EU Pushes Mercosur Trade Deal Through Amid Protests

Source: AP

Ukrainian President Volodymyr Zelenskiy announced Friday that he is in discussions with the United States about a potential free-trade agreement, a cornerstone of a wider prosperity package designed to fuel the nation's recovery after the war.

In a phone interview with Bloomberg, Zelenskiy explained the deal would establish zero tariffs on trade with the U.S. and would apply to certain industrialized regions of Ukraine. He argued this would provide the country with "very serious cards" against neighboring states, potentially attracting significant investment and new businesses.

The Ukrainian leader emphasized that he needs to discuss the proposal's details directly with President Donald Trump. He also framed the agreement as an additional guarantee for Ukraine's economic security.

Navigating Diplomacy Through US Envoys

Zelenskiy's comments followed a report from his top negotiator, Rustem Umerov, who held a call with Trump's special envoys, Steve Witkoff and Jared Kushner. According to Zelenskiy, the U.S. representatives have recently been in contact with Russia in "some kind of format," though he did not know if they planned to travel to Russia for in-person meetings.

The diplomatic process involves Ukraine submitting feedback on territorial proposals to the U.S. team. These proposals are then relayed to Russian officials for their input before a response is delivered back to Kyiv.

Zelenskiy expressed hope of receiving Russia’s response to a 20-point framework by the end of this month. This timeline would coincide with his efforts to finalize a recovery plan and security guarantees with Trump. He expects to meet Trump either in the U.S. or at the World Economic Forum in Davos, Switzerland.

Demand for Concrete Security Guarantees

A key focus for Zelenskiy is securing specific U.S. commitments in the event of renewed Russian aggression.

"I don't want everything to end up in them merely promising to react," Zelenskiy said. "I really want something more concrete."

While talks on security guarantees with allies have progressed, territorial disputes remain the primary obstacle in negotiations to end the invasion. Earlier this year, Trump stated he was "not thrilled" with Russian President Vladimir Putin but has not yet publicly committed to new measures to support Ukraine.

Two Proposals for De-escalation on the Battlefield

To address the military stalemate, Ukraine is considering two distinct plans, including one proposed by the United States to create a special economic zone.

1. The Free Economic Zone

This proposal, separate from the broader free-trade deal, is a localized plan for the battlefield area. If a truce is reached, a buffer area would be established as troops pull back. This zone would allow businesses to operate and people to live under a special legal and tax regime.

"The format is difficult but fair," Zelenskiy noted. He added that the plan would require Russia to "mirror" Ukraine's actions and would need domestic discussion. The zone could be created in parts of the Donbas region, serving as a compromise that requires both sides to withdraw their forces.

2. Freezing the Contact Line

A second option involves halting the fighting while leaving forces in their current positions, with unresolved issues addressed through diplomacy.

"It's about freezing the contact line, not the conflict," Zelenskiy clarified, adding that this arrangement would be easier for Ukraine's foreign allies to implement and monitor.

Ukraine's Unwavering Stance and Military Needs

Zelenskiy reiterated that Russia’s actions indicate it is not prepared for genuine diplomacy. He affirmed that Ukraine will never recognize its occupied territories as Russian, though it expects to restore full sovereignty in the future.

In this context, he urged the U.S. to provide a more systematic response to Russian aggression, noting that Ukraine has still not received all pledged Patriot air-defense systems and ammunition. His call came as Russia launched a major air attack on Kyiv early Friday, leaving large parts of the capital without power, heat, and water.

While Kyiv's mayor urged residents to leave the city to avoid freezing, Zelenskiy criticized the call as alarmist, stating that efforts should focus on restoring normal operations.

Regarding recent calls from European leaders for renewed dialogue with Moscow, Zelenskiy said he was not opposed, as long as Putin understands the discussions are serious. "We are moving toward the final stage, even if we don't yet know what it will look like," he concluded.

BLS, as well as the Labor Department, which oversees the statistical agency, didn’t respond to requests for comment.

