Trump Begins Negotiations in Attempt to End Russia-Ukraine War
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Newsbites
Chart of the week: Michael Jordan’s epic reign as America’s favorite athlete.
More than 75,000 federal employees have reportedly accepted the government’s offer to voluntarily quit and receive 8 months of full compensation and benefits, which represents about 3% of the 2M some workers that received the option. The initiative, called Fork in the Road, is part of the Trump Administration’s aim to reduce the size of the federal workforce.
Trump Tariffs: President Trump signed a memorandum for “fair and reciprocal” trade tariffs on all U.S. trading partners, including allies. “I will charge a reciprocal tariff, meaning whatever countries charge the United States of America,” Trump said Thursday. “In almost all cases, they’re charging us vastly more than we charge them but those days are over.” The memorandum tasks Howard Lutnick, Trump's nominee for Commerce Secretary, and Jamieson Greer, his global trade representative, to assess what would be considered fair and reciprocal trade between countries. President Trump also reinstated the 25% tariff on imported steel and raised the aluminum tariff from 10% to 25%.
More: Tariffs are taxes imposed by the government on imported goods. They increase the cost of foreign products, aiming to make domestic products more competitively priced.
Elon Musk spoke for about 30 minutes from the White House on Tuesday to discuss DOGE’s ongoing work (video). The press conference was briefly interrupted at various times by Musk’s 4-year-old son, X, who stood at Musk’s side and at times on his shoulders. President Trump was seated at his desk and answered questions as well. DOGE’s website went live this week, which provides an org chart of all federal employees, a list of federal regulations, and a tracker of the spending cuts DOGE has identified.
Gold prices skyrocket: Gold bars are being transferred between Europe and the U.S. at a rate not seen in a long time. With gold futures jumping 11% this year and an 85% increase in the price of gold in the past 5 years, banks such as JPMorgan and HBC Holdings might be looking to cash in or at least have the possibility of cashing in. Much of the world's gold is stored in London, which has massive and secure vaults and is a central trading location. As it turns out, the most efficient way to transfer gold is on normal commercial flights in the cargo section. So if you have taken a flight from Europe to the U.S. recently, it’s likely there was gold along for the ride as well.
More: Gold is often viewed as a haven against uncertainties for investors including inflation, falling price of the dollar, economic or cultural unrest, and more.
Pen and Paper Processing: All of the paperwork to process the retirement of federal employees is currently done with pen and paper. The paper files are then stored in an old limestone mine-turned-vault in Pennsylvania, where hundreds of government employees work. Given the manual process, a maximum of 10,000 people can retire per month. DOGE said one of its goals is to digitize and make the process more efficient.
Influenza infections are the highest they have been in 15 years in the U.S., according to the CDC, and about twice as high as last year. The most recent weekly report showed that 7.8% of hospital visits were for respiratory illness, the highest rate since the swine flu in 2009. The states that are experiencing the most infections are Texas, Oklahoma, Florida, South Carolina, Kentucky, Wisconsin, Pennsylvania, Maryland, Delaware, New Jersey, Connecticut and Maine.
The ceasefire between Israel and Hamas continues to hold, although it has appeared tenuous at times. The next three Israeli hostages are set to be released on Saturday (2/15). Earlier in the week, Hamas had suggested they may not release the hostages because they claimed Israel was not abiding by the agreement to allow the full level of humanitarian aid into Gaza. Israel threatened that if the hostages were not returned, war would resume. For now, the crisis seems to have been averted, though, as mediators from Egypt and Qatar said they were able to help both sides work through the disagreements.
Trump Begins Negotiations in Attempt to End Russia Ukraine War
Some context
The war between Ukraine and Russia started in Feb. of 2022. Since then, the U.S. has given Ukraine roughly $183B in money for weapons and defense among other things.
Although it’s impossible to find exact and honest numbers of deaths and wounded in the war due to unreliable reporting by each country, The Wall Street Journal reported in September of 2024 that more than 1M people have died or been injured since the war’s beginning. They estimate that more than 80,000 Ukrainian soldiers and 200,000 Russian troops have died.
