BlackRock Seals $11 Billion Deal With Saudi Aramco

Samantha Luan

Economic

Commodity

Forex

Summary:

Key Takeaways:

● Saudi Aramco and BlackRock finalize $11 billion gas transaction.

● The deal attracts significant global investor participation.

● Aramco retains majority control, supporting Vision 2030 strategy.

BlackRock Seals $11 Billion Deal with Saudi Aramco

BlackRock's Global Infrastructure Partners secured an $11 billion deal with Saudi Aramco for midstream gas-processing assets, integrating in Jafurah, Saudi Arabia, marking a pivotal international investment.The arrangement highlights significant cross-border investment, advancing Saudi Vision 2030 with no direct influence on cryptocurrency markets, yet potentially fostering institutional confidence in large-scale infrastructure ventures.BlackRock and Saudi Aramco have finalized an $11 billion lease and leaseback deal, with significant investment drawn to the Jafurah gas field. This arrangement marks a substantial progression in global energy infrastructure relationships.

The consortium, led by BlackRock's Global Infrastructure Partners, involves multiple investors. The partnership emphasizes Saudi Aramco's strategic goals in gas development, where it retains a controlling 51% interest, partnering with the Global Infrastructure Partners consortium.The deal's immediate effect unlocks strategic foreign investment for Saudi Arabia. It aligns with the country's ambitious Vision 2030 campaign, targeting vast foreign direct investment inflows to bolster economic diversification.

This transaction highlights a growing trend of long-term, de-risked investments within sovereign-backed energy sectors. The lease model used actively supports Aramco's asset optimization while promising substantial returns.This significant transaction underscores confidence in the energy sector’s growth. Such large-scale investments bolster the roles of private assets, creating a benchmark for future infrastructural commitments and sectoral expansions within international markets.

Insights suggest the deal might shape future financial landscapes, potentially influencing capital allocation toward infrastructure. Historically, these developments spur interest in related sectors, signaling evolving opportunities for traditional financial institutions globally."Jafurah is a cornerstone of our ambitious gas expansion programme, and the GIP-led consortium’s participation as investors in a key component of our unconventional gas operations demonstrates the attractive value proposition of the project.” — Amin Nasser, Chief Executive Officer, Saudi Aramco.

Source: CryptoSlate

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Adam

Commodity

Gold was extremely overbought in the spring & due for a rest. It has corrected bullishly but is far from its 200-day moving average.

Meanwhile, breadth indicators in gold stocks are flashing some warning signs.

Let’s dig into both.

We start with the quarterly chart of Gold.

It’s not the end of the quarter yet, but the message from Gold’s quarterly RSI stands.

Gold is very overbought.

Considering quarterly RSI, Gold is as overbought as it was in 1972, 1973, and 2006. The other similar overbought points were later in secular bull markets.

Gold Stocks Show Strong Breadth, but Overbought Signals Flash Caution_1

How do those points compare to the present?

In 1972, Gold corrected 12% for 4.5 months and came within 3% of the 200-day moving average.

In 2006, Gold corrected 23% for 5 months.

In 1973, Gold corrected 28% for 5.5 months.

At present, Gold is clearly closest to 1972. It has corrected 11% for nearly four months.

There are two conclusions.

First, after Gold’s failed breakout from last Friday, the correction figures to last longer and could come very close to testing the 200-day moving average.

Second, if Gold begins another leg higher that exceeds $4000, then in 2026 there is a severe risk of +20% correction, ala 1973 and 2006.

Turning to the present, we see Gold is $300 above its 200-day-moving average in the spot market and $280 above it in the futures market.

The spot market could test $3275 again, and if that breaks, there is downside potential to $3150-$3200.

In the spot market chart below, the 200-day moving average will surpass $3100 in September, around the time the correction turns 5 months old.

Gold against the stock market closed at 0.52. It has a confluence of strong support at 0.50-0.51, which will be retested again.

To confirm a trend change, we need to see the ratio close above 0.54.

