‘Our Institutional Geo-Economic Architecture’ Won’t Just Ride This Out, Rabobank Warns

Authored by Michael Every via Rabobank,

24 Hours

US retail sales soft, yields down, stocks up, oil up.

That’s one way to look at the last 24 hours. 

Or one can look at it –and the next 24 hours– more deeply.

Let’s start with geopolitics, then look at AI, and try to tie it all together into a better market take than the above.

As @desmondshum underlines:

“Europe isn’t merely “slowing.” It’s being structurally out-scaled and outbid - squeezed between an America that owns the high-tech frontier and a China that has moved from low-end volume into the mid-tech industrial core Europe once dominated…

…Without a hard turn –fast trade defence, real industrial policy, and bloc-level unity– Europe’s “model” doesn’t get reformed; it gets liquidated.”

Macron just declared a European ‘A new French report argues Europe needs to immediately impose 30% tariffs against China or devalue EUR vs CNY by 20-30% (how?) to retain its industrial core. That will get shot down – what then?

In 24 hours, an EU capitals say deleting US tech is not realistic; US-backed start-ups won a major German military drone contract; ‘even some of Mercosur’s biggest fans are nervous about moving too fast’, and the conference report released ahead of it warns Trump is a “demolition man” and “most of Europe is watching the US’ descent into ‘competitive authoritarianism’ with rising concern or even horror, wondering how resilient US democracy really is.” That said, the US ambassador to NATO just underlined the US just wants Europe to take primary responsibility for European defence as soon as possible, not as soon as comfortable – and there is a short shortlist of EU geostrategic options if Munich sees a new crisis.

Regardless, Europe needs to do much more and faster. 

As Russian casualties in Ukraine surge, Estonian intelligence claims its shell output soared to 7m in 2025, up from 4.5m, and it’s bringing drone training into schools and sucking more of the private sector into its war economy. To match these “preparations for the next war”, as Norway warns Russia could invade it, Europe will need to keep pace. The former head of Britain’s armed forces, with eight days of ammo, says Europe ‘must become a military superpower.’ Add that to Macron’s list?

Meanwhile, Israeli PM heads for the US to meet Trump as we wait to see if an Iran deal is struck, or if Iran is struck; and underlining how fast things are moving, Turkey –next to Europe– says it could join the nuclear arms race if Iran acquires a bomb.

So, what will Greece then want?

Let’s now turn to AI, where developments are as rapid and tectonic as in geopolitics – and the two are linked.

Many talked about AI as a meme to chase, a bubble, or something that won’t really impact them that much. Yet 

Then it’s off to the glue factory, perhaps.