Trump Approves F-35 Jets For Saudis, Stocks Losses Deepen | Daybreak Europe 11/18/2025

Here's a comprehensive summary of the provided YouTube video transcript:

Key Concepts

• Market Sell-off: A broad decline in equity markets across Asia, Europe, and the US.
• MSCI Asia Pacific Index: A benchmark index for Asian equities, which has fallen below its 50-day moving average.
• Moving Average: A technical indicator used to smooth out price data by creating a constantly updated average price.
• Bitcoin: A cryptocurrency that has experienced a significant price drop.
• F-35 Fighter Jets: Advanced stealth fighter jets manufactured by Lockheed Martin.
• Nvidia Earnings: Anticipated earnings report from the semiconductor company Nvidia, a key factor influencing tech stocks.
• US Jobs Data: Upcoming employment figures from the US, which are crucial for Federal Reserve policy decisions.
• Federal Reserve (Fed): The central bank of the United States, responsible for monetary policy.
• Interest Rate Cuts: Reductions in the Fed's benchmark interest rate.
• Treasuries: Government bonds, considered a safe-haven asset during market turmoil.
• Yields: The return an investor realizes on a bond.
• Yen: The currency of Japan, which has shown weakness.
• IPO (Initial Public Offering): The process by which a private company becomes public by selling shares to investors.
• Monetary Policy: Actions undertaken by a central bank to manipulate the money supply and credit conditions to stimulate or restrain economic activity.
• FOMC (Federal Open Market Committee): The principal monetary policymaking body of the Federal Reserve.
• Risk-Off Mood: A market sentiment characterized by investors seeking safety and avoiding riskier assets.
• Strategic Updates: Announcements by companies regarding their future plans and financial targets.
• Geopolitics: Political events and their impact on international relations and markets.
• Dubai Air Show: An aviation industry event featuring aircraft displays and deal-making.
• Bloomberg Africa Business Summit: An event focused on business and investment opportunities in Africa.
• Fiscal Headroom: The amount of financial flexibility a government has to spend or cut taxes.
• Gilt Markets: The market for UK government bonds.
• Return on Tangible Equity (RoTE): A profitability metric used to assess how effectively a company uses its tangible equity to generate profits.
• Cost-Income Ratio: A measure of a bank's efficiency, calculated by dividing operating expenses by operating income.
• Subsea Internet Cables: Underwater cables that transmit internet data.
• Ultra-Wealthy: Individuals with extremely high net worth.
• Inheritance Tax: A tax levied on the transfer of property from a deceased person to their heirs.
• Deposit Guarantee Scheme: A system that protects savers' deposits in case a financial institution fails.

Market Sell-off Deepens Across Global Equities

The primary story dominating the market is a deepening sell-off. The MSCI Asia Pacific Index has fallen below its 50-day moving average for the first time since April, indicating a significant shift in market sentiment. US and European futures are pointing to further losses, suggesting the downturn will continue.

• Specifics:

  • S&P 500 closed down 1% yesterday.
  • NASDAQ 100 fell by approximately 0.8%.
  • European futures are indicating losses of 1.1%.
  • FTSE 100 futures are looking to drop 113 points.
  • S&P 500 futures are pointing to losses of 0.5%.
  • NASDAQ 100 futures are looking at losses of 147 points.
  • The S&P 500 has fallen more than 3% since the end of October and broke below its 50-day moving average for the first time in 139 sessions.

• Key Drivers:

  • Anxiety surrounding Nvidia earnings, due on Wednesday.
  • Anticipation of crucial US jobs data on Thursday.
  • Concerns about the Federal Reserve's monetary policy, specifically the likelihood of a rate cut in December.

• Investor Behavior: Investors are seeking safe havens, leading to money moving into treasuries. The 10-year treasury yield is down two basis points.

Bitcoin Tumbles to Seven-Month Low Amidst Risk-Off Sentiment

The cryptocurrency market is experiencing a significant downturn, with Bitcoin tumbling to a seven-month low.

• Specifics:

  • Bitcoin has fallen below $90,000, trading at $89,862, down 2% in the session.
  • This level is significant as $90,000 was the average entry point for many retail holders of Bitcoin ETFs.
  • Bitcoin has pared its gains from its October all-time high of around $125,000, representing a roughly 30% drop in a short timeframe.
  • The cryptocurrency market is now in the red year-to-date.
  • Some traders are betting on $80,000 being the next key level for Bitcoin.
  • Approximately $400 billion of market cap has been wiped off Bitcoin month-to-date due to liquidations.

