High yield spreads widened 23 bps Friday to a five-week high of 301 bps, the biggest upside move since April 4th (up 40 to 427bps). The week’s 27 bps widening was the most since the week of April 4th (87bps). Investment-grade spreads widened four Friday (to 80bps), the largest since the seven bps jump on April 7th (to 116bps).
Leveraged loan prices dropped 0.22 this week to 97.31, the largest week drop since the week of April 11th (down 0.26 to 94.75).
Two-year Treasury yields sank 27 bps Friday to 3.68%, the largest one-day decline since the 30 bps drop on December 13, 2023 – when the Fed signaled the end of its tightening cycle and likely rate cuts to come in 2024. In an extraordinary move, the rates market Friday priced in more than an additional cut (29bps) by the Fed’s December 10th meeting (to 3.71%) – with markets now anticipating 62 bps of rate reduction. This followed a 10 bps w-t-d increase at Thursday’s close at 4.00% (only 33 bps of rate reduction), the high since February 13th. The market is now pricing an 87% probability for a cut at the September 17th FOMC meeting.
Bond and rate markets were blindsided. July Non-Farm Payrolls were reported at a much weaker-than-expected 73k (manufacturing down 11k). But the shock and awe were with the revisions. Initially reported at 147k, June payrolls were revised to only 14k (manufacturing down 15k). The Two-Month Payroll Net Revision was a huge negative 258k. A chunk of this was in the government sector. Revisions dropped three-month average payroll gains to only 35k. The Unemployment Rate rose from 4.12% to 4.25%.
From Bloomberg Intelligence: (Anna Wong, Stuart Paul, Eliza Winger and Estelle Ou): “Bottom line: The July jobs report has changed the narrative. The drastic backward revisions showed job growth close to zero in May and June — and July’s payrolls may also turn out to be flat or negative after subsequent revisions. More importantly, the unemployment rate rose even as the labor force contracted. Fed Governor Christopher Waller is right that labor-market conditions are not solid. We see a growing likelihood the Fed will cut rates earlier and by more than our base case of just one cut this year, in December.”
I doubt this is the end of the story. Interestingly, Non-Farm Payroll revisions placed recent monthly job growth in closer alignment to monthly ADP data. And at 104k, ADP July job gains were ahead of forecast to the highest level since March. Notably, job gains were registered in small, medium, and large companies, with a notable recovery in Services jobs after June’s weakness.
It’s worth noting that Non-Farm Average Hourly Earnings indicate ongoing moderate wage pressures, with July 0.3% pushing y-o-y gains to a stronger-than-expected 3.9% (2000-2020 annual avg. 2.5%). The APD survey also suggests sticky wage pressures, with Job Changers seeing 7.0% pay gains (hasn’t been higher since August ’24). Weekly Unemployment Claims (218k) remain at historically low levels.
Whether it’s the labor market, housing, or growth more generally, the U.S. Bubble Economy was extraordinarily unbalanced even before the administration’s new policies. Tariffs will have meaningful impacts on prices, demand, and capital investment. The immigration crackdown and deportations will be destabilizing for various industries. It is reasonable to expect an impact on the labor pool, working to underpin wage pressures.
There surely was more to the dramatic rates and bond market reaction than downwardly revised jobs data. It’s a hyper unsettled environment. Difficult not to think of “dancing,” a party that really got raging after the Fed responded to the subprime mortgage blowup.
From the archives (July 2007): “When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.” Citigroup CEO Chuck Prince
August 1 – Bloomberg (Rene Ismail and Jeannine Amodeo): “US leveraged-loan issuance skyrocketed in July as junk-rated borrowers flocked to the market largely to reprice debt, saving companies millions in interest expenses. July set a fresh record with $222.2 billion in loans launched, surpassing the prior $206.7 billion high set in January… During the month, more than 180 new leveraged-loan tranches came through the market… Managers of collateral loan obligations and exchange-traded funds that buy leveraged loans are flush with capital.”
August 1 – Bloomberg (Gowri Gurumurthy): “US junk bonds gained for a third straight month in July, the longest gaining streak since September, on signs of broad economic resilience and strong corporate earnings. The rally was propelled by CCCs, the riskiest tier of the high-yield market… More than $35b deals were priced in July, the second-busiest month since September 2021.”
July 31 – Bloomberg (Sandy Hendry and Tim Hakki): “Global tech bond sales jumped 83% this year and AI spending plans will drive more issuance. Credit investors are welcoming these high-rated issuers awash with cash. The $162 billion in bond sales by the sector, led by giants like AA+ Alphabet, is on course to top 2020’s record of $267 billion as yield spreads tighten during risk-on markets.”
August 1 - Bloomberg Intelligence’s Brian Meehan: “Leveraged funds have rebuilt net short positions in Treasury futures to $1.18 trillion – approaching the historic levels last seen ahead of the 2020 Treasury market blowout, when crowded basis trades collapsed during the Covid shock. Notional exposure is back near its highs… The basis trade is back, but in a more disciplined form. Leveraged net short in Treasury futures has climbed back to $1.065 trillion as of late July, just below the 2024 high of $1.1 trillion.”
July 31 – Wall Street Journal (Rolfe Winkler, Nate Rattner and Sebastian Herrera): “The AI arms race is accelerating as the major tech companies add to their already gargantuan levels of spending. The bets are paying off for investors, but not for all employees. Alphabet’s Google, Microsoft, Amazon and Meta Platforms are set to spend nearly $400 billion this year on capital expenditures, largely to build their artificial-intelligence infrastructure. That is more than the European Union spent on defense last year. Those firms and others plan to boost outlays even more. Morgan Stanley projects $2.9 trillion in spending from 2025 to 2028 on chips, servers and data-center infrastructure… The investments are helping power big increases in the companies’ profits, pushing some of their share prices to records.”
August 1 – Reuters (Stephen Nellis): “Apple CEO Tim Cook signaled… the iPhone maker was ready to spend more to catch up to rivals in artificial intelligence by building more data centers or buying a larger player in the segment, a departure from a long practice of fiscal frugality. Apple has struggled to keep pace with rivals such as Microsoft and Alphabet's Google, both of which have attracted hundreds of millions of users to their AI-powered chatbots and assistants. That growth has come at a steep cost, however, with Google planning to spend $85 billion over the next year and Microsoft on track to spend more than $100 billion, mostly on data centers.”
July 31 – New York Times (Mike Isaac, Eli Tan and Cade Metz): “Over the summer, Matt Deitke got a phone call from Mark Zuckerberg, Meta’s chief executive. Mr. Zuckerberg wanted Mr. Deitke, a 24-year-old artificial intelligence researcher who had recently helped found a start-up, to join Meta’s research effort dedicated to ‘superintelligence,’ a technology that could hypothetically exceed the human brain. The company promised him around $125 million in stock and cash over four years if he came aboard. The offer was not enough to lure Mr. Deitke, who wanted to stick with his start-up… He turned Mr. Zuckerberg down. So Mr. Zuckerberg personally met with Mr. Deitke. Then Meta returned with a revised offer of around $250 million over four years, with potentially up to $100 million of that to be paid in the first year…”
July 29 – Bloomberg (Fareed Sahloul and Liana Baker): “Dealmakers are brushing off lingering fears about trade wars and geopolitics, instead barreling into the traditionally quiet summer months with billions of dollars in M&A. Transaction values are up almost a fifth this year at $2.2 trillion… The latest boost to activity comes from almost $100 billion worth of announced deals in the US industrials sector. On Tuesday, railroad Union Pacific Corp. agreed to purchase Norfolk Southern Corp. in a tie-up valuing its smaller rival at around $85 billion including debt. It’s the biggest-ever deal in the railroad industry and the largest overall to be announced in 2025.”
Markets are hooked on dancing. The more sophisticated appreciate how abruptly the music ends.
Interesting moves by some of the “private Credit” players. KKR & Co stock sank 2.7% Friday, with a two-day drop of 5.2%. Apollo Global Management sank 4.8% Friday, with Ares Management down 2.6% over two sessions.
The KBW Bank Index fell 2.3% Friday for a two-session decline of 3.6%. The week’s 4.6% loss was the largest since the week of April 4th (13.8%). The Broker/Dealers’ 1.6% Friday decline boosted two-day losses to 2.6%. Friday financial losses included Wells Fargo (3.5%), Capital One (3.5%), and Bank of America (3.4%). Robinhood lost 3.1%.
It’s worth noting Friday’s four bps increase in European (subordinated) Bank CDS was the biggest increase since June 19th (“Trump Set to Decide Within Two Weeks Whether to Strike Iran”). The 11 bps jump in European high yield CDS was also the most since June 19th. Friday’s 6.4 jump in EM CDS (to a one-month high 161 bps) was the largest since April 10th (22 to 217bps).
The MAG7 Index dropped 3.1% in Friday trading, the largest one-day decline since April 21st. Amazon sank 8.3%, Meta 3.0%, Apple 2.5%, and Nvidia 2.3%. The Semiconductors ended the week with a 4.5% two-day drop.
It has been a pretty electrifying three-month dance party. Everything got even crazier, as “terminal phase excess” took full advantage of a dramatic loosening of financial conditions. The President’s tariff pause unleashed powerful short and “gamma” squeezes. Buy the dip and FOMO went nuts. When it hardly seemed possible, levered speculation took it up another notch. Liquidity over-abundance ensured the manic AI arms race went only more berserk.
President Trump over six short months has consolidated astounding power. The “Trump put” triggered another round of financial free-for-all. In ways, it’s more powerful than even the Fed “put.” How could that be, with the Fed’s arsenal of rates cuts and QE underpinning its market backstop cred?
“Terminal phases” are characterized by an exponential rise in systemic risk. On the stock side, inflating prices detach from deteriorating fundamental prospects – while surging market prices stoke industry investment booms that further inflate corporate earnings. In credit, there’s a surge in the quantity of increasingly unsound loans. Here you can also think Treasuries, speculative leverage, subprime leveraged loans and “private Credit”.
A historic surge in risk hedging is one manifestation of this massive increase in systemic risk. In the stock market, players are ready to buy put options and derivative hedges that offer protection against a market downturn, while hedge fund operators and others will boost short selling. Bond speculators and investors are keen to use derivatives to protect against Treasury losses, while shorting liquid Treasuries to hedge corporate credit, mortgage securities, munis, and myriad structured products.
This creates latent instability. If many within the marketplace move to offload risk, as they began to do in April, markets quickly turn illiquid and prone to dislocation. However, these outsized bearish hedges and derivatives create rocket fuel for market reversals and rallies.
When speculative Bubble markets inevitably find themselves in trouble, the President has the power to trigger powerful “squeezes” with a sentence or two on Truth Social. Who needs the Fed “put” when the President’s will be exercised so predictably. No need for the Fed’s balance sheet, not when “terminal phase” dynamics hold the potential for equity market squeezes, derivatives “gamma squeezes,” FOMO, and leverage speculation to unleash massive liquidity generation. Never has an individual wielded such power.
There’s huge downside to the “Trump put.” Importantly, it only stoked and perpetuated perilous late-cycle excess. The President is betting the ranch on one hell of an endless rave party. He’s spiking the punch with the dancers already stupid drunk. The Ecstasy Party will end with one ugly hangover. Sure seems we’ve witnessed enough of late to ponder Peak Dance Moves.
The President holds keys to both the bank vault and the asylum. Unleashing more “money” and craziness is an especially perilous undertaking at this most stretched “terminal phase.” There’s a strong case to make that markets and finance haven’t been so perverted since fateful 1929. And the markets and President Trump just feed off each other’s dance steps. Record markets and a President that couldn’t be more emboldened. Without the past few months of market exuberance, it’s a different tariff regime this week. Markets accommodate at their own peril.
Meanwhile, markets have the risk blinders placed firmly. The leverage lending and “private Credit” Bubbles turn more dangerous by the week. The AI mania and arms race bring new meaning to “overheated.” Loose conditions and liquidity overabundance underpin all of it.
The markets’ lesson from April was that the “Trump put” was real and really powerful. It should have been that market liquidity is especially tenuous at this very late stage of the cycle. Deleveraging lurks. It’s hard for me to believe most folks are comfortable with such unprecedented power operating out of the Oval Office. I’m uncomfortable. Markets should be. Increasingly unhinged.
For posterity, Friday highlights from Truth Social:
3:32 am EST: “Jerome ‘Too Late’ Powell, a stubborn MORON, must substantially lower interest rates, NOW. IF HE CONTINUES TO REFUSE, THE BOARD SHOULD ASSUME CONTROL, AND DO WHAT EVERYONE KNOWS HAS TO BE DONE!”
5:08 am EST: “STRONG DISSENTS ON FED BOARD. IT WILL ONLY GET STRONGER! ‘TOO LATE!’”
