A Japan-US Trade Deal was announced late on Tuesday, with reciprocal tariffs lowered from 25% to 15%.
Japanese stocks got an additional boost from news that auto tariffs will also be 15%, down from 27.5%, sending Toyota on its best day since 1987. Equities rose over 3.5% with the TOPIX closing just shy of all-time highs. In rates, re-pricing for BoJ hikes sent JPY yields higher; 10y JGB reaching 1.6%. USDJPY initially moved lower but has creeped higher on news of PM Ishiba considering to step down from office. However, PM Ishiba has since denied these reports (unclear just how he plans on staying in power after this weekend’s catastrophic loss in the Upper House elections), which in turn hammered the USDJPY again.  

Goldman Delta-One head Rich Privorotsky writes that Japanese autos surged double digits after the 15% tariff deal caught the market of, noting that guard (Polymarket had odds of a Japan deal by Aug 1 at ~20% ). In the context of 25% tariffs on Canada and Mexico, Rich thinks the market was “surprised Japan auto’s securing a more favorable status, even compared to what some U.S. automakers pay to import their own supply chains.” He adds that 15% Japan tariffs would have been unthinkable just months ago, but “now, Japan’s stock market is near all-time highs…art of the deal.“

“By accepting a diluted 15% tariff and pledging symbolic investment flows, Japan has offered a blueprint: concede just enough to defuse escalation without triggering deep structural reform,” said Charu Chanana, chief investment strategist at Saxo Markets.

Here are the main Takeaways:

• US Tariffs to Japan reduced from 25% to 15%. Japan is the 5th country the US has reached bilateral agreements with following UK (10%) , Vietnam (20%), Philippine (19%), and Indonesia (19%). 
• Auto tariffs are included, reduced from 27.5% to 15%. Shares of auto companies soar higher having priced in much higher tariffs. 
• White House say tariffs on drugs and chips to be negotiated separately, will not be worse than other trading partners
• Pricing for BoJ hikes returns – With the clearing of trade uncertainty and reduced tariff impact, markets are pricing for an earlier BoJ hike. Banks stocks move higher
• JPY Rates Front End –  Yields surge on increased BoJ hike prospects. Further moves from here, however, would require higher terminal yields. 
• JPY Rates Back End – Fiscal Concerns continue with reports of PM Ishiba stepping down. Weak demand for 40y JGB auction as expected as yields climb higher
• USDJPY – Rangebound with rates price action in driver seat. Two opposing factors looking to take control with Stronger JPY on trade agreement vs Weaker JPY on PM Ishiba stepping down seen intraday.
• JP Equities Themes: Exporters vs Domestic Demand, Defense Sector, Banks, and more…

Below we excerpt from a note published by Goldman’s trading desk focusing on the market reactions across different asset classes. 

Japan Headlines: Tariffs Agreement, PM Ishiba stepping down (or not?)

Earlier today, it was announced that US Tariffs to Japan will be reduced from 25% to 15%. Japan is the 5th country the US has reached bilateral agreements with following UK (10%) , Vietnam (20%), Philippine (19%), and Indonesia (19%). Notably, this deal includes auto tariffs which go “from from 27.5% (existing tariff of 2.5% + additional tariff 25%) to 15% (existing tariff of 2.5% + additional tariff 12.5%)” and Japan will “invest ¥80 tn in the US, create hundreds of thousands of jobs in the US, and open up the country to trade in automobiles, trucks, and other US agricultural products.” 

This agreement comes shortly after Japan’s Upper House Election over the weekend in which the ruling coalition (LDP + Komeito) lost its majority. Following the defeat, PM Ishiba had indicated his willingness to continue as prime minister, citing the importance of political stability whilst trade negotiations with the US were ongoing. 

Source: Goldman

Following the trade agreement, multiple news outlets reported midday that PM Ishiba has decided to step down by the end of August. However, PM Ishiba later denied these reports stating there is no truth to the reports he will be stepping down, even though it is unclear how he can credibly remain in charge after the huge drubbing in the elections. 

BoJ Hikes : Pricing Returns to Front-End Yields

With more clarity around US Tariffs on Japan and announced reduced tariff impact, markets are repricing for an earlier BoJ hike. 

According to Goldman STIR trader, Hosik Moon, “[The] Tariff deal has come much earlier than market expected and 15% should be considered satisfying result comparing with other countries. This will potentially pull the timing of BOJ’s next hike earlier as the Trump Tariff has been the only reason that pushed the October hike consensus to January next year”. 

Front-end pricing in JPY Rates has moved higher to reflect this shift in sentiment. 1y1y JPY OIS Swap has risen to 96bp while 2y1y is now at 107bp. Hosik notes that this coincides with levels that “are traded when terminal rate expectations are 1.25%-1.5%”. 

Moving higher than these levels would require a repricing of terminal rate expectations. 

