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
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
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:
Infrastructure Development and Logistics
Turkey's investments in infrastructure, such as ports, highways, and logistics hubs, enhance its role as a trade corridor between Europe and Asia. Improved logistics capabilities facilitate supply chain efficiency, reduce transit times, and attract global companies seeking regional distribution centers.
Labor Market and Human Capital Challenges
Conflict-induced displacement and workforce disruptions affect labor availability and productivity. Skilled labor shortages and demographic shifts challenge businesses' operational capacity and necessitate adjustments in human resource strategies to maintain competitiveness.
Strategic Focus on Technology and Sustainability
France prioritizes investments in data centers, AI, renewable energy, and circular economy projects. These strategic sectors receive significant funding to enhance digital sovereignty, ecological transition, and innovation, aiming to boost competitiveness and align with global sustainability trends.
Trade Agreements and Economic Partnerships
Japan's active participation in regional trade agreements like the CPTPP and RCEP enhances market access and regulatory harmonization. These frameworks facilitate smoother trade and investment flows but require businesses to comply with evolving standards and competitive pressures.
Hyperinflation and Economic Instability
Venezuela faces soaring inflation rates nearing 500%, with projections up to 682% in 2026, risking a return to hyperinflation. This severely erodes purchasing power, disrupts business operations, and complicates financial planning, deterring investment and destabilizing supply chains. Persistent fiscal deficits and currency depreciation exacerbate economic fragility, impacting both domestic and international stakeholders.
Emergency Investment Plan Initiatives
In response to economic slowdown, President Sheinbaum is collaborating with business leaders to develop an emergency investment plan focusing on infrastructure, housing, and connectivity. The proposed Infrastructure Investment for Wellbeing Law aims to mobilize private capital for socially beneficial yet profitable projects, seeking to stimulate growth and counteract recessionary pressures.
Israel's Military-Tech Exports to Latin America
Israel exports advanced military and surveillance technologies to Latin America, including predictive monitoring and riot-control vehicles. These exports extend Israel's geopolitical influence and open new markets but raise ethical concerns about repression and human rights, potentially affecting Israel's international trade relations and reputation.
Real Estate Market Recovery and Policy Reforms
Cairo's real estate sector rebounds due to government reforms, interest rate cuts, and ambitious FDI targets aligned with Egypt Vision 2030. Increased demand for office and residential spaces, supported by infrastructure development and urban expansion, attracts both multinational corporations and domestic investors, enhancing the sector’s role in economic growth and capital inflows.
German Manufacturing Sector Crisis
Approximately 8-15% of German manufacturing firms are in critical distress amid ongoing recessionary pressures. Factors include high energy costs, supply chain disruptions, and weak global demand. Output has contracted over 12% since early 2023, marking the deepest slump since 2008, with significant layoffs anticipated, particularly in automotive and energy-intensive industries.
Economic Contraction and Trade Impact
Japan's economy contracted 1.8% in Q3 2025, driven by declining exports amid rising U.S. tariffs and sluggish domestic demand. The contraction signals broader global trade disruptions, pressuring Japan's export-oriented industries, especially automotive, and raising concerns about prolonged economic stagnation and recession risks.
GBP Volatility and Currency Market Risks
UK budget uncertainty has heightened GBP volatility, creating a fiscal risk premium that unsettles forex markets. This volatility affects import costs, export competitiveness, and investor risk management strategies, with ripple effects across global financial markets including equities, bonds, and cryptocurrencies.
Agricultural Export Disruptions
Ukraine, a major global grain supplier, faces export challenges due to blocked ports and logistical constraints. This disrupts global food supply chains, elevates commodity prices, and compels businesses to seek alternative sourcing strategies, affecting international trade dynamics and food security concerns.
T-MEC Review Risks
The upcoming 2026 review of the US-Mexico-Canada Agreement (T-MEC) is the foremost risk for Mexico's economy, creating uncertainty that delays investment decisions and affects trade flows. While some negotiation issues are expected, the treaty is likely to pass with limited disruption. However, potential tariff changes and political tensions could impact Mexico's trade-dependent sectors and investor confidence.
