Sentinel minutes for week #8/2025: "We are the federal law"

Sentinel status: Greenish 🟢 = no costly urgent action recommended to our reserve team.

Top items:

• Russian and US officials met in Saudi Arabia for a first round of peace talks for Ukraine. Ukraine and other European countries were not invited.

• The Trump administration continues to downsize the US federal government at a rapid pace, and consolidate power in the executive branch. The Trump administration also replaced several top military leaders.

• European leaders are starting to plan for a possible future in which the US would not come to NATO’s defense.

• xAI launched Grok3, which appears to outperform OpenAI’s o3-mini-high on benchmarks.

This newsletter edition is particularly long. Readers might want to skim it and look for the bolded parts, and focus on sections of interest, rather than read it end to end.

Geopolitics

The Americas

United States

President Trump issued an executive order that asserts White House authority over all independent federal agencies. The list of such agencies notably explicitly includes the Federal Election Commission, but explicitly does not apply to the Federal Reserve's Board of Governors and Open Market Committee "in its conduct of monetary policy," but, does so “in connection with its conduct and authorities directly related to its supervision and regulation of financial institutions." So the Fed’s control of monetary policy is likely exempted for the sake of market stability.

In addition, Section 7 of the same executive order requires executive-branch personnel to follow the Trump administration's interpretations of the law.

The President and the Attorney General, subject to the President’s supervision and control, shall provide authoritative interpretations of law for the executive branch. The President and the Attorney General’s opinions on questions of law are controlling on all employees in the conduct of their official duties. No employee of the executive branch acting in their official capacity may advance an interpretation of the law as the position of the United States that contravenes the President or the Attorney General’s opinion on a matter of law, including but not limited to the issuance of regulations, guidance, and positions advanced in litigation, unless authorized to do so by the President or in writing by the Attorney General.

In the current political praxis of the United States, there are various workarounds that the government can pursue in order to take illegal or unconstitutional actions. Examples of such actions that previous administrations have taken include keeping prisoners in Guantanamo Bay in order to delay habeas corpus petitions, conditioning highway funding to force state compliance, and torturing the interstate commerce clause of the Constitution to regulate local matters. The point is that the US has some constitutional guarantees, but the mechanisms to protect the citizens from the government are imperfect and typically involve slow remedies. And requiring federal employees to defer to the President’s interpretation of the law—presumably when they believe that the administration is doing something illegal—weakens those checks and balances.

In a meeting of governors at the White House, the governor of Maine disagreed with Trump about transgender athletes. The governor said, “I’m complying with state and federal laws,” and Trump replied, “we are the federal law.”

Samotsvety forecasters gave a 5% to 20% probability (aggregate: 7.6%) to Trump frontally or blatantly ignoring a Supreme Court decision, and a 30% to 100% probability to him doing so sneakily, noting that this executive order “postponing enforcement” of the federal law banning TikTok is arguably already ignoring this Supreme Court decision ruling that the law banning TikTok is constitutional.

DOGE personnel continued to cut staff in many executive agencies. At the Department of Defense (DoD), approximately 5,400 probationary workers will be terminated starting this week, after which there will be a hiring freeze. The DoD’s eventual goal is to shrink its civilian workforce by 5% to 8%. At the Federal Aviation Administration (FAA), 400 jobs were cut. At the Food and Drug Administration (FDA), approximately 700 jobs were cut, including staff reviewing AI technologies and food safety, and the head of the food safety division resigned. Over 6,000 Internal Revenue Service (IRS) employees are expected to be let go by the end of this week. However, planned cuts to the Centers for Disease Control and Prevention (CDC) Epidemic Intelligence Service were reversed. The acting commissioner of the Social Security Administration has resigned after DOGE personnel requested access to a sensitive database.

