During the period mid-1938 to mid-1939 my research accomplished such things as medium tank advances, heavy tank brigades, submarine and cruiser improvements and training, etc. Our higher-tech initiatives advanced, too, with research into strategic rockets beginning, after initial success in creating useful engines.
Remember those 2-brigade medium tank divisions we were building? Now we begin to build single-brigade self-propelled artillery to accompany them (I'll combine them later).
In China, the Japanese commit horrible atrocities which are reported by the worldwide news. The USA embargoes Japan -- Germany is proud to have issued such an embargo on lesser provocations. The Japanese set up a puppet government in Nanjing (HPP represents this government as a separate country, and as Japan takes territory from Nationalist China, they "cede" the land to this new government).
Partly because of our coal storage problems... Which very quickly also stack up (no pun intended) next to metal storage problems and oil storage problems (the penalties start applying after you hit 50,000 units, which means "hoarders" like me get hit alot!)... I push ahead-of-time research for improving efficiency for home production of coal and metal.
In unsettling news... Poland seems to have become concerned enough about the USSR (noteworthily so, it's NOT US!

) that they mobilize their army. Hmm... I'm wondering if they might have jumped the gun on this, but who knows, really? I start prioritizing more of my combat units and aircraft, etc. so that I might have more ready just in case. In fact, I start to get really nervous!

Have we waited too late to build a large army? I start surveying my forces, seeing holes that I hadn't noticed before (perhaps even holes that don't really exist!).
Of course, I continue upgrading my Radar capacities. I have two stations, one in East Prussia, and another in Saarbrucken where they can keep an eye on the French (potential enemies, still).
The increasing amounts of intelligence I'm getting are interesting. I have a before and after shot above -- before I upgraded, and then my new intel capacity after, reaching all the way to the English Channel. Nice.
My main radar/intel station at Lyck, East Prussia, is growing into a massive system. It has to be in order to see beyond Poland (who is NOT my enemy) into the USSR (who is!). I have a reasonably good eyeball on their frontier forces, but I'll boost the power of this station gradually until I can see even more.
We begin researching Heavy Fighters, otherwise known as fighter-bombers or duel-role (multi-purpose) fighters. This is a big deal because the interceptor fighters just aren't quite worth what I pay for them comparatively.
Poland, in late 1938, is making good progress in building an alliance structure just like the one I've been wanting to create. I'd just as soon they do it, as it has basically the same effect.
Nationalist China is really taking it on the chin, now. By coicidence, they ask if they can join the Axis. I don't tell them no. I just ignore them. Persistently.
About this time, we get hints from the Soviets that they might want to collaborate with us on a project related to Poland. Obviously, the Poles are aware of their interest, but the Soviets are not aware of our particular bent on this subject. The event involves conditions (capture of Prague) which do not (won't) exist, and would also lower Allied neutrality, so we ignore the option. No Molotov-Ribbentrop Pact.
We're getting those Oil Storage problems now, but we're pushing through them to try to continually increase those stockpiles. We're flush with money, and we're using it to continue stockpiling despite the obstacles.
Although Germany certainly desires a peaceful relationship with the Allies, we are not blind to the possibility of eventual war, and so we're preparing by building a coastal watch radar station at Wilhelmshaven, increasing anti-aircraft capabilities there, and continuing to research more effective AA technology. We've been gradually building up AA capabilities around all of our major cities, especially in the east, where we expect the Soviets may try to use their massive strategic bombers to injure our factories.
We're also able to begin building Airborne Infantry, now, which will come in handy in the future (not right away).
Here's a look at our whole production schedule right now:
Not shown are several nearly-complete ships, airwings, or armor/infantry units which I don't want to complete and deploy yet because of the Threat they would generate. They're like my "production reserve" -- I can deploy them if I get into a war (this, obviously, is a little bit of an exploit, which maybe they'll fix in future versions).
Our radar advances yet again! So does our reach from Lyck, East Prussia. The Assault Weapons are something interesting to note -- HPP has separated out certain key techs like this so that you can advance many different unit types with the same research.
Our efforts to build a Diplomatic coalition against all enemies, but particularly and most obviously against Russia, continues. We feel like we're very close to gettting Hungary to join in (they're already allied to Poland). It's July 1939.
You can see the spread of other countries moving into the Axis sphere too -- Bulgaria, Lithuania, Portugal, Yugoslavia are closest. Latvia, Rumania, Greece, Poland and the Netherlands are further out but still steadily moving our way. Does it help that we're not hostile and increasing our Threat toward them? Possibly, though I've seen similar spreads in normal games.
Our tech advances help us with our Industry, and our nuclear research is moving right along. We begin to acquire a "nuclear pile" for a reactor. We also begin building a third radar/intel receiving station at Oppeln, south of East Prussia (the next-nearest German land to the USSR).
China is not doing well against Japan. The ghost is almost given up. We lose our access to Chinese ores. It may be because all but one of their ports is now occupied by the enemy, but I surmise it is actually because the mines are located in the interior, and now the Japanese have split the Chinese interior from the coast and these supplies cannot navigate through Guangxi territory. The Chinese are still trying to join the Axis. This is a terribly cynical, unsympathetic perspective, but in the world or realpolitik we wonder, won't they just go away?
Our wide range of intelligence on the USSR is yielding impressive results. We have 10 spies active in Russia, all of them working to increase the Soviet threat to their (our) neighbors, thus pushing them into our camp. But those spies also gather information about other things, as do our radar/intel stations.
Besides now having a picture of their deployments all along the border, we also notice that they have medium bombers staged along the border, they still rely in places upon cavalry, but they're starting to also deploy light tanks. There may be other armored units -- surely are -- which we don't know about.
Germany really hasn't deployed any armored divisions yet. Maybe one or two. The rest are waiting in production, though some of them are in that "production reserve."
For now, Germany, and Europe as a whole, remains at peace. It's August, 1939.