Digital and AI Disruption in Business Landscape
Accelerating digital transformation and AI adoption are reshaping Thailand’s business environment. While AI offers growth potential, concerns about an AI bubble and cautious corporate investment amid economic uncertainty may lead to job losses and reduced innovation, affecting competitiveness and long-term economic resilience.
Tariff Anxiety and CFO Uncertainty Premium
US CFOs report that policy volatility, including tariffs and regulatory unpredictability, imposes a 6% revenue drag despite price increases. Firms with significant global supply chains face amplified margin erosion and operational disruptions. This elevated uncertainty premium affects capital allocation, supplier diversification, and financial planning, underscoring the cost of geopolitical and trade policy risks on US business operations.
Economic Growth and Inflation Trends
Turkey's economy has expanded for 21 consecutive quarters with annual inflation declining to around 31%, the lowest in four years. This disinflation supports improved sovereign risk and investor confidence, potentially lowering borrowing costs and fostering a more stable environment for trade and investment.
Monetary Policy and Interest Rate Cuts
The Bank of Israel is poised to cut benchmark interest rates after nearly two years, responding to stable inflation and economic recovery. This move aims to stimulate growth but raises concerns about banking sector profits and consumer impacts. Interest rate adjustments will affect borrowing costs, investment flows, and financial market dynamics.
Infrastructure and Logistics Enhancements
Investments in transportation, ports, and digital infrastructure improve Israel's connectivity and supply chain efficiency. Enhanced logistics capabilities reduce costs and delivery times, benefiting exporters and importers alike.
Construction Sector Growth and Infrastructure Investment
Brazil’s construction market is expanding robustly, driven by urbanization, public-private partnerships, and sustainable development initiatives. Infrastructure projects in transport, energy, and utilities underpin economic growth and export competitiveness. However, inflationary pressures, regulatory inefficiencies, and labor shortages pose risks to project timelines and costs, affecting investment returns.
Stock Market Rally Driven by Major Conglomerates
Vietnam's stock market experienced a 36% gain in 2025, largely driven by Vingroup and its subsidiaries, which account for about three-fourths of the VN-Index's growth. While macroeconomic factors and trade agreements contribute, the outsized influence of key conglomerates highlights market concentration risks and the importance of diversified investment strategies for international investors.
Fiscal Policy and Taxation Challenges
France's fiscal situation is strained with high public debt (~115% of GDP) and a projected budget deficit of 5.4%. Proposed tax increases to reduce deficits face resistance from businesses fearing a negative impact on competitiveness. High effective tax rates (44%) burden businesses and consumers, limiting government revenue options and fueling social unrest, which may deter foreign and domestic investment.
U.S. Government Shutdown Impact
The historic 43-day U.S. government shutdown in 2025 caused significant economic drag, furloughing 900,000 federal workers and disrupting services. Despite this, markets showed resilience with the S&P 500 gaining 0.6% during the shutdown and a typical post-shutdown rally averaging nearly 17%. The event highlighted political risk but also tactical investment opportunities amid uncertainty.
Geopolitical Risks Impacting Energy Exports
Ukrainian attacks on Russian oil infrastructure and sanctions on major producers like Rosneft and Lukoil have disrupted oil exports, injecting volatility into global energy markets. These events elevate geopolitical risk premiums, complicate supply chains, and may reduce Russia's energy revenues, affecting its fiscal capacity and international trade relations.
Growth of Cyber Insurance Market
The South Korean cyber insurance market is expanding rapidly, driven by increasing cyber threats, stricter data protection laws, and rising awareness among businesses. Tailored insurance products combined with risk management services are becoming essential for sectors like finance and healthcare, reflecting the growing importance of cybersecurity in protecting supply chains and corporate operations.