Gold Stocks Show Strong Breadth, but Overbought Signals Flash Caution_2

GDX closed at $58. The breakout from a 4-year-long base gives it a measured upside target of $63.

The bullish percentage index, golden cross percentage, and percentage of HUI stocks above the 200-day moving average are all at 100%.

Strong breadth is part of bull markets, and extremely strong breadth early in a trend is a very good sign. But extreme breadth that persists for a while can mark an interim or intermediate peak.

The 20-day exponential moving average of new highs is at 17.8%. Those aforementioned peaks since 2016 came at 30%-35%.

Gold Stocks Show Strong Breadth, but Overbought Signals Flash Caution_3

GDXJ closed just below $73. The breakout from a 4.5-year-long base gives it a measured upside target of $82.

Below, we plot the 20-day exponential moving average of new highs in GDXJ and the 50-day exponential moving average of those new highs. The EMAs of new highs are at 13.8% and 10.4% respectively.

The 23% correction in Q4 2024 reset this data for the strong move into April.

Until the start of last week, GDXJ had gone nowhere for 3.5 months, and that allowed the data to reset again.

The question is, if Gold corrects here into the end of summer, do miners make no progress? Or will they outperform like they have been in recent months?

Gold Stocks Show Strong Breadth, but Overbought Signals Flash Caution_4

Finally, we look at how the miners are performing in real terms.

GDX and GDXJ are correcting bullishly against the 60/40 Portfolio (60/40 PF).

GDX against the 60/40 PF closed at 3.50. Holding above 3.00 puts the ratio in position to break out from a 12-year-long base.

Gold Stocks Show Strong Breadth, but Overbought Signals Flash Caution_5

GDXJ against the 60/40 PF is right behind. It’s correcting bullishly, too.

If the top chart were to break that base, then GDXJ against the 60/40 PF should run higher and test its 12-year-long base.

Precious Metals are at an interesting spot.

Gold has corrected for nearly 4 months yet remains overbought considering long-term RSI readings and its distance above the 200-day moving average.

Meanwhile, the gold stocks have strongly outperformed during this period. Some breadth indicators are quite overbought from a short to medium-term standpoint.

GDX against the 60/40 Portfolio is acting quite bullish and could threaten to break out from a 12-year-long base. That could initiate a major leg higher in the miners and juniors.

Another month or two of correction in the sector, entailing Gold sniffing its 200-day moving average while the gold stocks correct and breadth cools off, would be a very welcome sign.

One way to mitigate correction risk is to buy the right companies at good values.

Source: investing

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Adam

Russia-Ukraine Conflict

Economic

World markets are watching closely as U.S. President Donald Trump and Russia's Vladimir Putin meet in Alaska later on Friday to seal a possible ceasefire agreement in Ukraine.

This is a conflict that sparked an energy shock, sent food prices soaring, battered European assets and cut Russia's economy off from much of the Western world.

Details and the longevity of any agreement will be key, and for now investors are on standby. Ukraine's government bonds - key indicators of the mood - in recent days have largely stalled at a still-distressed 55 cents on the dollar.

"The big issue will be, of course, that even if we get a ceasefire, how sustainable is that?" said Zurich Insurance Group's chief markets strategist Guy Miller.

Here is a summary of how Europe's biggest conflict since World War Two has shaped markets and what impact a ceasefire agreement could have.

EUROPE HURT

Europe's reliance on cheap Russian gas meant its economy and stock market were ill-equipped to handle surging energy prices, and Germany's economy, Europe's industrial powerhouse, stagnated.

Stocks were broadly punished, with sectors reliant on low energy prices, such as industrials and chemicals, notably hit.

European banks also took a drubbing but have since recovered as those exposed to Russia cut ties.

It has not been all doom and gloom and the European STOXX 600 index is not far off March's record high.

Aerospace and defence stocks have had a supercharged rally since February 2022, with gains ranging from over 600% for Leonardo to over 1,500% for Rheinmetall.

