By Michael Every of Rabobank

Love and Death

I look at the world this morning and wonder how to fit what is going on into two pages, for markets who prefer two bullet points of two words each. So, I turn to Woody Allen’s 1975 movie ‘Love and Death’, an homage to 19th century Russian literary genius, for help:

NATASHA: It's a very complicated situation, Cousin Sonja. I'm in love with Alexei. He loves Alicia. Alicia's having an affair with Lev. Lev loves Tatiana. Tatiana loves Simkin. Simkin loves me. I love Simkin, but in a different way than Alexei. Alexei loves Tatiana like a sister. Tatiana's sister loves Trigorian like a brother. Trigorian's brother is having an affair with my sister, who he likes physically, but not spiritually.

SONJA: Natasha, it's getting a little late.

NATASHA: The firm of Mishkin and Mishkin is sleeping with the firm of Taskov and Taskov.

SONJA: Natasha, to love is to suffer. To avoid suffering, one must not love. But then one suffers from not loving. Therefore, to love is to suffer. Not to love is to suffer. To suffer is to suffer. To be happy is to love. To be happy, then, is to suffer, but suffering makes one unhappy. Therefore, to be unhappy one must love, or love to suffer, or suffer from too much happiness… I hope you're getting this down.

NATAHSA: I never want to marry. I just want to get divorced.

President Trump suggested 25% US tariffs on Mexico and Canada could be delayed to April, then aides said they begin as scheduled March 4; then Trump said the EU, “which was set up to screw us”, will get tariffed at 25% rate in April too. Those who want to see March becoming April, then May, etc., did, and MXN and CAD swung; others still see high US tariffs loom, and when they finally hit, it will be USD that rallies.

The Fed’s Bostic said the Fed Funds rate needs to stay where it is for now, and “We need to be in a restrictive posture.” The timing seems odd when DOGE is slashing and burning, and market fears about recession are rising again – but then again, so are consumer inflation expectations. With the US 10-year yield at 4.28% at the time of writing vs. a high of 4.79% on January 14, maybe the White House can live with that Fed stance… for now.

Ukraine says the minerals deal it’s to sign with the US depends on a security guarantee - which doesn’t seem guaranteed given it hasn’t been negotiated yet. 24-hours ago, the deal allowed Ukraine “to fight on”: does it? Uncomfortably for many analysts, the bottom layer of the Maslow --and current market-- pyramid is not really AI, or love of profits, but fear of death.

EU Commission President Von der Leyen is pushing a pan-European defence mechanism for key platforms and loosening fiscal rules to allow defence spending. European leaders will meet in London on March 2 and Brussels on March 6 to discuss these joint plans.

VdL is also pushing a €100bn Clean Industrial Deal to go green, not khaki. However, EU bureaucratic acronyms take time to slot into place while steel and aluminium firms needed for the military face high energy costs and global competition, and defence doesn’t think about the environment or emissions in the green sense. As Politico puts it, ‘Europe’s impossible choice: Which industries should survive the green transition?’

Poland says if Germany doesn’t want US troops based there, it will take them instead, as Berlin says it wants independence from the US and moots an extra €200bn in defence spending. Fort Trump is calling.

Far-right Romanian presidential candidate Georgescu, whose first-round victory saw the election cancelled, has been detained on suspicion of false statements regarding campaign finance, illegal possession of weapons, and initiating or establishing an organization "with a fascist, racist or xenophobic" character. Will there be more US-EU tensions over this?

The US told Chevron to pull out of Venezuela, suggesting a hardline Monroe Doctrine, as whispers are that any loss of oil output on that front can be compensated for by the Middle East.

We got a bizarre video of golden Trump statues and bearded belly dancers in “Trump Gaza” posted on the US President’s social media account. Yet the ludicrousness of the imagery perhaps sent a serious message too: why has the region constantly defaulted to the equally ludicrous status quo ante? That’s as The Wall Street Journal reports, ‘A Decimated Hamas Prepares for a New Fight With Israel’.

Iran may now have enough processed uranium for six nuclear bombs, though we’ve heard similar for years: then again, previously Iran and Israel hadn’t already directly attacked each other, and Hamas, Hezbollah, and Syria were in-between the two. Another source says autumn 2025 is the Israeli deadline for a strike on those sites if no deal can be agreed. Israel also insists on the demilitarisation of southern Syria, protecting Druze there and, at a stretch, potentially opening a corridor to the Kurds in the north. That’s as rumors are the Kurdish PKK may end their 40-year civil war vs Turkey, opening new possibilities for a post-civil war Syria.

Trump played his cards close to his chest over Taiwan in response to being asked if he would defend it, distancing himself from President Biden in that regard. However, if one looks at US actions and statements from Secretary of State Rubio, US grand macro strategy is now about looking to China. Almost everything we are seeing around us is still a reflection of that, from Ukraine to NATO to reaching out to Russia, to the new Monroe Doctrine, to tariffs to DOGE. The US will not just be singing ‘YMCA’ soon, but ‘In the Navy’, and songs from ‘South Pacific.’

Indeed, there’s lots more love-and-death geopolitics today:

• Financial Times editor Martin Wolf says the US is now “the enemy of the West”, as Jeff Bezos says the Washington Post is now for “personal liberties” and “free markets”, which seems quite Western to some – though context obviously matters.
• US and Russian representatives are in Istanbul to talk Ukraine without Ukraine or Europe. Martin Wolf adds Europe must rise to the current occasion or “disintegrate” and “be picked apart by world powers.” Indeed, markets are getting ahead of themselves on the Eastern front, failing to account for the risk that we get a frozen conflict in which the EU and Russia rearm for round two, rather than Russia selling Europe cheap gas and all watching Dr. Zhivago together.
• UK PM Starmer visits President Trump hoping for US support on Ukraine - not the “Can we have a free-trade deal, please?” mission he was originally hoping for.
• VdL visits India looking to make large friends, fast. Recall the US is now backing the India-Middle East-Europe Corridor (IMEC), which works against China’s interests, and will offer huge gains to both ends, while requiring stability in the middle - including Iran, Syria, and Gaza.

Like I said, it’s all a lot to take in and too much one still has to leave out. But I leave you on the latter part of ‘Love and Death’:

BORIS: “How I got into this predicament I'll never know. Absolutely incredible. To be executed for a crime I never committed. Of course, isn't all mankind in the same boat? Isn't all mankind ultimately executed for a crime it never committed? The difference is that all men go eventually, but I go six o'clock tomorrow morning. I was supposed to go at five o’clock, but I have a smart lawyer.”