Exchange Rate Volatility Drivers
The won's depreciation is fueled by structural factors including a widening interest rate gap with the US, record domestic liquidity, and surging overseas equity investments by Korean retail investors. These dynamics, combined with subdued foreign investment inflows and policy uncertainty, exacerbate FX volatility, complicating monetary policy and inflation control.
Bond Market Recovery and Sovereign Rating Upgrades
Pakistan's dollar bonds have delivered a 24.5% return in 2025, the highest in Asia, supported by sovereign rating upgrades from S&P and Fitch and plans to re-enter Eurobond markets in 2026. These developments signal improving fiscal discipline and reform momentum, enhancing market access and investor confidence despite regional geopolitical risks.
Prolonged U.S. Government Shutdown Impact
The historic 40+ day U.S. federal government shutdown in 2025 caused significant economic drag, furloughing 750,000 federal workers and disrupting services like air travel and food assistance. Despite short-term market volatility and consumer sentiment deterioration, equities showed resilience, with markets rallying post-resolution. The shutdown highlights political risk affecting U.S. economic growth and investor confidence globally.
Economic and Market Optimism Amid Challenges
Despite macroeconomic challenges like high interest rates and fiscal concerns, investor sentiment remains cautiously optimistic. The Ibovespa index shows strong performance, with projections of significant growth contingent on economic reforms and political developments. This optimism influences foreign investment flows and portfolio allocations in Brazil’s equity markets.
India's Economic Resilience Amid Global Uncertainty
India demonstrates robust economic resilience in 2025 despite global policy uncertainty, geopolitical tensions, and slowing growth in advanced economies. Supported by strong domestic demand, prudent monetary policy, and strategic trade diversification, India maintains steady industrial production and low inflation, positioning itself as a fast-growing major economy attractive for investment and trade.
Emergence of Quantitative Finance Sector
Israel is leveraging its technical talent and academic strengths to develop a burgeoning quantitative finance industry. Advances in AI and regulatory changes in the U.S. create opportunities for Israeli firms to export innovative financial models and technologies, diversifying the economy and attracting global capital.
Market Performance and Commodity Rally
South Africa’s equity market outperformed global peers in 2025, buoyed by a rally in precious metals like gold and platinum. Diversified mining companies and financial institutions offer attractive returns amid a commodity-driven upswing. However, underlying economic fundamentals remain weak, posing risks to sustaining market gains without broader economic recovery.
Financial Market Volatility and Risk Accumulation
Recent market volatility reflects deep-rooted financial risks including high corporate debt, shadow banking, and speculative asset bubbles in AI and cryptocurrencies. These systemic vulnerabilities pose risks to market stability and investor confidence, with potential spillovers into global trade and investment environments.
T-MEC Review Risks
The upcoming 2026 revision of the US-Mexico-Canada Agreement (T-MEC) poses significant uncertainty for Mexico's economy, particularly affecting investment flows and trade policies. While some experts predict controlled negotiations, the risk of sudden tariff changes and political tensions with the US could disrupt supply chains and dampen economic growth prospects.
Government Emergency Investment Plan
President Sheinbaum is collaborating with the private sector, including business magnate Carlos Slim, to launch an emergency investment plan focused on infrastructure, housing, and connectivity. The plan involves new legislation to mobilize private capital for socially beneficial yet profitable projects, aiming to counteract economic slowdown and stimulate growth through public-private partnerships and increased infrastructure spending.
Technological Innovation and Start-up Ecosystem
Israel's robust tech sector, especially in cybersecurity, AI, and biotech, attracts significant foreign direct investment. This innovation hub drives global partnerships and enhances Israel's role in high-tech supply chains, offering lucrative opportunities for investors.
Canada-U.S. Trade Tensions and Tariffs
Persistent U.S. tariffs on Canadian exports, especially non-CUSMA goods, have strained trade relations, reducing competitiveness and investor confidence. Retaliatory tariffs imposed by Canada were rolled back on some goods, but high U.S. tariffs remain. This dynamic disrupts supply chains, impacts key sectors like autos and agriculture, and influences cross-border investment decisions.