Oval Office and the World
Doug Nolan
A challenge to focus on market analysis after viewing the most disturbing Oval Office spectacle of our lifetimes.
I was more than ready to disregard another week of disruption and mayhem and focus specifically on increasingly unstable markets.
Hopefully next week.
“One of the Grimmest Days in American Diplomacy.”
“Zelensky Invades Trump’s Disinformation Space.”
“Russia Says Trump Showed ‘Restraint’ Against ‘Scumbag’ Zelensky.”
“Trump's Unprecedented Shouting Match with Zelenskyy Could Rattle the World.”
Believe me on this: no interest in stirring up discord.
I don’t want to be canceled by my paid subscribers (don’t have any).
Don’t want to lose all my followers on social media (don’t do social media).
Don’t want to defy the party line (fiercely independent).
Pleased to have readers of my analysis, but refuse to pander.
This is year 26 of chronicling, on a weekly basis, an incredible period in human history.
Today only intensified a foreboding feeling that decades of extraordinary history are coming to a perilous head.
This was another week that will be studied, discussed, and debated for generations.
I’ll offer a perspective on what transpired today, not because of any great insight.
We live in an age of perilous spin, disinformation, and propaganda.
I’m simply compelled to share what seems like an atypically unencumbered perspective.
For the record:
French President Emmanuel Macron and UK Prime Minister Keir Starmer did President Zelenskyy no favors.
The degree of flattery, fawning and pandering that world leaders accept as necessary to be on good terms with President Trump will be an ongoing issue.
Especially over time, many leaders will outright refuse to kowtow while others will want to avoid appearing embarrassingly spineless back home.
It seems too much to expect the wartime President of Ukraine – a nation that has suffered the loss of hundreds of thousands of its citizens, total destruction of scores of cities and villages, unspeakable war crimes, and is now in preparation for incredibly fraught negotiations with Putin – not to demonstrate strength and resolve.
I listened to the entire Oval Office event, replaying the final toxic exchange.
He didn’t kneel.
He didn’t succumb to current heads of state protocol of phony charm and flattery.
But it is dangerously unfair to claim that President Zelenskyy was disrespectful to the United States.
Fox News’s Sean Hannity:
“One thing is perfectly clear, if there was ever any doubt of American strength on the world stage – it is back, it is back big time.
President Trump will always stand up for you, the American people.
He’s going to put America first.
We’re not going to be disrespected.
We will not be swindled.
We will not be bullied.
Today, the Ukrainian President Zelenskyy, frankly, in many ways disgraced himself.
Lost an opportunity of a lifetime to stop the death and destruction of his country, and he did it on the world stage.”
There will be abundant White House and Republican spin.
Most Americans will probably never see more than short video clips.
MAGA is outraged with Zelenskyy.
It will be interesting to see how this plays with most Americans.
Many will no doubt share my shock.
It’s as if we’re witnessing a national transformation right before our eyes.
Pulling Ukraine support would be the ultimate tragic, divisive disruption.
Might fraying support from pro-Ukrainian Republicans pose risk to Trump's legislative agenda?
To see an intense discussion about Ukraine security guarantees and the Ukrainians’ lack of trust for Putin implode into the President’s rant about “stupid President” Biden,” “the Russian hoax,” and Hunter Biden’s bedroom and laptop could not have been more disturbing.
Foreign governments - friends and foes - will carefully analyze President Trump’s Oval Office behavior.
To at least half the country, today’s spectacle is additional evidence that questions the President’s fitness for office.
President Trump lost control with minimal provocation.
J.D. Vance was petty and a provocateur, demonstrating aggressive behavior aberrant for a vice president.
It’s not clear it was the “ambush” that many are calling it, but the two were belittling and bullying to the President of Ukraine that has demonstrated phenomenal courage and leadership in the most atrocious of circumstances.
Our nation today faces great peril.
Vulnerable once-in-a-century Credit and speculative Bubbles, precarious wealth disparities, distrust of institutions, festering social instability, and deep economic structural maladjustment - for starters.
Major financial and economic crises are likely, yet I view the greatest danger lies with our deeply divided society.
A deeply fractured world faces incredible challenges, including climate change and the potential for major trade and military confrontations.
