This was the week when – like Biden’s dementia – economic weakness became too much for the mainstream to ignore and while Powell hinted at cuts to come, the market demands more (again) and stocks won’t be satisfied until they get them.

Source: Bloomberg

“Growth scares” now dominate the narrative (maybe growth’s demise is not so ‘transitory’)…

Source: Bloomberg

…as Kamala overtakes Trump in the prediction markets…

Source: Bloomberg

The economic weakness prompted the market to bet large on bigger (and sooner) rate-cuts – now pricing in 116bps of cuts in 2024 (and 100bps more in 2025)…

Source: Bloomberg

If you feel like you’ve heard this story before, you have… twice!

Source: Bloomberg

…and neither time did things work out as the market had hoped…

Source: Bloomberg

…and that smashed Treasury yields lower on the week, with 2Y yields crashing almost 30bps today alone and down a stunning 50bps on the week!

Source: Bloomberg

Today was the biggest drop in 2Y yield since Dec 2023 (Powell pivot) and the biggest weekly drop since March 2023 (SVB collapse).

The entire curve (ex-30Y) is now below 4.00%…

Source: Bloomberg

And the yield curve has disinverted (2s30s now at its steepest since July 2022)…

Source: Bloomberg

Stocks did not love the dovishness as the ‘soft landing’ narrative morphed into ‘growth scare’ and ‘we are gonna need a bigger boat’-gull of rate-cuts. Small Caps (the most sensitive to the economy) collapsed this week, but while they were the worst of the bunch, all the US majors puked bigly…

This was the Russell 2000’s worst week since March 2023 (SVB collapse), and the fourth weekly drop for Nasdaq in a row.

The S&P 500 found support at its 100DMA today…

But NASDAQ broke below its 100DMA…

And The Nasdaq is now officially in correction…

Magnificent 7 stocks are now down an incredible $2.3 trillion market cap from their record highs…

Source: Bloomberg

“Most Shorted” stocks were clubbed like a baby seal this week, erasing all of early July’s short-squeeze…

Source: Bloomberg

The options markets shit the bed with VIX exploding to almost 30 at its peak today (highest since Oct 2022) and VVIX smashing above the critical scare level of 100 (to its highest since March 2022)…

Source: Bloomberg

And the “correlation 1” move in markets this week sent implied correlation dramatically higher…

Source: Bloomberg

The dollar dovishly tanked this week, back to July’s lows…

Source: Bloomberg

..as Yen soared (carry unwinds) to its strongest close against the greenback since January…

Source: Bloomberg

Bitcoin had a tough week, tumbling back from $70k to test down to $62k…

Source: Bloomberg

…but the entire crypto space was hit hard this week, with Solana the worst…

Source: Bloomberg

Gold tested up near record highs once again before being battered lower today (but was higher on the week)…

Source: Bloomberg

Crude oil prices plunged to two-month lows as the ‘growth scare’ weakness trumped MidEast geopol risk premium…

Source: Bloomberg

Finally, is it time for stocks to catch down to ‘economic’ reality?

Source: Bloomberg

How far will the world’s central banks allow stocks to fall before the liquidity firehose is unleashed?

Source: Bloomberg

…well it is an election year (for Dems).

Billionaire investor Warren Buffett’s Berkshire Hathaway has been offloading tens of millions of shares of Bank of America in the last several weeks. Since we first detailed the selling on Tuesday, Buffett’s firm has dumped millions more. 

Let’s begin with the note on Tuesday titled “Buffett Disposes 71 Million BofA Shares As Berkshire’s Cash Stockpile Rises.”

By the end of the week, new data from Bloomberg shows Berkshire sold a further 19.2 million BofA shares. 

Since the selling first began in mid-July, Berkshire has unloaded 90 million BofA shares, mostly above the $40 handle.

As of Thursday, Buffett’s Berkshire remained BofA’s largest shareholder, owning approximately 942.429 million shares. 

The size of Berkshire’s BofA stake has been reduced to where it was in early 2020. 

Berkshire’s rising stockpiles merely reflect the firm’s inability to find deals in today’s overvalued and weak economic environment. On Friday, economic data in the US showed troubling signs of a worsening employment landscape and rising recession risks.

In May, Buffett told investors at Berkshire’s annual meeting that “it’s a fair assumption” the firm’s cash stockpile would top $200 billion in the near term. The rising stockpile comes as the trusty ole’ ‘Buffett’ Indicator (US Equity market Cap/US GDP) has warned for quite some time about overvalued stocks.