With that said, President Trump told reporters on Wednesday that “probably 1.5M soldiers have been killed” to this point. Trump receives special intelligence briefings so we thought it seemed relevant to add this in as well.
Below is a map of how much ground Russia has made amid the war. This map includes Crimea which was annexed by Russia in 2014. Any peace deal moving forward will involve negotiations over whether Russia maintains all, some, or none of the land they have claimed in Ukraine.
The negotiator: A new approach to the war in Ukraine
The Trump Administration set a pragmatic tone on its aim to end the war in Ukraine. On Wednesday, Trump had a "lengthy and highly productive" phone call with President Putin. The call marks a notable change from President Biden, who refused to speak directly with Putin but stayed in close communication with Ukrainian President Zelensky.
Trump said he plans to meet with Putin in person in Saudi Arabia soon.
“I think we will get a ceasefire in the not-too-distant future,” Trump told reporters in the Oval Office, adding that Putin and Zelensky both want peace. “I want to see people stop being killed. That war is ridiculous, it should have never happened.”
U.S. Secretary of Defense Pete Hegseth also spoke at the NATO headquarters this week where he said the United States “does not believe that NATO membership for Ukraine is a realistic outcome of a negotiated settlement.”
He also said it is important to look at the reality of the battlefield and that it’s “unrealistic” that Ukraine would be able to reclaim all of the land that Russia has taken.
Insight: NATO, formed in 1949, is a military alliance of 32 countries aimed at securing and promoting democracy. Its core principle, collective defense under Article 5, means an attack on one is an attack on all, first invoked post 9/11.
American hostage released from Russia
In another sign of potential goodwill between Trump and Putin, Marc Fogel, an American teacher detained in Russia since 2021, returned to the U.S. on Wednesday in good spirits. “I feel like the luckiest man on earth right now,” he told reporters in the Oval Office beside Trump. (video)
Fogel was teaching at an Anglo-American school in Moscow when arrested by Russian officials at the airport for possessing drugs. His family said it was medically prescribed marijuana.
It’s unclear what the U.S. “gave up” in the negotiations with Russia and whether any of it had to do with the war in Ukraine.
Trends: Tech Giants Double Down on AI Spending, Invest in Nuclear Energy for Power Needs
You may not see AI as a big deal yet, but the U.S. tech giants definitely do. Collectively, Amazon, Google, Microsoft, and Facebook project that they will spend around $320B on capital expenditures for AI development in 2025. That’s a large increase from the already massive spend in 2024, which was over $200B. The investments will primarily be used to build data centers that are optimized to train, develop, and run AI applications.
What does an AI data center look like? A huge warehouse with thousands of computer servers, vast piping for liquid-cooled systems, cables, and intricate engineering (video).
The level of investment is unprecedented and is an indication of the importance these companies place on winning in the AI race. For perspective, Saudi Arabia is the 28th largest economy in the world, with an annual GDP of about $500B. The tech giants are spending more than half of that in a single year on AI development.
Why is the spend so high?
The reason is because Microsoft, Amazon, and Google are providing the AI computing infrastructure for most of the economy. The majority of companies rent server and storage space from data centers that are actually owned by the Big Three, a model known as cloud computing. A company like Airbnb, for example, does not operate its own data centers to host its website and applications, but rather, it rents space in Amazon data centers. As such, the $320B of investments is a signal of the huge demand from thousands of downstream customers that want to use AI data centers.
In addition, developing and training AI models requires very expensive computer chips. An NVIDIA H100 GPU, which is the best chip for AI work, costs around $25,000.
Last, AI applications require a lot more compute power than traditional applications. For example, a query on ChatGPT is estimated to require about 10x the processing power, i.e., electricity, as a traditional Google search.
For this reason, the tech giants are scrambling to find enough energy sources - including nuclear - to power their data centers. For example, Microsoft signed a deal with Constellation Energy to help reopen the Three Mile Island nuclear power plant in Pennsylvania, which was the site of the worst nuclear accident in the U.S. in 1979.
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