Silicon Valley Defense Startups Confront Growing Pains as Pentagon Integration Challenges Mount

Economic

Summary:

U.S. defense startups, backed by Silicon Valley capital, have rapidly gained traction through innovation in autonomous weapons and AI systems....

From Drones to Defense Contracts: Startups Hit Scaling Roadblocks

After a meteoric rise in attention and valuations, Silicon Valley–backed defense startups are entering a new, more difficult phase. Once admired for agile innovation and cutting-edge AI-driven military technologies, these companies are now grappling with the structural and operational challenges of building weapons at scale. Their recent success, amplified by the effectiveness of drones in the Russia-Ukraine war, brought a surge of Pentagon interest and funding. However, that same spotlight has exposed their limited manufacturing capabilities and unfamiliarity with the defense sector’s rigid procurement systems.

Startups such as Saronic Technologies and Anduril Industries exemplify the sector’s explosive growth. Saronic, which develops unmanned naval drones, reached a $4 billion valuation in February and is building a shipyard in Louisiana. Anduril, founded by Oculus creator Palmer Luckey, doubled its valuation to $30 billion by June. Meanwhile, Chaos Industries, a sensor and radar tech firm, also saw its valuation double to $4.5 billion after a recent funding round. But turning these valuations into long-term defense supply contracts requires more than technological innovation.

Pentagon Contracts Rise, but the Path to Scale Remains Elusive

According to Govini, a defense analytics firm, startup firms now command 1.3% of U.S. defense contracts, up from 0.6% last year a clear sign of growing inclusion in Pentagon procurement. Despite this, the traditional defense "primes" like Lockheed Martin, Boeing, RTX, and Northrop Grumman still dominate, holding over 92% of contract value. This contrast illustrates a fundamental bottleneck: while the Department of Defense is experimenting with startups, the bulk of major programs continues to flow to legacy contractors.

Christopher Calio, CEO of RTX (formerly Raytheon Technologies), emphasized this barrier: “It’s one thing to design and innovate. It’s another thing to build a prototype, and then it’s an entirely different ball game to scale manufacturing.” This sentiment reflects the causal relationship between scale and institutional trust: without demonstrating the ability to mass-produce and deliver reliably, startups will remain confined to small, exploratory contracts.

Cultural Divide and Pentagon Resistance to Change

The annual Reagan National Defense Forum, held this week in Simi Valley, California, revealed a telling juxtaposition: traditional defense CEOs in suits exchanging ideas with hoodie-wearing startup founders. U.S. Defense Secretary Pete Hegseth acknowledged the urgency of evolving the system, pledging to “transform the entire acquisition system to rapidly accelerate the fielding of capabilities and focus on results.”

However, deep-rooted obstacles persist. Entrenched political interests, legacy project backlogs, and a bureaucratic acquisition system designed around multibillion-dollar programs present systemic resistance. According to Zach Shore, chief revenue officer at Hermeus (a hypersonic aircraft startup), most firms struggle to move from $10–30 million prototype awards to full production-scale programs. This reveals a persistent structural barrier: despite policy rhetoric, the Pentagon’s procurement architecture remains largely inaccessible to newcomers beyond the pilot stage.

New Partnerships Signal a Shifting Landscape

While challenges remain, some large defense players are beginning to recognize the innovation edge that startups bring. L3Harris Technologies CEO Chris Kubasik highlighted the need for collaboration: “We need to leverage the established companies and the new entrants.” Recent partnerships support this idea. For example, Shield AI has partnered with HII, America’s largest military shipbuilder, to co-develop autonomous naval vessels. Anduril has also joined forces with South Korea’s HD Hyundai Heavy Industries for military and commercial shipbuilding.

These collaborations could serve as a bridge over the “valley of death” many startups face a term referring to the phase between innovation and sustainable revenue from large-scale contracts. JPMorgan CEO Jamie Dimon, who recently committed $10 billion in equity investments to defense tech and manufacturing, warned that legacy firms are not immune to stagnation. “There’s a valley of death for big companies too, driven by complacency, arrogance, bureaucracy,” he stated, underscoring the risk of institutional inertia in both old and new players.

