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Mission Grey Daily Brief - October 26, 2024

Summary of the Global Situation for Businesses and Investors

The war in Ukraine continues to dominate global affairs, with North Korean troops moving towards the frontline and Russian forces suffering record casualty rates. Elon Musk is accused of having close ties with Vladimir Putin, withholding Starlink access from Taiwan as a favour to China. US Treasury Secretary Janet Yellen announced new sanctions targeting secondary entities in countries supplying Russia with critical items for its military. Belarusian President Alexander Lukashenko threatened war if Russia attempts to annex Belarus. South Korea is threatening to arm Ukraine in response to North Korea's support for Russia. Putin hosted the BRICS summit in Russia, praising its role as a counterbalance to the West's "perverse methods", and pushing for the creation of a new payment system as an alternative to the SWIFT network. Israel launched a retaliatory strike on Iran.

Russia's War in Ukraine

The war in Ukraine continues to be a major concern for businesses and investors, with the conflict entering its 975th day and Russian forces suffering record casualty rates. North Korean troops are moving towards the frontline, posing a significant threat to Ukraine's defence. Vladimir Putin is pulling Kim Jong Un deeper into the war, revealing a weakness in the Kremlin's ability to recruit troops at home. North Korea's infusion of fresh soldiers will remain practically risk-free for Pyongyang, unless the United States returns to its aggressive sanctions posture against the Kim regime. Russia is no stranger to employing foreign armies, with Cossack warriors famously fighting for the tsars in centuries past and the Red Army bolstering its ranks with Mongolian troops when it invaded China at the end of World War II. Today, the "TikTok soldiers" of Chechen warlord Ramzan Kadyrov are scattered across Ukraine's front lines.

After nearly three years of fighting, Putin is running low on cannon fodder. The Kremlin is finding it difficult and expensive to entice more of Russia's poor and desperate to sign up for the war, even with promises of bonuses and good pay. In theory, Moscow could force millions of its fighting-age men into the Ukrainian meat grinder through conscription, but this option is politically perilous. The Putin regime discovered the dangers of the draft when it briefly attempted a "partial mobilization" in September 2022, with Russians responding with howls of opposition. The government quickly backed off of the effort, informing many that their call-up orders were issued by "mistake". Since then, Russia has relied on mercenary groups and lucrative payouts to make the "golden handshake" in exchange for military service in Ukraine. Even these enticements are proving to be insufficient for the Kremlin's manpower needs.

By providing fresh troops to Russia, North Korea will likely help to backfill some, but not all, of Moscow's gaps. US Defense Secretary Lloyd Austin warned the news is a "very, very serious issue", but cautioned that the precise contribution of Pyongyang's troops remained unknown. For the Kim regime, support for Russia has many strategic benefits and few risks. First, protection from United Nations sanctions. Russia has used its Security Council veto to repeatedly shield North Korea from international monitoring and penalties for its prohibited missile tests and nuclear weapons development. Second, a security guarantee from the world's largest nuclear power. This summer, Moscow and Pyongyang agreed to a NATO-style mutual defense pledge, promising to aid each other in the event of war. Third, North Korea's troops will gain valuable combat experience if they survive. Finally, and perhaps most importantly, the Kim regime will likely benefit from Russian technology transfers that could greatly accelerate its missile and nuclear programs.

In exchange, the costs to North Korea are a pittance. An expeditionary force of roughly 12,000 soldiers is small potatoes compared to Kim's million-man army. His related shipments of around three million artillery shells to Russia is also a small fraction of his total stockpile. The danger to Ukraine is great, however, with a senior Ukrainian official stating that the addition of North Korean artillery on the battlefield has been "much worse than the Shaheds", the Iranian-designed kamikaze drones that Russia is using to pound Kyiv's troops and infrastructure.

Elon Musk's Alleged Ties with Vladimir Putin

Elon Musk is accused of having close ties with Vladimir Putin, withholding Starlink access from Taiwan as a favour to China. The Wall Street Journal reported that Putin asked Musk to withhold Starlink from Taiwan as a favour to China's Xi Jinping, with unnamed officials stating that Musk has been in regular contact with Putin since 2022. The Journal reported that in late 2023, Musk received his first request from the Kremlin to refrain from activating Starlink over Taiwan, citing a former Russian intelligence officer. The request was made for Beijing's sake, as Moscow increasingly relied on trade from China. Based on The Journal's findings, it's unclear exactly how many times Putin or his administration asked Musk for the favour.

