Netanyahu’s Concepts Collapsed, One By One, As Trump Piled On Pressure: What Next for His Government?

Political

Middle East Situation

Summary:

With the return of hostages, the illusion of ‘total victory’ has passed. Calls for elections in Israel may grow, but Netanyahu will be keen to delay.

It took nearly two years of war, relentless protests demanding the release of hostages, and one energetic and determined American president to achieve what had seemed unachievable. President Donald Trump secured support from key Arab and Muslim countries, including Qatar and Turkey, and then forced an end to the war on both Israel and Hamas. Within days, the IDF withdrew most of its forces from Gaza and all 20 living Israeli hostages were released from captivity. International leaders then headed to a peace summit in Sharm al-Sheikh.

Netanyahu hadn’t been invited to the Sharm summit until he spoke with Egyptian President Abdel Fattah al-Sisi in Trump’s presence. For a second, Netanyahu actually considered sitting at the same table with Palestinian President Mahmoud Abbas to discuss peace, Gaza’s reconstruction, and what now appears to be the inevitable participation of the Palestinian Authority (PA) in this process (though he ultimately decided against attending). Watching these fast-paced events unfold was as surreal as witnessing Netanyahu’s public apology to Qatari leadership last month – with Trump watching carefully.

The prime minister’s position has changed dramatically. But how likely is it that he loses his grip on power?

The end of ‘total victory’

Just weeks ago, Netanyahu angrily dismissed anyone who suggested the war should end with a deal, insisting instead on ‘total victory’ – the promise he’d made from the first days of the Gaza war. He rejected the idea that Hamas’s disarmament should be deferred to the future, to allow the release of the hostages. He said ‘no’ to any PA involvement in Gaza’s reconstruction. And he insisted on providing only limited humanitarian aid through the Israeli-backed GHF, a failed project that has since been dismantled.

Those positions helped sustain the support of his far-right coalition partners, including Bezalel Smotrich and Itamar Ben-Gvir. But they have threatened to quit over Trump’s peace deal and voted against the first stage. The second stage – which includes Hamas disarmament, Gaza reconstruction, the PA’s return to Gaza, and a path toward Palestinian sovereignty – has not even been voted on yet.

In his recent speech, Netanyahu defended and even praised the deal, claiming Israel had received everything it wanted. That may well be true, but this deal also contradicts everything Netanyahu has preached for many years. Within days, the Rafah crossing between Gaza and Egypt will reopen, secured by Palestinian policemen trained in Egypt, according to Palestinian sources. This represents a de facto return of the PA to Gaza and marks the beginning of reunification between Gaza and the West Bank.

The uncertain future for Netanyahu

Since the early 2010s, Netanyahu’s strategy has been ‘divide and rule’ – preventing any opportunity for negotiations and any prospect of Palestinian statehood. This included weakening the PA in the West Bank while keeping Hamas alive in Gaza. Every single move – the pro-settlement policy in the West Bank and the Qatari suitcases of US dollars delivered to Hamas with Israel’s approval – served this goal.

For some time, Netanyahu genuinely believed he could have it all: lucrative peace deals with Arab states while ‘managing the conflict’ with Palestinians. This strategy disintegrated during the 7 October massacres, when 1,200 Israelis, mostly civilians, were slaughtered by Hamas.

The prolonged war that followed and the acute humanitarian crisis and human tragedy it created in Gaza caused the world to turn away from Netanyahu. Indeed, Saudi officials interviewed by Israeli media in recent days made clear that Saudi Arabia will not join the Abraham Accords as long as Netanyahu remains in power.

Ultimately, Netanyahu decided not to participate in the Sharm al-Sheikh peace summit. Nonetheless, the decisions made there will bind him and his government. His coalition members currently prefer to emphasize only the part of the agreement that returned the hostages. But there is clearly much more at stake, as detailed in Trump’s 21-point plan.

The state of the coalition

It remains to be seen how Netanyahu’s coalition partners will react to unfolding events in Gaza. The PA’s influence looks set to grow. The timeline for Hamas disarmament is delayed and indefinite. And the path to Palestinian statehood is now clearly backed by a decisive majority of the international community.