"If the fighting stops in Ukraine, I'd expect defence stocks to come off a little bit but I think the fundamental reason why defence stocks have rallied is still there," said Toni Meadows, CIO at BRI Wealth Management.

"If Putin is still there and Trump is still there, then the need for Europe to spend on defence is still there."

What a Russia-Ukraine ceasefire deal could mean for global markets_1

The chart shows that major global market indices went down in 2022 after Russia's invasion of Ukraine

HEATED

The invasion triggered a surge in European energy prices. Brent crude rose as much as 30% to $139 a barrel, while natural gas prices soared nearly 300% to record highs.

Crude subsided in the following months. But Dutch TTF futures, the regional benchmark for natural gas, soared as Europe scrambled for an alternative to the Russian gas that fed over 40% of total demand.

Europe has since become increasingly reliant on U.S. super-chilled liquefied natural gas. The European Union has committed to boosting its purchases of U.S. crude, gas and coal from around $75 billion in 2024 to $250 billion per year to 2027, under a new U.S. trade deal - a figure most experts say is unrealistic.

Oil and gas prices are below 2022 peaks, but they are higher than five years ago, up 50% and 300%, respectively.

What a Russia-Ukraine ceasefire deal could mean for global markets_2

European gas prices in euros

GENIE OUT OF THE BOTTLE

Following the COVID-19 pandemic, the war ensured the inflation genie was well out of its bottle as energy and food prices soared while agricultural exports from Russia and Ukraine - two leading grain exporters - were disrupted.

Central banks backtracked on the notion that an inflation spike was "transitory" and aggressive interest rate hikes followed.

Since late 2022, inflation and rates have come down in big economies and focus shifted to U.S. tariffs.

What a Russia-Ukraine ceasefire deal could mean for global markets_3

Inflation in the Group of Seven industrialised economies

High food prices remain a concern, especially for developing economies. World food commodity prices rose in July to their highest in over two years, according to the United Nations' Food and Agriculture Organization.

"If Ukraine could operate normally as an economy, that would help food prices around the world," said April LaRusse, head of investment specialists at Insight Investment.

What a Russia-Ukraine ceasefire deal could mean for global markets_4

Metal and wheat prices spike in wake of Russia's invasion of Ukraine

UKRAINE AND RUSSIA

Ukraine's economy was battered by the war. The country was forced to restructure $20 billion of its government debt last year as it could no longer afford the repayments given the demands of the conflict.

Its bonds , then rallied on hopes that a re-elected Trump would broker a peace deal but plunged following increasingly ugly exchanges between Trump and Ukraine's Volodymyr Zelenskiy that culminated in February's infamous Oval Office meeting.

The bonds recovered some ground again this week.

Russia's economy also contracted after the West introduced sweeping sanctions but soaring defence spending led to a rebound in 2023 and 2024. After jacking up rates to combat the subsequent inflation spike though, some Russian officials now warn of recession risks.

Russia's rouble sank to a record low soon after the invasion, but rebounded to seven-year highs later in 2022 as imports dried up. It is up nearly 40% against the dollar this year.

Russia and China meanwhile now do more of their trade in the yuan, which has overtaken the dollar as Russia's most traded foreign currency.

What a Russia-Ukraine ceasefire deal could mean for global markets_5

This chart depicts the prices of the Ukraine GDP warrant issued 2015, Ukraine GDP-linked bond 2035, and Ukraine GDP-linked bond 2036

CURRENCIES UPENDED

The war hit the euro , which fell almost 6% against the dollar in 2022 as the economic impact was felt.

Analysts say any improving sentiment created by a ceasefire could help the euro, but note that other factors, such as monetary policy were also key.

"The euro might benefit, but we wouldn't see this as a game changer for the currency," said Frederique Carrier, head of investment strategy for RBC Wealth Management in the British Isles and Asia.

While safe-havens such as the dollar and Swiss franc benefited , , the conflict shaped currencies in other ways.