Both as a nation and internationally, it has never been as critical to try to somehow come together to confront myriad issues and cooperate to resolve serious problems before they spiral completely out of control.
My overarching concern with the Trump administration was on full display today.
They have a way – seemingly a wanting – to divide and polarize, albeit our nation or the world.
An unstable world is even more dangerously fractured after today, and it is unjust to blame President Zelenskyy.
President Trump:
“We had a very meaningful meeting in the White House today.
Much was learned that could never be understood without conversation under such fire and pressure.
It’s amazing what comes out through emotion, and I have determined that President Zelenskyy is not ready for Peace if America is involved, because he feels our involvement gives him a big advantage in negotiations.
I don’t want advantage, I want PEACE.
He disrespected the United States of America in its cherished Oval Office.
He can come back when he is ready for Peace.”
Axios:
“Ukrainian President Volodymyr Zelensky said he doesn’t think he needs to apologize for his public spat with President Trump and Vice President Vance at the Oval Office.
‘I am not sure we did something bad,’ he said…”
Newsmax:
“WH: Support Rolls in for Trump After Standoff With Zelenskyy”
Secretary of State Marco Rubio:
“Thank you @POTUS for standing up for America in a way that no President has ever had the courage to do before.
Thank you for putting America First. America is with you!”
Secretary of the Treasury Scott Bessent (on Fox News):
“I’ve got to tell you, we were in shock.
This has to be one of the greatest diplomatic mishaps of all time by President Zelenskyy.
We were having a press conference.
We were going in to lunch.
And then we were going to sign the economic partnership agreement.
This was supposed to be a day where Ukraine and the U.S. intertwined our economic prospects and, instead, President Zelenskyy, and I think he’s probably used to dealing with American leadership that is weak.
And he ran into President Trump who didn’t back down, Vice President Vance, who didn’t back down.
They were asked to leave the room.
Then they had to be asked to leave the building.”
Dan Bongino:
“President Trump and VP Vance just put Zelensky in his place at the White House and the world is stunned by what they just witnessed.”
The Hill – February 28 (Julia Manchester):
“Top Russian official and former president Dmitry Medvedev celebrated what he called President Trump’s ‘proper slap down’ of Ukrainian President Volodymyr Zelensky in the Oval Office...
‘The insolent pig finally got a proper slap down in the Oval Office,’ Medvedev, the deputy chair of Moscow’s security council and former prime minister of Russia.
‘[Trump] is right: The Kiev regime is ‘gambling with WWIII,’’ the Russian leader added.”
FT:
“Hungary’s pro-Russian Prime Minister Viktor Orbán sided with Trump.
‘Strong men make peace, weak men make war,’ Orbán said.
‘Today President Trump stood bravely for peace.
Even if it was difficult for many to digest.
Thank you, Mr. President.’”
Retired United States Navy admiral NATO and Supreme Allied Commander, James Stavridis (CNN):
“I think we are headed, possibly – I don’t want to overstate this – I don’t want to be overly dramatic - but we could be looking at the last days of NATO.
This is a gut issue about who are you going to support: a democracy that’s under attack or are you going to support a dictator in Moscow.
This is going to drive a wedge deep in the heart of the alliance, and it’s going to bleed over beyond Ukraine… as to whether or not the United States can be trusted as a partner.
I think if I’m a European at this point, I’m saying I need bigger defense spending.
I need my European defense companies to step up.
I need to build a European armed forces – I need a command structure outside of NATO, perhaps embedded in the European Union.
We could see the end of NATO and the start of what may be called the European Treaty Organization – ETO.”
David Axelrod (CNN):
“What Zelenskyy keeps saying again and again and again, we need security guarantees because we can’t trust Putin who invaded our country repeatedly.
And Trump’s answer is ‘I trust him.’
Now that is not a security guarantee.
And it does raise the question that even if you accept that, what happens when Trump is gone if Trump is the guarantor.”
Telegraph:
“As the Smoke Cleared, Ukrainian-US Relations Lay Bloodied on the Oval Office Carpet.”
Axios:
“Trump’s ‘Disaster’ Meeting with Zelensky Stuns Republican Hawks in Congress.”
Salon:
“Time for Europe to Step Up.”
Washington Post:
“Tears and Shock in Ukraine and Europe After Heated Zelensky-Trump Meeting.”