If Bezalel Smotrich and Itamar Ben-Gvir do not resign over these issues, Netanyahu’s government could still survive for several months: elections are scheduled by law for late 2026. However, demands for a committee to investigate the security failures that led to 7 October will loom over the government, especially since the prime minister confirmed such a committee can only be formed after the war ends. Advancing a conscription bill, in order to ensure that the Ultraorthodox men will not serve in the army, will also pose problems in a country that has just lost 915 soldiers – men and women – in combat.

The chances of early elections are significant, though not certain. According to polls, Netanyahu’s Likud party would be unable to form a coalition, even accounting for its recent slight growth in support.

This means the prime minister may try to delay elections until he believes his chances of winning have improved. Prior to Trump’s visit to Israel, Netanyahu had threatened that Israel would return to fighting to eliminate Hamas, if any terms of the deal were violated. It seems now that even his far right wing partners understand that will be impossible for the time being, in light of Trump’s determination to end the war.

Netanyahu’s policies have collapsed, one by one. But the camp of those who still support them remains significant. Also, there is a lot of uncertainty about what will happen next in the West Bank. It is unclear whether the far-right wing partners of Netanyahu will get a free hand there to expand settlements and build new ones.

It is also unclear whether the Israeli opposition – weak and fragmented – will find the courage to call the prime minister’s bluff and offer the nation a different path: one of peace and reconciliation. Only then will the course of Israeli politics, and Israel’s fate, change dramatically – away from endless wars and illusions of ‘total victory’, to dialogue, cooperation and peace.

Source: Chatham House

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Gerik

Economic

On October 14, 2025, gold continued its rally, fueled by political instability, the "debasement" of fiat currencies, and rising global debt. While the U.S. stock market and cryptocurrencies recovered from a recent downturn, gold’s performance stood out as a clear safe haven amid ongoing trade tensions between the U.S. and China. The divergence in performance between gold and digital assets, especially Bitcoin, highlights key differences in their role as hedges during times of market stress.

The Role of Gold as a Safe Haven

Gold has had a historic rally this year, driven by concerns over economic instability and inflation, which have made it a go-to asset for investors seeking stability. The precious metal’s steady rise during periods of market volatility reinforces its status as a traditional store of value. This was evident during the recent market turmoil triggered by U.S.-China trade tensions. When President Trump announced plans for additional tariffs on China, global markets reacted swiftly. However, after Trump dialed back his rhetoric, both stocks and cryptocurrencies made a comeback. Gold, in contrast, remained a steady performer, continuing to benefit from investor appetite for safer assets.

Cryptocurrency Volatility and Divergence from Gold

Cryptocurrencies, particularly Bitcoin, have demonstrated greater volatility during market sell-offs. While Bitcoin surged to new highs prior to the U.S.-China trade tensions, it faced a sharp decline in the aftermath, falling by roughly 10% from $122,000 to as low as $109,000. This sell-off, along with significant drops in other altcoins, led to a contraction in the overall cryptocurrency market by hundreds of billions of dollars, according to CoinMarketCap data. The rapid price swings and intense volatility highlight the differences between crypto and gold as financial refuges.

The cryptocurrency market’s 24/7 trading window allows traders to react immediately to market events. However, during times of distress, such as the recent geopolitical uncertainty, crypto traders sold off their positions quickly, reflecting the asset's inherent instability. This stands in contrast to gold, which, despite the market's fluctuations, maintained its reputation as a stable, long-term store of value.

Bitcoin and the Stock Market Correlation

While cryptocurrencies like Bitcoin have been lauded for their potential to challenge traditional financial systems and act as a hedge against fiat currency debasement, they often move in correlation with the broader stock market. During moments of distress, when stock prices fall, cryptocurrencies tend to follow suit, amplifying both the potential gains and losses. This behavior contrasts with gold, which tends to act independently from stock market fluctuations, making it a more reliable safe haven in times of geopolitical or economic uncertainty.

