Dollar Tree conveyed a mixed perspective on the upcoming quarters due to tariff related costs. The strong consumer is key for the ongoing market rally.

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by Patrick Fearon-Hernandez, CFA, and Thomas Wash

[Posted: 9:30 AM ET] | PDF

Our Comment today opens with some notes on the big Shanghai Cooperation Organization summit in Tianjin, China. We next review several other international and US developments with the potential to affect the financial markets today, including a sharp sell-off in British government bonds and the pound today and a few words on the Friday decision by a US appeals court to invalidate most of the administration’s new “reciprocal” tariffs.

China-Shanghai Cooperation Organization: General Secretary Xi welcomed the leaders of about 20 nations for an SCO summit in China on Sunday, including Russian President Putin, Iranian President Pezeshkian, and Indian Prime Minister Modi. To many analysts, Modi’s decision to attend the Beijing-led political and security grouping is a worrying sign that India has now at least partially shifted its allegiance to China and away from the US.

• If New Delhi continues to realign with Beijing, it would potentially dash years of hopes in the West that India would be a bulwark against China’s growing geopolitical and economic power.
• As a reminder, membership in the SCO is one of the factors we use to assign countries into the world’s new geopolitical blocs. It’s also one reason why our methodology currently assigns India to the “Leaning China” bloc. Some observers have questioned that assignment, but it’s consistent with New Delhi’s quick pivot toward Beijing this spring.

China-Russia: Also at the SCO summit, the Kremlin said China and Russia have now finally agreed to jointly build the Power of Siberia 2 natural gas pipeline, an enormous new conduit between the countries. Once completed in the 2030s, the new pipeline would allow Russia to shift its gas exports away from Europe in favor of markets in China, which, in turn, would allow China to cut its imports of expensive LNG. However, it appears that commercial terms are still being negotiated, including pricing issues that have long been a stumbling block for Beijing.

China: The official purchasing managers’ index for manufacturing rose to a seasonally adjusted 49.4 in August, while the private-sector Caixin PMI for manufacturing jumped to 50.5. For a true gauge of what’s happening in the Chinese factory sector, analysts sometimes average the two, and using that method, the reading rose from 49.4 to 49.9. That still leaves the reading below the 50 level that indicates growth, but it does suggest that Chinese manufacturing is now basically just stagnant rather than falling, at least in part because of the government’s stimulus measures.

Japan: Despite Tokyo’s recent decision to double its defense spending and rearm to meet the growing geopolitical threat from China, new reports say it only managed to recruit half the 20,000 fresh troops it planned to hire in 2023. As with many nations in the US geopolitical bloc, military recruiting in Japan is facing challenges such as the country’s poor population growth, tight labor market, low military pay, and the perception of military service as dangerous.

• Those factors will likely make it hard for Japan to respond to US pressure for a more robust military effort.
• In turn, that could mean Japan will be more vulnerable to US moves to punish it for not rearming more aggressively.

Indonesia: The country’s wave of protests against corruption and lawmaker perks intensified over the weekend with looting, arson and deadly violence in multiple cities. The unrest became so bad that President Subianto was forced into an embarrassing cancelation of his trip to the SCO summit in China. He also was forced to strike a deal with several political parties to cut housing allowances and suspend overseas work trips for members of parliament. Those moves have helped calm the situation, but economically disruptive protests could still reignite.

Eurozone: In a report yesterday, the region’s July unemployment rate fell to a seasonally adjusted 6.2%, down from 6.3% in June and marking a new record low. The decline was especially impressive given the eurozone’s recent spate of weak economic growth. The drop in joblessness is expected to discourage the European Central Bank from a further interest-rate cut at its next policy meeting next week.

United Kingdom: In a potential sign of capital flight sparked by slow economic growth and rising public debt, 30-year gilt yields today spiked to 5.72%, reaching their highest level since 1998. Meanwhile, the pound depreciated 1.4% against the dollar, ending at $1.3352. The jump in government borrowing costs will likely put even more pressure on Prime Minister Starmer’s Labour Party government to come up with difficult tax hikes and/or spending cuts, which could further weigh on the economy and UK assets.

Russia-Ukraine War: In a previously unreported development that heralds a new era in warfare, Ukraine has been using drone swarm technology in its defense against Russia’s invasion over the last year. The technology involves loading multiple drones with artificial intelligence so they can operate, communicate, coordinate among themselves, and attack Russian positions or carry out other tasks autonomously, reducing the number of Ukrainian soldiers needed for the task. The technology is now expected to become a big part of the global defense industry.

United States-China: In the latest example of a high-profile scientist leaving the US to return to China, epidemiologist and human microbiome scientist Wang Leyao has left her positions at the University of Massachusetts at Amherst and the National Institutes of Health to join the Shenzhen Medical Academy of Research and Translation (Smart) as a senior research fellow in its Institute of Human Immunology. As we’ve noted before, the string of top scientists returning home could help China overtake or expand its lead over the US in key industries.

US Tariff Policy: A federal appeals court late Friday ruled that the White House’s “reciprocal” and fentanyl tariffs against China, Mexico, and Canada are illegal, upholding a lower court’s decision to block them. However, the court let the tariffs remain in place until October 14 to facilitate a likely administration appeal to the Supreme Court. So far, the decision doesn’t seem to be having much impact on the global financial markets, perhaps reflecting uncertainty that the Supreme Court will invalidate the tariffs.

