※ [Global Morning Briefing] is a roundup of global news compiled by Seoul Economic Daily.
Tariffs Open to Talks, China as Leverage: Lula's Pragmatic Diplomacy Ahead
Leftist President Luiz Inacio Lula da Silva won a fourth term in Brazil's presidential runoff, a result expected to complicate U.S. President Donald Trump's strategy of expanding a pro-American bloc in Latin America. Brazil, the region's biggest economy, has effectively halted the conservative wave spreading across Latin America.
In the runoff on the 25th, Lula took 51.79% of the vote, defeating Senator Flavio Bolsonaro, who finished with 48.21%. It is Brazil's first fourth presidential term and the first come-from-behind victory since runoff voting was introduced in 1988. In his victory speech, Lula declared that Brazil is no one's backyard.
South America now has eight conservative governments and four progressive ones, and Brazil had been seen as the last piece in Trump's "Donroe Doctrine." Lula's government is expected to continue refusing to join the Shield of the Americas, launched in March this year. The Council on Foreign Relations said Brazil would have joined had Bolsonaro won.
Cooperation is expected on trade, however. Brazil's growth forecast for next year has slowed to 2.3% and the country also faces the burden of U.S. tariffs, while 71% of Lula's supporters favor negotiating. Brazil is nevertheless likely to use expanded trade with China as leverage in talks, and the conservative Liberal Party, which took control of both chambers in this month's general election, is a constraining factor.
Bolsonaro rejected the result and said he would seek to have the election annulled. He took issue with a Supreme Court ruling that extended voting hours by two hours.
Separately, Venezuelan opposition leader and leading presidential contender Maria Corina Machado returned home the same day after about 10 months abroad.
Machado, who won the Nobel Peace Prize last year, returned secretly at a time when an interim government led by Delcy Rodriguez had taken power following the U.S. military's ouster of former President Nicolas Maduro in January. Machado is calling for an early presidential election, but the Trump administration is placing greater weight on cooperating with the Rodriguez interim government. Trump said that day he hoped Machado would be safe but that the U.S. was in control of Venezuela, drawing a line against the prospect of her taking power.
Facing Elections, Trump and Netanyahu Weigh the Iran Card
Israel is considering resuming attacks on Iran around its general election on the 27th and the U.S. midterm elections on Nov. 3. With Trump also leaning toward a hard line, analysts say the two leaders are using war as a means of holding on to power ahead of elections.
In a Fox News interview on the 25th, Trump said the time for a decision on Iran was approaching.
The New York Times, citing a senior U.S. official, reported that Washington appeared to be leaning toward additional airstrikes on Iranian territory. U.S. Central Command has also drawn up an expanded target list that includes key economic facilities such as energy infrastructure, according to the report.
Israel is the more impatient of the two. According to Channel 12, Prime Minister Benjamin Netanyahu ordered military action before the 27th, but the plan collapsed after Chief of Staff Eyal Zamir objected, demanding a signature providing legal authorization for the operation. Netanyahu denied reports of a rift, but Israeli media repeatedly reported that the aim was to lift his support in the final stretch of the campaign or to delay the general election. Netanyahu has in fact reached for the military option at moments of political crisis before, including Operation Pillar of Defense in Gaza in November 2012, consideration of a large-scale attack in September 2019 and the 11-day war with Hamas in May 2021.
The race is tight. Final surveys by three broadcasters released on the 23rd projected Netanyahu's camp winning 50 of 120 seats, 17 fewer than it holds now. The opposition led by former Chief of Staff Gadi Eisenkot was projected at 52 to 56 seats, leaving neither side with a majority. If coalition talks stall, Netanyahu could lead a caretaker government that leads to a new election, some say.
Big Tech Reassessed as Neocloud Firms Falter
With markets unsettled by deteriorating profitability at neocloud companies such as CoreWeave, Nvidia and Micron are expected to post strong third-quarter results. The stability of big tech firms, which have broad customer bases, is being reassessed.
The Wall Street Journal, citing FactSet and Dow Jones Market Data, reported on the 25th that third-quarter net profit at S&P 500 companies is expected to rise 29.2% from a year earlier.