The divergence between gold and cryptocurrencies highlights the distinct roles each asset plays in global markets. While gold continues to shine as a stable store of value amid economic uncertainty, cryptocurrencies like Bitcoin remain highly volatile, subject to rapid price swings driven by market sentiment. As trade tensions and global economic instability continue to shape investor behavior, gold’s status as a safe haven is reinforced, while cryptocurrencies may face more challenges in solidifying their position as a reliable alternative. For now, gold remains the go-to asset during times of distress, while cryptocurrencies continue to wrestle with their role in a broader financial ecosystem.

Source: Yahoo Finance

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Glendon

Economic

Forex

US customs authorities began collecting fees from Chinese-built and -operated merchant ships bringing goods into American ports on Tuesday, one more move in a series aimed at curbing China’s economic dominance.

The Trump administration has said the revenue collected would be used to support US shipbuilding resurgence, though there’s no mechanism in place yet for funding the industrial policy. The plan had become one of several points of contention in the US-China trade war, and at the end of last week Beijing announced its own retaliatory proposal to charge vessels with more than 25% US-ownership or control a hefty fee upon entry to Chinese ports.

That announcement — along with China’s threat of further curbs on critical mineral exports among other provocations — saw President Donald Trump kick off the weekend with a threat to slap an additional 100% import duty on goods from China as well as export controls on “any and all critical software” beginning Nov. 1.

The shock announcements sent markets into turmoil, as maritime analysts and commodities traders attempted to parse the implications for the flow of global raw materials and the shipping industry.

While there aren’t many US-headquartered shipping companies left, “there’s a substantial amount of American capital embedded throughout the industry,” said James Lightbourn, founder of Cavalier Shipping.

Beijing’s Response

China’s proposal had the potential to raise prices much more so than the US plan is expected to because most companies have already redeployed any Chinese-made vessels in their fleets to avoid the US — and the fees, said Lightbourn.

“China, on the other hand, is such a major destination for bulk commodity exports — such as crude oil and iron ore — that this type of geographical reshuffling would have been much less of a realistic tactic for US-linked shipping companies,” Lightbourn said in an email to Bloomberg.

The Ministry of Transport has since exempted US-owned ships that were built in China, which Lightbourn called a “clever touch,” he said.

The ship fees are latest in the tit-for-tat, unpredictable trade war of Trump’s second term. And while it’s still early to see the fallout from the highest US tariffs in nearly a century and supply chain uncertainty abounds, data show so far that global trade has held up better than many expected.

A new edition of DHL’s Global Connectedness Tracker, released Tuesday with New York University’s Stern School of Business, shows international flows of trade and capital investment has remained surprisingly resilient despite the quickly changing policy coming out of Trump’s second term.

Trade Resilience

Among the takeaways: In the first half of the year, global goods trade grew faster than any other half-year since 2010, with the exception of the volatile pandemic period. U.S. imports surged earlier in the year as cargo owners frontloaded purchases ahead of tariff hikes. At the same time, China’s export growth remained positive despite steep declines in shipments to the US.

“A key factor behind the expected resilience of trade growth is the relatively modest role the US plays in global trade — accounting for just 13% of global goods imports and 9% of exports in 2024 — and the fact that other countries have not followed the US on its current path of across-the-board tariff increases,” wrote the DHL-NYU study authors.

The tariff impact on consumer prices has also been relatively muted so far, though according to a new analysis from Goldman Sachs, that may be about to change.

US consumers will likely shoulder 55% of tariff costs by the end of the year, with American companies taking on 22%, Goldman Sachs analysts wrote in a note to clients this week. Foreign exporters would absorb 18% by cutting prices for goods, while 5% would be evaded, they wrote. (See Katia Dmitrieva’s full story here.)

Goldman’s latest report doesn’t include Trump’s most recent threats. “We are not assuming any changes to tariff rates on imports from China, but events in recent days suggest large risks,” the analysts wrote.

Indeed, US tariffs on imported timber, lumber, kitchen cabinets, bathroom vanities and upholstered furniture also kicked in on Tuesday, and USTR investigations expected to result in duties on sectors ranging from industrial robots, to semiconductors to medical devices are underway.