The exact reason for Berkshire’s BofA dump has yet to be disclosed. But raising cash could be a sign that Buffett and his team understand deals are ahead. This means valuations in overall markets must go lower.

Authored by Kyle Anzalone via The Libertarian Institute,

A recent high-level North Korean defector said Pyongyang would be interested in talks with former-US President Donald Trump if he wins the November election. During his first term, Trump engaged Supreme Leader Kim Jong Un in negotiations that nearly secured major agreement. 

Senior North Korean diplomat Ri Il Gyum, who recently defected to South Korea, said he believes Kim would be willing to restart talks with Trump if he retakes the Oval Office. 

Ri assesses that the negotiations could be more successful during Trump’s second term because Kim would take a different approach. According to background of Ri’s defection saga:

The escape of Ri Il Gyu from Cuba made headlines globally last month. He was the highest-ranking North Korean diplomat to defect to the South since 2016.

In his first interview with international media, Ri said North Korea has set Russia, the U.S. and Japan as its top foreign policy priorities for this year and beyond.

“Kim Jong Un doesn’t know much about international relations and diplomacy, or how to make strategic judgment,” he said.

“This time, the foreign ministry would definitely gain power and take charge, and it won’t be so easy for Trump to tie North Korea’s hands and feet again for four years without giving anything,” the diplomat continued.

Trump’s foreign policy team will also likely have a major impact on the chances of success in negotiations. During the first round of talks between Trump and Kim, the two inked a deal that started to reduce tensions on the Korean Peninsula. 

However, during the second summit in Hanoi, Trump succumbed to the arguments from uber-hawk John Bolton and presented Kim with an unworkable proposal, scuttling talks. 

Ri believes Kim feels better positioned now than he did during the previous Trump administration. President Joe Biden has attempted to isolate Russia, policy incentivising Moscow to increase ties with Pyongyang.

Ri says Kim no longer needs sanctions relief because of the boosted DPRK-Russia ties. 

Two weeks ago when Exxon previewed its upcoming earnings, there was some disappointment amid what was viewed as weakness in upstream prices and energy product margins.

Which is why much to everyone’s surprise, today’s Q2 report by the largest US energy major blew away estimates, revealing the second-best Q2 earnings in company history thanks to the recent closing of the $63 billion Pioneer acquisition, which made Exxon into the second biggest energy player in the world after Aramco (while closest competitor Chevron is still choking on its Hess acquisition).

For those who missed it, here is a snapshot of what XOM reported:

• Q2 EPS $2.14 (or GAAP earnings of $9.2BN) beating est. $2.02., and up from $2.06 YoY, with E&P (both US and International) drove the beat vs estimates.
• Q2 revenue $93.06bn, beating est. $90.09bn.
• Production higher at 4358 Mboe/d vs. Cons 4242.2 Mboe/d, with stronger US and International liquids and higher International gas production vs estimates on the quarter. Notably, during the quarter, the company achieved record production from both Permian and Guyana assets.
  • The Pioneer takeover, which closed in early May, helped lift Exxon’s overall production by 15% on a sequential basis, and setting the stage for daily output to average more than 4 million barrels this year.
• Capex in quarter came in at $7.04bn vs. Cons $6.23bn; Guided FY capex to ~$28bn, including $3bn for Pioneer.
• Cash flow from operations was $10.6bn, cash from operations excluding working capital movements was $15.2 billion.
• Shareholder distributions of $9.5 billion included $4.3 billion of dividends and $5.2 billion of share repurchases, consistent with the company’s announced plans.
• Expects over $19bn of share buybacks in 2024. Annual buyback pace of $20bn expected through 2025.
• XOM delays Golden Pass LNG to late 2025 on contractor dispute.

Regarding the recently closed acquisition of shale giant Pioneer, Exxon said that the deal closed “50% faster than similar deals in recent years”, the “Integration and synergy execution exceeding expectations”, the combined company has already achieved record production levels of “792 Koebd in June and 782 Koebd in second quarter”, and finally Pioneer has already contributed $0.5 billion in earnings from two months of operations (excluding $0.2 billion of one-time items, primarily transaction costs).

While YTD earnings were $17.5 billion down from $19.3 billion in the first half of 2023, this profit was generated with oil prices much lower, confirming that XOM’s breakeven price continues to drop and the company will be solidly profitable even if oil were to drop dramatically from here.