Source: Bloomberg

Atlanta Fed President Raphael Bostic has identified inflation as his primary economic concern, describing the current job market as being in a state of "low-hire, no-fire" amid ongoing uncertainty.

In a radio interview on Friday with WLRN in Florida, Bostic stressed that the central bank must remain sharply focused on taming price pressures.

Inflation Remains "Too High" for the Fed

Bostic stated that "inflation is still too high," arguing that the Federal Reserve's effort to manage prices is currently a more significant challenge than its employment mandate.

"You've got to get it under control, and we need to be laser-focused on making sure that everything we do is contributing to that," he explained.

He warned that persistent high prices are squeezing consumers and could ultimately weaken the economy in ways that become more difficult for the Fed to manage. "We still have this big concern around inflation, and we know that consumers across the spectrum are feeling the pressure of high prices," Bostic added.

Job Market Cools But Remains Stable

Bostic's comments followed the release of December's employment data, which provided new context on the state of the labor market. The report showed:

• A modest payroll gain of 50,000 jobs.

• A decline in the unemployment rate to 4.4%, down from 4.5% the previous month.

While acknowledging that labor markets have cooled, Bostic expressed some doubt that they are on a path toward significant weakness. This relative stability in hiring gives the Federal Reserve more time to deliberate before making a decision on interest rates, according to many economists.

Implications for Future Rate Cuts

The Fed's three-quarters of a percentage point in rate cuts last year was intended to support the job market while maintaining enough policy restraint to guide inflation back toward the 2% target.

Many economists still anticipate that the Fed will cut interest rates this year as price pressures ease and the effects of tariffs diminish. However, the steady employment figures reduce the immediate pressure on the central bank to act.

Housing Affordability Is a Supply Problem

When asked about a plan by President Donald Trump to direct $200 billion from government-sponsored housing companies to buy mortgage bonds, Bostic did not comment on the specific proposal.

Instead, he pointed to more fundamental issues driving housing costs. "I do think that a lot of the housing affordability challenges are about more than just financing," Bostic noted. "There's a supply and demand issue that has persisted in many major markets."

Bitcoin was trading near the $90,000 mark on Friday, finding stability after the U.S. Supreme Court delayed a key decision on Donald Trump's tariff policies, temporarily calming macroeconomic uncertainty across markets.

At the time of writing, Bitcoin's price stood at approximately $90,443, reflecting a 1% decline over the past 24 hours. Daily trading volume reached about $45 billion, while its total market capitalization fell slightly to $1.80 trillion.

Figure 1: Bitcoin's recent price chart shows tight consolidation around the $90,800 level, reacting to macroeconomic developments.

Despite the minor drop, the asset remains in a tight trading range. It is currently trading about 2% below its seven-day high of $91,839 and just 1% above its seven-day low of $89,671. Meanwhile, Bitcoin's circulating supply has reached 19,973,659 BTC, moving ever closer to its hard cap of 21 million coins—a core feature supporting its long-term value proposition.

Macro News Steadies BTC Price Above $90,000

Crypto markets initially showed signs of weakness this week as traders braced for a potential Supreme Court ruling on the legality of Trump-era global tariffs. The decision was widely seen as a major catalyst for broader market movements.

However, prices recovered on Friday after the court announced it would delay its ruling until the following week. This postponement reduced the immediate risk of market disruption, providing a lift to equities, bonds, and digital assets.

Analysts noted that the delay specifically eased concerns over a scenario where the U.S. Treasury might have to refund over $130 billion to importers if the tariffs were deemed illegal. Such an event could have created significant fiscal disruption.

The market's reaction underscores Bitcoin's growing sensitivity to macroeconomic factors, including shifts in policy expectations, liquidity conditions, and geopolitical events. While long-term adoption trends remain a primary driver, major legal and political developments continue to heavily influence its short-term price action.