“‘You’re Not Alone.’
EU Leaders Show Support For Zelensky After Trump Clash.”
Bloomberg: “Zelenskiy’s Blowup With Trump Leaves Allies Facing Disaster.”
February 28 – Guardian (Nadeem Badshah):
“The EU foreign policy chief has declared that ‘the free world needs a new leader’, as European leaders threw their support behind Ukraine’s president, Volodymyr Zelenskyy, after the stunning White House confrontation between him and Donald Trump.
Leaders from across Europe expressed their solidarity with the Ukrainian leader…
Their comments… laid bare the gaping rift between the US and its traditional allies in Europe over the war in Ukraine.
In a social media post Kaja Kallas, the EU high representative for foreign affairs and security policy, wrote:
‘Ukraine is Europe!
We stand by Ukraine.
We will step up our support to Ukraine so that they can continue to fight back the aggressor.
‘Today, it became clear that the free world needs a new leader.
It’s up to us, Europeans, to take this challenge.’
Addressing Zelenskyy directly, Ursula von der Leyen, the president of the EU Commission, wrote:
‘Your dignity honors the bravery of the Ukrainian people.
Be strong, be brave, be fearless.
You are never alone.’
She added: ‘We will continue working with you for a just and lasting peace.’”
AFP:
“UK Prime Minister Keir Starmer… vowed ‘unwavering support’ for Ukraine and spoke to both US President Donald Trump and Ukraine counterpart Volodymyr Zelensky following their angry White House meeting.
‘The prime minister has tonight spoken to both President Trump and President Zelensky.
He retains unwavering support for Ukraine, and is doing all he can to find a path forward to a lasting peace based on sovereignty and security for Ukraine,’ said a spokeswoman...”
AFP:
“Likely future German chancellor Friedrich Merz assured his support to Ukrainian President Volodymyr Zelensky following a spat with his US counterpart.
‘We must never confuse the aggressor and the victim in this terrible war,’ Merz, whose party recently came top in Germany's elections, said on X.
Outgoing Chancellor Olaf Scholz voiced support for Kyiv in a statement.”
FT:
“Jonas Gahr Støre, Norway’s prime minister, described the extraordinary scenes in the White House as ‘serious and disheartening’.
‘That Trump accuses Zelenskyy of gambling with World War Three is deeply unreasonable and a statement I distance myself from,’ he said.”
FT:
“Dutch Prime Minister Dick Schoof reaffirmed his support for Ukraine as ‘firmly as ever’, as he follows other European leaders in backing Kyiv after a disastrous meeting…
‘The Netherlands supports Ukraine as firmly as ever.
Now more than ever,’ Schoof said...
‘We want a lasting peace and an end to the war of aggression started by Russia.
For Ukraine and its people, and for Europe.’
‘Spain stands with you’, Prime Minister Pedro Sánchez wrote...
Ireland’s foreign minister Simon Harris wrote ‘Ukraine is not to blame for this war’.”
FT:
“The UK’s trade minister called Volodymyr Zelenskyy ‘probably the bravest political leader in Europe since Winston Churchill’, after the Ukrainian president’s tense exchange with Donald Trump during a visit to the White House.
‘We are in dangerous and uncharted waters this evening… every US president since Truman and Eisenhower has stood full square against Soviet expansion towards the east of Europe,” Douglas Alexander said…
‘It places a heavy burden of responsibility on the political leadership of this country, of other European countries, to recognise that we need to step up, acknowledge that the world has changed and act accordingly,’ he added.”
Belgium’s Prime Minister Bart De Wever:
“We stand behind Ukraine and the Ukrainian people in their historic fight to defend themselves against an unprovoked Russian aggression.
Their fight is our fight. United we are strong.”
Estonia Prime Minister Kristen Michal:
“We stand united with @ZelenskyyUa and Ukraine in our fight for freedom.
Always.
Because it is right, not easy.”
Slovenia President Nataša Pirc Musar:
“Slovenia upholds the principles and respect of international law and international relations.
What we witnessed in the Oval Office today undermines these values and the foundations of diplomacy.
We stand firmly in support of Ukraine’s sovereignty.
We repeat, Russia is the aggressor.”
FT:
“Justin Trudeau reaffirmed Canada’s support for Ukraine as his country’s foreign minister confirmed she had expressed the same sentiment to her counterpart in Kyiv.