A Tipping Point in U.S. Defense Innovation

Silicon Valley’s growing presence in U.S. defense contracting marks a significant cultural and technological shift. Yet, despite impressive valuations and media attention, the challenge remains deeply structural. Scaling up to meet Pentagon demands requires more than technical prowess it demands long-term manufacturing capabilities, patient capital, and systemic procurement reform.

As innovation pressure builds particularly with geopolitical concerns such as China’s military expansion the Pentagon’s ability to integrate nimble startups into its traditionally slow-moving system could determine the future shape of U.S. military competitiveness. In the words of Anduril’s strategy head Zach Mears, “The light switch is in the middle of being flipped.” Whether it stays on will depend on whether startups can transition from flashy prototypes to full-fledged defense partners and whether Washington lets them.

Source: Reuters

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Samantha Luan

Political

Economic

Key points:

· Firefighter dies after struck by tree

· Sixteen homes lost on Central Coast region in New South Wales

· Tasmania blaze destroys 19 homes at Dolphin Sands

An Australian firefighter was killed overnight after he was struck by a tree while trying to control a bushfire that had destroyed homes and burnt large swathes of bushland north of Sydney, authorities said on Monday.

Emergency crews rushed to bushland near the rural town of Bulahdelah, 200 km (124 miles) north of Sydney, after reports that a tree had fallen on a man. The 59-year-old suffered a cardiac arrest and died at the scene, officials said.

Prime Minister Anthony Albanese said the "terrible news is a sombre reminder" of the dangers faced by emergency services personnel as they work to protect homes and families.

"We honour that bravery, every day," Albanese said in a statement.

More than 50 bushfires were burning across the state of New South Wales as of Monday morning. A fast-moving fire over the weekend destroyed 16 homes in the state's Central Coast, home to about 350,000 people and a commuter region just north of Sydney.

Resident Rouchelle Doust, from the hard-hit town of Koolewong, said she and her husband tried to save their home as flames advanced.

"He's up there in his bare feet trying to put it out, and he's trying and trying, and I'm screaming at him to come down," Doust told the Australian Broadcasting Corp.

"Everything's in it: his grandmother's stuff, his mother's stuff, all my stuff - everything, it's all gone, the whole lot."

Conditions eased overnight, allowing officials to downgrade alerts to the advice level, the second-lowest danger rating.

On the island state of Tasmania, a 700-hectare (1,729 acres) blaze at Dolphin Sands, about 150 km (93 miles) northeast of the state capital of Hobart, destroyed 19 homes and damaged 40. The fire has been contained, but residents have been warned not to return as conditions remain dangerous, officials said.

Authorities have warned of a high-risk bushfire season during Australia's summer months from December to February, with increased chances of extreme heat across large parts of the country following several relatively quiet years.

New South Wales is among Australia's most wildfire-prone regions, with some experts saying climate change is increasing the danger. Australia's "Black Summer" fires of 2019-2020 destroyed an area the size of Turkey and killed 33 people.

Source: TradingView

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Adam

Stocks

U.S. stock futures were little changed Monday, consolidating after two straight weekly gains with investors turned their attention to this week’s Federal Reserve meeting, which is widely expected to deliver an interest-rate cut.

At 05:35 ET (10:35 GMT), Dow Jones Futures slipped 3 points, or 0.1%, while S&P 500 Futures inched 8 points, or 0.1%, higher and Nasdaq 100 Futures gained 65 points, or 0.3%.

All three major U.S. stock indexes recorded positive weeks last week, their second in a row, with the S&P 500 and NASDAQ Composite also notched four-day winning streaks on Friday, while the Dow Jones Industrial Average has been positive in three of the last four sessions.

Caution ahead of Fed decision

This positive tone exists as many investors expect the Fed to ease monetary policy on Wednesday, especially after the delayed release of September’s core personal consumption expenditures price index — the Fed’s preferred inflation gauge — came in softer than expected on Friday.

That cooler inflation reading, combined with signs of a softening labor market and fragile consumer spending, has reinforced the case for the Fed to provide more policy support.

There’s little in the way of economic data to change the narrative Monday, although Tuesday’s JOLTS job openings data could take on additional importance given the monthly official jobs report is now being released after the Fed meeting.