Additionally, XOM remains on track to achieving cumulative structural cost savings of $5 bn through year-end 2027 (vs 2023 levels). XOM has already achieved $10.7 billion of cumulative Structural Cost Savings versus 2019, including an additional $1.0 billion of savings during the year and $0.6 billion during the quarter.

 Looking ahead, the company forecasts that production, including eight months from Pioneer, expected to be ~4.3 Moebd, with full year 2024 total Permian production (most Pioneer) expected to be ~1.2 Moebd. In other words, Exxon is now not only the biggest and most important energy company in the world after Aramco, but it is now certainly too big to ever fail in the context of even a Kamala Harris administration. While the market may not appreciate the premium value such a designation entails, it will sooner or later.

“We delivered our second-highest 2Q earnings of the past decade as we continue to improve the fundamental earnings power of the company,” said CEO Darren Woods; he went on: “We achieved record quarterly production from our low-cost-of-supply Permian and Guyana assets, with the highest oil production since the Exxon and Mobil merger. We also achieved a record in high-value product sales, growing by 10% versus the first half of last year. We closed on our transformative merger with Pioneer in about half the time of similar deals. And we’re continuing to build businesses such as ProxximaTM, carbon materials and virtually carbon-free hydrogen, with approximately 98% of CO2 removed, that will create value long into the future.”

Many oil explorers ramped up cash returns to shareholders as commodity prices soared in 2022 and 2023, and had plenty of cash left over to invest in low-carbon alternatives. But with many renewable bets fizzling, especially among the more virtue-signaling oil majors (mostly in Europe) oil executives have been forced to refocus much of their attention on traditional fossil-fuel projects that can generate long-term cash flows.

Here, Exxon was an exception, having never turned its back on fossil fuels which is why the Kamala/Deep State administration hates it so much. It’s been able to increase production and returns, particularly through fast-growing projects in Guyana and the Permian Basin.

Production in Guyana and the Permian Basin reached all-time highs during the second quarter. Exxon is now the biggest producer in the Permian after closing the Pioneer transaction, its biggest deal since buying Mobil.

“It gives us a really big boost,” CFO Kathy Mikells said during an interview. 

Exxon plans to increase annual capital spending by 12% to $28 billion this year as a result of the combination with Pioneer. The boost is “consistent” with what Pioneer was previously spending, Mikells said. Cost savings through the integration process have come in ahead of expectations, she added.

Oil refining, in which Exxon has a bigger footprint than peers, has been a weak performer this year amid lower-than-expected gasoline and diesel demand. Fuel-making margins were compressed by higher prices for heavy crudes, such as those from Canada.

Long story short, the take home message here is that Exxon has become increasingly lean and efficient  (largely thanks to the belligerence of the Obama admin) to the point where it now generates the kind of results at $75 oil, that it once needed $90 oil to achieve. 

It is this operational leverage that will push the stock to all time highs soon, and certainly as soon as a new middle east conflict or a massive Chinese stimulus pushes oil back to $100 or over.

Exxon’s investor presentation is below (pdf link)

It didn’t take long after today’s dismal jobs report to spark what Wall Street hopes will be a Fed panic. Indeed, just moments after a catastrophic jobs report which “nobody’ could have possibly predicted, well some notable exceptions, some of the biggest Wall Street analysts are already tearing up the soft landing playbook they were all pitching just, well, 24 hours ago and are urging the Fed to not just cut but panic while it’s doing it.

We start with Goldman which begins by commenting on today’s jobs report, and says that “the softening in labor market conditions has now gone beyond the amount that was welcome.” As a result, Goldman now expects “an initial string of consecutive 25bp rate cuts in September, November, and December (vs. our previous forecast of cuts every other meeting)” or in other words 3 cuts in 2024 instead of just 2. While Goldman’s chief economist Hatzius, who for much of the past year was banging the table on just how strong the economy is (and has just flipflopped) notes that “the slowdown in job growth in the July report likely overstates the decline in the underlying trend, if the August employment report is also weak and confirms the slowdown in job growth, then a 50bp cut would become likely at the September meeting.“

But if Goldman’s 3 rate cuts is notable, then JPM’s new call for consecutive 50bps cuts is downright remarkable: that’s right, JPM chief economist Michael Feroli, also a huge bull until, well apparently this morning, decided to upstage Goldman and went a step further, predicting rate cuts in September and November, and not just any rate cuts but double, or 50bps, followed by quarter-point reductions at every subsequent meeting. And the punchline: Feroli parroted what we said earlier…

Fed now forced to cut and there is little chance it will wait 2 months. How soon until the emergency meeting. VIX 30 and we get one next week

— zerohedge (@zerohedge) August 2, 2024

… and said there’s “a strong case to act” before the next meeting on Sept. 18. Fed Chair Jerome Powell may not “want to add more noise to what has already been an event-filled summer,” however, he wrote. But if the Fed does want to panic, so be it.