Source: Goldman

JGB Curve: 40y Auction Low Demand, Curve Bear Flattening 

The front-end of the curve led sell-offs on the resurgence of BoJ hiking bets. The belly and back-end of the curve also saw strong selling pressure as 10y JGBs reached 1.6%. The 40y JGB auction also took place today, resulting with the weakest demand since 2011 as supply-demand dynamics have deteriorated in the sector. 

Given the Upper House Election results, fiscal expansion concerns will likely continue to drive back-end yields higher. Furthermore, as front-end pricing likely has reached the higher end of its range (that reflects terminal rate of 1.25%-1.5%), the curve can continue to steepen from here. 

Goldman Japan rates strategist Sung Mo Koo highlights that “[a]s in Deputy Governor Uchida’s press conference today, the agreement contributes to lower uncertainty in Japanese economy and higher likelihood of achieving the 2% inflation target. Market should find better demand at current level for up to 10y sector, whereas the ongoing fiscal concern due to political uncertainty is likely to drive back-end yields higher. Ultra-long end sector has been supported by foreigners in CY2025 as their net purchase amount skyrocketed by more than sevenfold year-to-date, but such trend is unlikely to continue long term.”

Source: Goldman 

USDJPY : Rangebound, Bouncing on headlines

USDJPY initially moved lower on the back of Japan-US Trade deal. However, headlines around PM Ishiba potentially stepping pushed the USDJPY back above 147. As a result, USDJPY has been stuck range bound in the 146-147 area. 

Goldman’s FX trader Kentaro Kawahara chimes in and notes that USDJPY remains “in a range with the rates price action in the driver seat”. He sees both USD Rates and JPY Rates contributing to the current USDJPY move. In terms of the next catalyst, he notes PM Ishiba stepping down would contribute to fiscal concerns with the outcome dependent on who becomes the next PM. Given the Upper House Election results, fiscal expansion concerns will likely drive USDJPY higher. 

At the moment however, more clarity is needed on the political front and USDJPY will remain range bound led by rate differentials. 

Source: Goldman

JP Equity: All-time high and abundant with themes

The Topix is close to an all-time high while the Nikkei index closed 3.51% higher. Needless to say, the trade agreement provides a huge boost to Japanese corporations as trade related sectors receive a massive boost to their outlook. 

According to Goldman Sales Trader Sophie Stanton, following the tariff announcements, themes around “Exporters vs Domestic Demand have surged”. Particularly, beneficiaries of this deal are “AUTOs with better than expected tariff rates (15%) & 15% YTD underperformance vs Topix (GSXAJPAM Index) and USD Earners (GSXAJPIN Index).” On the other hand, Inbound Tourism (GSXAJPTR Index) and Domestic Demand (GSXAJDCO Index) saw retracements as rotation into the prior themes took place.” 

Source: Goldman 

Sophie also highlighted that “Banks are finding bids after being ‘neglected’ as of late given the improved risk sentiment along with Semiconductors with relative underperformance following global peers”. 

Source: Goldman 

Another interesting theme that has emerged following the Upper House Election results is the decrease in defense spending. Enna Hattori (Equity Derivative Sales) writes that “[i]t’s difficult to ascertain where Nikkei goes in the event Ishiba resigns as the market is likely already pricing in the possibility to some degree. That said, the pocket of the market that is most likely to be impacted is Defense, given Ishiba’s support for defense spending. The sector remains well-loved, but a resignation could trigger an unwind either in the sector specifically or across MOMO more broadly.”

In a major breakthrough and short-term diplomatic ‘win’ for the Zelensky government, Germany and the United States have agreed to supply Ukraine with five more Patriot air defense systems, German Defense Minister Boris Pistorius announced on Monday.

The defense chief revealed the move at the 29th meeting of the Ukraine Defense Contact Group, describing that the deal was finalized during his recent visit to Washington, where he met with US Defense Secretary Pete Hegseth. “We will coordinate closely in the coming days to determine how best to achieve this,” Pistorius confirmed.

He additionally affirmed that Germany will also provide air defense ammunition and fund Ukrainian-made long-range drones.

This is despite German government officials previously expressing alarm that the country’s remaining stocks were too low to support additional transfer; however Pistorious sought to address this elephant in the room by announcing the US has agreed to supply Germany with replacement systems originally ordered by Switzerland. Delivery is likely years away though.

“Delivery of the systems, worth billions of euros, to Switzerland was scheduled to begin in 2027 and be completed in 2028,” EuroNews emphasizes.

The German government has already sent three of its dozen Patriot batteries to Ukraine. Two more are currently stationed in Poland, and others are used for NATO operations and training. Germany currently only has six, Pistorius disclosed.

The announcement comes as Russia intensifies its long-range missile attacks on Ukraine, increasingly using ballistic missiles, which ironically is a threat that only the Patriot system is capable of effectively intercepting.

In the early hours of Monday, Russian strikes hit the Ukrainian capital, killing one person and injuring at least six others, according to local officials.

