MI2 Partners

Aug 01, 2025

Geopolitics is one of our favourite distractions – rarely profitable, yet impossible for us to ignore. That’s why Lei’s analysis caught our attention. Her account elegantly solves two puzzles – just the sort of parsimony that appealed to William of Ockham: Why did China suddenly halt drone component sales to Ukraine, and why did Wang Yi become unusually candid about Beijing’s thinking on the Russia-Ukraine war? Her theory: a CCP defector turned up in Moscow with sensitive documents (and his superior’s wife!) outlining China’s contingency plans in the event of a successful regime-change operation against Putin and the installation of a Western-aligned Russian government. Putin’s response was a very tersely worded statement noting that Russia was a nuclear power, and the return of both defector and wife. Lei’s theory is that the deepening mistrust between Moscow and Beijing created an opening for Trump to drive a wedge between them, prompting Beijing to respond with tangible support.

But there is a broader lesson here, beyond the very real dangers of eloping with your boss’s wife. Sudden bouts of honesty are often suspicious developments which can signal ulterior motives. Lei suggests that Wang Yi’s uncharacteristic “honesty” was not addressed to Kallas and the EU but to Putin and Moscow and sent a signal of its commitment to the bilateral relationship. Maybe.

SUBSTACK LINK: https://open.substack.com/pub/mi2partners/p/thoughts-from-the-divide-why-such?r=1tabqm&utm_campaign=post&utm_medium=web&showWelcomeOnShare=true

Other posts

Thoughts From The Divide: Identifying Ducks

BY JON WEBB
While we may have missed getting out our Thoughts From The Divide year-in-review piece before the new year (mea maxima culpa), we did manage to spend some time going through our “best of” and “greatest hits” in anticipation of the changing of the calendar. As usual, there were some repeated themes and tropes, but at the highest level, what struck us was that last year seemed very much governed by the timeless question from the underrated philosopher of science, Whitney Houston: “How will I know?” (closely followed by her observation that “crack is whack”) Read more →

C8 Weekly Bulletin: Trick or Treat for ‘Long Only’?

BY ROBERT MINIKIN
This week’s Fed meeting will be watched closely for hints of a policy pivot following reports that some officials favour slower policy tightening and amidst a revival in global risk appetite. In this Bulletin we take a look at the recovery in the performance of 'long only' strategies on the C8 platform. Read more →

Thoughts From The Divide: Little Tweaks and Adjustments

BY JON WEBB
“I actually think we’re going to see inflation be choppy, and I expect that we’ll see employment stay robust.” As we noted back in May, “one swallow does not make spring”. But if we are to follow the advice of Keynes/Samuelson, when information changes, we should adjust our conclusions. Blast! The trick is, of course, balancing the two ideas to adjust conclusions when the evidence suggests such an adjustment is appropriate: you might call it Bayesian inference. The above quote from Bostic illustrates the problem, with the Atlanta Fed head implicitly stating that he will be ignoring any hot inflation prints. Read more →
Back to all posts →