5:51 am EST: “Too Little, Too Late. Jerome ‘Too Late’ Powell is a disaster. DROP THE RATE! The good news is that Tariffs are bringing Billions of Dollars into the USA!”
9:53 am EST: “Based on the highly provocative statements of the Former President of Russia, Dmitry Medvedev, who is now the Deputy Chairman of the Security Council of the Russian Federation, I have ordered two Nuclear Submarines to be positioned in the appropriate regions, just in case these foolish and inflammatory statements are more than just that. Words are very important, and can often lead to unintended consequences, I hope this will not be one of those instances. Thank you for your attention to this matter!”
11.09 am EST: “I was just informed that our Country’s ‘Jobs Numbers’ are being produced by a Biden Appointee, Dr. Erika McEntarfer, the Commissioner of Labor Statistics, who faked the Jobs Numbers before the Election to try and boost Kamala’s chances of Victory. This is the same Bureau of Labor Statistics that overstated the Jobs Growth in March 2024 by approximately 818,000 and, then again, right before the 2024 Presidential Election, in August and September, by 112,000. These were Records — No one can be that wrong? We need accurate Jobs Numbers. I have directed my Team to fire this Biden Political Appointee, IMMEDIATELY. She will be replaced with someone much more competent and qualified. Important numbers like this must be fair and accurate, they can’t be manipulated for political purposes. McEntarfer said there were only 73,000 Jobs added (a shock!) but, more importantly, that a major mistake was made by them, 258,000 Jobs downward, in the prior two months. Similar things happened in the first part of the year, always to the negative. The Economy is BOOMING under ‘TRUMP’ despite a Fed that also plays games, this time with Interest Rates, where they lowered them twice, and substantially, just before the Presidential Election, I assume in the hopes of getting ‘Kamala’ elected – How did that work out? Jerome ‘Too Late’ Powell should also be put ‘out to pasture.’ Thank you for your attention to this matter!”
12:44 pm EST: “In my opinion, today’s Jobs Numbers were RIGGED in order to make the Republicans, and ME, look bad — Just like when they had three great days around the 2024 Presidential Election, and then, those numbers were ‘taken away’ on November 15, 2024, right after the Election, when the Jobs Numbers were massively revised DOWNWARD, making a correction of over 818,000 Jobs — A TOTAL SCAM. Jerome ‘Too Late’ Powell is no better! But, the good news is, our Country is doing GREAT!”
3:05 pm EST: “‘Too Late’ Powell should resign, just like Adriana Kugler, a Biden Appointee, resigned. She knew he was doing the wrong thing on Interest Rates. He should resign, also!”
For the Week:
The S&P500 dropped 2.4% (up 6.1% y-t-d), and the Dow slumped 2.9% (up 2.5%). The Utilities increased 1.2% (up 13.2%). The Banks sank 4.4% (up 9.6%), and the Broker/Dealers declined 1.7% (up 27.1%). The Transports were hammered 7.7% (down 5.0%). The S&P 400 Midcaps slumped 3.5% (down 0.5%), and the small cap Russell 2000 sank 4.2% (down 2.8%). The Nasdaq100 lost 2.2% (up 8.3%). The Semiconductors fell 2.1% (up 11.0%). The Biotechs dipped 1.0% (down 0.7%). While bullion gained $26, the HUI gold index retreated 3.0% (up 55.8%).
Three-month Treasury bill rates ended the week at 4.165%. Two-year government yields sank 74 bps to 3.68% (down 56bps y-t-d). Five-year T-note yields fell 20 bps to 3.76% (down 62bps). Ten-year Treasury yields dropped 17 bps to 4.22% (down 35bps). Long bond yields fell 11 bps to 4.82% (up 4bps). Benchmark Fannie Mae MBS yields dropped 18 bps to 5.46% (down 38bps).
Italian 10-year yields declined four bps to 3.51% (down 1bp y-t-d). Greek 10-year yields fell four bps to 3.35% (up 14bps). Spain's 10-year yields declined five bps to 3.26% (up 20bps). German bund yields dipped four bps to 2.68% (up 31bps). French yields fell four bps to 3.35% (up 15bps). The French to German 10-year bond spread was unchanged at 67 bps. U.K. 10-year gilt yields dropped 11 bps to 4.53% (down 4bps). U.K.'s FTSE equities index slipped 0.6% (up 11.0% y-t-d).
Japan's Nikkei 225 Equities Index fell 1.6% (up 2.3% y-t-d). Japanese 10-year "JGB" yields fell five bps to 1.6% (up 46bps y-t-d). France's CAC40 sank 3.7% (up 2.2%). The German DAX equities index dropped 3.3% (up 17.7%). Spain's IBEX 35 equities index dipped 0.8% (up 21.8%). Italy's FTSE MIB index lost 1.9% (up 16.8%). EM equities were mostly lower. Brazil's Bovespa index declined 0.8% (up 10.1%), and Mexico's Bolsa index dipped 0.7% (up 14.9%). South Korea's Kospi dropped 2.4% (up 30.0%). India's Sensex equities index declined 1.1% (up 2.7%). China's Shanghai Exchange Index lost 0.9% (up 6.2%). Turkey's Borsa Istanbul National 100 index gained 1.0% (up 9.3%).
Federal Reserve Credit declined $15.1 billion last week to $6.596 TN. Fed Credit was down $2.293 TN from the June 22, 2022, peak. Over the past 307 weeks, Fed Credit expanded $2.870 TN, or 77%. Fed Credit inflated $3.785 TN, or 135%, over the past 664 weeks. Elsewhere, Fed holdings for foreign owners of Treasury, Agency Debt recovered $10.1 billion last week to $3.228 TN. "Custody holdings" were down $72.8 billion y-o-y, or 2.2%.
Total money market fund assets were little changed at $7.076 TN. Money funds were up $931 billion, or 15.2%, y-o-y.
Total Commercial Paper jumped $31.5 billion to $1.426 TN. CP has expanded $338 billion y-t-d and $187 billion, or 15.1%, y-o-y.
Freddie Mac 30-year fixed mortgage rates slipped two bps to 6.72% (down 1bp y-o-y). Fifteen-year rates dipped two bps to 5.85% (down 14bps). Bankrate's survey of jumbo mortgage borrowing costs had 30-year fixed rates up three bps to 6.86% (down 18bps).
Currency Watch:
For the week, the U.S. Dollar Index gained 1.5% to 99.141 (down 8.6% y-t-d). For the week on the upside, the Brazilian real increased 0.4%, and the Japanese yen gained 0.2%. On the downside, the South African rand declined 1.9%, the New Zealand dollar 1.7%, the Mexican peso 1.7%, the Australian dollar 1.4%, the euro 1.3%, the Swedish krona 1.3%, the British pound 1.2%, the Swiss franc 1.1%, the Norwegian krone 0.7%, the Singapore dollar 0.6%, the Canadian dollar 0.6%, and the South Korean won 0.5%. The Chinese (onshore) renminbi declined 0.33% versus the dollar (up 1.47% y-t-d).
Commodities Watch:
July 30 – Financial Times (Camilla Hodgson): “Investor appetite for gold remains undeterred by prices that have soared to record highs against a backdrop of geopolitical instability and weakening confidence in the US dollar. Global gold demand rose 3% year on year in the three months to June…, said the World Gold Council, which represents gold miners… Inflows into gold exchange traded funds remained strong, with global demand during the first half of the year at its highest since 2020.”
July 30 – Wall Street Journal (Ryan Dezember): “U.S. copper futures plunged roughly 20% in late trading Wednesday after President Trump unveiled 50% tariffs on copper products but not on the raw material itself. It is the latest example of how Trump’s gyrating trade policies have whipsawed financial markets… U.S. copper prices surged to records and well above global prices this month after Trump said he would impose a 50% import tax on the metal…”
The Bloomberg Commodities Index dropped 2.8% (up 1.9% y-t-d). Spot Gold increased 0.8% to $3,363 (up 28.2%). Silver was down 2.9% to $37.0375 (up 28.1%). WTI crude rallied $2.17, or 3.3%, to $67.33 (down 6%). Gasoline recovered 1.0% (up 5%), while Natural Gas declined 0.9% to $3.083 (down 15%). Copper sank 23.3% (up 10%). Wheat dropped 4.0% (down 6%), and Corn lost 2.5% (down 15%). Bitcoin fell $3,680, or 3.1%, to $113,960 (up 21.6%).
Market Instability Watch:
July 30 – Financial Times (Kate Duguid): “The US Treasury will issue more short-term debt to help fund its widening budget deficit, a continuation of a Biden-era policy that Treasury secretary Scott Bessent had previously disavowed. The Treasury department said… it would keep the size of its auctions of longer-dated bonds steady over the next ‘several quarters’. This suggests a vast increase in issuance of shorter-term debt… to meet the $1tn the department needs this quarter… Skewing its debt issuance to more shorter-dated bonds allows the government to step up its borrowing without sending yields on longer-dated bonds higher.”
July 30 – Wall Street Journal (Hannah Erin Lang): “It is a great year to be a Wall Street middleman. Investors are hot for just about everything right now, from the Magnificent Seven and meme stocks, to crypto, options and exchange-traded funds. That is bringing boom times to brokerages including Charles Schwab, Robinhood Markets and Interactive Brokers Group, which are all raking in revenue. Individual investors poured a record $155 billion into stocks and exchange-traded funds in the first half of this year, according to Vanda Research, and margin debit balances have never been higher. That is also true for the brokerages’ own stock prices. Shares of Robinhood have nearly tripled in 2025. ‘You have this huge wave of retail trading,’ said Dan Dolev, a senior analyst at Mizuho Securities. ‘Being a broker means you’re at the center of it.’ Trading revenue at Robinhood surged 65% in the second quarter from a year earlier…”
July 31 – Bloomberg (Finbarr Flynn): “Goldman Sachs… credit strategists warned against complacency and urged clients to hedge after a measure of credit risk for global corporate bonds fell to the lowest level in 18 years. ‘There are enough sources of downside risks to warrant keeping some hedges on in portfolios,’ Goldman strategists… wrote… ‘Growth could surprise further to the downside,’ dis-inflationary pressures could fade or renewed concerns over Fed independence may fuel a sharp selloff in long-dated yields. Their warning followed a drop this week in the yield premium on investment-grade notes worldwide to 0.79 percentage point, or 79 bps, the lowest level since July 2007, just before the global financial crisis…”
Global Credit and Financial Bubble Watch:
July 25 – Financial Times (Philip Coggan): “Government bond for sale: will accept any reasonable offer. Politicians across the developed world have a problem. They have large debts and need to borrow more money every year. But it is getting increasingly difficult to find automatic buyers of their bonds. The latest OECD report on government debt estimates that sovereign bond issuance by the group’s countries will be $17tn in 2025, up from $14tn in 2023. Some of that will, of course, be used to refinance existing debt, but the total amount of debt outstanding is expected to rise to $59tn, or about 84% of the GDP of those countries… Government debt interest costs in the average OECD country are at present 3.3% of GDP, more than the amount spent on defence.”
July 30 – Bloomberg (Zijia Song): “Developing nations from Panama to Angola are borrowing directly from Wall Street banks, getting short-term liquidity to help cope with rising debt burdens at the risk of longer-term pitfalls. Panama has borrowed $6 billion in bank loans denominated in US dollars, euros and Swiss francs within the past 10 months. Angola, which is using most of its fiscal revenue to pay salaries and service debt, in January increased its bond program to use the notes as collateral for about $1 billion of loans from JPMorgan... Now Colombia is in talks for up to $10 billion of loans in Swiss francs.”
July 26 – Bloomberg (Natasha Doff and Cecile Gutscher): “Investors are showing signs of pulling money out of government bonds and plowing it into US and European company debt… In June, money managers pulled $3.9 billion from Treasuries, while adding $10 billion to European and US investment-grade corporate debt, according to EPFR Global data. In July, investors have added another $13 billion to US high-grade corporates, the largest net client purchasing in data going back to 2015…”
July 30 – Bloomberg (Olivia Fishlow and Sonali Basak): “Centerbridge Partners joined the ranks of many alternatives managers that see accessing 401(k) retirement funds as a logical next step for private credit firms. Jeff Aronson, the co-founder and managing principal of Centerbridge, said… private credit is a safe investment for 401(k) participants, adding that the most important factor is that investors know what they’re buying… ‘I’m a huge believer,’ Aronson said… ‘I really believe it’s just a matter of time before these assets find themselves in a 401(k) account.’”
Trump Administration Watch:
July 31 – Axios (Ben Berkowitz): “President Trump… unleashed a fiery reaction after the Federal Reserve held interest rates steady… Trump’s rage at the Fed's resistance to cut rates has twice taken him to the verge of trying to fire Powell, both times scaring markets and raising concerns about the central bank's independence… Trump has repeatedly insisted rates should be lower, down to 1% or less. ‘He is TOO LATE, and actually, TOO ANGRY, TOO STUPID, & TOO POLITICAL, to have the job of Fed Chair,’ Trump said in a Truth Social post. ‘He is costing our Country TRILLIONS OF DOLLARS, in addition to one of the most incompetent, or corrupt, renovations of a building(s) in the history of construction!’”