Other European countries, are also meanwhile digging deep to provide more support for Ukraine – amid reports that Washington has stepped back compared to the opening years of the war.

“As well as the contribution to the Patriots, Brekelmans said the Netherlands would also provide more missiles for Ukraine’s small operational fleet of F-16 fighter jets, more radars and counter-drone technology,” Newsweek details. “The Netherlands was one of four countries that pledged to deliver fourth-generation Western jets to Kyiv.”

Authored by Evgenia Flimianova via The Epoch Times (emphasis ours),

The UK government gave the final go-ahead on Monday for the Sizewell C nuclear power plant to be built in eastern England after securing investment from Canadian pension fund La Caisse, Centrica, and Amber Infrastructure.

Sizewell C in Suffolk will be the UK’s second new nuclear plant in more than two decades, following the government’s 2013 deal with EDF to build Hinkley Point C in Somerset, which is now expected to come online in 2029 after years of delays and cost overruns.

The state will be the largest shareholder in the Sizewell C project with a 44.9 percent stake. La Caisse will hold 20 percent, energy firm Centrica 15 percent, and London-based Amber Infrastructure will take an initial 7.6 percent, joining France’s state-owned EDF, which had already announced its 12.5 percent stake.

The new plant will be the third nuclear station at the Sizewell site, following Sizewell A and B, both of which are being decommissioned.

Sizewell C was initially proposed in the early 2010s as a joint project between EDF and China General Nuclear Power Group (CGN). The UK government removed Chinese involvement in 2022, buying out CGN’s stake due to national security concerns.

The plant is expected to deliver clean power to the equivalent of 6 million homes and create up to 10,000 jobs at the peak of construction, the government said.

It also estimates the plant could save the UK electricity system around 2 billion pounds ($2.6 billion) per year on average, once operational.

“This government is making the investment needed to deliver a new golden age of nuclear, so we can end delays and free us from the ravages of the global fossil fuel markets to bring bills down for good,” Energy Secretary Ed Miliband said.

Funding, Overruns

The government said Sizewell C will be financed using a regulated asset base (RAB) model, allowing developers to recover certain development costs before construction begins.

These costs may include setting up the project company, preparing the supply chain, and conducting site investigations.

UK ministers said the project has secured more financing than the estimated 38 billion pound ($51 billion) construction cost, providing a buffer against overruns. The funding model encourages cost control by making investors, not taxpayers, bear the risk of budget overruns, the government said.

Alongside the agreed private investment, the National Wealth Fund—the government’s principal investor and policy bank—will provide most of the project’s debt financing, working with France’s Bpifrance Assurance Export to support construction of the plant.

Quebec-based global investment group La Caisse, which operates Canada’s second-largest pension fund, said it was investing up to 1.7 billion pounds ($2.3 billion) in the project.

“Our investment demonstrates our confidence in the UK market, our largest destination outside North America, and aligns with our commitment to the energy transition and decarbonization, enabled by our long-term capital and active ownership” La Caisse’s Head of Infrastructure Emmanuel Jaclot said in a July 22 statement.

Centrica said in a statement it had committed construction funding of 1.3 billion pounds ($1.7 billion).

“This isn’t just an investment in a new power station, it’s an investment in Britain’s energy independence, our net zero journey, and thousands of high-quality jobs across the country,” Centrica Group Chief Executive Chris O’Shea said on Tuesday.

France’s EDF said the project will support the French nuclear industry by involving about 40 French suppliers and lowering costs for future EPR2 reactors, the next-generation evolution of the European Pressurized Reactor design.

EPR2 is central to France’s plan to build at least six new reactors by 2050, as announced by French President Emmanuel Macron in 2022.

Global Nuclear Revival Gains Momentum

Britain’s Sizewell C decision comes amid a broader global nuclear revival, as countries seek to strengthen energy security, meet climate goals, and reduce reliance on fossil fuels.

In the United States, tech giants such as Microsoft, Amazon, and Google have signed long-term nuclear energy deals to power data centers. Last year, Microsoft entered a 20-year power purchase agreement to reopen Pennsylvania’s closed Three Mile Island (TMI) nuclear power plant.

The war in Ukraine and efforts to cut greenhouse gas emissions by 2030 returned nuclear energy to the European Union’s policy agenda. That includes the creation of the European Nuclear Alliance in 2023 to promote nuclear power as part of the bloc’s climate strategy, along with calls from EU leaders for the region to produce more of its own nuclear energy.

In Japan, utility giant Kansai Electric Power Co. announced on Tuesday that it is considering building the country’s first new nuclear reactor since the 2011 Fukushima disaster.

The company has resumed surveys for a potential project at its Mihama Nuclear Power Plant site.

Having managed to derail populist, NATO-skeptical presidential candidates through a variety of extraordinary means, Romania — bowing to pressure from NATO and President Trump — announced it will spend $2.3 billion on Israeli anti-aircraft systems to fend off the supposed Russian menace.

