FINANCIAL TIMES
-Moody's has lowered the US's triple-A credit rating to Aa1 from Aaa, warning of rising government debt and a widening budget deficit. The move comes amid concerns about the US's fiscal trajectory, with President Trump's Republican Party pursuing a budget bill that is expected to increase debt significantly over the next decade. Moody's expects federal deficits to widen to almost 9% of GDP by 2035, up from 6.4% last year, due to increased interest payments on debt, entitlement spending, and low revenue generation. The agency's downgrade reflects the increase in government debt and interest payment ratios over the past decade.
-President Trump's recent visit to the Middle East has sparked a debate among world leaders about how to manage his unpredictable and unpredictable style of dealings. While some Gulf countries have offered praise and investment pledges, others have resisted. China, for instance, has been resistant to Trump's praise or engagement, despite the punitive tariffs. However, on Monday, US and Chinese officials agreed to a sharp de-escalation in mutual import duties. The situation is similar to poker, where the game is about understanding the people you're playing with, and different countries with different tools and interests are trying to get different things. The UK has led the way in trying to pacify Trump and clinched an early trade agreement, while the EU has taken a different approach, betting that it will benefit more than suffer from a more protracted negotiation with Washington.
-The US and EU have started trade talks to counter Trump's tariffs, breaking a deadlock that left the bloc behind. They have exchanged negotiating documents for the first time, outlining areas of discussion including tariffs, digital trade, and investment opportunities. The European Commission's top trade official, Sabine Weyand, warned that some US tariffs would likely remain, especially on sectors the US wished to re-shore, such as steel and car manufacturing. The EU has made less progress with US officials than countries like Japan, South Korea, Vietnam, and the UK. Trump's trade representative, Jamieson Greer, urged the EU to expect Trump to reapply his April 2 tariffs in full.
-Russia and Ukraine are engaged in a diplomatic battle to convince Donald Trump that the other is the real impediment to peace. Russian President Vladimir Putin took a significant risk by slow rolling US negotiators over a peace proposal and refusing to attend talks with Ukraine's President Volodymyr Zelensky in Turkey. This refusal has met with little resistance and has not been enough to compel concessions or alter the course of his war. US President Donald Trump seemed to excuse the Russian leader's no-show and question the whole point of the Russia-Ukraine talks, saying "Nothing's gonna happen until Putin and I get together." This has revived fears that Trump will seek to cut a deal with Putin and sell Ukraine down the river. This suspicion is shared by some of America's closest allies, with German defense minister Boris Pistorius stating that Putin is trying to lead the American president down the garden path.
-President Trump's Middle East tour ended with a credit rating downgrade, gloomy consumer sentiment data, and challenges to his tax bill. Over the past two weeks, Trump's approval ratings have improved, and equity markets have bounced back after paused aggressive import tariffs. Labour market and inflation data have also been encouraging, defusing fears of a recession. However, Moody's stripped the US of its triple-a credit rating due to rising government debt. Consumer sentiment data showed confidence dropping to its second-lowest level on record, and conservative hardliners on the US House budget committee voted against Trump's biggest domestic legislative goal: a sweeping bill to extend tax cuts and enact deep government spending cuts.
-Trump, the US president, has been elected twice on the promise of being a decisive chief executive and bringing his business experience to bear. Foreign leaders have used the mantra "Trump is a businessman" to express their hopes for him to use his dealmaking experience to apply tariffs judiciously or put pressure on Russia. Since taking office, Trump has behaved like command-and-control corporate leaders, issuing executive orders at unprecedented speed and volume, and making appointments to cabinet positions and senior administrative roles from among loyalists. He has also pushed through radical cost-savings at federal departments and agencies with Elon Musk's help. However, the more capricious leader of the first term has re-emerged, initiating a rapid cull of members of his handpicked administration and staff.
-Portugal's immigration policy is on the ballot in elections, with the center-right government aiming to be tough without aping the far-right. The coalition's success depends on winning back voters from the populist Chega party, which has surged by harnessing voters' unease over a rise in immigration. António Leitão Amaro, the minister in charge of immigration, blamed the sharp increase on the "open doors" policy of previous Socialist governments. Amaro's Democratic Alliance is set to emerge as the largest party in the parliamentary election, but is forecast to fall short of a majority.
-Republicans are expressing concern over Donald Trump's policies, causing a decrease in consumer confidence in the US economy. The University of Michigan's overall index of consumer sentiment fell to 50.8 in May, while expectations fell to 46.5. The poll also revealed that people's expectations of inflation soared from 6.5% to 7.3%, the highest level since 1981, due to the Trump administration's trade war. Longer-term inflation expectations also increased from 4.4% to 4.6%, as registered Republicans became more concerned about the impact of tariffs on American prices. The elevated expectations come after inflation hit a four-year low of 2.3% in April.
-Rodrigo Duterte's arrest and transfer to the International Criminal Court in March led to the end of the Philippines' political dynasty. However, he was elected mayor of Davao City in absentia. Midterm polls have revitalized the Duterte family's political fortunes, with his daughter Sara running for a presidential election in 2028. The results could have far-reaching consequences for regional security and disputes in the South China Sea. The results could also threaten President Ferdinand Marcos Jr.'s administration, who has a bitter rivalry with the Duterte clan. The elections showed the Dutertes are still a dominant dynasty.