The Chinese embassy in Washington told The Journal that it was not aware of the specifics of this arrangement, and did not respond to a separate request for comment sent outside regular business hours by Business Insider. Taiwan does not have official Starlink access because its laws require satellite services to be provided through a joint venture with a local operator that maintains majority ownership. The New York Times reported that SpaceX was unwilling to accept such an arrangement, and the self-governed island is thus creating its own low-earth orbit satellite network. Musk's reported conversations with Putin coincide with his apparent shift in rhetoric toward Ukraine in late 2022. Until that point, the billionaire had vocally supported Kyiv, providing it with 15,000 Starlink terminals.

In October of that year, he began seeking funding from the Pentagon to continue the free services, tweeting that they were taking a financial toll. Musk also tweeted a poll that month about a peace plan reflecting some of Russia's war demands at the time, including Russia's formal obtaining of Crimea and a guarantee of Ukraine's neutrality. The billionaire's post drew the fury of pro-Ukrainian accounts, but he added that he only suggested those measures to avoid further death in Ukraine and the risk of nuclear war. "Obviously, we are pro-Ukraine", he tweeted, saying that SpaceX had spent about $80 million on free Starlink for Ukraine. Two weeks later, Ian Bremmer, a political scientist who founded Eurasia Group, wrote in an email to his subscribers that Musk had spoken with Putin before tweeting this controversial peace plan. Per Bremmer, Putin had told Musk that if he could not accomplish his goals in Ukraine, he would turn to "major escalation". Musk and the Kremlin said Bremmer's report was untrue.

The allegations present awkward implications for the US, with Musk's SpaceX holding defense and space contracts with the Pentagon and NASA. An analysis published on Monday by The New York Times reported that the company has $3.6 billion in contracts with the Defense Department — primarily for launching American satellites into orbit — and $11.8 billion with NASA. Russian forces were reported to be buying up Starlink terminals earlier this year to help their invasion of Ukraine. The system has been vital to Ukrainian forces over the two-year conflict. But Russian agents are reportedly now using 'intermediaries' in Dubai in order to get their hands on the terminals, circumventing western sanctions imposed on Russia. House Democrats warned that Russia's use of the system in Ukraine could raise national security concerns in March. In a letter to SpaceX, two Democrats on the House Oversight Committee demanded information about Russia's potential illegal acquisition of the satellite-enabled terminals, according to the Washington Post. The letter cited recent allegations from Ukrainian intelligence officials, who say that Russian troops are using Starlink terminals to coordinate war efforts in eastern Ukraine, in potential violation of US sanctions.

As founder of SpaceX, Musk has cultivated close ties with US military and intelligence, with access to sensitive information. The company is the primary rocket launcher for both NASA and the Pentagon. Starlink has said it does not do any business in or with Russia, and Musk has branded claims of association with Putin "absurd". Dmitry Peskov, spokesperson for the Kremlin, insisted neither Putin nor the Kremlin were in regular contact with Musk. Musk has not yet commented on the claims published in the WSJ. The Kremlin today slammed the claims in the WSJ report as "not true" and "absolutely false". While Beijing remains officially neutral on the conflict between Russia and Ukraine, it has supported Putin's claims that the war was provoked by western aggression. The US this month imposed its first sanctions on Chinese firms for making weapons for Russia, accusing them of collaborating with Russian defence firms to produce drones vital to the war effort.

US Treasury Secretary Janet Yellen Announces New Sanctions

US Treasury Secretary Janet Yellen announced new sanctions targeting secondary entities in countries supplying Russia with critical items for its military. Yellen told world financial leaders gathered in Washington for annual meetings of the International Monetary Fund (IMF) and World Bank that "We will unveil strong new sanctions targeting those facilitating the Kremlin's war machine, including intermediaries in third countries that are supplying Russia with critical inputs for its military". The IMF and World Bank meetings mark the last major international finance gathering to be held during President Joe Biden's administration and come as the state of the economy and inflation are top concerns for American voters. The presidential election between the Republican party nominee, former President Donald Trump, and Democratic party nominee Vice President Kamala Harris is slated to be decided on November 5, with the outcome expected to have an enormous impact on global finance and the world's economy.