July 28 – Wall Street Journal (Sam Goldfarb): “The Trump administration is making government borrowing exciting again. For decades, the Treasury Department’s choice of what mix of bonds to sell investors has been boring by design. Officials stressed they weren’t trying to get the best rate by market timing, worried that could invite speculation and uncertainty… The Trump administration is sending a different message. Calling himself ‘the nation’s top bond salesman,’ Treasury Secretary Scott Bessent has talked openly about waiting for interest rates to come down before considering the increases in longer-term debt issuance… President Trump has suggested that Treasury should only issue debt that matures in about six to nine months until Federal Reserve Chair Jerome Powell is replaced next year. ‘What I’m going to do is I’m going to go very short-term,’ he said in June. ‘Wait until this guy gets out, get the rates way down and then go long-term.’”
July 29 – Wall Street Journal (Greg Ip): “President Trump has achieved the remarkable: raising tariffs by more than the notorious Smoot-Hawley Tariff Act of 1930, while—it appears—avoiding the destructive trade war that followed. Including the deal struck over the weekend with the European Union, the U.S. will impose an effective tariff rate of about 15% on its trading partners, by far the highest since the 1930s, according to JPMorgan... Japan and the EU have together committed to investing $1.15 trillion in the U.S. Europe also agreed to energy and military purchases. And what did the U.S. give up in return? Nothing. So Trump has hit his goals, for now. But these deals don’t yet represent a new trade order. They are sort of a way station, more fragile and with less legitimacy than the system they have supplanted.”
July 28 – Bloomberg (Karishma Vaswani): “We have entered a dark era of trade deals, one where Washington now openly links national security to success. If countries want lower tariffs, they have to meet President Donald Trump’s defense demands. It’s working. Last week, the White House cut deals with Indonesia, the Philippines and Japan, granting them lower rates than Trump’s threatened tariffs. In exchange, they have had to sign up to vaguely worded commitments on defense and national security. This is a sharp break from normal statecraft, notes Bob Savic, head of international trade and sanctions consulting at the… Global Policy Institute. ‘The Trump administration has redefined US policy by explicitly tying economic agreements to national security,’ he told me. The White House’s core objective, he adds, is to leverage America’s economic power to protect and advance its strategic interests. Countering China and reshaping global rules in favor of the US are part of that calculation.”
July 31 – New York Times (Lydia DePillis and Rebecca F. Elliott): “Trade negotiations have for years focused on the rules of the road for commerce between nations. Under President Trump, the deal making has been more direct, especially when it comes to energy. Countries are now agreeing to purchase American fossil fuels, in specific amounts and often years into the future, whether or not their economies will demand it or whether the United States will have the ability to supply it… ‘This is new, and generally that’s because in trade agreements you want things that are clear and enforceable,’ said David Goldwyn, a former U.S. diplomat and U.S. Energy Department official. ‘These energy commitments are neither clear nor necessarily enforceable. They’re more aspirational, political encouragements.’”
August 1 – Wall Street Journal (Eric Niiler and Scott Patterson): “To make its case that climate regulations should be tossed out, the Trump administration asked a group of five researchers who are skeptical of established climate science to write a report for the Energy Department. The report challenges decades of scientific findings that emissions from cars, power plants and factories are warming the planet and posing risks to human health. The Environmental Protection Agency is using the report as the scientific basis to roll back its so-called endangerment finding, a legal tool that allows the agency to regulate industries and automakers under the Clean Air Act.”
July 31 – Axios (Tina Reed): “President Trump… said he demanded commitments from 17 big drugmakers to lower their U.S. prices by committing to a ‘most favored nation’ policy he laid out in a May executive order. The move raises the stakes for pharmaceutical manufacturers as they brace for threatened tariffs on the sector… The companies should ‘repatriate increased revenues’ in the form of lower prices in an ‘explicit agreement’ with the U.S…”
July 30 – Associated Press (Michelle L. Price and Lis Mascaro): “Treasury Secretary Scott Bessent said… the Trump administration was committed to protecting Social Security hours after he said… a new children’s savings program President Donald Trump signed into law ‘is a back door for privatizing Social Security.’ Bessent said… the accounts created under Trump’s tax break-and-spending cut law ‘will supplement the sanctity of Social Security’s guaranteed payments.’ ‘This is not an either-or question: our Administration is committed to protecting Social Security and to making sure seniors have more money,’ Bessent said…”
July 30 – Bloomberg (Josh Wingrove and Olga Kharif): “A group charged by President Donald Trump with recommending policies on crypto markets called on federal regulators to use their authority to provide more clear rules on the trading of digital assets and ease the adoption of new financial products… ‘By implementing these recommendations, policymakers can ensure that the United States leads the blockchain revolution and ushers in the Golden Age of Crypto,’ the White House said…”
July 31 – Bloomberg (Zachary R. Mider and Annie Massa): “Eric Trump’s stake in a four-month-old Bitcoin mining venture could be worth $367 million when it goes public in coming weeks. The second son of President Donald Trump holds a large stake in closely held American Bitcoin Corp., which he co-founded in March.”
China Trade War Watch:
July 30 – Bloomberg: “Beijing authorities summoned Nvidia Corp. to discuss alleged security risks related to its H20 chips, casting doubt over the Chinese business of the world’s most valuable company weeks after co-founder Jensen Huang met senior officials in the country.”
July 26 – Reuters (Brenda Goh and Liam Mo): “China’s Huawei Technologies showed off an AI computing system… that one industry expert has said rivals Nvidia’s most advanced offering, as the Chinese technology giant seeks to capture market share in the country's growing artificial intelligence sector. The CloudMatrix 384 system made its first public debut at the World Artificial Intelligence Conference (WAIC), a three-day event in Shanghai… Industry analysts view it as a direct competitor to Nvidia's, the U.S. chipmaker's most advanced system-level product currently available in the market.”
Trade War Watch:
August 1 – Reuters (David Lawder, Trevor Hunnicutt and Aida Pelaez-fernandez): “U.S. President Donald Trump imposed steep tariffs on exports from dozens of trading partners, including Canada, Brazil, India and Taiwan, ahead of a Friday trade deal deadline, pressing ahead with plans to reorder the global economy. Trump set rates including a 35% duty on many goods from Canada, 50% for Brazil, 25% for India, 20% for Taiwan and 39% for Switzerland…”
July 31 – Reuters (Jasper Ward): “U.S. President Donald Trump signed an executive order… increasing tariffs on Canadian goods to 35% from 25%, the White House said… ‘In response to Canada’s continued inaction and retaliation, President Trump has found it necessary to increase the tariff on Canada from 25% to 35% to effectively address the existing emergency’…”
July 27 – Financial Times (Henry Foy, Aime Williams and Andy Bounds): “The US and EU have struck a tariff deal that will avert a transatlantic trade war between the two sides but still impose American tariffs of 15% on most imports from the bloc. As part of the deal the EU has agreed to spend hundreds of billions of dollars on US energy products and weapons, and accepted a broad 15% levy that covers many key European exports, including cars…The deal marks a victory for Trump…”
July 28 – Reuters (Kate Abnett and Arathy Somasekhar): “The European Union's pledge to buy $250 billion of U.S. energy supplies per year is unrealistic because it would require the redirection of most U.S. energy exports towards Europe and the EU has little control over the energy its companies import… Total U.S. energy exports to all buyers worldwide in 2024 amounted to $318 billion… Of that, the EU imported a combined $76 billion of U.S. petroleum, LNG and solid fuels such as coal in 2024…”
July 27 – Reuters (Mark John): “In the end, Europe found it lacked the leverage to pull Donald Trump's America into a trade pact on its terms and so has signed up to a deal it can just about stomach - albeit one that is clearly skewed in the U.S.'s favour. As such, Sunday's agreement on a blanket 15% tariff after a months-long stand-off is a reality check on the aspirations of the 27-country European Union to become an economic power able to stand up to the likes of the United States or China. The cold shower is all the more bracing given that the EU has long portrayed itself as an export superpower and champion of rules-based commerce for the benefit both of its own soft power and the global economy as a whole.”
July 28 – Wall Street Journal (Megumi Fujikawa and Yang Jie): “Japan is playing down the risks from its trade deal with President Trump after the White House said the U.S. would direct $550 billion in investments by Japan and keep 90% of the profit. Tokyo’s chief negotiator, Ryosei Akazawa, said… the government bank at the center of the investment deal would strictly review the projects it is asked to finance and approve only those that comply with Japanese law… Over the weekend, Akazawa said that only 1% to 2% of the $550 billion amount would be actual investment, with the rest coming in the form of loans and loan guarantees. The government is facing a backlash from opposition lawmakers and some analysts who expressed concern that the trade agreement… could humiliate Japan. A White House fact sheet released last week said ‘Japan will invest $550 billion directed by the United States to rebuild and expand core American industries.’ It said ‘the U.S. will retain 90% of the profits from this investment -- ensuring that American workers, taxpayers, and communities reap the overwhelming share of the benefit’… Akazawa, the chief Japanese negotiator, told public broadcaster NHK… he expected the investment portion of the deal to come to about 1% to 2% of the $550 billion framework. He also said Japan could stretch the commitment out over the remaining 3 1/2 years of Trump's term.”
July 31 – Reuters (Luciana Novaes Magalhaes and Lisandra Paraguassu): “U.S. President Donald Trump… slapped a 50% tariff on most Brazilian goods to fight what he has called a ‘witch hunt’ against former President Jair Bolsonaro, but softened the blow by excluding sectors such as aircraft, energy and orange juice from heavier levies. Trump announced the tariffs, some of the steepest levied on any economy in the U.S. trade war, as his administration also unveiled sanctions on the Brazilian supreme court justice who has been overseeing Bolsonaro's trial on charges of plotting a coup.”
July 30 – Financial Times (Chris Kay, Jyotsna Singh and Aime Williams): “Donald Trump announced the US would levy 25% tariffs on imports from India and impose an unspecified penalty on the south Asian nation, but later threw his plans into doubt by saying the two sides were still negotiating. In a post…, the US president said Indian tariffs were ‘among the highest in the World’ and that New Delhi had ‘the most strenuous and obnoxious non-monetary Trade Barriers of any Country’. India had ‘always bought a vast majority of their military equipment from Russia’ and was Moscow’s biggest purchaser of energy at a time when the Ukraine war was still raging, Trump said. ‘ALL THINGS NOT GOOD!’ he wrote. ‘INDIA WILL THEREFORE BE PAYING A TARIFF OF 25%, PLUS A PENALTY FOR THE ABOVE, STARTING ON AUGUST FIRST.’”
July 30 – Reuters (Trevor Hunnicutt and Ju-min Park): “President Donald Trump said… the U.S. will charge a 15% tariff on imports from South Korea, down from a threatened 25%, as part of a deal that eases tensions with a top-10 trading partner and key Asian ally. South Korea also agreed to invest $350 billion in the United States in projects selected by Trump and to purchase energy products worth $100 billion.”
August 1 – Bloomberg (Alan Crawford): “Back in January, a global survey found that Indians were the most upbeat of any nation about what a second Donald Trump presidency would mean for their country. They’re likely having second thoughts now. Trump dinged India with a 25% tariff rate… He cited New Delhi’s own trade barriers, but rebuked Prime Minister Narendra Modi’s government over lots of other things too – including its BRICS membership, and close ties with Russia. ‘They can take their dead economies down together, for all I care,’ he posted on social media. Trump’s last-minute flurry… shows how he’s taking punitive tariff threats beyond the realm of trade and into other arenas – ramping up pressure on countries to bend to America’s will on matters from war to energy supplies.”
U.S./Russia/China/Europe/Iran Watch:
August 1 – Bloomberg (Jennifer A. Dlouhy): “President Donald Trump said the US is moving two nuclear submarines to respond to what he called ‘highly provocative statements’ from former Russian President Dmitry Medvedev. ‘I have ordered two Nuclear Submarines to be positioned in the appropriate regions, just in case these foolish and inflammatory statements are more than just that,’ Trump said in a social media post Friday. ‘Words are very important, and can often lead to unintended consequences, I hope this will not be one of those instances.’”
July 29 – Reuters (David Lawder): “U.S. Treasury Secretary Scott Bessent… said he warned Chinese officials that continued purchases of sanctioned Russian oil would lead to big tariffs due to legislation in Congress, but was told that Beijing would protect its energy sovereignty. Wrapping up two days of U.S.-China trade talks in Stockholm, Bessent said he also expressed U.S. displeasure at China's continued purchases of sanctioned Iranian oil, and its sales of over $15 billion worth of dual-use technology goods to Russia that have bolstered Moscow's war against Ukraine.”
