US President Donald Trump has told European leaders in a phone call following his Alaska summit with Putin that he wants to organize a trilateral meeting with the Russian president and Ukrainian leader Volodymyr Zelenskyy by next Friday, CNN reports, citing sources familiar with the discussion.

Trump stated he would begin working on organizing the meeting if Monday's discussions at the White House with Zelenskyy go well. In a related development, European officials are working on a plan to send one of Trump's preferred interlocutors, Finnish President Alexander Stubb, alongside the Ukrainian president, two European diplomats and another source familiar with the matter revealed to Politico. The idea is that Stubb could help prevent any conflicts between Trump and Zelenskyy and persuade the US president to include Europe in any future discussions. Another "heavyweight" who could go with Zelenskyy is NATO leader Mark Rutte, who also has a good relationship with Trump.

Volodymyr Zelenskyy announced on Saturday morning that he had spoken for an hour by phone with Donald Trump after the latter concluded his summit with Vladimir Putin in Alaska, and that European leaders then joined the call for another hour and a half. Zelenskyy said he would travel to Washington on Monday to discuss "all the details regarding the cessation of killings and the war" with Trump.

Market Signals

Market Volatility: The summit's outcome, characterized by uncertainty rather than a definitive resolution, is likely to sustain a degree of market volatility. Geopolitical tensions remain a dominant driver of market movements.
Energy Markets: The impact on oil prices is mixed. A "constructive agreement" that eases sanctions on Russian oil could lead to lower prices due to increased supply. Conversely, failed talks and escalated sanctions could drive prices up.
Defense Sector: Defense stocks saw a surge (e.g., SHLD +57.3%, ITA +23.5%) due to uncertainty surrounding U.S. military support for Ukraine. However, high P/E ratios (28-31X) indicate potential overvaluation risks.
Emerging Markets: Emerging markets have been impacted by the geopolitical uncertainty, with investors needing to remain attuned to shifting trade dynamics.

Winners & Losers

Winners: Russia (gains diplomatic validation and a potential shift in US policy), Defense contractors (benefit from continued uncertainty and debates over military aid). Losers: Ukraine (faces pressure to cede territory), European allies (risk of marginalization in crucial security discussions).

Action Timeline

Immediate (24-48h): Monitor outcomes of Trump-Zelenskyy meeting, assess energy sector exposure.
Short-term (1-2 weeks): Re-evaluate defense stock positions, monitor European and US sanctions policy.
Long-term: Accelerate supply chain diversification efforts, focus on companies with strong fundamentals in the defense sector.

Risk Assessment

Geopolitical Tensions: Continuation and escalation of the conflict in Ukraine due to the lack of a clear resolution from the summit.
Market Volatility: Geopolitical uncertainty as a major contributor to market volatility.
Erosion of US Credibility: Trump's "bark-and-no-bite" approach could undermine US credibility.
Supply Chain Disruptions: Ongoing risks to global supply chains.

Key Indicators

Signals for Market/Industry: Continued geopolitical uncertainty is impacting market volatility, particularly in the energy and defense sectors.
Leading Indicators: Outcomes of diplomatic meetings, changes in sanctions policy, levels of military support for Ukraine.

Regional Perspective

Trump proposes a trilateral summit with Zelenskyy and Putin by Friday, highlighting a direct US approach that could, however, marginalize Europe's role in crucial security decisions for the continent.

Immediate Implications

What happens next: The Trump-Zelenskyy meeting on Monday will be critical in determining the future direction of negotiations.
Time-sensitive opportunities or risks: Closely monitor immediate market reactions following the Trump-Zelenskyy meeting.

What to Watch

Leading Indicators: US-Ukraine relations, European stance on territorial integrity, sanctions policy.
Expected Next Developments: Outcomes of the Trump-Zelenskyy meeting, possibility of a trilateral summit.
Key Decision Points: Trump's decision on organizing the trilateral summit hinges on the success of talks with Zelenskyy.

Analysis

Trump's proposal for a trilateral summit represents a significant shift in US strategy towards the Ukraine conflict, with an increasing focus on direct negotiations and the potential for territorial concessions. This approach could reshape geopolitical alliances and alter market dynamics, especially in the energy and defense sectors.