Analysts say the use of sanctions against Russia and a decision by the West to freeze some $300 billion of Russian state assets in 2022 has accelerated de-dollarisation, in short, efforts by countries to decrease reliance on the dollar.

What a Russia-Ukraine ceasefire deal could mean for global markets_6

Currency performance since the outbreak of war Ukraine in Feb 2022

Source: reuters

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Daniel Carter

Political

Russia-Ukraine Conflict

Ukraine has been trying to inflict major blows on Russia in overnight and early morning cross-border attacks, including carrying out a strike on the Olya seaport in Russia's Astrakhan region, targeting a vessel reportedly transporting Shahed drone parts and Iranian-supplied ammunition.

Ukraine's General Staff described Friday that its operation involved Ukraine's Special Operations Forces (SSO) seeking to weaken Russia's ability to conduct airstrikes utilizing the Iranian-designed suicide drones which have long wreaked havoc on Ukrainian cities.

Olya has become viewed as a critical logistical hub for receiving military equipment from Iran. The vessel identified as the Port Olya 4 was said to be carrying unmanned aerial vehicle components and munitions at the time of the attack.

The early hours of Friday also saw a wave of Ukrainian drones targeted an oil refinery in Syzran, located in Russia's Samara region.

This flurry of drone activity seeking to take out sensitive Russian targets happened just hours before much anticipated talks between Presidents Trump and Putin are to get underway, and appears a last-ditch effort for the Ukrainian side to establish some badly needed leverage, even as Russia has made big, rapid gains on the ground on the Donbass region.

Yesterday, analysis by the Institute for the Study of War (ISW) made clear that "The Russian army took or claimed 110 square kilometers (42.5 square miles) on August 12 compared to the previous day," and that "It was the biggest advance since late May 2024."

So the Ukrainians are trying to provide a quick 'answer' for these ground losses for all the world to see just head of the Alaska summit. President Zelensky has repeatedly claimed this week that Putin is not actually interested in peace and that he's "bluffing".

Meanwhile, the Russian Ministry of Defense has detailed additional overnight inbound drone intercepts from Ukraine, as follows on Telegram:

● 13 over the Kursk region

● 11 over the Rostov region

● 7 over the Samara region

● 6 over the Belgorod region

● 5 over the Oryol region

● 4 each over the Bryansk and Voronezh regions

● 1 each over the Saratov region, Kalmykia, and the Sea of Azov.

Further, a string of significant oil and gas sites were struck by Ukrainian forces over the last week. Ukraine's military says these are 'military targets' - as Russia's energy sector props up Putin's military machine. On Thursday, Ukrainian drones successfully struck an oil refinery in Russia's Volgograd region, sparking a huge fire.

Rubio and the CIA chief will be in Alaska, but not Pentagon leadership: On Thursday, prior attacks on southern Russia resulted in a number of casualties.

Ukraine launched drone attacks on cities in southern Russia, killing one person and injuring at least 16 more — just a day before President Trump meets with Russian President Vladimir Putin in Alaska.

A Ukrainian drone hit an apartment building in Rostov-on-Don, injuring 13 people who were transferred to medical facilities for treatment, according to the region's Gov. Yury Slyusar.

In another attack, Ukraine's drone strike in Belgorod injured three people, according to local officials. Vyacheslav Gladkov, the governor of the region, posted a video appearing to show the drone striking a car in the city, located about 24 miles north of the Ukraine border.

As for Alaska, the summit is expected to commence at 11am local time, which is 3pm eastern US. President Trump on Friday stated simply on Truth social the words HIGH STAKES!!! The Russian delegation has already arrived, with Foreign Minister Sergei Lavrov telling reporters, "What we do know is that we have clear arguments to contribute to the discussion, and our position is well defined. We will present it accordingly."

And White House press secretary Karoline Leavitt has presented Trump's general stance by saying "The president wants to exhaust all options to try to bring this war to a peaceful resolution."