Just minutes after the ship fees took effect, Beijing announced curbs on five US units of Hanwha Ocean — one of South Korea’s biggest shipbuilders —in response to the probes of Chinese maritime industries. Meanwhile, the Ministry of Transport also said it was probing the USTR’s investigation into China’s maritime sector and may implement retaliatory measures.

Source: Bloomberg Europe

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Economic

Forex

The U.S. dollar strengthened on October 14, 2025, hitting its highest point since August 1. The rally came as fresh trade frictions between the U.S. and China unnerved investors, driving them towards safe-haven assets. The Bloomberg Dollar Spot Index rose by 0.3%, reflecting the greenback's renewed appeal in times of heightened geopolitical risk. This shift was accompanied by a decline in global stock markets, with government bonds also benefiting from the risk-off sentiment.

Impact of U.S.-China Trade Tensions

The escalation of trade tensions between the U.S. and China played a key role in the dollar’s advance. As markets digested the latest developments, including sanctions and retaliatory actions between the two nations, risk assets took a hit, and investors sought refuge in safer currencies. The Australian dollar, often viewed as a barometer of global risk sentiment, was one of the hardest hit, falling 1% to its lowest level in nearly two months. Similarly, the British pound also struggled, reaching a two-month low following weaker-than-expected labor data from the U.K.

The renewed status of the U.S. dollar as a safe-haven asset has provided the currency with a "few extra bits of bullish momentum," according to analysts at ING, suggesting that the dollar could continue to benefit in the near term. The options markets reflect this growing demand for bullish dollar exposure, particularly against the Australian dollar, British pound, and Canadian dollar. As investors seek to hedge against potential further declines in risk assets, the dollar has emerged as a preferred choice.

The Yen and Political Uncertainty in Japan

While the U.S. dollar strengthened, the Japanese yen experienced a mixed performance. The yen was the only G-10 currency to show strength on Tuesday, supported by its safe-haven status. However, ING analysts noted that the yen remains undervalued, and any easing of political uncertainty in Japan could provide the yen with further upward momentum. This is especially relevant as traders assess the ongoing Japanese political situation, which could influence the currency's future movements.

Market participants are also closely watching a keynote speech by Federal Reserve Chair Jerome Powell later on Tuesday, with traders eager for insights into whether recent market pricing on the central bank's outlook might be too dovish. Powell’s comments could provide further direction for the U.S. dollar, particularly if they signal any shifts in the Fed's policy stance amid rising concerns about global trade dynamics.

In conclusion, the U.S. dollar’s rally amid rising trade tensions with China underscores its role as a safe-haven asset in uncertain times. With options markets signaling strong demand for dollar exposure, especially against risk-sensitive currencies like the Australian dollar and the British pound, the dollar may continue to strengthen. However, developments in Japan’s political landscape and potential clues from Federal Reserve Chair Jerome Powell’s speech will be key factors in determining the dollar’s trajectory in the coming weeks.

Source: Bloomberg

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Samantha Luan

Economic

Commodity

Forex

Political

Gold has staged a dramatic rally this year as Russia’s war in Ukraine and the US Trump administration’s unorthodox economic policies sent investors and central banks reaching for safe-haven assets. Right now, however, it’s silver that’s stealing the spotlight.A squeeze in supply of the precious metal has catapulted it to a 70% gain on the London market this year, compared with a 55% increase for gold as of mid-October. Both have been experiencing a surge in demand from investors, who value their price stability through periods of political instability, inflation and currency weakness.

Unlike gold, silver isn’t just scarce and beautiful: It also has useful real-world properties that make it a valuable component in a range of products. With inventories at their lowest in years and investors still scrambling for more, there’s a risk of supply shortages that could impact multiple industries.Political and fiscal uncertainty this year in major economies including the US, France and Japan is putting pressure on their currencies, and investors have been hedging their exposure to US dollars, euros and yen by acquiring assets like gold and silver in what’s been termed the “debasement trade.”