July 31 – CBS (Anna Coren): “A CBS News investigation has revealed that China is still secretly buying Iranian oil and evading U.S. sanctions by using what's known as a ‘dark fleet’ to transfer oil from ship to ship in the middle of the sea. Over the years, the U.S. has implemented heavy sanctions on Iranian industries, including trying to stop tankers used to transfer Iranian oil to China… On Wednesday, the Treasury Department imposed additional sanctions, which Washington called the most extensive action of its kind since 2018.”
July 31 – Bloomberg (Jane Lanhee Lee and Mark Anderson): “China accused the US of exploiting a flaw in Microsoft Corp.’s email servers to steal military data and launch cyberattacks on its defense sector. The Cyber Security Association of China said… US actors had been linked to two major cyberattacks on Chinese military companies, without naming them. They exploited flaws in Microsoft Exchange to control the servers of a key company in the defense sector for nearly a year, it added.”
New World Order Watch:
July 29 – Wall Street Journal (Raffaele Huang and Liza Lin): “China is ramping up efforts to build a domestic artificial-intelligence ecosystem that can function without Western technology, as it steels itself for a protracted tech contest with the U.S. Washington has been trying to slow China’s AI progress through export controls and other restrictions that limit Chinese access to U.S. capital, talent and advanced U.S. technologies… But China is fighting back with expanding efforts to become more self-sufficient in AI…”
July 30 – Bloomberg: “While humanoid robots faced off in a boxing ring at China’s flagship artificial intelligence conference in Shanghai, a fight in the US-China tech war was fought in suits nearby over who gets to set the rules in the AI age. China’s answer is a new global organization to convene countries to foster safe and inclusive use of the powerful new technology. At the annual World AI Conference over the weekend, Chinese Premier Li Qiang warned of AI ‘monopoly’ and instead called on foreign officials in the room — mostly from developing countries — to cooperate on governance. The new group, known as the World AI Cooperation Organization, embodies China’s plan to jostle with the US for sway by positioning itself as a champion of AI for all. More favorable rules may give a global boost to Chinese companies competing with US firms to sell hardware and services in a market estimated to hit $4.8 trillion by 2033.”
July 26 – Financial Times (Michael Stott): “Brazil will double down on its commitment to the Brics bloc, the Brazilian president’s top foreign policy adviser has said, a move that defies US President Donald Trump’s threats to impose punitive tariffs… Celso Amorim, lead foreign affairs adviser to leftwing President Luiz Inácio Lula da Silva, told the Financial Times those attacks ‘are reinforcing our relations with the Brics, because we want to have diversified relations and not depend on any one country’.”
August 1 – Bloomberg (Sudhi Ranjan Sen): “New Delhi and Moscow have a ‘steady and time-tested partnership,’ India’s foreign ministry spokesperson said…, just days after US President Donald Trump ripped the South Asian nation over its ties with Russia.”
Ukraine Watch:
July 28 – Bloomberg (Skylar Woodhouse and Hadriana Lowenkron): “President Donald Trump said he would shorten his timeline for Russian leader Vladimir Putin to reach a truce with Ukraine or face potential economic penalties, heightening pressure on Moscow to bring the fighting to a halt. ‘I’m going to make a new deadline of about 10, 10 or 12 days from today,’ Trump told reporters... ‘I’ll announce it probably tonight or tomorrow,’ Trump added. ‘But there’s no reason to wait. If you know what the answer is,’ expressing frustration with Putin for rebuffing previous calls for a ceasefire.”
July 31 – Financial Times (Christopher Miller): “Waves of Russian drones and missiles hit Kyiv overnight into Thursday, killing at least 11 people and injuring more than 100, in an attack that came days after US President Donald Trump issued an ultimatum to Moscow and narrowed the window for agreeing to a ceasefire… Some 12 other children were among the at least 135 wounded in attacks on several residential buildings, including a direct strike on a high-rise apartment block.”
July 27 – Financial Times (Chris Cook and Max Seddon): “Russia has depleted its once-vast stockpiles of Soviet-era weaponry during the full-scale invasion of Ukraine, with the flow of goods from military storage facilities to the front-line now back down to pre-2022 levels. Shipments starting in the vicinity of Russia’s principal storage fields are on track to fall from a peak of 242,000 tonnes in 2022 to 119,000 tonnes in 2025, according to an analysis of logistics data by the Kyiv School of Economics Institute.”
Middle East Watch:
July 28 – Financial Times (Robert Wright): “Yemen’s Houthi militants have vowed to ‘escalate’ their attacks on merchant ships, raising the risk for ships on the vital trade route through the Red Sea and the Suez Canal. The Iran-backed group said… it would attack ships belonging to any company trading with Israel ‘regardless of the nationality of that company’.”
Taiwan Watch:
August 1 – Financial Times (Kathrin Hille, Demetri Sevastopulo and Aime Williams): “Taiwan’s failure to secure a trade deal with Donald Trump before his August 1 deadline has deepened fears that Washington could water down security support for Taipei to smooth relations with Beijing. Taiwan — the world’s most important chip manufacturer and the seventh-largest US trading partner — was one of the first countries to start talks with Washington after Trump unveiled his ‘liberation day’ tariffs in April. Despite those efforts, Trump… imposed a 20% tariff on imports from Taiwan.”
July 28 – Bloomberg (Jenny Leonard and Yian Lee): “Taiwanese President Lai Ching-te appeared to call off an overseas trip planned for next week after the Trump administration failed to greenlight his stopover in the US, amid concerns it could derail trade talks with China. Lai had previously intended to stop in New York on Aug. 4 and then Dallas 10 days later as part of a trip to diplomatic allies Paraguay, Guatemala and Belize.”
AI Bubble Watch:
July 31 – New York Times (Andrew Ross Sorkin, Bernhard Warner, Sarah Kessler, Michael J. de la Merced, Danielle Kaye and Calum Marsh): “Usually, investors hate when companies announce huge spending plans. That’s why it has been so wild to see them cheer as Microsoft and Meta announced mammoth new artificial intelligence investments. The more they spend, the higher their stocks seem to go. Microsoft raised its suggested annual outlay to $120 billion — up from an originally mind-bending forecast of $80 billion… Meta said that capital expenditures — which these days largely means spending on A.I. data centers — could reach up to $72 billion this year. Microsoft said it planned to spend $30 billion on capex in the current quarter alone. Both reports come after similarly big commitments disclosed last week by Alphabet, Google’s parent company.”
July 31 – Bloomberg (Carmen Reinicke and Subrat Patnaik): “Microsoft Corp. has become the second company in the world to reach a $4 trillion market capitalization after reporting quarterly earnings that beat Wall Street’s expectations, sending the stock soaring Thursday. Shares of the technology behemoth jumped as much as 8.2% in early trading in New York, pushing its market value to $4.1 trillion. Nvidia Corp. became the first company to hit the milestone earlier this month.”
July 25 – Financial Times (William Langley, Eleanor Olcott and Ryan McMorrow): “China has unveiled a sweeping plan to expand its role in artificial intelligence governance including the creation of a global co-operation organisation as Beijing vies with Washington for technological leadership. Speaking at the opening of the World Artificial Intelligence Conference (WAIC) in Shanghai on Saturday, Chinese premier Li Qiang said AI innovation was hindered by ‘bottlenecks’ such as the supply of computer chips. Without explicitly mentioning the US, he took aim at ‘technological monopolies’ and restrictions which could lead to AI becoming ‘an exclusive game for a few countries and companies’.”
July 27 – Axios (Scott Rosenberg): “The U.S.’s great AI race with China, now freshly embraced by President Trump, is a competition in the dark with no clear prize or finish line. Similar ‘races’ of the past — like the nuclear arms race and the space race — have sparked innovation, but victories haven’t lasted long or meant much. Both Silicon Valley and the U.S. government now agree that we must invest untold billions to build supporting infrastructure for an error-prone, energy-hungry technology with an unproven business model and an unpredictable impact on the economy and jobs. ‘America is the country that started the AI race. And as president of the United States, I’m here today to declare that America is going to win it,’ Trump said at a Wednesday event titled ‘Winning the AI Race.’”
July 30 – Bloomberg (Newley Purnell, Yazhou Sun and Mark Bergen): “When the world’s elite gathered in Davos, Switzerland, in January 2024, Sachin Dev Duggal reveled in his role as the founder of a bona fide artificial intelligence unicorn. His startup, Builder.ai, sponsored glitzy events with celebrities and magazine editors. The BBC featured him on air as an expert in the buzzy technology… Whatever magic Duggal once conjured is now gone. A year after his Davos appearance, he was pushed out as chief executive… The startup’s board later restated sales and a major lender seized virtually all of its cash, forcing the company into bankruptcy in June.”
July 29 – Wall Street Journal (Lindsay Ellis and Katherine Bindley): “What do you hire a 22-year-old college graduate for these days? For a growing number of bosses, the answer is not much—AI can do the work instead. At Chicago recruiting firm Hirewell, marketing agency clients have all but stopped requesting entry-level staff—young grads once in high demand but whose work is now a ‘home run’ for AI, the firm’s chief growth officer said. Dating app Grindr is hiring more seasoned engineers, forgoing some junior coders straight out of school, and CEO George Arison said companies are ‘going to need less and less people at the bottom.’”
Bubble and Mania Watch:
July 30 – Bloomberg (Olga Kharif and David Pan): “Crypto Inc. is borrowing straight from Wall Street’s playbook. As the digital-asset industry booms, 160 public companies have drawn inspiration from industry vanguard Michael Saylor to amass some 300,000 Bitcoin. Increasingly though, they’re no longer content to simply sit on it. They’re lending their coins, locking them up for rewards, or selling options, all in a bid to milk income from idle holdings. It’s a break from Bitcoin’s original creed. The crypto experiment was born as a rejection of Wall Street’s leverage and financial engineering.”
July 25 – Wall Street Journal (Gregory Zuckerman and Vicky Ge Huang): “It’s the hottest trade of the summer. Companies are raising tens of billions of dollars, not to invest in their businesses or hire employees, but to purchase bitcoin and more obscure cryptocurrencies. A Japanese hotel operator, a French semiconductor manufacturer, a Florida toy maker, a nail-salon chain, an electric-bike maker—they’re all plowing cash into tokens, helping to send all kinds of digital currencies to record levels. News that a new company plans to buy crypto is enough to send its shares flying—spurring others to consider joining the frenzy. Since June 1, 98 companies have announced plans to raise over $43 billion to buy bitcoin and other cryptocurrencies, according to Architect Partners... Nearly $86 billion has been raised for this purpose since the start of the year. That’s more than double the amount of money raised in initial public offerings in the U.S. in 2025, according to Dealogic.”
July 29 – Bloomberg (Georgia Hall): “Private equity-owned companies drove an increase in defaults and continue to turn to distressed debt exchanges after credit conditions deteriorated in the wake of US tariff announcements, according to Moody’s... In the three months through June, 21 companies defaulted on more than $27 billion of debt… That’s up from the 15 companies that defaulted on about $15 billion of debt in the prior quarter. Many private equity firms were caught out by interest rate hikes in 2022 after snapping up lower-rated businesses during the easy money era using floating-rate debt. Those firms are typically more highly leveraged than their public equivalents making them more vulnerable to distress.”
July 26 – Wall Street Journal (Anne Tergesen): “Americans are putting more money than ever into 401(k)s. They are also pulling more out. Last year, a record 4.8% of workers in 401(k) plans took a hardship distribution for financial emergencies, up from a prepandemic average of about 2%, according to Vanguard... And nearly one-third of people who leave jobs annually liquidate their 401(k)s… This adds up to a sea change in how Americans view their retirement savings: The $12.2 trillion in 401(k) accounts isn’t necessarily locked away, earmarked only for retirement income. As people divert more of their savings to 401(k)s, the accounts are doing double duty as emergency funds.”
July 29 – Reuters (Patturaja Murugaboopathy): “U.S. covered call funds are drawing robust inflows this year as investors search for higher returns… According to Morningstar data, U.S. derivative income funds, primarily made up of covered call strategies, attracted a record $31.5 billion in the first half of this year. Till the middle of this month, they secured another $2.5 billion, lifting the total net assets to a record $145 billion… Covered call funds generate income by owning stocks and selling call options on them, collecting premiums in return.”
Inflation Watch:
July 31 – Associated Press (Christopher Rugaber): “The Federal Reserve’s preferred inflation gauge ticked higher last month in a sign that President Donald Trump’s broad-based tariffs are starting to lift prices for many goods. Prices rose 2.6% in June compared with a year ago…, up from an annual pace of 2.4% in May. Excluding the volatile food and energy categories, prices rose 2.8% in the past year… The figures are above the Fed’s 2% goal. The uptick in prices helps explain the central bank’s reluctance to cut its key interest rate this week, despite repeated demands from Trump that it do so.”