Source: Zero Hedge

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Warren Takunda

Economic

The UK economy defied US tariff pressures in the second quarter, expanding by 0.3% and outpacing most G7 peers despite a slowdown from the optimistic 0.7% growth seen earlier in the year. Strong performances in the services and construction sector helped drive the gains, offsetting a drop in manufacturing and other production sectors.

Donald Trump fired Bureau of Labor Statistics (BLS) commissioner Erika McEntarfer, a veteran economist with decades of experience inside the federal government, after claiming without evidence that official jobs data had been “rigged” against him.

In her place, the US president has lined up an ardent supporter of his agenda accused of regularly misrepresenting and exaggerating statistics, who previously urged Trump’s officials to “take a chainsaw” to the agency he has been tapped to oversee.

EJ Antoni, an economist at the Heritage Foundation and contributor to Project 2025, the rightwing blueprint drawn up ahead of Trump’s re-election, has been nominated by the president to take charge of US government labor statistics. He did not respond to a request for comment.

McEntarfer’s abrupt dismissal had already raised fears in Washington, on Wall Street and far beyond about the integrity of official US government data. Plans to replace her with Antoni – confirmed hours after he had called on the BLS to halt the publication of monthly jobs data – have only heightened concern among leading economists.

“From selectively presenting data from particularly convenient dates to misrepresenting axes to exaggerate magnitudes, he has used all the tricks in the book and shown time and again that he is not a credible source of information,” Dave Hebert, an economist at the American Institute for Economic Research, a conservative thinktank, told the Guardian. “Worse, he has repeatedly shown that he fundamentally misunderstands what some of the data the BLS puts out actually means.

“It’s difficult to imagine someone effectively leading a vital organization like the BLS who cannot correctly define the data they’re putting out.”

After July’s lackluster jobs report, there have been further signs of economic strain under Trump. On Thursday, the producer price index – which measures wholesale inflation – was revealed to have risen 0.9% in July, markedly more than expected, and the biggest monthly increase in three years.

But data released under Antoni – who requires confirmation by the US Senate – won’t be believed, according to Hebert. “I have no problem with someone who supports President Trump, but we cannot afford such a partisan person who has neither the credibility nor the ability to generate believable data,” he added.

Antoni was pictured in a crowd of Trump supporters outside the Capitol during the January 6 insurrection in 2021. The White House told NBC News he was just a bystander, in town for meetings.

He is a prolific user of social media, and has frequently appeared on Fox News, Newsmax and other conservative outlets to promote Trump’s policies and arguments.

In July 2024, Antoni quoted a post on X, formerly Twitter, which seemingly claimed the 2020 election was stolen. He has also derided the Federal Reserve; called social security, Medicare and Medicaid “Ponzi schemes”; and frequently cast aspersions on the BLS, which he is now set to lead, joking that the “L” is “silent”. Back in March, he called 10,000 federal government job losses “a fabulous start”.

Responding to a September 2023 article by ZeroHedge, a libertarian and conspiracy theory website, about US men going abroad to find wives, Antoni wrote in a post: “Shortages in domestic markets always encourage imports. The laws of Supply and Demand will not be conned, not in any aspect of life.”

In recent days, Antoni has also stirred controversy online after viewers noticed a painting of a Nazi battleship featured in some of his broadcast interviews.

In a 2023 podcast interview with TFTC, Antoni confirmed the painting to be the Bismarck, used by Nazi Germany’s Kriegsmarine during the second world war. Upon being asked about the painting, he replied: “The Bismarck, yep, in all his glory.”

But it is Antoni’s use of official data that has drawn the most ire among other economists, who have suggested he mischaracterized BLS data about multiple job holders and native-born and foreign-born workers. He has also tried to frame previous revisions by the bureau as part of a Democratic conspiracy under Biden.

Elon Musk’s “department of government efficiency” “needs to take a chainsaw to the BLS”, Antoni wrote on X in November. Shortly before his nomination to lead the bureau this week, he told Fox News the monthly jobs report should be paused over claims its data is flawed. The White House has since claimed “the plan” is to continue publishing the closely watched report.