Fed funds futures are pricing in a roughly 88% chance of a Fed cut, according to CME’s FedWatch tool.

The language used by the Fed officials, especially in the post-meeting statement and the projections for 2026, will be closely watched.

"The key question is what will the Fed signal for next year, given that we will be getting a new forecast update from them," ING analysts said in a note.

"As such, the most dovish they could possibly be is to put a second rate cut for their 2026 forecast, but they will be reluctant," they added.

Lululemon, Costco earnings awaited

Corporate earnings are also set to play a role in market direction, with results due from the likes of Lululemon , Costco , Broadcom, Oracle, and Adobe this week.

Separately, S&P Global said Carvana Co, CRH PLC , and Comfort Systems will join the S&P 500 index on Dec. 22, a change that typically sparks repositioning among index-tracking funds.

Crude hand back some gains

Oil prices slipped lower Monday, falling from near two-week highs on Monday as investors look to the Federal Reserve for guidance.

Brent futures dropped 0.9% to $63.20 a barrel, and U.S. West Texas Intermediate crude futures fell 0.9% to $59.54 a barrel.

Both contracts closed Friday’s trading session at their highest levels since November 18.

Aside from the Fed meeting, progress towards peace in Ukraine remains slow, and Reuters reported that the Group of Seven countries and the European Union are in talks to replace a price cap on Russian oil exports with a full maritime services ban, which would likely further curb supply from the world’s second-largest oil producer.

Source: investing

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Warren Takunda

Economic

China’s exports returned to growth in November after an unexpected contraction in October, pushing its trade surplus in dollar terms for 2025 past the $1 trillion mark for the first time, according to data released Monday.

Exports climbed 5.9% from a year earlier in November while imports rose just under 2%.

The customs data released on Monday also showed that shipments to the U.S. dropped nearly 29% year-on-year. But as trade with the U.S. weakens, China is diversifying its export markets throughout Southeast Asia, Africa, Europe and Latin America.

China’s exports had contracted just over 1% in October. November’s worldwide exports of $330.3 billion exceeded economists’ estimates. Imports totaled $218.6 billion for the month.

The nearly $1.08 trillion trade surplus for the first 11 months of this year is a record high, surpassing the $992 billion surplus for all of 2024, based on official data compiled by FactSet.

A year-long trade truce between China and the U.S. was reached at a meeting between U.S. President Donald Trump and Chinese leader Xi Jinping in late October in South Korea. The U.S. has lowered its tariffs on China, and China has promised to halt its export controls related to rare earths.“It’s likely that November exports have yet to fully reflect the tariff cut, which should feed through in the coming months,” ING Bank chief economist for Greater China Lynn Song wrote in a report.

China’s factory activity contracted for an eighth straight month in November, according to an official survey, and economists said it was still early to determine whether there was a real rebound in external demand following the U.S.-China trade truce.

With exports still going strong, economists generally expect China to meet its target of around 5% annual growth for this year.

Chinese leaders outlined a focus on advanced manufacturing for the next five years following a high-level meeting in October. It also highlighted the need to boost domestic consumption, which could help address trade imbalances.

A meeting of the ruling Chinese Communist Party’s decision-making Politburo was held on Monday, led by Xi, to discuss economic plans for 2026, according to the Xinhua state news agency. It said Chinese leaders reiterated a focus on “pursuing progress while ensuring stability.”

A readout from Xinhua said China needs to better coordinate its domestic economic work in the face of global “trade struggles.”

Businesses and investors are paying close attention to China’s annual Central Economic Work Conference, which is expected to take place later this month and could map out economic priorities for the next year in more details.

“Trade diversification will remain a long-term strategy for China to fight the trade war and manage external exigencies,” said Chi Lo, Global Market Strategist at BNP Paribas Asset Management.

The recent stabilization of trade relations with Washington is unlikely to last long and the global trade environment will probably continue to be volatile, he said, as China-U.S. relations “remain in a stalemate” despite their temporary trade truce.

Still, some economists believe that China will continue to gain export market share in coming years.

Morgan Stanley predicts by 2030, China’s market share in global exports will reach 16.5%, up from about 15% currently, fueled by its edge in advanced manufacturing and high-growth sectors such as electric vehicles, robotics and batteries.