Moving on to Citi economists, who were already among the most aggressive in calling for the Fed to cut interest rates this year, said they expect half-point rate cuts in September and November and a quarter-point cut in December, having previously predicted quarter-point cuts at all three meetings. The Fed will then reduce rates by a quarter point at each meeting until mid-2025, bringing the policy band to 3%-3.25%, Veronica Clark and Andrew Hollenhorst predicted.

Finally, Bank of America’s chief economist Michael Gapen, who’d been a holdout for rate cuts beginning in December, said he is also now looking for the first move in September.

The good news is that none of the above matters: like faithful windsocks, all of the so-called strategists above are useless and merely chase momentum. The question is what the market thinks will happen, and as the chart below shows, interest-rate swaps show that traders see a more-than-70% chance of half-point move in September, and are pricing in a total of about 115 basis points of reductions by year-end…

… expecting, or rather pushing risk off so far that the Fed has no choice but to panic.

Via American Greatness,

The overnight transformation of Vice President Kamala Harris from an abrasive, word salad dispensing political opportunist into a hip, approachable political savior has been extraordinary, to put it mildly.

But a number of Gen-Z online content creators are calling into question whether any of it is authentic and some are saying it’s part of an astroturfed effort to make Harris more appealing to younger voters.

Comedian Steve McGrew shared an email that appears to offer him money, in exchange for posting positive videos about Harris.

I’m going to post a video of Kamala Harris and her moronic takes every day until the election.

This is her famous “coconut tree” speech from 2023. pic.twitter.com/Ur32WLtB64

— Sarah Fields (@SarahisCensored) July 28, 2024

A recent Harris campaign rally in Atlanta drew large numbers of enthusiastic participants but the purported groundswell of support for the presumptive Democratic nominee didn’t necessarily reflect reality.

Many of the attendees were paid to attend or came to hear Megan Thee Stallion perform and began streaming out of the venue halfway through Harris’ speech.

Yesterday’s event was not a “rally” for Kamala. This was a trashy vile concert for a twerking Meghan Thee Stallion that Kamala was invited to speak at. Most of the attendees received a $150 incentive bonus and left halfway into her speech. She is WEIRD😈 pic.twitter.com/IJ1L7Ac1zw

— 🇺🇸Kimmie🇺🇸 (@kimmagagal2) July 31, 2024

Other content creators told the Daily Caller that recent lighthearted Harris videos poking fun at coconut tree anecdote are simply another way for Democrats to create the appearance of support for their candidate through manipulation of social media.

The videos are intended to convey an attitude of organic support for Harris having made a transition, As Van Jones put it, “She’s gone from cringe to cool.”

They trying to get ME to be a paid shill for Kamala. GFYS! But let this be a lesson… they are PAYING people to pretend to support KumSwalla pic.twitter.com/kokPoAHvyK

— Steve Mudflap McGrew’s REMASCULATE podcast (@REMASCULATE) July 28, 2024

Chrissy Clark is a Gen-Z conservative commentator who says the Democratic National Committee (DNC) is using an “influencer dark network” to push online trends that are intended to build up Harris’ image and make her seem cool and approachable.

According to the Daily Caller, the DNC has paid hundreds of thousands of dollars to a media company representing young TikTok influencers and it’s expected that Harris will capitalize on those relationships as her campaign swings into gear.

But getting these younger voters to share memes and laugh at Harris won’t necessarily translate into getting them to vote for her.

Gen-Z has likely noticed that the same people telling them that Kamala is a great candidate this month, are the same ones who were telling them Biden was fit for the job last month.

After this week’s ‘soft’ survey data signaled serious ugliness in the US manufacturing economy…

Source: Bloomberg

…this morning we get ‘hard’ data confirmation as US Factory Orders plunged 3.3% MoM in June (the biggest MoM drop since COVID lockdowns), dragging orders down 3.6% YoY (also the worst since COVID lockdowns)…

Source: Bloomberg

The final durable goods orders print was worse than the initial – down a shocking 6.7% MoM…

Source: Bloomberg

All of which is adding to the ‘growth scare’ narrative that has been quietly accelerating…

Source: Bloomberg

How long before The Fed is forced into dovish retreat (adjusting its two-cuts-by-year-end forecast to the market’s four cuts!).