The big-ticket, Israel-benefitting purchase comes even as Romania is poised to impose dramatic austerity measures to address its deteriorating financial condition. Romania’s 2025 deficit will be the largest in the country’s history. At roughly 9% of GDP, its deficit is also the EU’s highest by that measure. The alarming numbers have triggered reprimands from the European Commission, which asked Romania to bring its deficit down to 2.8% of GDP by 2030. At last month’s NATO summit, the organization’s members bent to Trump’s long-running demands, agreeing to more than double their targeted military spending — from 2% of GDP to 5% — by 2035.  

Working hard to rationalize the outlay, Reuters’ report on the Israeli deal notes that Romania “has had Russian drone fragments fall in its territory repeatedly over the past two years.” The Times of Israel bolstered the narrative with a headline claiming “Romania [is] on edge over Russia.”

Last year, Romania seemed poised to elect the deeply NATO-skeptical populist Calin Georgescu, who won the first round of Romania’s two-round presidential election. Citing supposed Russian interference, the country’s Constitutional Court threw out the election and ordered it to be started anew. In a May triumph for the EU establishment, centrist Bucharest mayor Nicusor Dan prevailed.  

Romania’s pending redistribution of $2.3 billion of its wealth to Israel’s booming arms industry comes as the government is  poised to unleash drastic austerity measures that are certain to stoke resentments. Potential moves include firing 20% of the country’s civil service workers, increasing value-added taxes, and increasing taxes on profits and dividends from 10% to 16%. “This correction is so extensive, so far-reaching, that pain cannot be avoided,” former finance minister and current head of the Romanian Fiscal Council Daniel Daianu told Politico. 

Meanwhile, Romania will shower $2.3 billion on an Israeli arms industry already enjoying record revenues. Hitting a new high for the fourth consecutive year, Israeli weapon sales totaled just under $14.8 billion in 2024. European customers accounted for 54% of exports, the Times of Israel reports. 

Under the new arms agreement, Romania will buy short-range and very-short-range anti-aircraft systems from Israel’s Rafael Advanced Defense Systems, with contracts encompassing training, logistical support and ammunition. The first two V/SHORAD systems will be delivered within three years of the contract’s signing, which is expected this fall. The Defense Post reports that Rafael submitted its SPYDER missile systems in the bidding competition. Rafael defeated South Korea’s LIG Nex1, European multinational MBDA and Germany’s Diehl Defence.  

Too many conservative Americans clap like seals when Trump demands that European countries spend more money on “defense” — seemingly oblivious to the fact that higher defense spending by European governments is not geared to achieving lower defense spending by the US government. Indeed, in a matter of several weeks during his new term, Trump went from oratorically aspiring to partner with Russia and China to cut the three countries’ military budgets in half, to enthusiastically announcing his approval of a Pentagon request to lift spending to a record $1 trillion.

Fittingly, Trump did so in an Oval Office session with Israeli Prime Minister Benjamin Netanyahu at his side. Turning to the man who would soon drag Trump into a war on Iran launched on false claims about Iran’s nuclear program, Trump said, “You’ll like to hear of this.”

Via Remix News,

The highest crime rate of any German city is Bremen, and it just so happens that this city state also has the highest share of residents with an immigration background, at least compared to other states.

“Data from the Federal Criminal Police Office (BKA) now show that, relative to population, no major German city has a higher crime rate. 15,424 crimes per 100,000 inhabitants are the highest, ahead of Frankfurt am Main (14,600) and Berlin (14,252),” writes Weser Kurier.

The Free Democrats (FDP) recently labeled the city the “most dangerous city in Germany.”

Bremen clearly ranks first in terms of robberies, with 194 cases per 100,000 inhabitants.

In second place is Frankfurt am Main with 14,600 registered crimes per 100,000 inhabitants. Frankfurt was in first place last year.

In third is Berlin with 14,252 registered crimes per 100,000 inhabitants.

Bremen also tops the charts with theft statistics, with shoplifting and theft from vehicles also extremely high.

However, it should be noted that all of this data is for 2024, and already Bremen is seeing a decrease in some crimes this year, including a 20 percent drop in robbery so far in 2025. Critics also contend that Bremen’s crime rate, while still extremely high, is not actually the highest due to a backlog of cases being included in the 2024 statistics. Even if that backlog is removed, Bremen remains at the top of the list for a broad range of crimes.

No matter which way the data is analyzed, the share of migrants involved in crimes in Bremen still remains incredibly high.

In fact, non-German suspects are responsible for 73 percent of all crime in Bremen in 2024, compared to 57 percent in 2023.

As Buten an Binnen notes:

“Young men from Morocco, Algeria, Tunisia, Libya, and Syria stand out as suspected perpetrators. This group of people continues to be kept in mind, and many of the perpetrators have been imprisoned.”