US “Recession”: As economists and market strategists, we’re always on the lookout for a shift in the business cycle, so we were struck by new research from data analysis group IFS claiming the US is already in recession. However, on closer inspection, it turned out that the report, titled “The Sex Recession,” focuses on survey results showing a big drop in the number of Americans having, er, intimate relations. It’s not clear if this type of recession will affect the stock market, but the researchers note that it points to a further fall in the US birth rate and population growth.

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by Patrick Fearon-Hernandez, CFA, and Thomas Wash

[Posted: 9:30 AM ET] | PDF

Our Comment opens with an analysis of the recent upward revisions to US GDP data. We then explore several pivotal global developments, including Japan’s potential shift away from long-duration bond issuance, Canada’s concession on US tariffs, and the sell-off in British bank shares. Finally, we conclude with an overview of other essential domestic and international factors shaping the financial landscape.

 GDP Surprise: The US economy grew even faster than initially thought in the second quarter, with GDP revised up to a robust 3.3% annualized rate. This upgrade was fueled by strong consumer spending, solid net exports, and increased business investment, which more than offset a slight dip in government outlays. Crucially, underlying domestic demand — measured by Final Sales to Private Domestic Purchasers — remained sturdy, growing at a steady pace and signaling that the economy retained its momentum from the start of the year.

• The stronger-than-expected GDP data bolsters the argument that the economy is not in recession. The solid expansion in the second quarter effectively offsets the prior quarter’s contraction, signaling resilience rather than a downward trend. A key driver of this performance was household spending on durable goods, with orders for motor vehicles providing a significant lift to overall sales figures.
• Although the data is positive, it warrants cautious optimism. The labor market’s stagnation, characterized by a hiring freeze amid a lack of layoffs, indicates that firms view the economic softness as transitory. For investors, we believe this environment presents an opportunity to increase risk exposure. We advise focusing on companies with strong profitability and domestic supply chain reliability, which are critical differentiators in the current climate.

 Japan Reducing Long Bond Supply: The Ministry of Finance in Japan has reportedly surveyed primary dealers regarding a potential reduction in the issuance of long-term government bonds. This action is a strategic move to address the upward pressure on domestic interest rates. It comes as the Bank of Japan (BOJ) begins to unwind its extensive quantitative easing program, and the government continues with its own fiscal expansion.

• By reducing the supply of these longer-dated bonds, the Ministry aims to stabilize the bond market and help prevent a sharp increase in government borrowing costs, which have been rising due to weak demand and the BOJ’s reduced market presence.
• This trend is indicative of a deteriorating appetite for debt among bond investors. While we have not yet witnessed a failed auction, the clear pushback from the market is a cause for vigilance. In response, major sovereign debt issuers like Japan, the US, and the UK have indicated a strategic pivot towards shortening the maturity of their debt issuance to accommodate investor demand.

 Jumbo Cut in September? Fed Governor Christopher Waller stated he is prepared to cut interest rates aggressively if upcoming jobs data shows further labor market softening. His comments come amid growing market expectations for a September rate cut, fueled by recent downward revisions to payrolls that have raised doubts about the labor market’s strength. This highlights the ongoing tension within the Fed over whether to prioritize its price stability or maximum employment mandates.

 Brazil Response: In response to recent US tariffs that imposed duties as high as 50% on Brazilian exports, the administration of President Lula da Silva is preparing retaliatory measures. The Brazilian Chamber of Foreign Trade has been tasked with assessing the tariffs’ economic impact and developing a list of potential countermeasures. The government is scheduled to officially announce this retaliatory investigation later today. The rise in trade tensions between the two countries will likely impact Brazilian equities more than their US counterparts.

 Canadian Tariffs: The Canadian government now concedes that it will not secure the complete removal of US tariffs on its exports. This pessimistic outlook follows Canada’s commitment to unilaterally lift its retaliatory tariffs on American goods by September 1, among other concessions made to ease trade tensions. Although the majority of bilateral trade flows freely, persistent US tariffs on Canadian steel continue to inflict economic damage.

 Taiwan-US: Two US senators have reignited the debate over America’s commitment to Taiwan. Mississippi Senator Roger Wicker and Nebraska Senator Deb Fischer have voiced strong support for the island’s freedom and its right to self-determination. Their statements come during a fact-finding trip to the region, aimed at assessing the security situation amid heightened military pressure from China, which seeks to assert its control over Taiwan.

 UK Banks Under Fire: Shares of British financial services firms are facing selling pressure due to investor concerns over potential tax increases. The government is exploring options to address a 20 billion GBP ($26.9 billion) budget deficit, and a recent think tank proposal to raise taxes on bank profits has fueled fears that the sector will bear a significant burden. This approach signals a potential policy shift, as the governing party appears to be moving away from the idea of a wealth tax to instead concentrate fiscal measures on specific industries.

 Taliban-Pakistan: The Taliban has warned of retaliation against Pakistan after airstrikes hit two provinces in Afghanistan. The strikes, which Pakistan is believed to have conducted, threaten to escalate tensions between the two Muslim nations. Pakistan has accused Afghanistan of sheltering militants responsible for recent terrorist attacks on its soil. While the conflict is likely to remain localized, it contributes to the broader instability that has kept global oil markets on edge.

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