• Connection to Equity Markets: Bitcoin is described as a "canary in the coal mine" for the sell-off in equity markets, with the risk-off sentiment filtering into the crypto space.

Geopolitical Tensions and Diplomatic Efforts

Japan is stepping up diplomatic efforts to ease tensions with China following backlash over Prime Minister Fumio Kishida's comments linking a Taiwan Strait crisis with the possible deployment of Japanese troops.

• China's Reaction: Beijing has expressed a strong backlash, raising fears of a breakdown in economic ties.
• Japan's Stance: Prime Minister Kishida is unlikely to retract her statements, as she was elected on a platform of strong leadership and her cabinet enjoys a 70% approval rating. Japan is focusing on deploying multiple diplomatic channels to de-escalate the situation.
• Potential Economic Fallout:
  • Travel Advisory: China has already issued a travel advisory, which could significantly impact the 10 million Chinese and Hong Kong tourists visiting Japan annually.
  • Industry Targeting: Further escalation could target Japanese automakers, which rely on Chinese materials like rare earths and critical minerals.

US Approves F-35 Sale to Saudi Arabia Ahead of Trump-MBS Meeting

The US has given the go-ahead for Saudi Arabia to purchase F-35 fighter jets. This decision comes ahead of a meeting between President Trump and Crown Prince Mohammed bin Salman (MBS).

• Significance: This is a major concession to Saudi Arabia and is seen as a move to strengthen ties between Washington and Riyadh.
• Regional Balance: The F-35 is considered cutting-edge technology, and its possession by Saudi Arabia is expected to create a more balanced power dynamic in the Gulf region, alongside Israel's existing F-35 fleet.
• Competition: The F-35 is competing with Russian stealth fighters for Middle East defense budgets.

Corporate Updates and Strategic Plans

Several companies have announced strategic updates and deal-making activities:

• Crédit Agricole: The second-largest French bank has unveiled its first strategic plan under its new CEO.

  • Target: Net income of over €8.5 billion by 2028.
  • Target: Return on tangible equity of 14% by 2028.
  • Expectations for strong business growth outside France.

• Amundi: This French financial player has outlined its financial objectives through 2028.

  • Target: Earnings per share of over €7 by 2028.
  • Target: Payout ratio of at least 65% over 2025-2028.
  • Strategic Move: Taking a 9.9% stake in ICG (Intermediate Capital Group), a London-based private equity and credit specialist.

• Akzo Nobel: The paint company is entering an all-stock deal with competitor Axalta.

  • Deal Structure: An all-stock combination.
  • Special Dividend: Akzo Nobel will pay a special cash dividend of around €2.5 billion to its holders.
  • Exchange Ratio: Axalta holders will receive 0.65 shares of Akzo Nobel stock.
  • Combined Entity: The deal creates a coatings company with an enterprise value of approximately $25 billion USD. Akzo Nobel, the company behind Dulux paints, saw its stock fall over 3% on the Trade Gate exchange following the announcement.

• Deutsche Bank: The German lender unveiled new targets that have led to investor scrutiny and a stock decline.

  • Targets:
    • Return on tangible equity of 13% by 2028 (a 3 percentage point increase).
    • Payout of 60% of profits to shareholders via dividends and buybacks.
    • Cost-income ratio reduction to 60%.
  • Investor Reaction: Investors found the targets not overly ambitious compared to competitors like UniCredit (15% RoTE) and BBVA (17%).
  • Future Focus: Deutsche Bank plans to continue its strategy of stabilization and gradual growth, with increased investment in investment banking and wealth management.

• UBS: The Swiss bank's chairman has held talks with US Treasury Secretary about potentially moving the bank's headquarters to the US. This is amid uncertainty over Switzerland's proposed capital reforms, which could significantly increase UBS's capital requirements.

• Apple:

  • iPhone Sales in China: iPhone sales have surged in China, with iPhones accounting for one in every four smartphones sold in October, the first time Apple has hit this threshold since 2022. This supports CEO Tim Cook's prediction of a return to growth in China this quarter.
  • Designer Departure: An industrial designer who helped develop the iPhone XR and appeared in its introduction video has left Apple for an AI startup, marking another setback for the company's design group.

