The last guardrail on U-S-Russian nukes snapped at midnight. New START’s cap of 1,550 deployed warheads and 700 launchers—already stretched by mutual allegations of non-compliance—now vanishes, ending a bilateral arms-control lineage dating to SALT I in 1972. Moscow voices “regret” while vowing flexibility; Washington’s response is a call for a “modernized” pact that also ropes in China—something Beijing flatly rejects. (apnews.com)

In the short run, nothing explodes; both arsenals remain below treaty limits. But history is unkind to verification vacuums: after the ABM Treaty collapsed in 2002, both sides poured money into missile-defense and MIRVed systems, costs that ultimately fed the 2008–09 recession’s defense-induced debt spike. Expect capital markets to start repricing geopolitical risk premia as the Congressional Budget Office already pegs nuclear modernisation at $756 bn over 30 years. (amp.dw.com)

The deeper pattern is strategic tri-polarity. Deterrence once ran on a bipolar ledger; add China’s projected 1,000 warheads by 2030 and the arithmetic of stability breaks down. As nuclear scholar James Acton warns, “three-way arms racing is a game with no equilibrium.” Equilibrium is exactly what just expired.

— The Gist AI Editor

Markets Shudder

Global markets are showing signs of strain as emerging market assets head for their worst week in over two months (Bloomberg). The slump is attributed to a rout in technology shares and cooling commodity prices. Concurrently, oil has seen a decline amid indications of easing supply risks, offering some relief on the inflation front but signaling potential weakness in global demand (WSJ). This pullback in risk assets reflects growing investor caution. From our perspective, these corrections are healthy market functions, washing out excess and reminding investors that fundamentals ultimately prevail over momentum.

Decoupling in Drive

The U.S. auto industry is accelerating efforts to remove Chinese software from vehicles, a direct response to new federal rules banning the technology on national security grounds (WSJ). This policy forces a costly and complex re-engineering of supply chains, illustrating the tangible economic impact of geopolitical tensions. While aimed at securing data, such mandates interfere with free commerce and may slow innovation by limiting access to global technologies. It is a stark reminder that national security imperatives are increasingly shaping, and often restricting, patterns of international trade and corporate strategy.

Reddit’s Rhapsody

In a standout performance, social media firm Reddit posted a robust fourth quarter, with ad revenue jumping an impressive 75% (WSJ). The surge helped the company’s overall revenue surpass analyst expectations, demonstrating the platform’s growing monetization power. This success story, built on user-generated content and community engagement, is a powerful example of entrepreneurial innovation. In contrast, Chinese private healthcare provider Distinct also saw its shares surge in its Hong Kong debut, signaling strong investor appetite in Asia’s healthcare sector (Bloomberg).

Policy Divergence

While many Western nations tighten immigration controls, Spain is taking a notably different path. Prime Minister Pedro Sánchez’s government is advancing a policy to regularize large numbers of undocumented immigrants, betting on the economic benefits of an expanded labor force (Bloomberg). This approach, framed in direct opposition to Trump’s hardline stance, represents a significant real-world experiment in demographics and economic growth. Our view is that legal, market-driven immigration is a powerful engine for prosperity, but large-scale amnesties risk creating unforeseen social and economic distortions.

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

Sánchez Defies Trump Again With Spain’s Big Bet on Immigrants
— Bloomberg

Emerging Market Assets Set for Worst Week Since November
— Bloomberg

China’s Distinct Healthcare Surges in HK Debut
— Bloomberg

The Car Industry Is Racing to Replace Chinese Code
— Wall Street Journal

Reddit Logs Higher Fourth-Quarter Profit as Ad Revenue Jumps
— Wall Street Journal

Oil Falls Amid Signs of Easing Supply Risks
— Wall Street Journal

The Davos Dividend

My long-held skepticism about the tangible returns of the World Economic Forum finds new backing in a decade-long study (2009-2018). The analysis reveals that corporate attendance at Davos, at a cost of $20,000 to $70,000 per delegate, yields no measurable financial gains for shareholders. There’s no evidence of improved stock market performance or better credit ratings for participating firms (CEPR). Instead, the primary outcome appears to be a shift toward stakeholder-oriented social performance. This raises a fundamental question for any board: is this an efficient use of capital, or a costly subscription to a consensus-driven worldview that dilutes focus on core shareholder value? The data suggests the latter.

Asian Tech Tremors

A telling signal for European markets comes from the East, where the Tokyo Stock Exchange opened lower. The Nikkei index shed 0.68% to hit 53,452.85, dragged down by a sell-off in technology stocks (Ansa). This movement isn’t isolated; it’s a direct echo of a correction in the US Nasdaq. The tight correlation underscores the globalized nature of tech valuations and serves as a morning warning for Frankfurt’s DAX and Paris’s CAC 40. European tech and growth stocks are now braced for potential contagion as capital flows react to transatlantic sentiment shifts ahead of the opening bell.

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

Frei über Sozialreform-Streit: Anträge überleben so nicht
— ZDF

Showing up in the Alps: The economic value of Davos
— CEPR

When healthy living becomes repression
— El Pais

Aktuelles zum Krieg in der Ukraine
— ZDF

DWD warnt: Glatteis und Eisregen im Nordosten
— ZDF

Epstein’s world: Inside his network of wealth, power and hustle
— Politico Europe