Yellen touched on the use of the proceeds from frozen Russian sovereign assets to provide loans for Ukraine. As she spoke, the European Parliament approved a loan of up to 35 billion euros ($38 billion) for Ukraine's defense and reconstruction that will be repaid using future revenues from Russian central bank assets frozen abroad. Yellen referred to the overall $50 billion loan package being negotiated by the Group of Seven and EU allies, saying the United States expects to be able to contribute $20 billion. The U.S. Treasury Department is "working tirelessly to unlock the economic value of frozen Russian sovereign assets to aid Ukraine", Yellen said. Earlier on October 22, Britain announced its readiness to provide Ukraine with a loan of<co: 2>Earlier on October 22, Britain announced its readiness to provide Ukraine with a loan of


Further Reading:

As North Korea, Iran and China support Russia’s war, is a ‘new axis’ emerging? - CNN

If South Korea decides to get involved in Ukraine, it has powerful options - Business Insider

Israel launches retaliatory strike on Iran - Financial Times

Lukashenko warns of war if Russia attempts to annex Belarus - RBC-Ukraine

MEPs Denounce Azerbaijan's Rights Violations Ahead Of Key Conference - Radio Free Europe / Radio Liberty

North Korea’s troops reveal Putin’s Ukraine pickle — no more cannon fodder - New York Post

Putin 'asked Elon Musk to switch off internet over Taiwan as a favour to China' - Daily Mail

Putin hosts growing BRICS alliance in Russia, touting it as an alternative to the West's "perverse methods" - CBS News

Putin once asked Elon Musk to not activate Starlink over Taiwan as a favor to Xi Jinping: report - Business Insider

Russo-Ukrainian War, day 975: Russian forces suffer record casualty rates as North Korean troops move towards the frontline - Euromaidan Press

Ukraine calls on North Korean soldiers to surrender and promises safety, food and medical care - Euronews

Vance says it is Ukraine's decision to end the war - NBC News

Vladimir Putin signals North Korean troops are in Russia - Financial Times

Themes around the World:

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Kredi notu, bankacılık dayanıklılığı

Fitch, çatışma kısa sürerse Türkiye’nin kredi ve bankacılık risklerinin yönetilebilir kaldığını; ancak yüksek petrol fiyatlarının enflasyonu ve dış dengeyi bozabileceğini vurguladı. Bankaların likidite/sermaye tamponları olumlu, fakat şoklar uzarsa yeniden fiyatlama ve refinansman maliyetleri yükselir.

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Domestic Supply And Export Controls

Damage to refineries and export terminals is pushing Moscow to consider measures such as renewed gasoline export bans to protect the domestic market. Such interventions can abruptly disrupt product availability, pricing, and fulfillment for industrial users, distributors, and regional supply chains tied to Russia.

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Tech M&A and capital recycling

Large exits and defense-linked demand keep Israel’s tech ecosystem investable but sensitive to security and governance headlines. The Wiz deal (about $32bn) implies significant liquidity for founders and employees, while war uncertainty and talent outflows can reshape valuations and hiring plans.

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Persistent Imported Inflation Pressures

Core inflation has remained above the BOJ’s 2% target for nearly four years, reinforced by weak-yen import costs and higher energy prices. Companies operating in Japan should expect continued wage pressure, pricing adjustments, and tighter scrutiny of procurement and consumer demand resilience.

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Fiscal Credibility and Risk Premium

Fiscal discipline remains central to Brazil’s risk outlook, with policymakers warning that uncertainty over debt stabilization and reform momentum can sustain higher risk premiums, weaker confidence, and elevated borrowing costs, shaping capital allocation, exchange-rate expectations, and infrastructure financing conditions.

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Rare earth price floors and contracts

New offtake structures, including a ~$110/kg NdPr floor price and long-duration supply commitments through 2038, aim to stabilize investment economics outside China. Japanese buyers secure supply but may face structurally higher magnet costs, altering EV, electronics, and defense bill-of-materials.

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Security and organized crime logistics

Cartel violence and insecurity remain a core operational risk, affecting trucking corridors, warehouses, and employee safety. High-profile enforcement actions can trigger localized disruption and heightened scrutiny at borders, raising insurance costs, transit times, and the need for robust security protocols.

