Equities opened the week on the back foot: MSCI’s Asia-Pacific index slipped 1 %, South Korea’s Kospi lost 2.7 %, while S&P 500 futures managed only a tepid 0.3 % bounce. Traders are bracing for a trifecta of policy calls—Bank of Japan (likely +25 bp), Bank of England (markets price a 25 bp cut to 3.75 %), and the ECB on hold—against a backdrop of thinning year-end liquidity. (reuters.com)

What rattled sentiment most was fresh evidence that China’s growth engine is sputtering: fixed-asset investment fell 2.6 % y/y in November, the third straight monthly drop, while property prices and new-home sales kept sliding. Beijing has promised to “appropriately increase” central-government spending, but investors remember similar pledges in 2015 that never gained traction. (reuters.com)

The result is a policy dilemma familiar since the GFC: central banks in advanced economies are edging toward easing just as the world’s second-largest economy is flirting with deflation. Unless fiscal authorities step up, monetary tweaks may prove “pushing on a string.” As historian-economist Adam Tooze reminds us, “A polycrisis cannot be met with piecemeal responses.” (Tooze, “Chartbook,” 2024).

The Gist AI Editor

Germany Re-evaluates China Trade

Germany’s export-driven economy is undergoing a strategic rethink of its deep-seated trade relationship with China (WSJ). For the first time in decades, political and business leaders are questioning the long-held doctrine of “Wandel durch Handel,” or change through trade, as concerns over supply chain dependency and geopolitical rivalry intensify. Bilateral trade reached €163.4 billion in the first eight months of 2025, yet Berlin’s 2023 China strategy notably labels Beijing a “competitor” and “systemic rival.” This marks a significant pivot from viewing China primarily as a growth market to recognizing it as a source of systemic risk, forcing a difficult balance between economic interests and national security.

Financial Engineering Gains Steam

In a significant move to manage balance-sheet risk, Sumitomo Mitsui Banking Corp.’s (SMBC) Asia Pacific arm has executed its first synthetic risk transfer (SRT) deal, valued at $3.2 billion, with Blackstone and Stonepeak (Bloomberg). SRTs are financial instruments that allow banks to transfer the credit risk of a loan portfolio to investors without selling the underlying assets. This technique frees up regulatory capital, enabling banks to increase lending. The growing use of these complex deals by major financial institutions highlights a market-based approach to navigating stringent post-crisis capital requirements and enhancing lending capacity in a competitive environment.

Gold Glimmers on Fed Easing and Geopolitical Risk

Gold prices are edging higher, reflecting investor sentiment shaped by expectations of monetary easing by the U.S. Federal Reserve and persistent geopolitical instability (WSJ). As central banks signal potential rate cuts, non-yielding assets like gold become more attractive compared to interest-bearing instruments. Ongoing purchases by central banks worldwide further bolster demand, underscoring the metal’s role as a hedge against economic uncertainty and currency devaluation. This steady climb acts as a barometer for global risk aversion and a preference for tangible assets over fiat currencies.

Stay tuned for the next Gist—your edge in a shifting world.

Gold Edges Higher Amid Some Tailwinds
— Wall Street Journal

Why Germany Wants a Divorce With China
— Wall Street Journal

The Medical Case Against Rescheduling Weed
— Wall Street Journal

Japan Set to Lose Last Pandas in Symbol of Icy China Ties
— Bloomberg

SMBC Asia Inks Debut $3.2 Billion SRT With Blackstone, Stonepeak
— Bloomberg

Russian Ship Quits Attempt to Load Sanctioned LNG Due to Ice
— Bloomberg

Brussels Targets Housing Affordability

The European Commission is moving to address the continent’s escalating housing crisis with its first-ever Affordable Housing Plan. A key proposal involves revising state aid rules to fast-track public investment in affordable housing construction (Politico). This signals a significant shift, acknowledging that market forces alone have failed; since 2015, inflation-adjusted house prices have surged 24%, while residential investment fell 6% between 2022 and 2024 (ECB). The plan also aims to regulate short-term tourist rentals, which have depleted housing stock in major cities. For libertarians, relaxing state aid rules—typically a bastion of free-market purity—is a pragmatic concession to a crisis fueling populist discontent. The true test will be whether these interventions can meaningfully increase supply without distorting markets further. I see this as a necessary, if ideologically complex, pivot to prevent broader social instability.

Germany Inc. Wants Its Quid Pro Quo

German industry is signalling a transactional turn on Ukraine aid, urging that future financial support be more explicitly linked to reconstruction contracts for German firms (Politico). Michael Harms, a key voice for the Eastern Europe Committee of German Business, noted frustration that tenders are often won by Chinese, Indian, and Turkish companies based solely on price. This push for a “cleverer” approach reflects a growing domestic pressure to see a tangible return on the immense public funds directed to Kyiv. While understandable from a national interest perspective, this sentiment cuts against the grain of open-market principles. It raises the prospect of aid becoming a tool for industrial policy, potentially creating friction within the EU single market and complicating the merit-based, transparent reconstruction Ukraine needs.

Catch the next Gist for the continent’s moving pieces.

Dobrindt: Deutschland nimmt Kolesnikowa und Babariko auf
— ZDF

Marocco, salgono ad almeno 21 i morti nell’inondazione a Safi
— Ansa

Decisions today, discoveries tomorrow: Europe’s Choice for the next decade of medicine development
— Politico Europe

Aktuelles zum Krieg in der Ukraine
— ZDF

Das Grill-Duell: Weber & Co. Im Härtetest
— ZDF

Brussels to free up cash, target tourist flats in EU’s first-ever Affordable Housing Plan
— Politico Europe