Nvidia and Micron alone account for 34% of that increase. Micron's net profit last quarter rose more than tenfold from a year earlier, and Nvidia's net profit is expected to jump about 90%. The second-quarter growth rate was 52%, but that reflected one-time investment gains at Amazon and Alphabet, making the current level, similar to the first quarter, a solid showing.
Unlike neocloud firms, which depend on a small number of tenants leasing artificial intelligence data center capacity, big tech companies are drawing attention for their broad customer bases. SpaceX Chief Executive Elon Musk noted on X, formerly Twitter, that in recent weeks the bond market has effectively closed off funding channels for companies with no clear revenue outside AI data centers. He stressed that SpaceX holds an investment-grade rating and has revenue from Starlink and rocket launches, allowing it to raise $40 billion for graphics processing unit purchases.
The stability of Amazon Web Services, the leader in general-purpose cloud computing, is also drawing notice. Amazon Chief Executive Andy Jassy said on a podcast with Ben Horowitz, co-founder of venture capital firm Andreessen Horowitz, on the 23rd that most of its AI cloud capacity is sold out through 2027 and that a substantial portion of 2028 capacity is also under contract.
China Opens Fifth Plenum; Xi's "Leader" Title, Party Chairmanship Revival in Focus
The Chinese Communist Party opened the fifth plenary session of its 20th Central Committee in Beijing on the 26th, beginning discussions on strengthening party control. Attention centers on whether President Xi Jinping, who is expected to secure a fourth term at next year's 21st Party Congress, will formalize the title of "leader," a term evocative of Mao Zedong.
According to Xinhua, the meeting runs for four days through the 29th. The central agenda is the comprehensive and strict governance of the party, or the overhaul of a system for managing the party thoroughly and rigorously. The aim is seen as going beyond a one-off purge to strengthen oversight and control of how officials carry out their duties, with more detailed evaluation criteria.
Hou Yichao, a researcher on Chinese politics and the economy, told Singapore's Channel NewsAsia that the questions of interest are whether the oversight system of the party's discipline inspection and supervision bodies will be restructured, and whether this year's party-wide education campaign on a "correct view of political performance" will be turned into a new institutional framework.
Xi may also raise his political standing ahead of a fourth term. Some observers say he could lay the groundwork for reviving the post of party chairman, which existed in the Mao era before being abolished in 1982. A revival would carry symbolic weight as a departure from the collective leadership system maintained since Deng Xiaoping and a return to the concentration of power in one person.
Christopher Nye, a researcher at the U.S.-based Jamestown Foundation, told Britain's Financial Times that if the "leader" title is formally adopted at this meeting, reviving the party chairmanship would emerge as a realistic possibility at next year's party congress. The prevailing view is that Mao is the only figure in Communist Party history to have been effectively recognized as "leader."
Le Pen Launches Fourth French Presidential Bid With Fiscal Reform Pledge
Marine Le Pen, a leading contender in France's presidential election and a National Rally lawmaker, formally declared a presidential bid. With the country's debt crisis deepening, Le Pen presented a fiscal reform plan and even called for intervention by the European Central Bank, but markets see little chance of it being realized.
According to Britain's Financial Times, Le Pen argued at a campaign launch rally in Orleans on the 25th that she is the only candidate who can restore order and unity. About 8,500 supporters gathered at the rally, where Le Pen emphasized restoring the rule of law and national unity and called for regaining confidence in the future.
The election will be held in April next year. Le Pen, of the far right, is making a fourth attempt at the presidency and led this week's Ipsos poll with 32% to 34% support in the first round.
Her fiscal pledges have also taken shape. According to Bloomberg, Le Pen said on the 6th of this month that she would cut France's fiscal deficit to 3.7% of gross domestic product by 2027 and to 2.2% by 2032. To that end, she proposed reducing France's contributions to the European Union to 5 billion euros a year, and she called on the ECB to intervene to ease borrowing costs for eurozone countries and improve their public finances.
The ECB appears unlikely to respond, however. Her funding plans lean heavily on cutting EU contributions and immigration-related spending, and ECB President Christine Lagarde drew a line on the 14th, saying France's own fiscal policy is the first problem it must resolve.