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Foreign Investment Security Screening

US market access remains attractive, but security-led scrutiny of foreign capital is intensifying. CFIUS-style logic is spreading globally and US debate over Chinese investment is hardening, raising transaction risk, longer approval timelines, and governance requirements for cross-border mergers, technology deals, and greenfield projects.

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Energy Cost Shock Intensifies

UK businesses remain exposed to severe energy-price volatility, worsened by Middle East disruption. Forecasts suggest electricity costs could rise 10%-30% and gas 25%-80%, squeezing margins, disrupting contract planning, weakening manufacturing competitiveness and complicating site-selection decisions for energy-intensive investors.

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Port, rail and “dry canal” logistics shifts

Expanding gateways are reshaping routing options. Lázaro Cárdenas is adding capacity (APM Terminals Phase III: 6.2bn pesos/US$350m) while the Isthmus of Tehuantepec interoceanic corridor targets ~1.4m TEU/year and under‑6‑hour cross‑Mexico transfers, diversifying Panama Canal exposure.

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Gas Supply and Production Gap

Domestic gas output is around 4.2 billion cubic feet per day against demand near 6.2 billion, leaving Egypt reliant on LNG and pipeline imports. Arrears repayments and new discoveries may support upstream investment, but supply tightness still threatens industrial continuity.

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Fuel Subsidies Distort Energy Economics

Jakarta will keep subsidized fuel prices unchanged even with oil above US$100 per barrel, absorbing costs through the budget. This cushions short-term consumer demand and logistics costs, but increases fiscal strain and policy risk for energy-intensive businesses.

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Vision 2030 Reform Momentum

Economic reforms continue to improve Saudi Arabia’s investment climate, with GDP nearing SAR 4.7 trillion, non-oil sectors at 56% of GDP, and total investment rising to SAR 1.44 trillion in 2024, supporting long-term foreign business expansion.

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Fuel Shock and Inflation Risks

Oil disruption linked to Middle East conflict is pushing Brent above $100 and implies steep April fuel hikes of roughly R4 per litre for petrol and nearly R7 for diesel. Higher transport and input costs threaten margins, inflation, consumer demand and operating budgets.

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US Trade Pressure Escalates

Relations with Washington have become a material trade risk. A Section 301 investigation and prior 30% US tariffs on steel, aluminium and autos threaten AGOA-linked sectors, especially vehicles, agriculture and wine, increasing market-access uncertainty and export diversification pressure.

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Strategic Industrial Upgrading Push

Taiwan is leveraging AI, semiconductors, drones, robotics, and advanced manufacturing to deepen trusted-partner supply chains. Strong inbound interest from Nvidia, AMD, Amazon, Google, and others supports opportunity, but also raises competition for talent, power, land, and industrial infrastructure capacity.

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Energy shock and price volatility

Iran conflict disruption risks have lifted oil and gas prices, raising UK inflation outlook and business input costs. Ofgem cap could rise to about £1,801 from July (≈+£160). Low gas storage increases exposure, impacting manufacturing, logistics and consumer demand.

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Trade Diversion Toward Europe

China’s trade patterns are shifting as exports of rare earth magnets and other strategic goods tilt away from the US and toward Europe. For multinationals, this suggests changing tariff exposure, partner dependence and logistics routing, with greater regionalization across procurement and sales networks.

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Energy Import Vulnerability Repricing

Taiwan imports about 96% of its energy and remains exposed to maritime disruption and LNG price shocks. Although authorities say gas supply is secured through May, conflict-driven volatility is forcing companies to reassess power resilience, fuel sourcing and operating cost assumptions.

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Power Security Constraining Industry

Rapid industrial growth is colliding with energy constraints as electricity demand rises 8–10% annually, outpacing supply. Narrow reserve margins, grid congestion, and delayed renewables risk rationing, higher operating costs, inflation pressures, and weaker confidence among export manufacturers and foreign investors.

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Selective maritime corridors and diplomacy

Iran is reportedly allowing passage for certain third-country shipping after negotiations (e.g., India’s LPG carriers), effectively creating “safe corridors” close to Iran’s coast. Trade flows may hinge on diplomatic engagement, political signaling, and opaque rules—complicating logistics planning and charters.

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Outbound M&A and megadeal momentum

Governance pressure and cheap financing are driving record-scale Japanese deals, including take-privates and overseas acquisitions. Rising deal flow boosts integration and leverage risks but creates entry points for foreign partners, suppliers, and private capital across industrial and tech assets.