Authored by Martin Young via CoinTelegraph.com,

Decentralized finance (DeFi) may be experiencing a revival, with key metrics such as active loans and total value locked (TVL) on the rise since their more recent lows in 2023. 

Crypto market analytics platform Token Terminal proclaimed that “DeFi is waking up again” in a July 31 post on X.

It backed up this claim with charts and statistics, one of which was for active loans, which have returned to levels not seen since early 2022, at around $13.3 billion.

DeFi lending allows investors to lend out their crypto holdings to borrowers while earning interest on the loans. Lending and borrowing activity is a key metric for gauging DeFi participation and overall market health.

DeFi active loans hit a peak during the crypto bull run of 2021 at $22.2 billion when Bitcoin and Ether were pushing $69,000 and $4,800, respectively. It fell soon after, hitting around $10 billion in March 2022 before plummeting down to $3.1 billion in January 2023.

However, since last year’s low, there has been a significant recovery in DeFi lending, according to Token Terminal. The company added that active loans could mean leverage is increasing, which is a “leading indicator of a bull market.”

DeFi active loans. Source: Token Terminal

DeFi total value locked also took a massive hit in 2023, with TVL falling 80% from its November 2021 peak of $180 billion to around $37 billion by October 2023.

However, since then, the sector has recovered roughly 160%, with TVL now standing at around $96.5 billion, according to DefiLlama.

Additionally, DeFi TVL doubled in the first half of 2024 from around $54 billion to peak at $109 billion in June.

Speaking on overall sector growth, founder of DeFi protocol Synthetix, Kain Warwick, told Cointelegraph “The infrastructure has been ready for a while, but it is still enthusiasts using DeFi.”

Kain and the team are working on and have launched an “on-chain gateway” called Infinex which has also been dubbed the “UX Layer” of DeFi aiming to facilitate the bridging of assets between different blockchains.

In a July 30 X post, Humble Farmer Academy founder Taiki Maeda commented that the sector is approaching a period of “DeFi renaissance” after more than four years of extreme underperformance.

He was referring specifically to DeFi lending platform Aave, which he said was “poised to outperform” due to the supply of its native stablecoin GHO surging and the Aave DAO taking “great steps to lower costs and introduce new revenue drivers.”

However, according to CoinGecko, the majority of DeFi-related tokens are still in the depths of bear market lows. This category of crypto assets has a market capitalization share of just 3.4%.

Native tokens for some former darlings of DeFi, such as Aave, Curve DAO (CRV) and Uniswap, remain more than 80% down from their all-time highs despite the border crypto market being down just 22% from its 2021 peak.

Ever since Democrats coup’d Joe Biden into stepping aside, they’ve done their best to shield frontrunner Kamala Harris from opening her mouth (a difficult ask), lest she remind everyone that she’s actually an idiot whose vocabulary relies on a very limited random word generator.

Point in case – Harris was caught on camera in the wild – where she gave an unscripted answer while she and President Joe Biden greeted three American citizens and one permanent resident who arrived home after a prisoner exchange with Russia on Thursday.

“This is just an extraordinary testament to the importance of having a president who understands the power of diplomacy and understands the strength that rests in understanding the significance of diplomacy,” said Harris, using so many words to say so little.

KAMALA — UNSCRIPTED FOR THE FIRST TIME:

“This is just an extraordinary testament to the importance of having a president who understands the power of diplomacy and understands the strength that rests in understanding the significance of diplomacy.”

WHAT? pic.twitter.com/lxlhhG1xhT

— RNC Research (@RNCResearch) August 2, 2024

Thursday’s exchange of 24 prisoners was the largest such swap since the Cold War, and included Wall Street Journal reporter Evan Gershkovich and former Marine Paul Whelan and 14 other individuals who were being held in Russia, in exchange for 8 held by the west – including a Russian assassin and two hackers being held in the US, Germany, Norway, Slovenia and Poland.

The plane carrying the formerly detained Americans landed at Joint Base Andrews in Maryland at around 8PM local time.

Whelan, a 54-year-old ex Marine, was sentenced to 16 years in 2020 after being detained two years earlier on suspicion of spying. Both were freed Thursday as part of the East-West prisoner swap – the largest since the Cold War.

After being freed from their Russian cells, the former prisoners took a four-hour flight from Moscow to Ankara. They then boarded a plane for a 10-hour trek back to the US.