President Trump fired the previous chairman of the Joint Chiefs of Staff, who had spoken out about the death of George Floyd in 2020. Trump nominated a three-star general to take his place, passing over 37 active-duty four-star generals. Hegseth also announced the firings of two other senior officers, the Chief of Naval Operations and the Vice Chief of Staff of the Air Force.

Hegseth also fired the Judge Advocates General (JAGs) of the Army, Navy and Air Force. The JAG of each military service is the senior officer of that service’s JAG Corps, which is responsible for legal matters for that service. Among other duties, JAG Corps lawyers interpret the law for military commanders and help to determine which orders are lawful and constitutional. Firing JAGs is unprecedented. Hegseth has disparaged the JAG Corps for their prosecutions of war crimes and battlefield rules of engagement.

It is possible that Hegseth will fire additional senior officers, at least in part in an attempt to purge the military of leaders who support DEI efforts.

In a hypothetical future conflict between the Trump administration and any other branch of government, a military with top leaders who are supportive of Trump’s views would be most likely to side with Trump. Earlier this month, Garry Kasparov tweeted that, “this doesn't end with fights over top-secret documents, budget cuts, & unaccountable agents taking over. It ends with who has the guns when they won't listen to the judges.” Notably, at the end of the first Trump administration, his previous Chairman of the Joint Chiefs of Staff, Mark Milley, became concerned about Trump planning a coup, telling associates, “They may try, but they're not going to fucking succeed. You can't do this without the military. You can't do this without the CIA and the FBI. We're the guys with the guns.”

Samotsvety forecasters assigned a 95% to 97% probability to there being “free and fair” elections in 2028, with one outlier at <10% giving a final probability of 91%. Perhaps one good way to think about this is to consider the probability of a coup over the next 25 elections, over 100 years, if each were to be held during the presidency of a Trump-like incumbent. It doesn’t seem unreasonable for that probability to be above 50%. Forecasters also brought up that persuasion tech could become much better over the next few years, that markets don’t care that much and indeed even slightly prefer autocracies, that a war or something really weird could suspend the status quo, and that “free and fair” elections are pretty fuzzy criteria. As a point of comparison, Metaculus assigns a 79% to the US still being a “liberal democracy”, according to one particular index, continuously throughout 2030.

Still, forecasters only assigned ~0.05% (0.01% to 0.1%) to more than 300K excess deaths in the US from political violence in the next four years.

The Department of Justice eliminated a database that tracks misconduct by federal law enforcement officers.

DOGE initially aimed to save taxpayers $2T. So far, it claims to have saved US taxpayers $55b, but its own wall of receipts shows only $7.2b. A Wall Street Journal Analysis instead puts the total savings for the contracts DOGE has listed as canceled at about $2.6b. Polymarket has launched a savings tracker, which currently reports a total of $55b.

Reuters reported previously that initial DOGE targets have been programs disliked by conservatives rather than major sources of government spending. Some federal workers have been fired whose salaries were not paid by taxes per se, although ultimately, their positions were funded through other compulsory means.

A reduction in government expenditures of $2T/year, with large-scale cuts in the numbers of government employees and contractors could have a substantial austerity effect on the economy. For comparison, the US pandemic stimulus was about $5T, and the American Reinvestment and Recovery Act of 2009 authorized an $831B stimulus, $494B of which was spent through fiscal year 2011. Apollo, a top global investment firm, cautioned about a downside risk to the economy:

1) The consensus expects total DOGE-related job cuts to be 300,000, and the number of people filing for unemployment benefits has been rising in Washington, DC, but not in Virginia, Maryland, and Washington, DC combined, see the first two charts. Total employment in the United States is 160 million, with 7 million unemployed. Also, about 5 million people change jobs every month. In that context, 300,000 federal jobs lost is not much. However, studies show that for every federal employee, there are two contractors. As a result, layoffs could potentially be closer to 1 million. Any increase in layoffs will push jobless claims higher over the coming weeks, and such a rise in the unemployment rate is likely to have consequences for rates, equities, and credit.