July 29 – Bloomberg (Naureen S Malik): “In terms of electricity, a huge swath of the US encompassing 13 states was, for many years, the proverbial land of plenty. From Illinois to New Jersey to North Carolina, the area covered by PJM Interconnection LLC had more than enough power to get by. But that picture is changing rapidly as data center developers flock to the nation’s largest grid… There’s no longer any spare power supply to feed the city-sized data campuses under development, PJM’s independent market watchdog said last week. Tech companies will need to bring their own generating plants. There are signs of stress already. During the past five weeks, PJM issued nine level 1 energy emergency alerts…”
July 29 – Reuters (David Gaffen and Marleen Kaesebier): “U.S. President Donald Trump is getting his tariffs. Companies are making it clear how they intend to deal with it - passing them on to American consumers. Throughout the spring, big retailers and consumer product makers warned that levies on imported goods would squeeze their operations, forcing them to choose between lower earnings and passing on higher costs to customers. On Tuesday, the packaging giant, which makes household basics spanning from Bounty paper towel to Tide detergent, issued a sour outlook for 2025 and sent a message to big retailers like Walmart that it would have to raise prices on some U.S. goods from next week… P&G said it would raise prices on about a quarter of its products in the U.S. to help offset the cost of new tariffs. Price hikes are in the mid-single digits across categories…”
July 29 – CNBC (Mike Winters): “Even with home sales at a historic low, prices continue to rise — adding hundreds of dollars to monthly payments so far in 2025. In June, the median price for an existing home in the U.S. reached a record high of $435,300… That’s up 2% from a year ago and marks the 24th straight month of annual price growth. While more homes are being built, ‘multiple years of undersupply are driving the record high home price,’ says Lawrence Yun, NAR’s chief economist… ‘Home construction continues to lag population growth.’”
July 29 – Axios (Tina Reed): “The trade deal between the U.S. and the European Union could hit the pharmaceutical industry with billions in new costs and ultimately drive up prices and limit access. Drugmakers have been heavily reliant on foreign countries' manufacturing and raw materials, most of it duty-free. Those free-trade policies are on the way out as the U.S. prepares to impose a 15% tariff on U.S.-bound imports of branded drugs from Europe… ‘The cost of imported drugs is about to become more expensive for all Americans,’ Joe Brusuelas, principal and chief economist for RSM US, told Axios. Europe is among the biggest sources of branded drugs and their ingredients for the U.S. Ireland alone accounted for about $50 billion of U.S. pharma imports last year.”
July 29 – Associated Press (Josh Boak and Paul Wiseman): “As President Donald Trump prepares to announce new tariff increases, the costs of his policies are starting to come into focus for a domestic manufacturing sector that depends on global supply chains, with a new analysis suggesting factory costs could increase by roughly 2% to 4.5%. ‘There’s going to be a cash squeeze for a lot of these firms,’ said Chris Bangert-Drowns, the researcher at the Washington Center for Equitable Growth who conducted the analysis.”
Federal Reserve Watch:
July 30 – Financial Times (Claire Jones, Myles McCormick, Kate Duguid and George Steer): “The Federal Reserve has signalled that it could hold interest rates steady at least through September as it defies Donald Trump’s repeated calls for the central bank to dramatically lower borrowing costs. The central bank left borrowing costs unchanged at 4.25% to 4.5%... Fed governors Michelle Bowman and Christopher Waller dissented with the decision, saying the central bank should have cut rates by a quarter percentage point. It marked the first time since 1993 that two governors formally objected to a rate decision. Fed chair Jay Powell said following the meeting that ‘it seems to me — and to almost the whole committee — that the economy is not performing as though restrictive policy is holding it back inappropriately’. Still, he cautioned that ‘there’s also downside risk to the labour market in coming months’.”
July 30 – Reuters (Michael S. Derby): “U.S. Federal Reserve Chair Jerome Powell… said there is no place for the central bank to consider government financing needs when setting interest rate policy. ‘We have a mandate’ from Congress, and that is to keep inflation in check and the job market as strong as it can be, Powell said… Given that legal charge, ‘we don't consider the fiscal needs of the federal government. No advanced economy central bank does that, and it wouldn’t be good’ for the Fed to do so as it would compromise its credibility.”
U.S. Economic Bubble Watch:
July 30 – Associated Press (Paul Wiseman): “The U.S. economy expanded at a surprising 3% annual pace from April through June, bouncing back at least temporarily from a first-quarter drop that reflected disruptions from President Donald Trump’s trade wars… From April through June, a drop in imports — the biggest since the COVID-19 outbreak — added more than 5 percentage points to growth. Consumer spending registered lackluster growth of 1.4%, though it was an improvement over the first quarter’s 0.5%... Federal government spending and investment fell at a 3.7% annual rate on top of a 4.6% drop in the first quarter… The Federal Reserve’s favored inflation gauge – the personal consumption expenditures, or PCE, price index – rose at an annual rate of 2.1% in the second quarter, down from 3.7% in the first. Stripping out volatile food and energy prices, so-called core PCE inflation rose 2.5%, down from 3.5% in the first quarter.”
July 30 – Reuters (Lucia Mutikani): “U.S. private payrolls increased more than expected July, the ADP National Employment Report showed… Private payrolls rose by 104,000 jobs last month after a revised 23,000 decline in June. Economists… had forecast private employment increasing 75,000 following a previously reported drop of 33,000 in June.”
July 31 – Reuters (Lucia Mutikani): “The number of Americans filing new applications for unemployment benefits increased marginally last week, suggesting that the labor market remained stable… Initial claims for state unemployment benefits rose 1,000 to a seasonally adjusted 218,000 for the week ended July 26… The number of people receiving benefits after an initial week of aid, a proxy for hiring, were unchanged at a seasonally adjusted 1.946 million…”
July 31 – Wall Street Journal (Veronica Dagher): “Condo sellers haven’t faced a market this weak in more than a decade. Prices are down, supply is up and sellers often feel lucky to get an offer, especially in the South. In several parts of the country, prospective buyers hold most of the cards. They are often winning concessions from sellers eager to unload condominiums that are likely facing rising homeowner-association dues, in part because of higher insurance costs.”
July 30 – CNBC (Diana Olick): “Mortgage interest rates have barely moved in several weeks, but rates are not what is weighing on consumers most. It’s really uncertainty about the economy that worries people more… Applications for a mortgage to purchase a home dropped 6% for the week and were 17% higher than the same week one year ago. Volume, however, is so low that the annual comparison is skewing deceptively high.”
July 29 – Bloomberg (Claire Ballentine): “Home-price growth in the US decelerated in May for the fourth consecutive month. A national gauge of prices rose 2.3% from a year earlier, according to… S&P CoreLogic Case-Shiller. That was the smallest increase since July 2023 and comes after a 2.7% annual increase in April.”
July 30 – Yahoo Finance (Claire Boston): “Home contract signings slumped more than expected in June, the latest sign that the housing market is still essentially frozen. The Pending Home Sales Index slumped 0.8% from May and 2.8% from a year earlier to a reading of 72. A level of 100 is equal to contract activity in 2001… Contract signings fell in all regions of the country on a monthly and annual basis, except the Northeast, where they were flat from 2024 and up 2.1% from May.”
August 1 – Axios (Sami Sparber and Emily Peck): “Real estate prices are all about ‘location, location, location,’ and right now that’s particularly true — in half the country home prices are still going up, and in the other half they're falling. The price data shows that the housing story is more complicated than affordability and still-high mortgage rates… Zoning laws, climate risks and economic vibes also play a big role. Ultimately, this tale of two housing markets is all about supply. In the places facing shortages of available homes, and less newly constructed housing, prices are holding up. But areas in the South, particularly Texas and Florida, that had lots of new construction over the past few years, are seeing prices fall. And it’s not just new homes; existing homeowners in these regions are also looking to sell and leave behind higher insurance costs, and climate risks.”
July 27 – Wall Street Journal (Rebecca Picciotto): “Individual home buyers are largely locked out of the housing market as home prices continue to climb and interest rates remain stuck. But investors are buying, and dominating the market. So far in 2025, investors who buy homes to flip or rent out have made up about 30% of purchases of both existing and newly built single-family homes, the highest share on record… There is also a change in the makeup of single-family residential investors… This buying group was once flooded with large private-equity firms such as Blackstone and Starwood Capital Group. But in the first half of this year, small investors made up about 25% of these home purchases while large investors accounted for about 5% on average… This shift happened mostly because large investors and traditional home buyers have slowed down…”
July 29 – Bloomberg (Jonnelle Marte and Maria Eloisa Capurro): “Upper-income Americans are increasingly falling behind on credit card and auto loan payments, signaling an underlying vulnerability in the US economy as the labor market slows. Delinquencies on such debts from those making at least $150,000 annually have jumped almost 20% over the last two years, faster than for middle- and lower-income borrowers, according to the credit-scoring firm VantageScore…”
The S&P500 dropped 2.4% (up 6.1% y-t-d), and the Dow slumped 2.9% (up 2.5%). The Utilities increased 1.2% (up 13.2%). The Banks sank 4.4% (up 9.6%), and the Broker/Dealers declined 1.7% (up 27.1%). The Transports were hammered 7.7% (down 5.0%). The S&P 400 Midcaps slumped 3.5% (down 0.5%), and the small cap Russell 2000 sank 4.2% (down 2.8%). The Nasdaq100 lost 2.2% (up 8.3%). The Semiconductors fell 2.1% (up 11.0%). The Biotechs dipped 1.0% (down 0.7%). While bullion gained $26, the HUI gold index retreated 3.0% (up 55.8%).
Three-month Treasury bill rates ended the week at 4.165%. Two-year government yields sank 74 bps to 3.68% (down 56bps y-t-d). Five-year T-note yields fell 20 bps to 3.76% (down 62bps). Ten-year Treasury yields dropped 17 bps to 4.22% (down 35bps). Long bond yields fell 11 bps to 4.82% (up 4bps). Benchmark Fannie Mae MBS yields dropped 18 bps to 5.46% (down 38bps).
Italian 10-year yields declined four bps to 3.51% (down 1bp y-t-d). Greek 10-year yields fell four bps to 3.35% (up 14bps). Spain's 10-year yields declined five bps to 3.26% (up 20bps). German bund yields dipped four bps to 2.68% (up 31bps). French yields fell four bps to 3.35% (up 15bps). The French to German 10-year bond spread was unchanged at 67 bps. U.K. 10-year gilt yields dropped 11 bps to 4.53% (down 4bps). U.K.'s FTSE equities index slipped 0.6% (up 11.0% y-t-d).
Japan's Nikkei 225 Equities Index fell 1.6% (up 2.3% y-t-d). Japanese 10-year "JGB" yields fell five bps to 1.6% (up 46bps y-t-d). France's CAC40 sank 3.7% (up 2.2%). The German DAX equities index dropped 3.3% (up 17.7%). Spain's IBEX 35 equities index dipped 0.8% (up 21.8%). Italy's FTSE MIB index lost 1.9% (up 16.8%). EM equities were mostly lower. Brazil's Bovespa index declined 0.8% (up 10.1%), and Mexico's Bolsa index dipped 0.7% (up 14.9%). South Korea's Kospi dropped 2.4% (up 30.0%). India's Sensex equities index declined 1.1% (up 2.7%). China's Shanghai Exchange Index lost 0.9% (up 6.2%). Turkey's Borsa Istanbul National 100 index gained 1.0% (up 9.3%).
Federal Reserve Credit declined $15.1 billion last week to $6.596 TN. Fed Credit was down $2.293 TN from the June 22, 2022, peak. Over the past 307 weeks, Fed Credit expanded $2.870 TN, or 77%. Fed Credit inflated $3.785 TN, or 135%, over the past 664 weeks. Elsewhere, Fed holdings for foreign owners of Treasury, Agency Debt recovered $10.1 billion last week to $3.228 TN. "Custody holdings" were down $72.8 billion y-o-y, or 2.2%.
Total money market fund assets were little changed at $7.076 TN. Money funds were up $931 billion, or 15.2%, y-o-y.
Total Commercial Paper jumped $31.5 billion to $1.426 TN. CP has expanded $338 billion y-t-d and $187 billion, or 15.1%, y-o-y.
Freddie Mac 30-year fixed mortgage rates slipped two bps to 6.72% (down 1bp y-o-y). Fifteen-year rates dipped two bps to 5.85% (down 14bps). Bankrate's survey of jumbo mortgage borrowing costs had 30-year fixed rates up three bps to 6.86% (down 18bps).