What all Germany’s cities with the highest crime rates have in common is that they all have the highest shares of migrants in the country.

According to bpb, “the proportion of migrants in Bremen is very high, at 45.1 percent of the population. This makes Bremen the most migrant of all German states.”

Berlin and Bremen are unique in Germany, as they are both states and cities. However, among cities, Bremen still tops the list of one of the cities with the most foreigners as a percentage of the population, in close competition with Frankfurt.

There may be arguments that Bremen, Berlin, and Frankfurt are dangerous merely because they are cities. However, in Germany, there are some useful reference points. For example, Bremen and Dresden have nearly the same population size of around 500,000 people. Meanwhile, Dresden only features residents with a migrant background, numbering only 10 to 12 percent. The crime rate is drastically lower in Dresden, despite Dresden being in the much poorer eastern part of Germany.

Read more here…

In a huge development which is no doubt related to recent nuclear saber-rattling in the context of the Ukraine war, the US has likely stationed nuclear weapons in Britain for the first time in more than 15 years, according to The Telegraph and other British media reports.

“An American C-17 transport plane visited RAF Lakenheath in Suffolk on Thursday, making a transatlantic journey from Kirtland Air Force base in New Mexico, where the US Air Force (USAF) stores nuclear bombs,” The Telegraph writes Tuesday. 

“Analysts said it was likely that the flight contained nuclear bombs, which were last stationed in the UK in 2008, before being removed under the Obama administration,” the report continues. 

The British newspaper says that supporting evidence that this is the case includes previously revealed details of an upcoming “nuclear mission” at Lakenheath.

This mission was first made known in unclassified documents that The Telegraph says were likely published by the US government by mistake, or else it could have been an intentional leak in order to signal Russia.

The logistics of last Thursday’s rare US transatlantic flight from New Mexico also suggests a highly sensitive mission to transfer nuclear assets:

The airspace over the base was restricted on Thursday and the aircraft did not immediately return to the US, in what one analyst told The Times appeared to be a “one-way drop-off”.

The plane also refuelled over the east coast of the US which The Aviationist specialist news website said this was a clue that it was flying a priority mission.

Separately The Times had also reported the story, including the detail that the US military transport plane which flew to Lakenheath had flown from the US with its transponders on, allowing it to be tracked by foreign governments.

One analyst said, “Flying transpondered C-17s from hot storage in Kirtland to Lakenheath and then returning and not going to a storage facility tells me this is a one-way drop-off flight.”

“Sometimes these particular C-17 flights are flown without transponders. So, the fact that they transpondered, this suggests to me that this has got to be deliberate,” the analyst added.

This is your weekly reminder that there is no such thing as a “tactical” nuclear weapon.

Any use of a nuclear weapon is immediately at the Strategic level, and if used against a nuclear power, will result in a general nuclear exchange. https://t.co/vFJks9wBOa

— cdrsalamander (@cdrsalamander) July 20, 2025

Again, this seems some deliberative ‘messaging’ to Moscow, coming as President Trump is seeking to pressure the Russian and Ukrainian sides to make progress at the negotiating table. Washington knows it has little leverage, given Kiev forces have remained on a backfoot, and Russia is making slow but steady progress in the east.

The Kremlin says that it is ‘monitoring’ these reports. Recently Russia’s strategic doctrine has been updated, given President Putin a little broader interpretation concerning deployment of nuclear weapons. It is believed that Russian tactical nukes are also still on Belarusian soil, which has greatly alarmed Europe.

Via Remix News,

The European Commission’s seven-year budget is already facing backlash, with Ursula von der Leyen’s request for €2 trillion from member states being slapped down by German Chancellor Friedrich Merz and other leaders.

One of the main voices against the budget is Hungarian Prime Minister Viktor Orbán, who says it is designed to bring Ukraine into the EU as a member and hand Kyiv billions of euros.

“If we look only at financial aspects, we should see that in addition to the 20-25 percent of budget resources allocated to Ukraine, 10-12 percent of previously taken out loans go to loan repayments,” said Orbán in an interview with Kossuth Radio’s “Good Morning, Hungary” program.

Adding up money to Ukraine and debt repayments, 30 percent of the budget goes to areas that were not included in the previous seven-year budget, said the Hungarian prime minister.

“That’s why everyone in the European Union is shouting,” he added.

“The budget is a great science to understand, you have to be able to read not only what is written in it, but also what is hidden behind the lines,” Orbán said.

The Hungarian prime minister said the problem with the budget is that it does not have a clear strategic basis.

“If we do not know what it is for, then it cannot be good, because we must first answer what goals we want to achieve with it,” he said.

As far as Orbán is concerned, the main goal of the budget is to admit Ukraine into the EU.