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Hormuz Shipping Disruption Risks

Conflict-driven restrictions in the Strait of Hormuz have sharply disrupted commercial traffic, with roughly 20 vessels attacked and normal daily passages far below prewar levels. Higher freight, insurance and rerouting costs are creating immediate trade, supply-chain and operational exposure across energy-intensive sectors.

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China semiconductor supply-chain bans

A proposed FAR rule implementing NDAA Section 5949 would bar US federal procurement of electronics containing “covered” semiconductors linked to entities such as SMIC, YMTC, and CXMT, with certifications and 72‑hour reporting. Contractors must map components and redesign supply chains ahead of 2027 deadlines.

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Sector Tariffs Hit Industrial Exports

U.S. tariffs continue to weigh on strategic Mexican exports, especially autos, steel and aluminum. Steel exports reportedly fell 53% under 50% U.S. duties, while automotive parts tariffs are raising supplier costs and complicating pricing, production planning and cross-border investment decisions.

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Gaz hub’ı, transit politikası

Avrupa’nın Rus gazını aşamalı bitirme planı ve TurkStream’in kritik rolü, Türkiye’yi ‘gaz hub’ı senaryolarında merkez yapıyor. AB’nin Türkiye üzerinden yeniden ihracatı izleme niyeti, enerji ticareti, depolama ve uzun vadeli kontratlarda düzenleyici/uyum belirsizliği yaratıyor.

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Manufacturing Strategy Gains Urgency

Policymakers increasingly view manufacturing expansion as essential for jobs, exports, and macro stability as AI threatens India’s $254 billion IT-services engine. Electronics output has risen 146% since 2020-21 and mobile exports eightfold, but tariff, land, power, and compliance frictions still constrain scale-up.

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Energy Policy Constrains Private Capital

Energy remains a sensitive issue in Mexico’s talks with Washington and a persistent concern for investors. Although authorities cite a 54% CFE and 46% private participation model, unclear permitting and state-centered policy continue to restrict private power, renewables and industrial project development.

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Industrial Overcapacity Trade Backlash

China’s export-led industrial model is intensifying foreign backlash, especially in EVs, batteries, metals and machinery. US investigators are targeting alleged excess capacity, while persistent price competition and overseas expansion by Chinese firms increase tariff, anti-dumping and localization risks.

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High Capital Costs Constrain Investment

Despite the rate cut, Brazil still maintains one of the world’s highest real interest rates, while transmission-sector equity cost estimates rose to 12.50%. Expensive capital can deter smaller entrants, compress project returns and slow expansion plans in infrastructure and industry.

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Energy Infrastructure Under Persistent Attack

Russian strikes continue to hit power, oil and gas assets, causing outages across multiple regions and industrial power restrictions. Grid damage, generation deficits and recurring blackouts raise operating costs, disrupt production schedules, and increase demand for backup power investment.

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Digital regulation and data flows

US scrutiny of Korean digital rules is rising alongside domestic privacy reforms on cross-border data transfers. With over 65% of AmCham survey respondents calling regulation restrictive, platform governance, mapping data, and AI data rules could materially affect tech, cloud, and e-commerce firms.

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Inflation and Shekel Pressure

Oil above $100 a barrel, a weaker shekel and fuel-price pressures threaten to lift inflation by about one percentage point, reducing chances of near-term rate cuts and increasing hedging, financing and pricing challenges for importers and exporters.

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State ownership policy and privatization push

Cairo is updating the State Ownership Policy to expand private participation, including integrating state entities into the budget, removing preferential treatment, and clarifying commercial activities. If implemented credibly, this could open M&A and PPP opportunities, while execution risk and governance remain key.

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China trade exposure and diversification

Australia’s trade remains highly exposed to China while geopolitics intensifies across energy, minerals, and security. Reports note China’s outbound critical-minerals push and an 85% fall in China FDI into Australia since 2018, accelerating diversification to G7/Indo-Pacific partners and reshaping market access.

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Inflation Keeps Rates Elevated

Urban inflation rose to 13.4% in February, prompting expectations that the central bank will keep rates at 19% for deposits and 20% for lending. Persistently high borrowing costs, fuel pass-through, and weaker household demand weigh on investment decisions and consumer-facing sectors.