A Temporary Armistice.
Avoiding economic catastrophe.
1. President Trump on Wednesday defended his agreement to end the Iran war, saying he wanted to avoid an “economic catastrophe” that could have resulted if the conflict the U.S. launched had continued. Mr. Trump—who in an unexpected move signed the deal yesterday in Versailles—said he was influenced by the stock market’s rise as he worked toward a resolution of the conflict. He said he didn’t want to be compared with former President Herbert Hoover, who was president during the 1929 market crash that led to the Great Depression. “He was always the one I didn’t want to be,” Trump told reporters at the Hôtel Royal where he and other world leaders gathered for the Group of Seven meeting. “I didn’t want to see an economic catastrophe.” (Source: wsj.com)
2. Niall Ferguson:
Right now, Trump’s 14 Points look as wretched as Wilson’s 14 Points looked splendid in 1918. But who can be sure what lies ahead? What if the most perilous time for Iran’s horrible regime is not when it is under intense bombardment, but when it makes peace and smells the approach of boatloads of money? What if, at the same time, it turns out that the IRGC’s equally blood-soaked confederate, Vladimir Putin, is in deeper trouble than we realize with his war in Ukraine? And what if the reason oil prices didn’t go even higher than they did in the past four months is that China’s domestic economy is in free fall, as some numbers indicate?
What if, in short, President Trump’s luck holds—as it has held so often throughout his 80 years of often reckless risk-taking?
In the end, the wording of this lousy memorandum of understanding may matter less than the second- and third-order consequences of Trump’s Iran war. The economic consequences to date have certainly been far less damaging than I foresaw earlier in the conflict. Maybe, just maybe, the same will turn out to be true of the geopolitical consequences. (Source: thefp.com, axios.com, reuters.com)
3. Robert Pape:
The official memorandum released by the Trump administration contains one important provision absent from the earlier Bloomberg version.
The key sentence reads:
“Upon the signing of this MOU, the Islamic Republic of Iran will make arrangements using its best efforts for the safe passage of commercial vessels with no charge for 60 days”.
That language transforms the agreement from a permanent settlement into a temporary armistice.
Assuming no other crises emerge—a large assumption—the next sixty days could bring a period of relative stability. Oil flows would resume. Insurance costs would ease. Markets would respond positively.
But the agreement itself creates a new deadline.
Once the sixty-day period expires, Iran and the Gulf states are scheduled to negotiate the future administration and maritime services of the Strait of Hormuz. The original crisis centered on the closure of Hormuz. The next crisis may center on who governs Hormuz. (Source: political-science.uchicago.edu, escalationtrap.substack.com, axios.com)
4. President Trump on Wednesday said that he would “rather not have” the North American trade agreement that was negotiated during his first term. The free trade pact that binds North America is up for review next month. The risk of the deal collapsing now appears greater than before. “I’m thinking about maybe we won’t be able to make a deal. I would rather not have the USMCA,” Trump told reporters in Paris, referring to the U.S.-Mexico-Canada trade agreement. “I’d rather leave it unsigned, I’d rather have it terminated,” the president said — though he added that he “may” sign it. “We do better as a country if we don’t have an agreement.” (Source: axios.com)
5. The U.S. government’s latest battle with Anthropic has revived long-simmering concerns throughout the AI industry that the White House has placed a bullseye on their reliance on foreign AI talent. The Trump administration appears to have targeted only Anthropic so far, warning the company on Friday in a letter from Commerce Secretary Howard Lutnick that it would need a license to make its latest models available to “foreign persons,” including its own employees. But Anthropic’s biggest rival, OpenAI, has flagged its concerns about the issue. (Source: theinformation.com)
6. Paul Kedrosky:
I have written here many times (see here. here, here, etc.) about the sharply growing role of AI capex in US GDP growth, but it is now becoming material in GDP outright. As (this) Epoch figure shows, the ongoing AI infrastructure buildout has compressed a decade of capital spending into about two years. Computing infrastructure's share of nominal US GDP sat near 0.5% for most of the 2015–2022 period, with a gentle upward trend. Then it broke sharply upward around 2023, nearly tripling to approach 1.6% of GDP by 2026. This was driven almost entirely by AI-related compute hardware, data center construction, and networking layered on a non-AI compute data center base that never moved. (Source: paulkedrosky.com)
7. Two AI medical tools matched or surpassed doctors across a range of diagnostic and treatment decisions, in the latest sign that specialist health large language models are moving closer to demonstrating clinical value. Mira, developed by researchers in Germany, outperformed physicians in analyses of diseases including pancreatic cancer and pneumonia, while Google’s Amie produced more precise treatments and investigation plans than humans, according to results published in Nature (yesterday). The studies suggest specialist health AI tools can give better medical advice than general consumer AI models. But their inventors and independent experts warned that the tests were conducted in controlled simulations and did not mean the tools were ready for real-world clinical use. (Sources: ft.com, nature.com)
