Drones; Elections; Bonds

Naval Drones in Ukraine

“Ukraine’s naval drone success holds a huge lesson for the U.S. Navy”

• “Without a standing navy of its own, Ukraine has disabled at least one-third of Russia’s Black Sea Fleet.”

• Anti-ship cruise missiles helped, but “Ukraine has also innovated brilliantly by developing its own unmanned surface vessels, which can hunt Russian warships in wolf packs.”

• Unmanned speed boats, only a few hundred thousand dollars, are sinking multi-million dollar warships, a story that has big implications for the inter-strait relationship. The drone technology gives advantage to defenders.

• Just like it was for battleships in WWII, carriers are now seem to be at the twilight of their days.

• The US navy not entirely invested into the game perhaps due to the military contractors, Pentagon bureaucrats and Congress.

Areas of importance for South Africa’s New Government

“As President Takes Oath, 4 Challenges for South Africa’s New Government”

• ANC got only 40% of the vote, resulting in a divided government. The second largest party, the Democratic Alliance that has been a staunch opponent to ANC, won 22%.

• But ANC is not very much willing to share the power (i.e., sharing cabinet posts with other parties).

• The economy is in a bad shape and the country is moving to the direction of privatization and deregulation. Both the incumbent president and Democratic Alliance in agreement seem to be in agreement on this.

• Racial disparity (e.g., land ownership) is the biggest issue of contention between ANC and DA.

• Foreign policy: ANC has “agitated” the West but DA is more west-leaning.

Economic Consequences of the French electoral Result.

“What would a far-right or leftwing government mean for France’s economy?”

• Both far-right (RN) and hard-left (New Popular Front, NFP) parties of Francce are fiscal populists.

• The far right:

  • promises of easing the cost of living crisis (e.g., tax cuts on energy), implications for which are big fiscal holes.
  • promises of the French contribution to the EU (which would be retaliated by not receiving the funding from the EU); reversing the pension reform
  • promises of ending some tax cuts to fill the hole (but estimated too small in scale)

• The hard-left:

  • a radical tax-and-spend plan (costing more than 100 bn euros)
  • wage increase; reversing the pension reform
  • promises of ‘squeezing the rich (and corporations)’ to fund the program (but the tax rates in France is already quite high)

• “The left would cause capital flight and the far right would cause a debt crisis.”

Rush to Indian Bonds as an alternative

“JPMorgan Ignites $40 Billion Rush Into Indian Bonds”

• “India’s $1.3 trillion in sovereign debt as fixed-income investors seek an alternative to Russia and China”

• “On June 28, JPMorgan Chase & Co. plans to add Indian government debt to its biggest emerging-market bond index” and Bloomberg Index Services Ltd. and FTSE Russell are following the suit.

• Perhaps as a result, “In June, India’s foreign exchange reserves hit a high, and the rupee has been the best-performing currency in emerging Asia against the dollar in 2024 even as the US currency has strengthened globally.”

• The reason? “With China facing economic challenges, Russia isolated because of its invasion of Ukraine and no other obvious candidate poised to supplant them, India’s robust economic expansion has made it a top choice for investors seeking diversification” and the electoral setback that Modi suffered doesn’t seem to have much influence here.