An opinion piece in the New York Times raises the specter of a global financial meltdown if the US were to decide not to make payments on some US government bonds.

DOGE personnel are gaining more access to government computer systems. This poses a small but non-zero risk to the economy if a disagreement were to come to a head between Musk and Trump.

Members of Elon Musk's private security detail were deputized by the US Marshals Service. It is unclear what authorities members of his security team have been granted, but such deputies are typically allowed to carry weapons on federal grounds and conduct arrests.

Because of cuts to grants and funding uncertainty, some US universities are implementing budget cuts and hiring freezes, and many universities are admitting fewer or no new graduate students.

Canada

In Canada, a fiber-optic cable between Cape Breton Island and Newfoundland in the Gulf of St. Lawrence was cut in December, 2024, in a likely act of sabotage. Another cable in the area was cut in December, 2023.

Europe

US and Russian officials met in Saudi Arabia for a first round of talks about the possibility of ending the war in Ukraine. Neither Ukrainian representatives nor EU representatives were invited.

Trump and Zelensky exchanged words after the latter expressed "surprise" that Ukraine had not been invited to participate in the talks in Saudi Arabia. Trump blamed Ukraine for starting the war, telling Ukrainians through reporters in Florida that, "You should have never started it. You could have made a deal." Trump also called Zelensky a "dictator"; other Western leaders dissented, with British PM Keir Starmer saying that Zelensky was democratically elected and that it is perfectly reasonable to suspend elections during wartime as the UK did during WWII. Trump later acknowledged that Russia "attacked" Ukraine.

An agreement between the US and Ukraine that would give the US access to minerals in Ukraine is reportedly nearing completion. The US threatened to shut off Ukraine’s access to Starlink if a deal is not reached.

Zelensky offered to step down in exchange for peace and/or Ukraine joining NATO. He also warned that, “we believe that Putin will wage war against NATO.”

In peace talks in Saudi Arabia, Russia reportedly asked for the withdrawal of NATO troops from Eastern Europe. US officials reportedly rejected the idea, and the US has assured Poland that US troops will not be withdrawn from NATO's eastern flank. However, some European officials believe that Trump is planning to accede to Russian demands that the US withdraw troops from former Soviet territories and satellites. JD Vance also floated the idea of withdrawing US troops from Germany.

The Financial Times reported that the US may withdraw its troops from the Baltic states. Lithuania's President has downplayed these reports. Forecasters believe that the possibility of US troop withdrawal from the Baltics increases the risk of a Russian invasion of at least one of the Baltic States by 2030 but still believe that such an invasion is unlikely (as reported last week, with the prospect of US troops withdrawing from the Baltics already priced in).

Countries on the Baltic Sea are increasing preparations for the possibility of war with Russia.

Earlier this month, a Danish intelligence report warned that Russia would likely be able to wage a local war with a bordering country within six months, a regional war in the Baltic Sea region within two years, and a large-scale war in Europe within five years if the US does not come to Europe's defense.

An annual report by Estonia's Foreign Intelligence Service warns that Russia plans to have a military force of 1.5m personnel by 2026, more than double the pre-war level of 600-700k.

European defense stocks surged and US defense stocks fell, as the US signaled decreasing involvement in the defense of NATO countries in the future and European governments geared up to increase defense spending in response. European weapons systems are much more diverse than US systems, and cooperation among systems will be key.

In Germany, projections show the conservative Christian Democratic Union (CDU) led by Friedrich Merz, the likely next Chancellor of Germany, and its sister Christian Social Union (CSU) together winning the most votes in German parliamentary elections, at 28.6% of all votes. The right-wing populist Alternative for Germany (AfD) party came in second, at 20.8%. After the election, Merz gave a speech in which he said that the Trump administration is aligning with Russia and does not care about Europe, and that his “absolute priority” will be to “strengthen Europe as quickly as possible so that, step by step, we can really achieve independence from the USA.” On Friday, Merz proposed the idea that Britain and France could “share” their nuclear weapons to provide a nuclear umbrella for Germany as well, as, he said, the US could no longer be relied on to defend NATO countries.