She was seen running into the arms of her family Thursday, after embracing both Kamal Harris and Joe Biden upon exiting the plane.

But it was Whelan who disembarked first, followed by Gershkovich, and then Kurmasheva. All three were seen giving Harris and Biden handshakes before blissfully running into the arms of their respective families.

…

The prisoners were seen speaking with the president and vice president on the landing strip as onlookers cheered, in a display that, instead of occurring in private, was aired for the world to see.  –Daily Mail

On Friday, former President Trump said that the swap marked a victory for Russian President Vladimir Putin, and said he would have cut a better deal if he was in the White House.

“Well, as usual, it was a win for Putin…But we got somebody back. So, I’m never going to be challenging that. It wouldn’t have happened with us,” Trump told Fox Business. “We wouldn’t have had to let some of the great killers of the world go.”

Trump to Bartiromo on prisoners coming home: “Well, as usual it was a win for Putin, or any other country that deals with us. But we got somebody back so I’m never gonna be challenging that. It wouldn’t have happened with us” (One of the prisoners was taken while Trump was POTUS) pic.twitter.com/UZwwgMI5hq

— Aaron Rupar (@atrupar) August 2, 2024

Authored by Andrew Korybko via substack,

Russia and the West exchanged 24 prisoners on Thursday in the largest such swap since the Old Cold War. The Wall Street Journal (WSJ) and CNN published detailed reports about the diplomacy that led up to this deal, which included the WSJ’s Evan Gershkovich and Russia’s Vadim Krasikov as the highest-profile exchanges. The New York Times also shared brief bios about the others who were swapped.

Here are the top five takeaways from this historic deal that most observers might have missed:

1. Germany Was Responsible For Holding Everything Up

Russia conveyed that it won’t agree to any swap without the release of Vadim Krasikov, who was jailed in Germany for assassinating a Chechen terrorist that President Putin told Tucker Carlson had driven his car over the heads of Russian prisoners, among his other crimes. Germany balked for a while though due to the “morality” of releasing a convicted killer that’s serving a life sentence, but the US convinced it to go along with this, especially since Russia and Belarus agreed to release jailed Germans as part of the deal.

2. Poland, Slovenia, and Norway Chipped In But Got Nothing In Return

A total of four Russians who were imprisoned in the aforementioned countries were also released even though their governments didn’t get anything in return. This suggests a concession on the West’s part, albeit one that enabled Russia to make its own such concession that’ll be touched upon in the next point for turning this deal into the largest one in decades. Those three Western countries are presenting this as an “act of solidarity”, but it’s really proof of the US’ hegemonic power over them.

3. A Russian “Government-In-Exile” Will Likely Soon Take Shape

Eight members of Russia’s non-systemic “opposition” were also sent to the West as part of this deal. They’ll predictably soon set up a “government-in-exile”, which might generate lots of media attention but fail to have any influence inside of Russia. Their inclusion in this swap made it appear more “moral” in Germany’s eyes and thus helped convince it to agree. It can also be understood as a reciprocal concession for freeing the four Russians mentioned above from Poland, Slovenia, and Norway.

4. Turkiye’s Role In Facilitating This Swap Positions It To Host The Next Round Of Peace Talks

For as noble as China, India, and Hungary’s efforts are in trying to mediate a resolution to the Ukrainian Conflict, Turkiye has a much better chance of doing so than they do. Its role in facilitating this latest swap builds upon the earlier ones that it facilitated, which show that Russia and the West still regard it as a neutral middleman. This suggests that they’d agree to it hosting the next round peace talks along the lines of spring 2022’s ultimately sabotaged ones once all parties are ready instead of looking elsewhere.

5. Kamala Will Try Politicizing This Swap To Discredit Trump

Trump claimed earlier this spring that only he could secure Gershkovich’s release and that he’d get Putin to agree to this as a favor without receiving anything in return, yet the this week’s historic swap proved him wrong. In response, Trump suggested that the deal was lopsided despite the West getting twice as many people as Russia did, and he also speculated that cash was paid for them too. Kamala will certainly try politicizing this swap to discredit Trump, but it’s unclear whether voters will care all that much.

*  *  *

Altogether, each side in this swap got what they wanted, and it represents a rare example of successful New Cold War diplomacy. Reflecting on the top five takeaways, the last two are the most significant, but neither can be taken for granted with respect to Turkiye hosting the next round of peace talks (let alone anytime soon) and Kamala’s politicization of this swap having any effect on the presidential race. Even so, they’re what observers should monitor to see whether anything meaningful comes of them.