Waltz out of the fray
The US, Iran, China, South Korea, and the UK.
The five things you need to know today:
UNITED STATES. Trump’s national security adviser takes the bullet.
IRAN. Washington makes new threats on the eve of talks.
CHINA. A moderating tone doesn't a deal make.
SOUTH KOREA. The presidential frontrunner is unacquitted.
BRITAIN. Reform UK is no longer just a party of protest.
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UNITED STATES. 👊🇺🇸🔥
Trump’s national security adviser takes the bullet.
Donald Trump nominated Mike Waltz as UN ambassador, an effective demotion from security adviser. Marco Rubio would be "double-hated" as NSA. A State Department spokeswoman said "it’s like hanging on to a freaking bullet train."
INTELLIGENCE. The spokeswoman presumably intended to compliment the White House's dynamism, but Rubio’s appointment appears to either devalue his work at State or demonstrates Trump’s lack of alternatives. What's clear is that Trump devalues the work of the United Nations. His previous nominee, Elise Stefanik, was deemed too valuable to Congress to be let go. As for Waltz, best remembered for his Signal chat emojis, he will be put out of harm's way.
FOR BUSINESS. Roving negotiator Steve Witkoff has been tipped as permanent replacement, presumably once his deals on Iran, Israel, and Russia wrap up. Such an appointment would add further opacity to White House decision-making. For all Waltz's apparent flaws, he was a seasoned politician and a predictable adviser. Witkoff's experience is limited to real estate, even if with a great deal of financial success. Witkoff's son manages the $TRUMP meme coin.
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IRAN. Smart of the rial
Washington makes new threats on the eve of talks.
Donald Trump said Thursday all countries buying oil from Iran "will not be allowed to do business with the United States of America in any way, shape, or form." Tehran earlier postponed nuclear talks in Oman, ostensibly on logistical grounds.
INTELLIGENCE. Steve Witkoff was due to travel for the next round of seemingly positive talks, but these now seem in abeyance following Trump's threats and Wednesday's comments by Pete Hegseth warning Iran of "CONSEQUENCE at the time and place of our choosing" regarding its alleged support for the Houthis. The US Navy is currently bogged down in costly and potentially futile operations in the Red Sea. Trump has separately pressed Egypt for its support.
FOR BUSINESS. If not Hegseth or another US official sabotaging the talks, it's likely to be Israel. Benjamin Netanyahu, never happy with the prospect of another JCPOA-style deal, admitted Friday to bombing the presidential palace in Damascus, a particularly obtuse show of resolve. An aid vessel off Malta, heading to Gaza, has also allegedly been attacked by the IDF. Alternatively, the move could simply be to intimidate Iran, and potentially China, its key customer.
CHINA. Open question
A moderating tone doesn't a deal make.
Asian stocks and US futures surged Friday after Beijing said it was "evaluating" an offer from Washington to hold trade talks and that its "door was open". Scott Bessent said Thursday he was confident China “will want to reach a deal”.
INTELLIGENCE. China's commerce ministry also said "attempting to use talks as a pretext to engage in coercion and extortion would not work." Market enthusiasm seems premature in what will be a drawn-out process, even if Washington and Beijing ultimately return to status quo ante or something that will meet the needs of both Trump and the US consumer. For now, their desires – insofar as they’re coherently expressed – appear mutually incompatible.
FOR BUSINESS. Trump will either need to sacrifice his trade policy or the US economy. Without disrupting itself or others, the US can't easily stop Chinese imports. The White House will either need to accept an ongoing deficit (even if just in non-critical goods like textiles and toys) or press ahead. To help him back down, Xi Jinping may need to give Trump something else he wants, such as Chinese-owned factories, or carte blanche in the Western Hemisphere).
SOUTH KOREA. Courting disaster
The presidential frontrunner is unacquitted.
The supreme court Thursday overturned Lee Jae-myung's acquittal on election-law violations, putting the opposition frontrunner's presidential candidacy into fresh doubt. Acting president Han Duck-soo stepped down to contest the poll.
INTELLIGENCE. Impeached ex-president Yoon Suk-yeol has also been indicted on additional charges. Elections will be held on 3 June. The contest so far has had as many twists as a Korean soap opera. This makes good television but harms the country's stability amid rising geopolitical and economic threats. Factory output suffered its worst slump in 2.5 years Thursday, with the PMI at 47.5 for April in contrast to Wednesday's relatively strong trade data.
FOR BUSINESS. South Korea has grown strongly through previous periods of political instability (i.e., most of its post-war history). Its exporters are world-class, and firms like Samsung are nearing parity with Nvidia and others on a range of high-tech goods. Yet unlike the 1990s, when it was in a class of its own, South Korea lacks its previous cost advantages. And its once ironclad US security guarantee is now being questioned just as new risks rise in the north.
BRITAIN. The race is Runcorn
Reform UK is no longer just a party of protest.
Nigel Farage's Reform UK won its fifth seat by six votes, counting in the constituency of Runcorn and Helsby showed early Friday. The hard-right party, associated with pro-Brexit views, also won its first mayoral race, in Greater Lincolnshire.
INTELLIGENCE. Runcorn, a new constituency with many of the characteristics of the “red wall” districts that fell to Boris Johnson in a previous moment of populism, was ripe for the taking. Mike Amesbury, the incumbent, had been expelled from Labour after footage emerged of him punching a constituent. Lincolnshire is a bigger prize, but this is in Reform heartland. What it means is that Reform is no longer just a place for protest but a party that must deliver.
FOR BUSINESS. The cure for populism tends to be election – at least in places like the UK that largely trend toward the centre ground. Much has been said about the death of a two-party Tory/Labour system, but this was always under strain from the LibDems and other minor parties. The loss gives Keir Starmer another excuse to purge querulous MPs and assert his authority. The next national election isn't due until 2029 – plenty of time for all to make mistakes.
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Best,
Michael Feller, Chief Strategist