‘Russia illegally and unjustifiably invaded Ukraine,’ Canada’s prime minister said...
‘Canada will continue to stand with Ukraine and Ukrainians in achieving a just and lasting peace,’ Trudeau wrote.”
Financial Times:
“Italian Prime Minister Giorgia Meloni has called for an immediate US-EU summit, and said Rome will be proposing this to all its partners in the coming hours.
‘Every division of the west makes us all weaker and favours those who would like to see the decline of our civilisation,’ Meloni said.
‘An immediate summit is needed between the United States, European states and allies to speak frankly about how we intend to face today’s great challenges, starting with Ukraine, which together we have defended in recent years, and those that we will be called to face in the future.’
‘This is the proposal that Italy intends to make to its partners in the next few hours,” she said, adding that ‘a division would not benefit anyone’.”
The Oval Office meltdown concluded a market week where meltdown suddenly doesn’t appear an unlikely scenario.
Despite booming earnings, Nvidia sank 7.1%.
Bloomberg’s Mag 7 Index slumped 4.7%, trading Friday at the lowest level since November 6th.
The Semiconductors traded to the low back to September 11th.
The historic AI/tech Bubble has begun to deflate.
Bitcoin sank 12.7% for the week, trading Thursday at the low since November 10th.
Ethereum collapsed almost 16%, trading intraday Thursday at a 14-month low.
XRP fell 15%, Binance Coin 9%, and Solana 12%.
The historic crypto Bubble has begun to deflate.
De-risking/deleveraging has gained momentum.
Ten-year Treasury yields sank 23 bps to 4.20%, the lowest yield since December 9th, and the biggest weekly decline in three months.
Market expectations for the year-end Fed funds rate sank 22 bps to 3.64%, the largest weekly drop since early September.
High yield spreads to Treasuries rose nine (2-wk gain 20bps) to 280 bps, the high since the first trading session of 2025.
Major equities indices were down 3.9% in Japan, 1.7% in China, 3.4% in India, 1.9% in Taiwan, 4.6% in South Korea, 3.4% in Brazil, and 2.6% in Mexico.
February 24 – Bloomberg:
“China’s strategy of defending its currency by choking local liquidity is sending ripples throughout the financial system, squeezing banks and fueling losses at bond funds.
The latest sign of a cash crunch at Chinese banks is a sharp drop in their lending through repurchase contracts, or repo.
The country’s biggest banks cut their lending in the repo market by around two-thirds in mid-February compared with the daily average last year, according to people familiar...
‘If banks’ cash-borrowing pressure keeps building and the costs further climb, it may limit their ability to issue loans and support the economy,’ Yang Yewei, an analyst at local brokerage Guosheng Securities, wrote…”
President Trump has announced so many tariffs that it’s difficult to keep track.
Tariffs on Mexico, Canada and China will go into effect on Tuesday.
Scores more are scheduled for early April.
The Oval Office fiasco doesn’t brighten what was already a most challenging environment for negotiating trade deals.
The reality of tariffs and trade wars began to sink in this week.
To be sure, this is an inhospitable environment for speculative leverage.
And it is an especially fraught backdrop for a highly destabilizing global de-risking/deleveraging to take hold.
CNN’s Caitlan Collins:
“A question that a lot of people have is how are you going to balance the budget without touching Social Security, or Medicare or Medicaid, while also increasing defense spending, which is what the White House laid out today?”
Speaker Mike Johnson:
“Part of the equation is all the new revenue that President Trump and the administration are delivering for the American people.
Look, the tariffs are estimated – just the tariff on China – the 10% import tax on China – of course they’ve been fleecing us for a long time as an unfair trade partner – that alone is going to yield $600 billion dollars over ten years in new revenue for the government.
The DOGE savings.
Elon Musk has said that he can find close to a trillion dollars in fraud, waste and abuse.
I was with him late last night in his office going through what he is doing.
This is very real.
We’re going to have new revenue and savings that we have never had before.
The ‘gold card’ that President Trump announced yesterday – that can bring in hundreds of billions of dollars.
So, we’ll see how all this plays out over the months ahead as the budget and the spending habits of Washington change and the efficiency of Washington changes.
I think the American people are going to like what they see.”
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