⚠️🌾 A shocking new EU budget leak reveals a dangerous gamble: Ukraine would get a massive funding boost, while European farmers lose out. This plan risks sidelining rural Europe and threatening families across the continent. Brussels must not abandon Europe’s farmers to bankroll… pic.twitter.com/J74f27q1ND

— Orbán Viktor (@PM_ViktorOrban) July 16, 2025

“The EU budget has only one obvious purpose: to bring Ukraine into the EU, and these funds are transferred to Ukraine,” he said.

According to the prime minister, the right move would be not to accept the Ukrainians but to instead develop a kind of cooperative relationship with them.

He also said that not only is there uncertainty about Ukraine, but money is also being lost for agriculture. The prime minister asked the question: “What will happen to farmers if the EU does not support them in the future?”

The budget will not survive

According to Orbán, this budget will not survive, with EU countries lining up to reject it. This may be much more than bravado, as it is widely reported at the moment that a number of key EU leaders are coming out against the budget, most notably German Chancellor Friedrich Merz.

“A comprehensive increase in the EU budget is unacceptable at a time when all member states are making considerable efforts to consolidate their national budgets,” said Stefan Kornelius, spokesperson for Merz’s government. “We will therefore not be able to accept the Commission’s proposal.”

A path forward will not be easy, as Orbán notes that any EU budget agreement requires unanimous approval from all member states.

Given that the Commission is trying to tie rule-of-law sanctions to a variety of expanded areas, which countries like Hungary, Poland, and Slovakia are certain to reject, negotiations are expected to be intense.

During the last seven-year budget, many conservatives and those on the right criticized the previous Orbán government and their then Polish conservative allies for agreeing to the rule-of-law sanctions in exchange for signing off on the budget. The move turned out to be a bad one for Hungary, Poland, and other sovereignist-minded political parties. The EU froze tens of billions for both nations, and for Poland, only unfroze the money once the left-liberal Tusk government came to power. For Hungary, approximately €10 billion still remains frozen.

Read more here…

Authored by Gregory Copley via The Epoch Times,

We know that the world is moving into an age of uncertainty. But towards what? Our planning does not extend that far…

We are too preoccupied with the immediate to even consider the longer-term.

And if governments are fighting for or against immediate challenges, are societies fighting for the same reasons, or are they fighting for something more at the core of their identity?

Firstly, we need to look at just some of the immediate vital issues in the global strategic evolution which cannot be ignored, or set aside in favor of pressing domestic issues.

These are the issues defined largely by governments, and take the public along with them. But ask what is it that societies seek, and it goes more deeply than platitudes about “world peace.”

We are now seeing the conclusion of trends of the past few hundred years.

In the longer-term, we are moving—unless strategic consideration is given—into an age bereft of history, identity, and considered values and goals.

So, firstly, let’s look in the short-term:

• U.S. relative dominance revives, but is moving toward isolation: The United States, under the Donald Trump presidency, is moving into a position of relative global dominance, largely through decisive action, but also because of the reduction in capabilities of other states. Perceived U.S. prestige and trustworthiness continues to decline, making global U.S. operations more expensive to prosecute.

• Xi is gone; the PRC has begun its change: The People’s Republic of China (PRC) has been laid to waste economically, resulting in the removal of Chinese Communist Party (CCP) General Secretary Xi Jinping from any real power as of July 2025. The CCP is also under threat, but the June 2025 U.S.–PRC trade deal has kept the party alive and in control of China, at least for now. It will take decades to restore China to strength. To survive with a minimum of chaos, the PRC will need to transform into a true market economy, working equitably with other trading powers, or else the CCP will collapse. Essentially, China could become a new country based on its deeper past.

• Diminished likelihood of Taiwan invasion: The likelihood of a PRC invasion of Taiwan in the coming few years is now lower, but the situation remains unstable.

• An effective end to 20th-century treaties: Most international governance and treaty organizations were rendered meaningless or weak by the first half of 2025. That extends from the United Nations to the European Union (EU), BRICS, OECD, etc. and bilateral treaties on trade, security, or other issues. Everything is now up for discussion. The collapse of the EU may allow European states to revive.

• Iran now altered, will alter more soon: Change in the government of Iran, which would change the nature of Iranian society back to more traditional lines, is closer, because of the recent Israeli–U.S. war with the Iranian clerics. A new Iranian leader could emerge from the military, pushing the clerics back to the mosques. This will usher in new access to and from the Central Asian states.

• Russia is emerging as a major global power, given the relative stability of its economic base and political structure, but will need eventually to consider a leadership transition. The mechanism will remain opaque. There is no evidence that Russia would be competitive with the United States, strategically, over the coming few years, other than by its alignment with India. In this context, the Russian war with Ukraine is essentially over, in meaningful terms.

• Turkey as the font of instability: Turkey is moving further into instability, and, to distract public discontent with the increasing poverty, could move aggressively into a conflict situation directly with Israel and/or Greece, and attempt further military incursion into Syria and to assert dominance over the new Syrian government.