Technical Outlook: Bitcoin Consolidates After January Rally

Bitcoin's current price stability represents a cooling-off period following a surge in the opening days of the year. That early-January rally boosted bullish sentiment but eventually met resistance, triggering a round of profit-taking that stalled its momentum.

From a technical perspective, traders are closely watching the $90,000–$91,000 zone as a critical area of support.

• A sustained break below this level could open the door to further downside, potentially pushing the price toward the high-$80,000 range.

• Conversely, a decisive move back above $92,000 would signal renewed strength and likely clear a path toward higher resistance levels.

For now, Bitcoin remains locked in a consolidation pattern, with compressed volatility as traders await a new catalyst to dictate the next major move.

Could the U.S. Government Become a Major Bitcoin Buyer?

Looking ahead, Cathie Wood of ARK Invest recently suggested that political dynamics could lead the U.S. government to begin actively purchasing Bitcoin by 2026. In a podcast, Wood argued that cryptocurrency has become an important political issue for President Trump, which could shape future policy.

While the United States currently holds a Bitcoin reserve composed of seized assets, Trump has pledged not to sell any of it. Wood believes the administration's stance could evolve from merely holding confiscated coins to making outright purchases for a national strategic reserve. She noted that the original goal was to acquire one million BTC.

Crypto has also grown into an organized political force, supporting Trump and engaging with the White House through donations and events. This growing influence, combined with executive orders that have already established a reserve and stockpile, sets the stage for a potential policy shift.

Wood sees direct government purchases as a potential market inflection point. With nearly 20 million of the total 21 million BTC already mined, U.S. government buying would introduce a massive new source of demand, likely having a significant positive impact on the Bitcoin price.

As of the time of writing, Bitcoin is priced at $90,814.

Recent reports suggest China is preparing to approve the import of older-generation Nvidia artificial intelligence (AI) chips, potentially reopening a critical market for the U.S. chipmaker after a previous ban.

While details are still emerging, regulators will reportedly allow sales of these AI processors to commercial and technology customers. However, significant limitations will apply. The Chinese government is expected to prohibit the use of these chips by government agencies, military operations, critical infrastructure, and state-owned businesses due to security concerns.

Figure 1: Nvidia's powerful AI processors, typically housed in data center servers like these, are at the heart of renewed trade discussions between the U.S. and China.

Sizing Up the Market Opportunity

The financial stakes for Nvidia are enormous. In calendar 2024, the last full year of sales to China, the company generated $17.1 billion in revenue from the country despite initial export restrictions on its most advanced chips. Nvidia later estimated it absorbed an $8 billion revenue hit from expanded U.S. export controls.

Nvidia CEO Jensen Huang has highlighted the "very high" demand for the company's chips in China, suggesting that approved sales could exceed $50 billion annually. This figure may even be conservative.

According to a Reuters report, Nvidia has already received orders from Chinese customers for over 2 million H200 chips, priced at $27,000 each. This alone translates to approximately $54 billion in potential revenue. After accounting for a 25% export levy payable to the U.S. government, Nvidia could still clear more than $40 billion from these existing orders.

Impact on Nvidia's Financial Outlook

Crucially, potential sales to China are not included in Nvidia's current financial guidance, meaning any revenue would represent a significant boost to its forecasts. This comes as the company already expects to generate $500 billion from its AI-focused data center processors in the six quarters ending in early 2027—a figure Huang recently hinted was too conservative.

A return to the Chinese market could dramatically alter Nvidia's financial trajectory. Here’s a breakdown of the potential impact:

• Revenue Boost: Analysts currently forecast Nvidia's revenue for next year at $320 billion. An additional $40 billion would represent a major increase.

• Earnings Per Share (EPS): With a net profit margin of 56%, a $40 billion revenue injection could potentially drive the company's EPS to $8.29.

• Stock Price: Applying Nvidia’s current price-to-earnings (P/E) ratio of approximately 46 to that new EPS figure would imply a share price of around $380—more than double its present level.

Simply put, Nvidia's reentry into the Chinese market could unlock substantial growth and deliver a windfall for its shareholders.