-Romanian markets are facing further turmoil following a dramatic sell-off following presidential elections this weekend, which could lead to the country losing its investment grade status and a drop in the leu against the euro. The ultranationalist candidate, George Simion, is running against the pro-EU centrist mayor of Bucharest Nicushor Dan. The collapse of the government and resignation of prime minister Marcel Ciolacu have left investors preparing for months of uncertainty over how a new government will cut the budget deficit, which ballooned to over 9% of GDP last year. Both candidates have promised to cut the deficit and rein in debt, but there is little clarity on how their plans will work.
NEW YORK TIMES
-A top adviser to the director of national intelligence, Tulsi Gabbard, has ordered a senior analyst to redo an assessment of the relationship between Venezuela's government and a gang after intelligence findings undercut the White House's justification for deporting migrants. The move follows a disclosure that intelligence agencies disagree with a key factual claim Trump made to invoke a wartime deportation law. The initial version countered a White House narrative, and a political appointee told a career official to rework the assessment, a direction that allies of the intelligence analyst said amounted to pressure to change the findings. Trump invoked the Alien Enemies Act to remove people accused of being members of the gang, Tren de Aragua, and claimed that Venezuela's government directed the gang to commit crimes inside the United States.
-The Supreme Court has extended a temporary block on using the Alien Enemies Act to deport Venezuelans, stating that the Trump administration will not be allowed to deport a group of Venezuelan detainees accused of being members of a violent gang under a rarely invoked wartime law while the matter is litigated in the courts. Justices Samuel A. Alito Jr. and Clarence Thomas dissented, arguing that the justices had no authority to hear the dispute at this stage.
-The Supreme Court has extended a temporary block on using the Alien Enemies Act to deport Venezuelans, stating that the Trump administration will not be allowed to deport a group of Venezuelan detainees accused of being members of a violent gang under a rarely invoked wartime law while the matter is litigated in the courts. Justices Samuel A. Alito Jr. and Clarence Thomas dissented, arguing that the justices had no authority to hear the dispute at this stage. The ruling deals a sharp blow to the Trump administration’s efforts to deploy the wartime law to pursue swift, sweeping deportations of Venezuelan migrants accused of being members of the gang, Tren de Aragua.
-Democrats who supported Biden's re-election bid are now seeking atonement as their party faces record low approval ratings. They are attempting to reposition themselves as truth-tellers of what happened in 2024. Some strategists argue that rebuilding trust in the Democratic brand begins with confronting how the party handled the 2024 race. Connecticut Democrat Senator Chris Murphy, who vouched for Biden's ability to communicate his re-election message, is leading the charge in attempting to erase past endorsements of Biden's acuity. Murphy believes that Biden suffered cognitive decline while in office.
-Gunfire was heard in central Gaza early Saturday, hours after the Israeli military said its forces were preparing for a major advance into the territory. The shots could be heard from the central city of Deir al Balah, but the origin of the sound was unknown. It was not immediately clear whether Israeli forces, which already hold large parts of the territory, had begun a new advance. A military spokeswoman declined to comment on whether troops had started to move.
The fighting came as mediators, including the Trump administration, sought to broker a new temporary truce. Israel and Hamas have been at war since October 7, 2023, when the Palestinian militants launched an attack on Israel in which about 1,200 people were killed and 250 taken hostage. The Israeli campaign in Gaza that followed has killed more than 50,000 people, according to Palestinian health officials.
-The United Arab Emirates (UAE) is investing heavily in Africa, seeking resources and power as the US and other economic powers reduce their investment, aid, and presence in the continent. Last year, the Emirati International Holding Company acquired a 51% stake in Zambia's Mopani Copper Mines for over $1 billion. The UAE is using its wealth and influence to fill the void left by the US and China, which have reduced their investment, aid, and presence in Africa. Since 2019, $110B worth of deals, mostly by firms aligned with ruling powers, have been announced, dwarfing amounts pledged by any other country.-
NEW YORK POST
-President Trump has accused Ukrainian President Volodymyr Zelensky of having "pissed away" billions of dollars in US aid for Ukraine, stating that the money is the money. Trump's criticism came in response to a question about placing sanctions on Russia. Zelensky's handling of US aid was a source of frustration for Trump, who criticized the $60 billion checks sent every time Zelensky traveled to Washington. Trump continued to voice his displeasure with Kyiv, stating that the US sends checks and cash, not equipment. When Trump argued that European nations should have contributed more than the US to the war effort, Baier tried to redirect him to his Putin question. Trump responded by arguing that the US has been "treated worse" than Europe by Ukraine and that the mess will get solved. Trump and Zelensky had a heated Oval Office back-and-forth earlier this year.
-Meta, parent of Facebook and Instagram, has been accused of allowing thousands of fraudulent ads on its platforms, despite a lack of crackdown on fraud cases to avoid losing ad revenue. The Wall Street Journal reported that Meta accounted for nearly half of all scam complaints related to Zelle (quick, digital money transfers between US bank accounts) transactions between mid-2023 and mid-2024.