Silver is an excellent electrical conductor that’s used in circuit boards and switches, electric vehicles, batteries and solar panels. It’s also used in coatings for medical devices. And like gold, it’s still a popular ingredient for making jewelry and coins. As a tradable asset, it’s cheaper than gold per ounce, making it more accessible to retail investors, and its price tends to move more sharply during precious metal rallies.China and India remain the top buyers of silver, thanks to their vast industrial bases, large populations and the important role that silver jewelry continues to play as a store of value passed down the generations.

Governments and mints also consume large quantities of silver to produce bullion coins and other products.

Silver’s varied uses mean its market price is influenced by a wide array of events including shifts in manufacturing cycles and interest rates and even renewable energy policy. When the global economy accelerates, industrial demand tends to push silver higher. When recessions loom, investors often step in as alternative buyers.The market is thinner than with gold. Daily turnover is smaller, inventories are tighter and liquidity can evaporate quickly. That isn’t because there is less silver than gold available for trading. In fact, it’s the opposite: There are about 790 million ounces of silver in vaults overseen by the London Bullion Market Association, compared with 284 million ounces of gold. But silver is far less valuable per weight. The silver stored in London is worth about $40 billion, while the gold is worth $1.1 trillion.

LBMA data show silver inventories in London — the backbone of the global trade — have dropped by roughly a third since mid-2021, leaving less metal available for lending or delivery. Global demand for silver has outpaced the output from mines for four consecutive years, eroding the supply buffer once held in London. Meanwhile, silver-backed exchange-traded funds have drawn in new investment, forcing custodians to secure physical bars just as available supply was dwindling.

A proposed US tariff on certain imported metals earlier this year added fuel to the fire, spurring speculative buying and depleting inventories even further. Spot prices in London are trading at multi-year premiums to futures in New York.

The result has been strained liquidity and a scramble to secure silver bars.

The country’s festive season, culminating in Diwali on Oct. 20, is traditionally a peak period for precious metal buying. Silver imports have nearly doubled from last year as jewelers rushed to restock amid soaring bullion prices.Indian buyers are now paying premiums of 10% or more over global benchmark prices, underscoring how tight physical supply has become. That demand has siphoned off even more metal from Western vaults, worsening the squeeze.

Some traders have been booking space on transatlantic cargo flights for bulky silver bars — an expensive transport method typically reserved for gold — to capture price differentials between London and New York.For sectors like solar panel manufacturing, in which silver paste is a critical ingredient, sustained high prices could begin to erode profitability and spur efforts to substitute silver components for other metals.

Global mine production has been constrained by declining ore grades and limited new project development. Mexico, Peru, and China — the top three producers — have all faced setbacks ranging from regulatory hurdles to environmental restrictions. Reshuffling inventory from New York to London might solve the immediate crisis, but it won’t fix persistent supply deficits.

Whether the market finds a balance — or faces another bout of panic buying — will depend on how quickly new supply can reach the vaults.

Source: Bloomberg Europe

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Gerik

Economic

Stocks

According to a recent survey by Bank of America (BofA), 54% of global fund managers now believe that artificial intelligence (AI) stocks are in a bubble, a stark shift from last month’s survey when concerns about tech stock valuations were more muted. The latest findings reflect growing unease about the rapid surge in AI-related stocks, which have driven U.S. equity markets to multiple record highs this year. This surge has pushed the tech-heavy Nasdaq 100 index up by 18%, raising questions about whether the rally has overshot the earnings outlook for the sector.

AI Stocks and Market Valuations

The recent surge in AI stocks has led to a significant increase in the forward price-to-earnings ratio of the Nasdaq 100, now nearing 28, which is above the historical average of 23 over the past decade. The BofA survey reveals that concerns about the overvaluation of tech stocks have intensified, with more than half of fund managers now seeing AI stocks as overpriced. Despite this, some analysts, including strategists at Goldman Sachs, caution that it may still be too early to label the market as a bubble.

The overwhelming optimism surrounding AI spending and the productivity benefits it promises has driven the tech sector’s impressive performance, but many investors are now questioning whether the market’s valuation reflects its actual earnings potential. This has led to fears that the rapid rise in AI stocks may be unsustainable in the long term.