“He’s utterly unqualified and as partisan as it gets,” Stan Veuger, a senior fellow at the conservative American Enterprise Institute, told the Washington Post.

Daniel Di Martino, a fellow at the conservative thinktank the Manhattan Institute, has previously criticized Antoni for claiming that unemployment rate had been “artificially” reduced. “This is one of the many elementary errors that show me Mr Antoni is unqualified for the labor market data collection and analysis role he was nominated to,” Di Martino wrote on social media this week. “People will discuss credentials but what matters is whether you know what you’re talking about.”

Friends of BLS, a group co-chaired by William Beach, who served as BLS commissioner during Trump’s first term, has urged the Senate to do its due diligence in assessing Antoni’s suitability for the role.

“The unwarranted dismissal of Dr Erika McEntarfer, the 16th Commissioner of Labor Statistics, and the baseless characterization of BLS employment estimates as ’fake’ and ‘rigged’ have undermined public trust in the Bureau’s integrity and the usefulness of its statistics,” the group wrote. “The next Commissioner must not only manage the difficult responsibilities inherent to the role, but also restore public trust, defend the agency against political interference, and accelerate critical modernization efforts across all programs.”

The White House did not immediately respond to requests for comment.

Source: Theguardian

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Adam

Economic

The end of summer usually marks one of the slowest periods of the year for investment bankers.

This year, however, markets aren't taking a vacation.

Halfway through August, the IPO market has already roughly doubled the amount of activity typically seen during the month, with 12 new issues worth at least $50 million raising some $2.9 billion in capital.

August typically saw nine IPOs raising an average of $1.5 billion collectively over the past decade, according to data from IPO research firm Renaissance Capital.

"There's clear demand for new issues, and these companies are striking while the iron is hot," Renaissance Capital director of investment strategies Avery Marquez said.

Marquez noted that given how the IPO market has been largely frozen in the past years, the surge in activity isn't necessarily surprising. Still, he said, "these companies would likely not be going public right now if there wasn't such a strong appetite for IPOs."

This week, crypto exchange operator Bullish (BLSH) enjoyed the latest high-profile market debut, raising over $1 billion in its IPO and seeing its stock open at $90 per share, nearly triple the $37 where the company priced its offering.

At the close of its first day of trading, Bullish had a market cap of $10 billion, almost double the company's IPO valuation.

The lack of a summer slowdown has been good for Wall Street banks, especially after predictions for a breakout year were shunted after tariff uncertainty defined much of the first half of the year.

At its current pace, August remains on track to see IPO activity match a strong July, which saw $5.2 billion raised on 29 IPOs, including one of the year's most expected offerings in design software maker Figma (FIG).

Shares of Figma opened for trading on July 31 at more than double where the stock was priced, eventually gaining as much as 250% in a first-day pop. Morgan Stanley, Goldman Sachs, Allen & Co., and JPMorgan led the company's IPO process.

And just as has been the case in the broader market, tech and crypto names have been stars in the IPO market this year as well. Stablecoin issuer Circle (CRCL), fintech Chime (CHYM), and AI data center play CoreWeave (CRWV) all went public with well-received debuts.

The pipeline halfway through the third quarter appears robust through the end of 2025, with companies like Klarna and StubHub looking likely to join the party this year.

In the second quarter, JPMorgan (JPM), Goldman Sachs (GS), Citigroup (C), and Morgan Stanley (MS) all reported increased revenue from equity underwriting fees over the previous quarter. Only JPMorgan's fees were down year over year.

This summer's flurry of activity should make the third quarter even stronger. Shares of all four firms are up more than 35% since April 9; Citi stock is up more than 60%.

"While we're still in the earlier stages of the investment banking recovery, the outstanding performance in equity underwriting this quarter is a positive leading indicator," Morgan Stanley CEO Ted Pick said on the company's second earnings call last month.