Currency Watch:
For the week, the U.S. Dollar Index gained 1.5% to 99.141 (down 8.6% y-t-d). For the week on the upside, the Brazilian real increased 0.4%, and the Japanese yen gained 0.2%. On the downside, the South African rand declined 1.9%, the New Zealand dollar 1.7%, the Mexican peso 1.7%, the Australian dollar 1.4%, the euro 1.3%, the Swedish krona 1.3%, the British pound 1.2%, the Swiss franc 1.1%, the Norwegian krone 0.7%, the Singapore dollar 0.6%, the Canadian dollar 0.6%, and the South Korean won 0.5%. The Chinese (onshore) renminbi declined 0.33% versus the dollar (up 1.47% y-t-d).
Commodities Watch:
July 30 – Financial Times (Camilla Hodgson): “Investor appetite for gold remains undeterred by prices that have soared to record highs against a backdrop of geopolitical instability and weakening confidence in the US dollar. Global gold demand rose 3% year on year in the three months to June…, said the World Gold Council, which represents gold miners… Inflows into gold exchange traded funds remained strong, with global demand during the first half of the year at its highest since 2020.”
July 30 – Wall Street Journal (Ryan Dezember): “U.S. copper futures plunged roughly 20% in late trading Wednesday after President Trump unveiled 50% tariffs on copper products but not on the raw material itself. It is the latest example of how Trump’s gyrating trade policies have whipsawed financial markets… U.S. copper prices surged to records and well above global prices this month after Trump said he would impose a 50% import tax on the metal…”
The Bloomberg Commodities Index dropped 2.8% (up 1.9% y-t-d). Spot Gold increased 0.8% to $3,363 (up 28.2%). Silver was down 2.9% to $37.0375 (up 28.1%). WTI crude rallied $2.17, or 3.3%, to $67.33 (down 6%). Gasoline recovered 1.0% (up 5%), while Natural Gas declined 0.9% to $3.083 (down 15%). Copper sank 23.3% (up 10%). Wheat dropped 4.0% (down 6%), and Corn lost 2.5% (down 15%). Bitcoin fell $3,680, or 3.1%, to $113,960 (up 21.6%).
Market Instability Watch:
July 30 – Financial Times (Kate Duguid): “The US Treasury will issue more short-term debt to help fund its widening budget deficit, a continuation of a Biden-era policy that Treasury secretary Scott Bessent had previously disavowed. The Treasury department said… it would keep the size of its auctions of longer-dated bonds steady over the next ‘several quarters’. This suggests a vast increase in issuance of shorter-term debt… to meet the $1tn the department needs this quarter… Skewing its debt issuance to more shorter-dated bonds allows the government to step up its borrowing without sending yields on longer-dated bonds higher.”
July 30 – Wall Street Journal (Hannah Erin Lang): “It is a great year to be a Wall Street middleman. Investors are hot for just about everything right now, from the Magnificent Seven and meme stocks, to crypto, options and exchange-traded funds. That is bringing boom times to brokerages including Charles Schwab, Robinhood Markets and Interactive Brokers Group, which are all raking in revenue. Individual investors poured a record $155 billion into stocks and exchange-traded funds in the first half of this year, according to Vanda Research, and margin debit balances have never been higher. That is also true for the brokerages’ own stock prices. Shares of Robinhood have nearly tripled in 2025. ‘You have this huge wave of retail trading,’ said Dan Dolev, a senior analyst at Mizuho Securities. ‘Being a broker means you’re at the center of it.’ Trading revenue at Robinhood surged 65% in the second quarter from a year earlier…”
July 31 – Bloomberg (Finbarr Flynn): “Goldman Sachs… credit strategists warned against complacency and urged clients to hedge after a measure of credit risk for global corporate bonds fell to the lowest level in 18 years. ‘There are enough sources of downside risks to warrant keeping some hedges on in portfolios,’ Goldman strategists… wrote… ‘Growth could surprise further to the downside,’ dis-inflationary pressures could fade or renewed concerns over Fed independence may fuel a sharp selloff in long-dated yields. Their warning followed a drop this week in the yield premium on investment-grade notes worldwide to 0.79 percentage point, or 79 bps, the lowest level since July 2007, just before the global financial crisis…”
Global Credit and Financial Bubble Watch:
July 25 – Financial Times (Philip Coggan): “Government bond for sale: will accept any reasonable offer. Politicians across the developed world have a problem. They have large debts and need to borrow more money every year. But it is getting increasingly difficult to find automatic buyers of their bonds. The latest OECD report on government debt estimates that sovereign bond issuance by the group’s countries will be $17tn in 2025, up from $14tn in 2023. Some of that will, of course, be used to refinance existing debt, but the total amount of debt outstanding is expected to rise to $59tn, or about 84% of the GDP of those countries… Government debt interest costs in the average OECD country are at present 3.3% of GDP, more than the amount spent on defence.”
July 30 – Bloomberg (Zijia Song): “Developing nations from Panama to Angola are borrowing directly from Wall Street banks, getting short-term liquidity to help cope with rising debt burdens at the risk of longer-term pitfalls. Panama has borrowed $6 billion in bank loans denominated in US dollars, euros and Swiss francs within the past 10 months. Angola, which is using most of its fiscal revenue to pay salaries and service debt, in January increased its bond program to use the notes as collateral for about $1 billion of loans from JPMorgan... Now Colombia is in talks for up to $10 billion of loans in Swiss francs.”
July 26 – Bloomberg (Natasha Doff and Cecile Gutscher): “Investors are showing signs of pulling money out of government bonds and plowing it into US and European company debt… In June, money managers pulled $3.9 billion from Treasuries, while adding $10 billion to European and US investment-grade corporate debt, according to EPFR Global data. In July, investors have added another $13 billion to US high-grade corporates, the largest net client purchasing in data going back to 2015…”
July 30 – Bloomberg (Olivia Fishlow and Sonali Basak): “Centerbridge Partners joined the ranks of many alternatives managers that see accessing 401(k) retirement funds as a logical next step for private credit firms. Jeff Aronson, the co-founder and managing principal of Centerbridge, said… private credit is a safe investment for 401(k) participants, adding that the most important factor is that investors know what they’re buying… ‘I’m a huge believer,’ Aronson said… ‘I really believe it’s just a matter of time before these assets find themselves in a 401(k) account.’”
Trump Administration Watch:
July 31 – Axios (Ben Berkowitz): “President Trump… unleashed a fiery reaction after the Federal Reserve held interest rates steady… Trump’s rage at the Fed's resistance to cut rates has twice taken him to the verge of trying to fire Powell, both times scaring markets and raising concerns about the central bank's independence… Trump has repeatedly insisted rates should be lower, down to 1% or less. ‘He is TOO LATE, and actually, TOO ANGRY, TOO STUPID, & TOO POLITICAL, to have the job of Fed Chair,’ Trump said in a Truth Social post. ‘He is costing our Country TRILLIONS OF DOLLARS, in addition to one of the most incompetent, or corrupt, renovations of a building(s) in the history of construction!’”
July 28 – Wall Street Journal (Sam Goldfarb): “The Trump administration is making government borrowing exciting again. For decades, the Treasury Department’s choice of what mix of bonds to sell investors has been boring by design. Officials stressed they weren’t trying to get the best rate by market timing, worried that could invite speculation and uncertainty… The Trump administration is sending a different message. Calling himself ‘the nation’s top bond salesman,’ Treasury Secretary Scott Bessent has talked openly about waiting for interest rates to come down before considering the increases in longer-term debt issuance… President Trump has suggested that Treasury should only issue debt that matures in about six to nine months until Federal Reserve Chair Jerome Powell is replaced next year. ‘What I’m going to do is I’m going to go very short-term,’ he said in June. ‘Wait until this guy gets out, get the rates way down and then go long-term.’”
July 29 – Wall Street Journal (Greg Ip): “President Trump has achieved the remarkable: raising tariffs by more than the notorious Smoot-Hawley Tariff Act of 1930, while—it appears—avoiding the destructive trade war that followed. Including the deal struck over the weekend with the European Union, the U.S. will impose an effective tariff rate of about 15% on its trading partners, by far the highest since the 1930s, according to JPMorgan... Japan and the EU have together committed to investing $1.15 trillion in the U.S. Europe also agreed to energy and military purchases. And what did the U.S. give up in return? Nothing. So Trump has hit his goals, for now. But these deals don’t yet represent a new trade order. They are sort of a way station, more fragile and with less legitimacy than the system they have supplanted.”
July 28 – Bloomberg (Karishma Vaswani): “We have entered a dark era of trade deals, one where Washington now openly links national security to success. If countries want lower tariffs, they have to meet President Donald Trump’s defense demands. It’s working. Last week, the White House cut deals with Indonesia, the Philippines and Japan, granting them lower rates than Trump’s threatened tariffs. In exchange, they have had to sign up to vaguely worded commitments on defense and national security. This is a sharp break from normal statecraft, notes Bob Savic, head of international trade and sanctions consulting at the… Global Policy Institute. ‘The Trump administration has redefined US policy by explicitly tying economic agreements to national security,’ he told me. The White House’s core objective, he adds, is to leverage America’s economic power to protect and advance its strategic interests. Countering China and reshaping global rules in favor of the US are part of that calculation.”
July 31 – New York Times (Lydia DePillis and Rebecca F. Elliott): “Trade negotiations have for years focused on the rules of the road for commerce between nations. Under President Trump, the deal making has been more direct, especially when it comes to energy. Countries are now agreeing to purchase American fossil fuels, in specific amounts and often years into the future, whether or not their economies will demand it or whether the United States will have the ability to supply it… ‘This is new, and generally that’s because in trade agreements you want things that are clear and enforceable,’ said David Goldwyn, a former U.S. diplomat and U.S. Energy Department official. ‘These energy commitments are neither clear nor necessarily enforceable. They’re more aspirational, political encouragements.’”
August 1 – Wall Street Journal (Eric Niiler and Scott Patterson): “To make its case that climate regulations should be tossed out, the Trump administration asked a group of five researchers who are skeptical of established climate science to write a report for the Energy Department. The report challenges decades of scientific findings that emissions from cars, power plants and factories are warming the planet and posing risks to human health. The Environmental Protection Agency is using the report as the scientific basis to roll back its so-called endangerment finding, a legal tool that allows the agency to regulate industries and automakers under the Clean Air Act.”
July 31 – Axios (Tina Reed): “President Trump… said he demanded commitments from 17 big drugmakers to lower their U.S. prices by committing to a ‘most favored nation’ policy he laid out in a May executive order. The move raises the stakes for pharmaceutical manufacturers as they brace for threatened tariffs on the sector… The companies should ‘repatriate increased revenues’ in the form of lower prices in an ‘explicit agreement’ with the U.S…”
July 30 – Associated Press (Michelle L. Price and Lis Mascaro): “Treasury Secretary Scott Bessent said… the Trump administration was committed to protecting Social Security hours after he said… a new children’s savings program President Donald Trump signed into law ‘is a back door for privatizing Social Security.’ Bessent said… the accounts created under Trump’s tax break-and-spending cut law ‘will supplement the sanctity of Social Security’s guaranteed payments.’ ‘This is not an either-or question: our Administration is committed to protecting Social Security and to making sure seniors have more money,’ Bessent said…”
July 30 – Bloomberg (Josh Wingrove and Olga Kharif): “A group charged by President Donald Trump with recommending policies on crypto markets called on federal regulators to use their authority to provide more clear rules on the trading of digital assets and ease the adoption of new financial products… ‘By implementing these recommendations, policymakers can ensure that the United States leads the blockchain revolution and ushers in the Golden Age of Crypto,’ the White House said…”
July 31 – Bloomberg (Zachary R. Mider and Annie Massa): “Eric Trump’s stake in a four-month-old Bitcoin mining venture could be worth $367 million when it goes public in coming weeks. The second son of President Donald Trump holds a large stake in closely held American Bitcoin Corp., which he co-founded in March.”
China Trade War Watch:
July 30 – Bloomberg: “Beijing authorities summoned Nvidia Corp. to discuss alleged security risks related to its H20 chips, casting doubt over the Chinese business of the world’s most valuable company weeks after co-founder Jensen Huang met senior officials in the country.”
July 26 – Reuters (Brenda Goh and Liam Mo): “China’s Huawei Technologies showed off an AI computing system… that one industry expert has said rivals Nvidia’s most advanced offering, as the Chinese technology giant seeks to capture market share in the country's growing artificial intelligence sector. The CloudMatrix 384 system made its first public debut at the World Artificial Intelligence Conference (WAIC), a three-day event in Shanghai… Industry analysts view it as a direct competitor to Nvidia's, the U.S. chipmaker's most advanced system-level product currently available in the market.”