“Despite persistent trade tensions, continued protectionism, and G20 economies taking up active industrial policies, we believe China will gain more share in the global goods export market,” Morgan Stanley Chief Asia Economist Chetan Ahya said in a recent note.

Source: AP

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Gerik

Economic

Ambitious Goals Meet Harsh Realities in Railway Overhaul

Argentina, a leading global exporter of soybeans, corn, and lithium, is embarking on an ambitious initiative to modernize and privatize its neglected freight railway network. The move, led by President Javier Milei, is a centerpiece of his broader strategy to reduce state burdens, attract foreign investment, and revitalize the economy. The first tender set for early 2026 will cover the Belgrano Cargas network, comprising the country’s three largest freight lines spanning nearly 8,000 kilometers.

The overarching goal is to drastically lower freight costs for inland producers and boost export competitiveness, especially from remote agricultural and mining regions. But while the plan holds long-term economic promise, the structural degradation of the railway system poses a steep challenge to implementation.

Historical Decline Undermines Present Capacity

According to Alejandro Núñez, president of Belgrano Cargas y Logística, Argentina’s current rail cargo volumes are lower than in 1970, despite agricultural output having multiplied sixfold since then. Today, the network transports just 7.5 million tons annually 60% of which are agricultural goods often on rails so deteriorated that derailments are common and cargo theft, especially of soybeans, is a recurring issue.

This mismatch between production growth and transport infrastructure exposes the core causal barrier to competitiveness: Argentina’s logistics system is outdated, inefficient, and overdependent on costly road freight. While rail accounts for just 5% of domestic cargo transport, Brazil moves 20% by rail and the U.S. and Canada exceed 40%.

Privatization Linked to Broader Economic Strategy

The privatization effort aligns with President Milei’s ideological push to shrink the public sector and attract capital into critical sectors. Officials view railway upgrades as essential to achieving the government’s export target of $100 billion annually by 2032, up from $71.5 billion recorded through October 2025. Foreign Minister Pablo Quirno has underscored that reducing inland transport costs especially from provinces like Salta to Rosario’s port zone will be key to this export push.

In practical terms, transporting grain from Salta to Rosario is currently more expensive than shipping the same volume from Rosario to Vietnam. This reveals a direct cost inefficiency rooted not in global trade dynamics, but in domestic infrastructure failure.

Investment Interest and Infrastructure Cost Outlook

The modernization plan will require significant capital. Núñez estimates a minimum of $800 million to bring current lines up to standard. That figure could rise substantially as additional 11,000 kilometers of idle rail lines are included in future tenders.

Major players are already showing interest. Grupo México Transportes (GMXT) is expected to bid and is reportedly prepared to invest up to $3 billion if awarded the contract. Media reports also suggest agricultural giants like Bunge, Cargill, and Louis Dreyfus, along with Rio Tinto, may join the bidding process. While none of the companies have publicly confirmed their plans, their involvement would inject considerable momentum into the project.

Boosting Agricultural and Mining Logistics

Experts argue that a revamped railway system could transform Argentina’s internal supply chain. Alfredo Sesé of the Rosario Stock Exchange notes that over half of Argentina’s agricultural production lies more than 300 kilometers from port. Given that trucking costs range from 7 to 9 cents per ton per kilometer, compared to rail’s sub-5 cent average, the savings from improved rail access would be substantial, especially for distant farms.

Mining, particularly lithium and copper, also stands to benefit. Roberto Cacciola of the Argentine Chamber of Mining Companies emphasized the need for reliable logistics to support existing projects and bring new extraction operations online in the coming years. As the world’s fourth-largest lithium exporter, Argentina is under pressure to streamline its mineral logistics to meet rising global demand.

While Argentina’s railway privatization and modernization initiative offers a bold blueprint for economic renewal, its success will hinge on overcoming entrenched inefficiencies, securing substantial investment, and navigating a complex political and logistical landscape. If realized, the project could redefine Argentina’s position in global grain and mineral markets. But with decades of underinvestment and structural decay to reverse, the journey from vision to reality will be a long one.

Source: Reuters

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Michelle

Stocks

Economic

It's been another frenetic year in China's electric vehicle market. Xiaomi continued its stunning rise from smartphone maker to EV darling, while market leader BYD's runaway growth stalled out.