Source: finance.yahoo

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Damon

Russia-Ukraine Conflict

Donald Trump headed to Alaska on Friday for what he called a "high stakes" summit with Russia's Vladimir Putin to discuss a ceasefire deal for Ukraine to help end the deadliest war in Europe since World War Two.

Ukrainian President Volodymyr Zelenskiy, who was not invited to the talks, and his European allies fear Trump might sell out Ukraine by essentially freezing the conflict and recognising - if only informally - Russian control over one fifth of Ukraine.

Trump sought to assuage such concerns as he boarded Air Force One, saying he would let Ukraine decide on any possible territorial swaps. "I'm not here to negotiate for Ukraine, I'm here to get them at a table," he said.

Both the U.S. and Russian presidents, due to meet at a Cold War-era air force base in Alaska's largest city, are seeking wins from their first face-to-face talks since Trump returned to the White House.

Trump, who casts the war as a "bloodbath" fraught with escalatory risk, is pressing for a truce in the 3-1/2-year-old war that would bolster his credentials as a global peacemaker worthy of the Nobel Peace Prize.

For Putin, the summit is already a big win as he can use it to say that years of Western attempts to isolate Russia have unravelled and that Moscow has retaken its rightful place at the top table of international diplomacy.

The summit, the first between a U.S. and Russian leader since 2021, was set to start at 11 a.m. Alaska time (1900 GMT).

Trump, who once said he would end Russia's war in Ukraine within 24 hours, conceded on Thursday it had proven a tougher nut to crack than he thought. He said that if Friday's talks went well, quickly arranging a second three-way summit with Zelenskiy would be even more important than his encounter with Putin.

"It's time to end the war, and the necessary steps must be taken by Russia. We are counting on America," Zelenskiy wrote on the Telegram messaging app on Friday, adding that the Trump-Putin meeting should open the way for a "just peace" and three-way talks with him included.

'SMART GUY'

Of Putin, Trump said on Friday: "He is a smart guy, been doing it for a long time but so have I... We get along, there's a good respect level on both sides." He also welcomed Putin's decision to bring a lot of businesspeople with him to Alaska.

"But they're not doing business until we get the war settled," he said, repeating a threat of "economically severe" consequences for Russia if the summit goes badly.

One source acquainted with Kremlin thinking said there were signs that Moscow could be ready to strike a compromise on Ukraine given that Putin understood Russia's economic vulnerability and costs of continuing the war.

Reuters has previously reported that Putin might be willing to freeze the conflict along the front lines, provided there was a legally binding pledge not to enlarge NATO eastwards and to lift some Western sanctions.

Russia, whose war economy is showing signs of strain, is vulnerable to further U.S. sanctions - and Trump has threatened tariffs on buyers of Russian crude, primarily China and India.

"For Putin, economic problems are secondary to goals, but he understands our vulnerability and costs," the Russian source said.

On the eve of the summit, Putin held out the prospect of something else he knows Trump wants - a new nuclear arms control agreement to replace the last surviving one, which is due to expire in February next year.

COMMON GROUND?

The source familiar with Kremlin thinking said it looked as if the two sides had been able to find some common ground.

"Apparently, some terms will be agreed upon... because Trump cannot be refused, and we are not in a position to refuse (due to sanctions pressure)," said the source, who spoke on condition of anonymity because of the matter's sensitivity.

Putin has so far voiced stringent conditions for a full ceasefire, but one compromise could be a truce in the air war. Putin has said he is open to a ceasefire but has repeatedly said the issues of verification need to be sorted out first.

Zelenskiy has accused Putin of playing for time to avoid U.S. secondary sanctions and has ruled out formally handing Moscow any territory.

Beyond territory, Ukraine has been clear in talks with Western allies that it needs a security guarantee backed by Washington. It is unclear how that guarantee could work - and what part the U.S. would play in it.

Ukrainians who spoke to Reuters in central Kyiv on Friday were not optimistic about the Alaska summit.

"Nothing good will happen there, because war is war, it will not end. The territories - we're not going to give anything to anyone," said Tetiana Harkavenko, a 65-year-old cleaner.