Trade War Watch:
August 1 – Reuters (David Lawder, Trevor Hunnicutt and Aida Pelaez-fernandez): “U.S. President Donald Trump imposed steep tariffs on exports from dozens of trading partners, including Canada, Brazil, India and Taiwan, ahead of a Friday trade deal deadline, pressing ahead with plans to reorder the global economy. Trump set rates including a 35% duty on many goods from Canada, 50% for Brazil, 25% for India, 20% for Taiwan and 39% for Switzerland…”
July 31 – Reuters (Jasper Ward): “U.S. President Donald Trump signed an executive order… increasing tariffs on Canadian goods to 35% from 25%, the White House said… ‘In response to Canada’s continued inaction and retaliation, President Trump has found it necessary to increase the tariff on Canada from 25% to 35% to effectively address the existing emergency’…”
July 27 – Financial Times (Henry Foy, Aime Williams and Andy Bounds): “The US and EU have struck a tariff deal that will avert a transatlantic trade war between the two sides but still impose American tariffs of 15% on most imports from the bloc. As part of the deal the EU has agreed to spend hundreds of billions of dollars on US energy products and weapons, and accepted a broad 15% levy that covers many key European exports, including cars…The deal marks a victory for Trump…”
July 28 – Reuters (Kate Abnett and Arathy Somasekhar): “The European Union's pledge to buy $250 billion of U.S. energy supplies per year is unrealistic because it would require the redirection of most U.S. energy exports towards Europe and the EU has little control over the energy its companies import… Total U.S. energy exports to all buyers worldwide in 2024 amounted to $318 billion… Of that, the EU imported a combined $76 billion of U.S. petroleum, LNG and solid fuels such as coal in 2024…”
July 27 – Reuters (Mark John): “In the end, Europe found it lacked the leverage to pull Donald Trump's America into a trade pact on its terms and so has signed up to a deal it can just about stomach - albeit one that is clearly skewed in the U.S.'s favour. As such, Sunday's agreement on a blanket 15% tariff after a months-long stand-off is a reality check on the aspirations of the 27-country European Union to become an economic power able to stand up to the likes of the United States or China. The cold shower is all the more bracing given that the EU has long portrayed itself as an export superpower and champion of rules-based commerce for the benefit both of its own soft power and the global economy as a whole.”
July 28 – Wall Street Journal (Megumi Fujikawa and Yang Jie): “Japan is playing down the risks from its trade deal with President Trump after the White House said the U.S. would direct $550 billion in investments by Japan and keep 90% of the profit. Tokyo’s chief negotiator, Ryosei Akazawa, said… the government bank at the center of the investment deal would strictly review the projects it is asked to finance and approve only those that comply with Japanese law… Over the weekend, Akazawa said that only 1% to 2% of the $550 billion amount would be actual investment, with the rest coming in the form of loans and loan guarantees. The government is facing a backlash from opposition lawmakers and some analysts who expressed concern that the trade agreement… could humiliate Japan. A White House fact sheet released last week said ‘Japan will invest $550 billion directed by the United States to rebuild and expand core American industries.’ It said ‘the U.S. will retain 90% of the profits from this investment -- ensuring that American workers, taxpayers, and communities reap the overwhelming share of the benefit’… Akazawa, the chief Japanese negotiator, told public broadcaster NHK… he expected the investment portion of the deal to come to about 1% to 2% of the $550 billion framework. He also said Japan could stretch the commitment out over the remaining 3 1/2 years of Trump's term.”
July 31 – Reuters (Luciana Novaes Magalhaes and Lisandra Paraguassu): “U.S. President Donald Trump… slapped a 50% tariff on most Brazilian goods to fight what he has called a ‘witch hunt’ against former President Jair Bolsonaro, but softened the blow by excluding sectors such as aircraft, energy and orange juice from heavier levies. Trump announced the tariffs, some of the steepest levied on any economy in the U.S. trade war, as his administration also unveiled sanctions on the Brazilian supreme court justice who has been overseeing Bolsonaro's trial on charges of plotting a coup.”
July 30 – Financial Times (Chris Kay, Jyotsna Singh and Aime Williams): “Donald Trump announced the US would levy 25% tariffs on imports from India and impose an unspecified penalty on the south Asian nation, but later threw his plans into doubt by saying the two sides were still negotiating. In a post…, the US president said Indian tariffs were ‘among the highest in the World’ and that New Delhi had ‘the most strenuous and obnoxious non-monetary Trade Barriers of any Country’. India had ‘always bought a vast majority of their military equipment from Russia’ and was Moscow’s biggest purchaser of energy at a time when the Ukraine war was still raging, Trump said. ‘ALL THINGS NOT GOOD!’ he wrote. ‘INDIA WILL THEREFORE BE PAYING A TARIFF OF 25%, PLUS A PENALTY FOR THE ABOVE, STARTING ON AUGUST FIRST.’”
July 30 – Reuters (Trevor Hunnicutt and Ju-min Park): “President Donald Trump said… the U.S. will charge a 15% tariff on imports from South Korea, down from a threatened 25%, as part of a deal that eases tensions with a top-10 trading partner and key Asian ally. South Korea also agreed to invest $350 billion in the United States in projects selected by Trump and to purchase energy products worth $100 billion.”
August 1 – Bloomberg (Alan Crawford): “Back in January, a global survey found that Indians were the most upbeat of any nation about what a second Donald Trump presidency would mean for their country. They’re likely having second thoughts now. Trump dinged India with a 25% tariff rate… He cited New Delhi’s own trade barriers, but rebuked Prime Minister Narendra Modi’s government over lots of other things too – including its BRICS membership, and close ties with Russia. ‘They can take their dead economies down together, for all I care,’ he posted on social media. Trump’s last-minute flurry… shows how he’s taking punitive tariff threats beyond the realm of trade and into other arenas – ramping up pressure on countries to bend to America’s will on matters from war to energy supplies.”
U.S./Russia/China/Europe/Iran Watch:
August 1 – Bloomberg (Jennifer A. Dlouhy): “President Donald Trump said the US is moving two nuclear submarines to respond to what he called ‘highly provocative statements’ from former Russian President Dmitry Medvedev. ‘I have ordered two Nuclear Submarines to be positioned in the appropriate regions, just in case these foolish and inflammatory statements are more than just that,’ Trump said in a social media post Friday. ‘Words are very important, and can often lead to unintended consequences, I hope this will not be one of those instances.’”
July 29 – Reuters (David Lawder): “U.S. Treasury Secretary Scott Bessent… said he warned Chinese officials that continued purchases of sanctioned Russian oil would lead to big tariffs due to legislation in Congress, but was told that Beijing would protect its energy sovereignty. Wrapping up two days of U.S.-China trade talks in Stockholm, Bessent said he also expressed U.S. displeasure at China's continued purchases of sanctioned Iranian oil, and its sales of over $15 billion worth of dual-use technology goods to Russia that have bolstered Moscow's war against Ukraine.”
July 31 – CBS (Anna Coren): “A CBS News investigation has revealed that China is still secretly buying Iranian oil and evading U.S. sanctions by using what's known as a ‘dark fleet’ to transfer oil from ship to ship in the middle of the sea. Over the years, the U.S. has implemented heavy sanctions on Iranian industries, including trying to stop tankers used to transfer Iranian oil to China… On Wednesday, the Treasury Department imposed additional sanctions, which Washington called the most extensive action of its kind since 2018.”
July 31 – Bloomberg (Jane Lanhee Lee and Mark Anderson): “China accused the US of exploiting a flaw in Microsoft Corp.’s email servers to steal military data and launch cyberattacks on its defense sector. The Cyber Security Association of China said… US actors had been linked to two major cyberattacks on Chinese military companies, without naming them. They exploited flaws in Microsoft Exchange to control the servers of a key company in the defense sector for nearly a year, it added.”
New World Order Watch:
July 29 – Wall Street Journal (Raffaele Huang and Liza Lin): “China is ramping up efforts to build a domestic artificial-intelligence ecosystem that can function without Western technology, as it steels itself for a protracted tech contest with the U.S. Washington has been trying to slow China’s AI progress through export controls and other restrictions that limit Chinese access to U.S. capital, talent and advanced U.S. technologies… But China is fighting back with expanding efforts to become more self-sufficient in AI…”
July 30 – Bloomberg: “While humanoid robots faced off in a boxing ring at China’s flagship artificial intelligence conference in Shanghai, a fight in the US-China tech war was fought in suits nearby over who gets to set the rules in the AI age. China’s answer is a new global organization to convene countries to foster safe and inclusive use of the powerful new technology. At the annual World AI Conference over the weekend, Chinese Premier Li Qiang warned of AI ‘monopoly’ and instead called on foreign officials in the room — mostly from developing countries — to cooperate on governance. The new group, known as the World AI Cooperation Organization, embodies China’s plan to jostle with the US for sway by positioning itself as a champion of AI for all. More favorable rules may give a global boost to Chinese companies competing with US firms to sell hardware and services in a market estimated to hit $4.8 trillion by 2033.”
July 26 – Financial Times (Michael Stott): “Brazil will double down on its commitment to the Brics bloc, the Brazilian president’s top foreign policy adviser has said, a move that defies US President Donald Trump’s threats to impose punitive tariffs… Celso Amorim, lead foreign affairs adviser to leftwing President Luiz Inácio Lula da Silva, told the Financial Times those attacks ‘are reinforcing our relations with the Brics, because we want to have diversified relations and not depend on any one country’.”
August 1 – Bloomberg (Sudhi Ranjan Sen): “New Delhi and Moscow have a ‘steady and time-tested partnership,’ India’s foreign ministry spokesperson said…, just days after US President Donald Trump ripped the South Asian nation over its ties with Russia.”
Ukraine Watch:
July 28 – Bloomberg (Skylar Woodhouse and Hadriana Lowenkron): “President Donald Trump said he would shorten his timeline for Russian leader Vladimir Putin to reach a truce with Ukraine or face potential economic penalties, heightening pressure on Moscow to bring the fighting to a halt. ‘I’m going to make a new deadline of about 10, 10 or 12 days from today,’ Trump told reporters... ‘I’ll announce it probably tonight or tomorrow,’ Trump added. ‘But there’s no reason to wait. If you know what the answer is,’ expressing frustration with Putin for rebuffing previous calls for a ceasefire.”
July 31 – Financial Times (Christopher Miller): “Waves of Russian drones and missiles hit Kyiv overnight into Thursday, killing at least 11 people and injuring more than 100, in an attack that came days after US President Donald Trump issued an ultimatum to Moscow and narrowed the window for agreeing to a ceasefire… Some 12 other children were among the at least 135 wounded in attacks on several residential buildings, including a direct strike on a high-rise apartment block.”
July 27 – Financial Times (Chris Cook and Max Seddon): “Russia has depleted its once-vast stockpiles of Soviet-era weaponry during the full-scale invasion of Ukraine, with the flow of goods from military storage facilities to the front-line now back down to pre-2022 levels. Shipments starting in the vicinity of Russia’s principal storage fields are on track to fall from a peak of 242,000 tonnes in 2022 to 119,000 tonnes in 2025, according to an analysis of logistics data by the Kyiv School of Economics Institute.”
Middle East Watch:
July 28 – Financial Times (Robert Wright): “Yemen’s Houthi militants have vowed to ‘escalate’ their attacks on merchant ships, raising the risk for ships on the vital trade route through the Red Sea and the Suez Canal. The Iran-backed group said… it would attack ships belonging to any company trading with Israel ‘regardless of the nationality of that company’.”
Taiwan Watch:
August 1 – Financial Times (Kathrin Hille, Demetri Sevastopulo and Aime Williams): “Taiwan’s failure to secure a trade deal with Donald Trump before his August 1 deadline has deepened fears that Washington could water down security support for Taipei to smooth relations with Beijing. Taiwan — the world’s most important chip manufacturer and the seventh-largest US trading partner — was one of the first countries to start talks with Washington after Trump unveiled his ‘liberation day’ tariffs in April. Despite those efforts, Trump… imposed a 20% tariff on imports from Taiwan.”
July 28 – Bloomberg (Jenny Leonard and Yian Lee): “Taiwanese President Lai Ching-te appeared to call off an overseas trip planned for next week after the Trump administration failed to greenlight his stopover in the US, amid concerns it could derail trade talks with China. Lai had previously intended to stop in New York on Aug. 4 and then Dallas 10 days later as part of a trip to diplomatic allies Paraguay, Guatemala and Belize.”
AI Bubble Watch:
July 31 – New York Times (Andrew Ross Sorkin, Bernhard Warner, Sarah Kessler, Michael J. de la Merced, Danielle Kaye and Calum Marsh): “Usually, investors hate when companies announce huge spending plans. That’s why it has been so wild to see them cheer as Microsoft and Meta announced mammoth new artificial intelligence investments. The more they spend, the higher their stocks seem to go. Microsoft raised its suggested annual outlay to $120 billion — up from an originally mind-bending forecast of $80 billion… Meta said that capital expenditures — which these days largely means spending on A.I. data centers — could reach up to $72 billion this year. Microsoft said it planned to spend $30 billion on capex in the current quarter alone. Both reports come after similarly big commitments disclosed last week by Alphabet, Google’s parent company.”