• Subsea Internet Cables: The completion of multiple subsea internet cables through the Red Sea for the "to Africa" cable system is delayed due to political tensions, security threats, operational factors, regulatory concerns, and geopolitical risk. This is disrupting broadband supply and causing financial costs.

Bloomberg Africa Business Summit Highlights

The inaugural Bloomberg Africa Business Summit in Johannesburg is focusing on investment and growth opportunities on the continent.

• Key Themes:

  • Young Population: Africa has the youngest and fastest-growing population globally, powering a tech boom.
  • Rare Earths and Precious Metals: The continent is rich in these resources, leading to competition between the US and China.
  • Infrastructure Investment: DP World emphasizes the need for investment in ports and logistics infrastructure to boost Africa's role in global trade (currently less than 3% of global trade, with intra-Africa trade at about 10%).

• Notable Speakers/Conversations:

  • CEO of the South African Public Investment Corporation discussing co-investment talks with sovereign wealth funds.
  • Hendrik du Toit, CEO of Ninety One (South Africa's largest fund manager).
  • Jonathan Oppenheimer, a key figure in the investment landscape.
  • Alex Cozy, Managing Director for Google in Africa, discussing AI strategy.

UK Wealthy Preparing for Potential Tax Hikes

Britain's wealthiest families are actively seeking to protect their fortunes ahead of the upcoming government budget.

• Rumored Tax Increases: Potential measures include an exit charge for wealthy individuals leaving the country and increased levies on expensive homes.
• Defensive Strategies: Families are adopting more defensive wealth planning strategies, including the increased use of corporate trustees.
• Broader Tax Landscape: This is in anticipation of not only next week's budget but also inheritance tax changes coming in April and further reforms in 2027.
• Anecdotal Evidence: There are consistent reports of influential individuals and ultra-high net worth individuals leaving the UK, creating a "chill" in London's wealth economy.

Federal Reserve Policy and Market Expectations

The market is closely watching the Federal Reserve's stance on interest rates, particularly for a potential cut in December.

• Fed Governor Chris Waller's View: Waller supports a rate cut at the next FOMC meeting on December 9-10, citing current data. He is considered to be on the dovish end of the spectrum.
• Market Pricing: The odds of a December Fed cut have significantly dropped from nearly 100% in late October to around 45%. This shift is a key driver of market anxiety.
• BNP Paribas Markets Analysis:
  • Expects the Fed to deliver "risk management cuts" in December, March, and June, slowing down as it approaches neutral rates.
  • Believes the Fed will be more concerned by labor market risks than inflation, provided inflation doesn't accelerate significantly.
  • Prefers positioning in the "belly" of the US Treasury curve (10-year to 30-year) due to the stronger case for lower yields.
  • Views the September jobs report as potentially being "tailed" by the market due to its backdated nature.

UK Budget and Gilt Markets

The UK budget, scheduled for November 26th, is a key focus for gilt markets.

• Assumptions: No income tax hike is expected, but changes to thresholds or freezing them could increase tax revenue. Other potential revenue sources include gambling and mansion taxes.
• Fiscal Headroom: An increase in fiscal headroom to £15-20 billion (from the current £10 billion) is considered crucial for government credibility. A headroom of £10 billion or less could lead to a further sell-off in gilts.
• Disinflationary Impulse: The budget is expected to provide a disinflationary impulse, supporting the case for further Bank of England rate cuts.
• Bank of England Rate Cut: A rate cut in December is expected due to weak labor market data.

Other Market News

• Bank of England Deposit Guarantee: The amount of savings guaranteed by the Bank of England's regulatory arm will be raised to £120,000 from next month, up from the current £85,000 cap set in 2017.
• EU-US Trade Tensions: The EU plans to warn the US against expanding steel and aluminum tariffs and will push for a quota system. The UK is also drawing up countermeasures against proposed EU steel tariff increases.

Conclusion and Key Takeaways

The market is characterized by widespread anxiety and a deepening sell-off, driven by concerns over upcoming corporate earnings (Nvidia), crucial economic data (US jobs), and the Federal Reserve's monetary policy path. The significant drop in Bitcoin highlights the prevailing risk-off sentiment. Geopolitical tensions between Japan and China, along with the US approval of F-35 sales to Saudi Arabia, add to the complex global landscape. Corporate updates reveal strategic shifts and deal-making, while in the UK, wealthy individuals are bracing for potential tax hikes. The Federal Reserve's next move on interest rates remains a pivotal factor influencing market direction.