Regulatory scrutiny increased, with policymakers focusing their attention on everything from the long-running price war, zero-mileage used cars and flush door handles.

Technology advances continued apace, with BYD and CATL going head-to-head to develop ultra-fast charging batteries and carmakers increasingly making advanced driver-assistance systems more widely available.

So what does 2026 have in store? Here are five key things to watch:

Can BYD Bounce Back?

BYD started this year with a target to sell 5.5 million vehicles, building on last year's record 4.25 million. But after a strong start, sales have tailed off — particularly after steep price cuts invoked the wrath of government regulators — forcing the company to lower its objective for this year. BYD's earnings have declined the past two quarters, and the stock has slumped around 36% from its May peak.

The question is whether this ends up being just a blip for China's biggest EV maker, or the start of a tougher phase as it faces increased competition from the likes of Geely and Xiaomi, as well as heightened regulatory scrutiny. Analysts are still bullish, with 34 rating the stock a buy, compared to just three sells, according to data compiled by Bloomberg.

Deutsche Bank analysts see BYD's ultra-fast charging batteries, God's-Eye driver-assist features and new models helping drive sales to 5.6 million units in 2026. Chairman Wang Chuanfu blamed BYD's slowdown in domestic sales on a lack of compelling technological upgrades and said during a shareholder meeting last week that breakthroughs are ahead in the years to come.

Competition Curbs

While China's auto industry has long been the beneficiary of government support, the tables turned somewhat this year as part of the country's anti-involution drive pushing back against aggressive price wars and industry overcapacity.

In June, the chiefs of major carmakers were summoned to Beijing and given a dressing down for their "rat race competition." The government also took aim at the practice of offloading unsold cars into the secondhand market while boosting sales figures.

A continued hard line from Beijing could act as a damper on the EV market in 2026. The government has yet to renew its trade-in subsidy that encourages drivers to swap older cars for EVs or more fuel-efficient models. Tax rebates are also set to be wound back next year ahead of their total abolition in 2027, as policymakers look to wean the sector off state support.

The uncertain fate of the subsidies has had the effect of pulling car purchases into the final months of this year and could mean a rocky start to 2026.

Xiaomi's Next Act

Tech giant Xiaomi has enjoyed a stellar year with its EVs, consistently beating internal sales targets — it now expects to deliver 400,000 vehicles this year — and reaching profitability in less than half the time it took Tesla.

But there are constraints to the company's growth. It currently has just two models — the SU7 sedan and YU7 midsize sport utility vehicle — and with just one factory in Beijing, there's a lengthy wait time for its EVs. That should ease with a new production line, speeding delivery for some trims.

For the smartphone and home-device maker's next act, it's reportedly working on a full-size sport utility vehicle to compete with the likes of Nio and Li Auto in the highly competitive premium EV segment. The new model is key to bringing fresh impetus to Xiaomi's small lineup that also may need a refresh to stay competitive.

Global Domination

Given the feverish competition at home, Chinese automakers are accelerating their push into global markets. BYD has been at the forefront, opening factories in Brazil and Thailand, with Hungary and Turkey to follow.

The diversification is paying off, with the stock jumping last week after the company reported that exports climbed even as overall shipments fell in November.

BYD is aiming for export sales of 1.6 million vehicles in 2026, up from around 1 million this year, according to Citi analysts. Geely is targeting 600,000 international sales next year, which would be up to 80% higher than 2025.

Even with the key North American market effectively closed off due to tariffs, Europe, South America, Southeast Asia, Australia and even the Middle East are proving to be fertile ground for Chinese automakers.

Battery giant CATL is also pushing ahead with its overseas expansion efforts in a bid to localize production and be closer to customers, with a key factory in Hungary to come on line next year.

Make-or-Break for Nio

Nio faces a critical year, with founder William Li's goal to reach profitability this quarter looking like a stretch. The company was once the rising star of Chinese EV startups, taking on Tesla in the premium end of the market and building a cult-like following with its clubby Nio Houses and showy investor days.