• Illegal migration reaching an apogee? Illegal migration into Western Europe from Africa and the Middle East could become greatly more manageable if and when the agreement is reached—possibly in 2025—for a unified government of Libya under a traditional leadership. The example of U.S. curtailment of illegal immigration in 2025 may be a contributing factor as well.

• Much of Africa “in reorganization”: Africa, host to the most devastating current wars in terms of lives lost and people displaced, has entered a new, painful era of self-determination and re-defined borders. Some areas are better placed than others to emerge successfully into the new era.

• Central Asia re-emerges: Central Asia, including Azerbaijan and Afghanistan, emerge as a new strategic zone, gaining great economic leverage as it breaks its landlocked status through Iran and new modi vivendi are achieved with Armenia, Afghanistan, and Pakistan.

• The Americas start “reorganizing”: Chile became the first major South American state to undergo substantive transformation, but Brazil could also see major change with its next election.

• Oceania in decline: Australia, New Zealand, and the South Pacific states now seemed to have tipped into political and economic stagnation, which may only be reversed by radical restructuring of a type only possible following a major collapse, which may be decades coming.

The longer-term: The current tipping point coincides with the end of the “baby boom” generation, which followed World War II. With its passing, because of the purposeful elimination of historical education, comes a reduced ability to move forward retaining historical cultures, languages, and identity. How, then, will states define themselves and their goals? Will they sink more into mass identity, or will individual thought revive? How long has it been since societies have known for what principles they stood?

Will societies survive and dominate more if they retain identity and long-term purpose? What are the options, at this stage, for retaining historical continuity? For retention of traditions? For re-seizure of education systems? Is there any program, anywhere, to begin planning for the future?

Policymakers may have immediate reasons for engaging in conflict, but societies see the wars as a quest for meaning.

Will states which have regained their old identities—their meaning—prosper best by mid-century?

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times or ZeroHedge.

Authored by Peter Berkowitz via RealClearPolitics,

Progressive left and postliberal right intellectuals converge in teaching scorn for America’s founding principles. Attacking from different angles, both camps employ grossly flawed arguments to justify the repudiation of the U.S. Declaration of Independence’s ringing affirmation 249 years ago of the unalienable rights that human beings share.

Captive to the taste for the gaudy and the melodramatic nurtured by American higher education, both camps want to revalue traditional values, change the world rather than understand it, and replace history’s complexities with simplistic grand narratives of good and evil. At the same time, their wild exaggerations, contrived charges, and enthusiastic followings provide an occasion to restate America’s founding principles, recognize their pertinence to the enduring challenges of free and democratic self-government, and rebuild civic education around them.

The 1619 Project prominently set forth a version of the progressive left’s signature opinion that systemic racism disfigures America. Published in the summer of 2019 as a special issue of The New York Times Magazine, the collection of essays undertook to correct the record about America’s founding.

Led by Nikole Hannah-Jones, who won a Pulitzer Prize for her contribution, 1619 Project essayists argued that the United States was not truly founded in July 1776 when the Declaration of Independence proclaimed, “these United Colonies are, and of Right ought to be Free and Independent States.” Rather, America came into being in 1619 when 20 enslaved Africans arrived in the fledgling British territory of Virginia.

Abolished in 1865 by the 13th Amendment, the evil institution of slavery was always a grotesque affront to the equality in unalienable rights affirmed by the Declaration. Nevertheless, according to the 1619 Project, slavery forms the deepest substratum of American existence, has touched every aspect of the United States, and remains the defining fact of the nation’s life. In the 1619 Project’s telling, the Declaration of Independence’s self-evident truths about individual rights and the consent of the governed were always so much window-dressing designed to distract from and thereby perpetuate slavery. Yet it seems lost on 1619 Project producers, distributors, and consumers that despite the resentments and distrust that currently wrack the nation, the United States remains by most any objective measure the freest, most tolerant, and most prosperous multi-religious, multi-racial, and multi-ethnic great power in history.

Approaching matters from the opposite side of the political spectrum but with similar vehemence, “Why Liberalism Failed,” a 2017 volume by University of Notre Dame political science professor Patrick Deneen, elaborates the postliberal right’s characteristic view that freedom in America has produced a systemically corrupt and decadent society. The chief villain, according to Deneen, is John Locke. But to convict Locke of subverting Western civilization in general and America in particular, Deneen reduces the 17th-century British thinker, and indeed the entirety of the modern tradition of freedom, to a tendentious reading of a few lines from the opening pages of his 1689 classic, “The Second Treatise of Government.”

Locke’s great sin, in Deneen’s account, involves giving authoritative expression to the proposition – central to the Declaration and a cornerstone of American constitutional government – that human beings are by nature free and equal. The proper political expression of this equality in freedom, maintains Locke, consists in liberty under settled laws enacted, enforced, and adjudicated within a constitutional order to which one has consented.