Stray Russian drones hit Moldova and Romania.

A drone strike on Chernobyl hit the New Safe Containment roof and caused a fire. The fire was extinguished.

Middle East

Egypt is developing a plan to rebuild Gaza without removing Palestinians, in response to Trump's plan to take over Gaza and remove Palestinians. With the leaders of Egypt and Jordan unwilling to accept Trump’s plan for Gaza, Trump appeared to back down, saying, “I’ll tell you, the way to do it is my plan. I think that’s the plan that really works. But I’m not forcing it. I’m just going to sit back and recommend it.”

Israel's PM Benjamin Netanyahu wants to draw the United States into airstrikes on Iranian nuclear sites. Unless the US provides Israel with bunker-busting bombs, American involvement would be vital for the success of any such operation. President Trump has said that he would prefer to strike a deal with Iran but would consider military action if talks did not lead to Iran totally abandoning its nuclear program.

The IRGC held large-scale military exercises in southwest Iran.

The US seized a weapons shipment to Yemen’s Houthis from Iran; Iran denied provenance.

Asia

The US removed the phrase, "we do not support Taiwan independence" from its State Department website. A Chinese Foreign Ministry spokesperson said that the US should "stop condoning and supporting Taiwan independence," and asked the US to, "immediately correct this mistake."

US General Gregory Guillot, head of US Northern Command and North American Aerospace Defense Command (NORAD), said that North Korea’s new Hwasong-19 missile is likely capable of hitting targets throughout North America.

South Korea held military drills near the de facto maritime border between North Korea and South Korea, and South Korea and the US conducted joint military air drills.

India imposed direct federal rule on the northeastern state of Manipur, after the state’s chief minister resigned amid ongoing ethnic violence between the state’s two main tribal groups.

Former Bangladeshi PM Hasina accused Yunus of “unleashing terrorists” and pledged to return to avenge the deaths of police officers. Her return seems unlikely; however, if she were to return, wider turmoil in the region could be expected. Forty one former Bangladesh police officials were arrested over the crackdown on protests that led to her ouster.

Australia

China conducted naval drills in international waters around Australia, at one point coming with within 150 nautical miles (277 km) of Sydney—for context, territorial waters are 12 nautical miles (22 km).

Africa

A UN official said that nearly 3,000 people have died this year in fighting in the Democratic Republic of Congo (DRC) between the M23 rebels and the national army, over control of the eastern city of Goma. After seizing control of Goma, the rebels took Bukavu, the second-largest city in the eastern part of the DRC.

The DRC has asked for Chad’s support to combat the M23 rebels, and Uganda has deployed troops in one eastern DRC town to help the local government fight the rebels. The US has imposed sanctions on M23 members.

The Rapid Support Forces (RSF) rebel group in Sudan has killed 200 civilians in three days. RSF leaders, currently meeting in Kenya, are expected to announce that the group will form its own government in areas under its control. Sudan’s government recalled its ambassador from Kenya in protest over the country’s hosting of RSF leaders.

Biorisks

H5N1 bird flu was detected in rats in the US for the first time, in California.

More dairy herds in the US continue to be confirmed to have H5N1 infections.

The US CDC conducted a survey of 150 bovine veterinary practitioners; three were found to have H5N1 antibodies, “including two without exposures to animals with known or suspected HPAI A(H5) virus infections and one who did not practice in a U.S. state with known HPAI A(H5) virus–infected cattle.”

Canada bought 500,000 H5N1 vaccines for use in people most at risk of infection from animals.

US egg prices hit a record high in January.

H5N1 killed over half a million poultry in Andhra Pradesh, India last week. Authorities are implementing containment measures.

As part of the Trump administration's widespread staff reductions, the USDA accidentally fired staff members working on bird flu and is trying to rehire them.