It has failed to live up to the early promises, racking up $20 billion in losses and counting. The stock is down more than 90% from the heady peak of 2021, when the automaker was valued at almost $100 billion. Sales are hovering around 40,000 a month, a fraction of market leaders.

Nio heads into 2026 with limited visibility of its sales performance, according to Citi analyst Jeff Chung. As more rivals start to leapfrog Nio in deliveries, it adds pressure to its finances and finite cash reserves.

Renault supports France's call for EVs sold in Europe to contain locally sourced parts, but is warning against making the content requirements too onerous. Electric-car batteries are still mostly made outside Europe and are the most expensive part of an EV, Chief Strategy Officer Josep Maria Recasens said in an interview. Rather than single out EVs, the EU should impose a 60% local-content rule across all passenger vehicle types, including combustion models, he said.

Source: Bloomberg Europe

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Adam

Economic

MARKET WRAPS Stocks:

European shares were struggling for direction as the trading week kicked off, with investors turning their attention to the upcoming Federal Reserve policy meeting.

After recent weak U.S. jobs data, the Fed could deliver its third and final 25 basis-point rate cut for 2025 on Wednesday, although the decision is unlikely to be unanimous, Deutsche Bank said.

"We expect Powell to emphasize that the hurdle for further cuts in early 2026 is high, signalling a near-term pause ," it said.

An interest-rate cut by the Fed is fully priced in, while consensus is growing that it will be framed as hawkish, BNY said. That means that further monetary policy easing would depend on weaker data or lower inflation in March and June 2026.

The coming Fed Chair transition also presents a risk , as markets evaluate any new leadership, BNY added.

In Europe, the eurozone's data calendar for the coming week will be light. Italian industrial production data for October are due Wednesday. Final CPI data for November are due Friday from Germany, France and Spain.

Elsewhere, Chinese government data earlier on Monday showed that its trade surplus topped $1 trillion this year, comfortably beating forecasts.

U.S. Markets:

Stock futures inched higher early Monday, led by Nasdaq-100 contracts.

Dovish comments from some Fed officials and the latest U.S. labor market data are supporting the case of a rate cut this week.

However, traders are cautiously waiting for Powell's speech for more cues on the path ahead. "What happens next is the part no one agrees on, " said Swissquote.

Forex:

The euro rose after European Central Bank policymaker Isabel Schnabel indicated that the ECB's next move in interest rates could be a rise rather than a cut , ING said.

Commerzbank said the currency could come under pressure if the EU uses frozen Russian sovereign assets to provide much-needed financial aid to Ukraine.

Such a move could " undermine the attractiveness of the eurozone as an investment destination and, in turn, cause long-term damage to the euro itself," it added.

The dollar fell as investors awaited the Fed rate decision.

Sterling fell slightly as last week's rally lost steam. "We caution that the pound's recent strength could prove fragile if global conditions deteriorate or if attention swings back to the U.K.'s challenges," Monex Europe said.

Bonds:

Global rates could be set to test higher levels , said ING. While the Fed was expected to cut interest rates, it could be cautious about prospects for further reductions and this could put some pressure on yields, it added.

Eurozone government bond yields rose, with the 10-year Bund yield rising to their highest level since March , according to LSEG.

Treasury yields edged higher in early trading hours.

Energy:

Oil prices were steady as investors monitored geopolitical risks and awaited the Fed's decision.

A peace deal to end the war in Ukraine looks distant at the moment, while continued attacks on Russian energy infrastructure raise the risk premium , according to market watchers.

Metals:

Gold inched lower, but continued to be supported by expectations of a Fed interest-rate cut this week and a softer dollar.

Gold's outlook for 2026 is likely defined by ongoing geoeconomic uncertainty , the World Gold Council said.

Copper

Copper prices extended last week's gains, surging to fresh record highs on fears of global supply shortages.

"Supply shortages continue to spark panic buying ," ANZ said.

Iron

Iron ore prices were lower in early trade. On the supply side, cumulative global iron ore shipments in 2025 continue to rise on year, while port inventories are also building, Nanhua Futures said.

EMEA HEADLINES

German Industrial Output Accelerates Again

Industrial production in Europe's largest economy continued to accelerate in October, surpassing expectations as the sector awaits large-scale government investment.