Deneen, however, attributes a dark secret teaching to Locke, according to which Lockean freedom entails emancipation from the imperatives of virtue, duty, and nature’s and God’s law. For Deneen, Lockean freedom, and therefore American freedom from the beginning and in its essence, gives rise to an incoherent and inhuman demand for the chimera of absolute freedom. Deneen does not allow his polemic to be sidetracked by such core components of Locke’s thinking as his insistence on the duty to honor God’s authority, his distinction between liberty and license, and his 1693 book, “Some Thoughts Concerning Education,” which deals with the virtues and how parents should foster them.

In America’s universities, many students will encounter the progressive left’s and postliberal right’s vilification of America’s founding principles instead of receiving a proper introduction to the case for the Declaration and the Constitution. For such students and indeed for citizens whose instincts, sentiments, and experience tell them that America’s founding principles sustain the nation, Vincent Phillip Muñoz provides an excellent tonic in “The American Revolutions of 1776,” which appears in the summer issue of National Affairs.

A professor of political science at the University of Notre Dame (like Deneen), Muñoz tactfully understates matters in observing that “As America’s 250th anniversary approaches, not everyone is eager to celebrate the Declaration of Independence and the political revolution it sparked.” His essay, a version of which will appear in the American Enterprise Institute’s forthcoming volume “Religion and the American Revolution” – part of AEI’s “America at 250” initiative (I contributed to an earlier volume in the series) – briskly lays out three revolutionary achievements of 1776. These achievements deserve our gratitude, warrant celebration, and suffer suppression by or exclusion from university curricula. All three champion unalienable or natural rights and the limited government that secures them.

The first revolution of 1776 affirmed that just government is grounded in the consent of the governed. Without questioning God’s authority, the American view broke with the then-prevalent notion that legitimate political authority derives from divine right. And without challenging the classical premise that citizens should govern and be governed in accordance with human nature, America’s founders rejected the classical idea that wisdom or moral virtue provides decisive title to rule.

America’s founders held that while human beings are not equal in all respects and not free in all ways, we are born equal in rights and therefore neither masters over nor subordinate to others. Each has equal right to govern himself or herself, but no one has the right to govern another. One crucial exercise of the right to govern oneself consists in consenting to the exercise of political authority. In practice, that means that each has an obligation to obey only those laws – the disagreeable as well as the agreeable – that issue from established constitutional processes to which he or she has consented. Consent can be given expressly, as in the formal ceremonies by which immigrants officially acquire citizenship, or tacitly, as in the manner of the native-born who acquire the obligation to obey the laws through living under them and enjoying their benefits.

The second revolution of 1776 taught that government’s primary purpose is to secure natural or unalienable rights. America’s founders parted ways with the traditional view that government’s purpose was to perfect or save souls, but the parting was not driven by indifference or hostility to higher concerns. Rather, the founders proceeded from the conviction that care of the soul was the proper responsibility of individuals, families, and religious institutions.

Securing rights did not preclude government from assuming additional responsibilities, provided that they were consistent with the equal rights of all, to advance the common good. “Unlike influential progressive thinkers such as Herbert Croly and political leaders such as Franklin Roosevelt, the founders did not hold that a fundamental purpose of government is to provide directly for the people’s material needs or to ameliorate all unfortunate circumstances,” Muñoz writes. “They instead understood the role of government as securing the conditions, including the economic conditions, that would allow Americans to be responsible – to employ their natural rights to provide for themselves, their families, and those under their care.”

The third revolution of 1776 maintained that religious liberty, the right of individuals to worship in accordance with conscience, was an essential right. Far from expressing or implying antipathy to religion, limiting government’s authority over religious belief and practice stemmed from a determination to protect faith. Prohibiting government from establishing religion or impairing its free exercise reflected the belief that true religion could not be dictated by civil law because it was grounded in conscience and choice. Another reason to restrict political control over religion was the distinct tendency of government officials to lack competence in interpreting scripture and managing religious teaching and observance.

From the founders’ perspective, moreover, the spirit of liberty and the spirit of religion were not political antagonists but rather political allies. In their view, since human beings are by nature free and equal and endowed with reason, only faith practiced in accordance with conscience could be pleasing to God. And because the numerous Christian denominations at the founding affirmed that every human being is precious in God’s eyes and that power must be divided between church and state, religion in America bolstered the nation’s natural rights principles.

These three revolutionary achievements of 1776 – grounding just government in citizens’ consent, focusing government on securing rights, and protecting religious liberty out of respect for faith – deserve to be widely heralded in next year’s celebrations of the Declaration of Independence’s 250th anniversary. And study of their origins, integration into American constitutional government, and implications for today’s challenges should promptly be placed at the center of civic education in America.

Peter Berkowitz is the Tad and Dianne Taube senior fellow at the Hoover Institution, Stanford University. From 2019 to 2021, he served as director of the Policy Planning Staff at the U.S. State Department. His writings are posted at PeterBerkowitz.com and he can be followed on X @BerkowitzPeter.