Chronic wasting disease, a highly transmissible prion disease, is spreading through deer in Canada. It is already widespread in deer in the US, where it has been spreading at least since it was first detected in a captive deer in 1967. It is currently thought to pose an extremely small threat to humans, although human deaths from prion diseases in the US, while extremely rare, have been rising in recent years concomitant with the rise of CWD, and recently, the deaths of two hunters in Michigan are suspected to have been caused by eating venison from affected deer.

Uganda discharged all eight remaining Sudan ebolavirus patients after they tested negative twice; the initial patient died. A total of 265 contacts of these cases remain in quarantine.

Armed conflict in the DRC caused 400 mpox patients to flee treatment centers, and chaos in the region raises the risk of greater mpox spread.

A modeling study reports that wastewater sampling at 20 airports around the globe would likely detect an emerging outbreak promptly.

Large numbers of biologists and medical researchers have not received US federal grant money since President Trump took office, and the NIH has stopped considering new grant proposals. There are thus many researchers who are highly skilled and angry at the sudden changes that have often upended their lives, their careers, and the work of their laboratories. This situation increases the risk of bioterrorism. While we believe this risk is extremely small, we raise it here because we also believe it is not zero.

Artificial Intelligence and Other Tech

xAI launched Grok-3, their most capable AI system so far. Trained with more than 200,000 GPUs in their Memphis data center, Grok-3 appears to be comparable to OpenAI’s o3-mini-high on benchmarks, besting it on the AIME mathematics benchmark and the GPQA benchmark.

OpenAI researcher Boris Power accused xAI of cheating on the benchmark; however, xAI’s Igor Babuschkin makes a persuasive case that this was a fair comparison.

We haven’t found a benchmark score of Grok-3 for Humanity’s Last Exam, which would be more interesting, as it is further from saturation.

Arc Institute and Nvidia released Evo-2, the largest AI model for biology. It can write whole chromosomes and small genomes from scratch and tell you which mutations are likely harmful. It’s also open sourced.

OpenAI’s weekly active users has surpassed 400 million.

Google has developed an AI co-scientist tool. It reportedly generated a hypothesis for why some bacteria are resistant to antibiotics that took a research team at Imperial College London years to develop and that was not in the public domain. Some of its other hypotheses were also considered impressive, including one that the researchers hadn't considered.

OpenAI’s former CTO Mira Murati has launched her Thinking Machines AI lab.

OpenAI is considering giving special voting rights to its non-profit board members.

Microsoft is to invest $700m in cybersecurity in Poland, as part of the second phase of an already completed $1 billion data-center project.

New downloads of DeepSeek have been suspended in South Korea because of concerns about data protection.

xAI is in talks to raise $10 billion at a $75 billion valuation.

The US AI Safety Institute is likely to be gutted by the Trump Administration.

Meta has announced plans to build the world's longest undersea cable that would link the US, India, South Africa, Brazil and other countries. The stated goal is to support its AI projects.

Natural Disasters

The risk that asteroid 2024 YR4 will hit Earth in 2032 continues to change as scientists collect more data. The risk grew this week to 3.1%, was revised down to 1.5%, and fell to 0.28% according to NASA and down to 0.16% according to the ESA.

In the US, “Southern California has a 36% chance of a M7.5 or greater earthquake in the next 30 years,” according to Elizabeth Cochran of the USGS Earthquake Science Center. Such an earthquake could be devastating for a big city in California and could cause roughly 1,800 deaths, 50,000 injuries, and $200 billion in damage. Notably, many AI companies are located in California.

Geologists warn that a mega-earthquake in Istanbul, Turkey, is “overdue.” The scientists warn that such an earthquake could cause “hundreds of thousands” of deaths, in large part because buildings in Turkey have not been built or upgraded to withstand severe earthquakes. It is estimated that there is a 60% chance of a magnitude 7 earthquake at one location in the region by 2030.