Output jumped 1.8% on month, Germany's statistics agency Destatis said Monday, compared with a 1.1% increase in September. Economists polled by The Wall Street Journal expected a rise of 0.3%.

L'Oreal Doubles Stake in Swiss Skincare Company Galderma

L'Oreal is buying a stake in Galderma from an investor group, doubling its holding in the Swiss company to 20% in a deal that expands its footprint in dermatology.

Financial terms weren't disclosed. The package of about 24 million Galderma shares would be valued at 3.9 billion francs ($4.85 billion) based on Friday's closing price of 162.80 francs. The seller is an investment group led by Sweden's EQT and includes Sunshine SwissCo, Abu Dhabi Investment Authority and Auba Investment, L'Oreal said.

Repsol, HitecVision to Merge JV With TotalEnergies UK's Upstream Business

Repsol and HitecVision said they would merge their joint venture Neo Next Energy with TotalEnergies' U.K. offshore oil and gas production business.

The Spanish energy company said Monday that under the terms of the transaction, TotalEnergies UK would acquire a 47.5% stake in Neo Next Energy.

Kloeckner & Co Shares Rise on Takeover Talks With Worthington Steel

Shares in Kloeckner & Co surged Monday on takeover talks with U.S. metals processor Worthington Steel.

Shares were 21% higher in early European trade and have now risen 64% in the year to date.

GLOBAL NEWS

China's Exports Bounce Back, Trade Surplus Powers Past $1 Trillion

China's trade surplus has topped $1 trillion this year, with fresh data showing that exports bounced back last month despite a sharper drop in shipments to the U.S.

Outbound shipments rose 5.9% on the year in November, reversing from October's 1.1% drop, government data showed Monday.

Japan Is Out Spending. Bond Markets Seem Nervous About Picking Up the Tab.

TOKYO-Japanese Prime Minister Sanae Takaichi says her $135 billion stimulus package will prop up the world's fourth-largest economy.

Some see a danger in swelling a debt pile that is already one of the largest globally. But many economists say fears of a fiscal unraveling are overblown.

German Industrial Output Accelerates Again

Industrial production in Europe's largest economy continued to accelerate in October, surpassing expectations as the sector awaits large-scale government investment.

Output jumped 1.8% on month, Germany's statistics agency Destatis said Monday, compared with a 1.1% increase in September. Economists polled by The Wall Street Journal expected a rise of 0.3%.

Israel Closes In on Hamas Fighters Trapped in Tunnels, Testing Cease-Fire

For most of the year, a couple hundred Hamas militants have manned fighting positions in the tunnels under southern Gaza. But the walls are closing in.

The U.S.-brokered cease-fire in October left them on the wrong side of the line dividing the parts of the enclave controlled by Hamas and Israel. Food and especially water are running low, Arab intelligence and Israeli military officials briefed on the fighters' situation said. And with the hostages and the bodies of all but one of the dead captives now returned by Hamas, Israel has a freer hand to tear up tunnels looking for its enemy.

Trump's Firing Spree Gives Supreme Court the Chance to Remake Government

WASHINGTON-President Trump's firing spree at federal agencies has snowballed into a Supreme Court showdown over how modern American government should work.

Dangling by a thread is the tradition that certain sensitive policy details-from regulating nuclear reactors to setting safety standards for consumer products-should be managed by bipartisan panels of technocrats, whose jobs are insulated from political pressure.

Putin Wanted AI Supremacy. Now Russia Is Struggling to Stay in the Race.

President Vladimir Putin has often proclaimed that Russia must lead the world in artificial intelligence. In reality, the country is stuck on the sidelines as others pull ahead.

As the U.S. and China race to dominate AI models and applications and countries in Europe and the Middle East pour resources into building computing infrastructure, the Ukraine war has derailed Russia's once lofty ambitions.

Trump-Brokered Cease-Fire Crumbles on Thai-Cambodian Border

Thailand's military on Monday launched airstrikes on targets across its disputed border with Cambodia, shattering a volatile cease-fire agreement between the two Southeast Asian countries brokered by President Trump.

Thai officials said they acted after soldiers stationed near the border came under fire from Cambodian troops on Sunday and Monday morning. Cambodian officials, meanwhile, blamed the Thai military for restarting the fighting.