Shifts in Fund Managers’ Sentiment

The BofA survey also highlights a shift in fund managers' equity allocations, with exposure to U.S. stocks rising to its highest level in eight months, reflecting increased confidence in the U.S. market. However, this optimism is tempered by concerns about AI stocks and the private credit market. While fears of a U.S. recession have eased, the recent rise in global geopolitical tensions, particularly between the U.S. and China, has added uncertainty to the outlook.

The survey found that AI-related risks are now considered the biggest tail risk for the global market, followed closely by concerns about rising inflation and the potential erosion of the Federal Reserve's independence. These worries reflect a broader unease about the long-term stability of the market, despite current optimism.

Geopolitical Tensions and Market Impact

Amid the growing concerns over AI valuations, the mood in the market has been further dampened by renewed fears of a U.S.-China trade war. These concerns have weighed on the performance of U.S. stocks, with the Nasdaq 100 leading the declines. Futures for the benchmark index were down about 1% on Tuesday, reflecting broader investor caution.

The latest Bank of America survey underscores growing concerns about the sustainability of the AI stock rally and the broader market's valuation. While the U.S. equity market remains an attractive destination for many investors, especially in the tech sector, fears of an AI bubble and geopolitical risks, particularly the ongoing U.S.-China tensions, have begun to temper sentiment. As market participants weigh these risks, the future trajectory of AI stocks remains uncertain, and cautious optimism may be the prevailing sentiment in the months ahead.

Source: Yahoo Finance

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Gerik

Economic

Cryptocurrency

The cryptocurrency market experienced a sharp downturn on October 14, 2025, losing more than $150 billion in market value over a 24-hour period. This significant drop followed a brutal liquidation event that saw $19 billion of leveraged positions wiped out in a historic selloff. Major digital assets, including Bitcoin and Ether, slumped as much as 3.75% and 7.5%, respectively, as tensions between the U.S. and China continued to escalate, causing further volatility in the global financial markets.

China’s Retaliation Against the U.S.

The crypto market’s sharp decline coincided with China’s retaliatory measures against the U.S. in the ongoing trade dispute. On Tuesday, China sanctioned U.S. subsidiaries of South Korean shipbuilding giant Hanwha Ocean, in response to U.S. sanctions targeting China’s maritime industry. This move exacerbated market concerns, particularly as U.S. President Donald Trump had previously threatened China with additional tariffs, further inflaming the situation. The growing geopolitical instability contributed to a risk-off sentiment among investors, leading to widespread selloffs in both traditional and digital asset markets.

Impact on Cryptocurrencies

Bitcoin, the world’s largest cryptocurrency by market capitalization, fell to approximately $111,500, marking a 3.75% decline. Ether, the second-largest digital asset, dropped by 7.5%, falling below the $4,000 mark. Smaller, more volatile cryptocurrencies also saw significant losses, deepening the downturn. The combined market value of all cryptocurrencies fell by over $150 billion, according to CoinGecko data, highlighting the broad scale of the selloff.

While digital assets briefly rebounded on Monday, most major tokens have since resumed their descent. The rapid decline reflects growing unease among investors, particularly in light of the tense geopolitical environment and the looming threat of further U.S. tariffs on Chinese goods.

Investor Nervousness and Market Consolidation

The market’s response to the selloff has been one of caution, with many investors pulling funds from exchange-traded funds (ETFs) linked to Bitcoin and Ether. On Monday, $756 million was withdrawn from U.S.-based Bitcoin and Ether ETFs, underscoring the nervousness that has taken hold of crypto investors. Analytics firm Glassnode noted that the market has entered a consolidation phase, characterized by renewed caution and more selective risk-taking. As a result, the rebuilding of investor confidence is likely to be slow and measured in both the spot and derivatives markets.

The $150 billion loss in the cryptocurrency market highlights the vulnerability of digital assets to external factors, particularly geopolitical tensions. As the U.S. and China continue to clash over trade issues, the impact on global markets, including cryptocurrencies, is becoming more pronounced. With investor sentiment subdued and market volatility heightened, the crypto sector faces a period of consolidation and uncertainty as it navigates these turbulent times.