July 31 – Bloomberg (Carmen Reinicke and Subrat Patnaik): “Microsoft Corp. has become the second company in the world to reach a $4 trillion market capitalization after reporting quarterly earnings that beat Wall Street’s expectations, sending the stock soaring Thursday. Shares of the technology behemoth jumped as much as 8.2% in early trading in New York, pushing its market value to $4.1 trillion. Nvidia Corp. became the first company to hit the milestone earlier this month.”
July 25 – Financial Times (William Langley, Eleanor Olcott and Ryan McMorrow): “China has unveiled a sweeping plan to expand its role in artificial intelligence governance including the creation of a global co-operation organisation as Beijing vies with Washington for technological leadership. Speaking at the opening of the World Artificial Intelligence Conference (WAIC) in Shanghai on Saturday, Chinese premier Li Qiang said AI innovation was hindered by ‘bottlenecks’ such as the supply of computer chips. Without explicitly mentioning the US, he took aim at ‘technological monopolies’ and restrictions which could lead to AI becoming ‘an exclusive game for a few countries and companies’.”
July 27 – Axios (Scott Rosenberg): “The U.S.’s great AI race with China, now freshly embraced by President Trump, is a competition in the dark with no clear prize or finish line. Similar ‘races’ of the past — like the nuclear arms race and the space race — have sparked innovation, but victories haven’t lasted long or meant much. Both Silicon Valley and the U.S. government now agree that we must invest untold billions to build supporting infrastructure for an error-prone, energy-hungry technology with an unproven business model and an unpredictable impact on the economy and jobs. ‘America is the country that started the AI race. And as president of the United States, I’m here today to declare that America is going to win it,’ Trump said at a Wednesday event titled ‘Winning the AI Race.’”
July 30 – Bloomberg (Newley Purnell, Yazhou Sun and Mark Bergen): “When the world’s elite gathered in Davos, Switzerland, in January 2024, Sachin Dev Duggal reveled in his role as the founder of a bona fide artificial intelligence unicorn. His startup, Builder.ai, sponsored glitzy events with celebrities and magazine editors. The BBC featured him on air as an expert in the buzzy technology… Whatever magic Duggal once conjured is now gone. A year after his Davos appearance, he was pushed out as chief executive… The startup’s board later restated sales and a major lender seized virtually all of its cash, forcing the company into bankruptcy in June.”
July 29 – Wall Street Journal (Lindsay Ellis and Katherine Bindley): “What do you hire a 22-year-old college graduate for these days? For a growing number of bosses, the answer is not much—AI can do the work instead. At Chicago recruiting firm Hirewell, marketing agency clients have all but stopped requesting entry-level staff—young grads once in high demand but whose work is now a ‘home run’ for AI, the firm’s chief growth officer said. Dating app Grindr is hiring more seasoned engineers, forgoing some junior coders straight out of school, and CEO George Arison said companies are ‘going to need less and less people at the bottom.’”
Bubble and Mania Watch:
July 30 – Bloomberg (Olga Kharif and David Pan): “Crypto Inc. is borrowing straight from Wall Street’s playbook. As the digital-asset industry booms, 160 public companies have drawn inspiration from industry vanguard Michael Saylor to amass some 300,000 Bitcoin. Increasingly though, they’re no longer content to simply sit on it. They’re lending their coins, locking them up for rewards, or selling options, all in a bid to milk income from idle holdings. It’s a break from Bitcoin’s original creed. The crypto experiment was born as a rejection of Wall Street’s leverage and financial engineering.”
July 25 – Wall Street Journal (Gregory Zuckerman and Vicky Ge Huang): “It’s the hottest trade of the summer. Companies are raising tens of billions of dollars, not to invest in their businesses or hire employees, but to purchase bitcoin and more obscure cryptocurrencies. A Japanese hotel operator, a French semiconductor manufacturer, a Florida toy maker, a nail-salon chain, an electric-bike maker—they’re all plowing cash into tokens, helping to send all kinds of digital currencies to record levels. News that a new company plans to buy crypto is enough to send its shares flying—spurring others to consider joining the frenzy. Since June 1, 98 companies have announced plans to raise over $43 billion to buy bitcoin and other cryptocurrencies, according to Architect Partners... Nearly $86 billion has been raised for this purpose since the start of the year. That’s more than double the amount of money raised in initial public offerings in the U.S. in 2025, according to Dealogic.”
July 29 – Bloomberg (Georgia Hall): “Private equity-owned companies drove an increase in defaults and continue to turn to distressed debt exchanges after credit conditions deteriorated in the wake of US tariff announcements, according to Moody’s... In the three months through June, 21 companies defaulted on more than $27 billion of debt… That’s up from the 15 companies that defaulted on about $15 billion of debt in the prior quarter. Many private equity firms were caught out by interest rate hikes in 2022 after snapping up lower-rated businesses during the easy money era using floating-rate debt. Those firms are typically more highly leveraged than their public equivalents making them more vulnerable to distress.”
July 26 – Wall Street Journal (Anne Tergesen): “Americans are putting more money than ever into 401(k)s. They are also pulling more out. Last year, a record 4.8% of workers in 401(k) plans took a hardship distribution for financial emergencies, up from a prepandemic average of about 2%, according to Vanguard... And nearly one-third of people who leave jobs annually liquidate their 401(k)s… This adds up to a sea change in how Americans view their retirement savings: The $12.2 trillion in 401(k) accounts isn’t necessarily locked away, earmarked only for retirement income. As people divert more of their savings to 401(k)s, the accounts are doing double duty as emergency funds.”
July 29 – Reuters (Patturaja Murugaboopathy): “U.S. covered call funds are drawing robust inflows this year as investors search for higher returns… According to Morningstar data, U.S. derivative income funds, primarily made up of covered call strategies, attracted a record $31.5 billion in the first half of this year. Till the middle of this month, they secured another $2.5 billion, lifting the total net assets to a record $145 billion… Covered call funds generate income by owning stocks and selling call options on them, collecting premiums in return.”
Inflation Watch:
July 31 – Associated Press (Christopher Rugaber): “The Federal Reserve’s preferred inflation gauge ticked higher last month in a sign that President Donald Trump’s broad-based tariffs are starting to lift prices for many goods. Prices rose 2.6% in June compared with a year ago…, up from an annual pace of 2.4% in May. Excluding the volatile food and energy categories, prices rose 2.8% in the past year… The figures are above the Fed’s 2% goal. The uptick in prices helps explain the central bank’s reluctance to cut its key interest rate this week, despite repeated demands from Trump that it do so.”
July 29 – Bloomberg (Naureen S Malik): “In terms of electricity, a huge swath of the US encompassing 13 states was, for many years, the proverbial land of plenty. From Illinois to New Jersey to North Carolina, the area covered by PJM Interconnection LLC had more than enough power to get by. But that picture is changing rapidly as data center developers flock to the nation’s largest grid… There’s no longer any spare power supply to feed the city-sized data campuses under development, PJM’s independent market watchdog said last week. Tech companies will need to bring their own generating plants. There are signs of stress already. During the past five weeks, PJM issued nine level 1 energy emergency alerts…”
July 29 – Reuters (David Gaffen and Marleen Kaesebier): “U.S. President Donald Trump is getting his tariffs. Companies are making it clear how they intend to deal with it - passing them on to American consumers. Throughout the spring, big retailers and consumer product makers warned that levies on imported goods would squeeze their operations, forcing them to choose between lower earnings and passing on higher costs to customers. On Tuesday, the packaging giant, which makes household basics spanning from Bounty paper towel to Tide detergent, issued a sour outlook for 2025 and sent a message to big retailers like Walmart that it would have to raise prices on some U.S. goods from next week… P&G said it would raise prices on about a quarter of its products in the U.S. to help offset the cost of new tariffs. Price hikes are in the mid-single digits across categories…”
July 29 – CNBC (Mike Winters): “Even with home sales at a historic low, prices continue to rise — adding hundreds of dollars to monthly payments so far in 2025. In June, the median price for an existing home in the U.S. reached a record high of $435,300… That’s up 2% from a year ago and marks the 24th straight month of annual price growth. While more homes are being built, ‘multiple years of undersupply are driving the record high home price,’ says Lawrence Yun, NAR’s chief economist… ‘Home construction continues to lag population growth.’”
July 29 – Axios (Tina Reed): “The trade deal between the U.S. and the European Union could hit the pharmaceutical industry with billions in new costs and ultimately drive up prices and limit access. Drugmakers have been heavily reliant on foreign countries' manufacturing and raw materials, most of it duty-free. Those free-trade policies are on the way out as the U.S. prepares to impose a 15% tariff on U.S.-bound imports of branded drugs from Europe… ‘The cost of imported drugs is about to become more expensive for all Americans,’ Joe Brusuelas, principal and chief economist for RSM US, told Axios. Europe is among the biggest sources of branded drugs and their ingredients for the U.S. Ireland alone accounted for about $50 billion of U.S. pharma imports last year.”
July 29 – Associated Press (Josh Boak and Paul Wiseman): “As President Donald Trump prepares to announce new tariff increases, the costs of his policies are starting to come into focus for a domestic manufacturing sector that depends on global supply chains, with a new analysis suggesting factory costs could increase by roughly 2% to 4.5%. ‘There’s going to be a cash squeeze for a lot of these firms,’ said Chris Bangert-Drowns, the researcher at the Washington Center for Equitable Growth who conducted the analysis.”
Federal Reserve Watch:
July 30 – Financial Times (Claire Jones, Myles McCormick, Kate Duguid and George Steer): “The Federal Reserve has signalled that it could hold interest rates steady at least through September as it defies Donald Trump’s repeated calls for the central bank to dramatically lower borrowing costs. The central bank left borrowing costs unchanged at 4.25% to 4.5%... Fed governors Michelle Bowman and Christopher Waller dissented with the decision, saying the central bank should have cut rates by a quarter percentage point. It marked the first time since 1993 that two governors formally objected to a rate decision. Fed chair Jay Powell said following the meeting that ‘it seems to me — and to almost the whole committee — that the economy is not performing as though restrictive policy is holding it back inappropriately’. Still, he cautioned that ‘there’s also downside risk to the labour market in coming months’.”
July 30 – Reuters (Michael S. Derby): “U.S. Federal Reserve Chair Jerome Powell… said there is no place for the central bank to consider government financing needs when setting interest rate policy. ‘We have a mandate’ from Congress, and that is to keep inflation in check and the job market as strong as it can be, Powell said… Given that legal charge, ‘we don't consider the fiscal needs of the federal government. No advanced economy central bank does that, and it wouldn’t be good’ for the Fed to do so as it would compromise its credibility.”
U.S. Economic Bubble Watch:
July 30 – Associated Press (Paul Wiseman): “The U.S. economy expanded at a surprising 3% annual pace from April through June, bouncing back at least temporarily from a first-quarter drop that reflected disruptions from President Donald Trump’s trade wars… From April through June, a drop in imports — the biggest since the COVID-19 outbreak — added more than 5 percentage points to growth. Consumer spending registered lackluster growth of 1.4%, though it was an improvement over the first quarter’s 0.5%... Federal government spending and investment fell at a 3.7% annual rate on top of a 4.6% drop in the first quarter… The Federal Reserve’s favored inflation gauge – the personal consumption expenditures, or PCE, price index – rose at an annual rate of 2.1% in the second quarter, down from 3.7% in the first. Stripping out volatile food and energy prices, so-called core PCE inflation rose 2.5%, down from 3.5% in the first quarter.”
July 30 – Reuters (Lucia Mutikani): “U.S. private payrolls increased more than expected July, the ADP National Employment Report showed… Private payrolls rose by 104,000 jobs last month after a revised 23,000 decline in June. Economists… had forecast private employment increasing 75,000 following a previously reported drop of 33,000 in June.”
July 31 – Reuters (Lucia Mutikani): “The number of Americans filing new applications for unemployment benefits increased marginally last week, suggesting that the labor market remained stable… Initial claims for state unemployment benefits rose 1,000 to a seasonally adjusted 218,000 for the week ended July 26… The number of people receiving benefits after an initial week of aid, a proxy for hiring, were unchanged at a seasonally adjusted 1.946 million…”
July 31 – Wall Street Journal (Veronica Dagher): “Condo sellers haven’t faced a market this weak in more than a decade. Prices are down, supply is up and sellers often feel lucky to get an offer, especially in the South. In several parts of the country, prospective buyers hold most of the cards. They are often winning concessions from sellers eager to unload condominiums that are likely facing rising homeowner-association dues, in part because of higher insurance costs.”
July 30 – CNBC (Diana Olick): “Mortgage interest rates have barely moved in several weeks, but rates are not what is weighing on consumers most. It’s really uncertainty about the economy that worries people more… Applications for a mortgage to purchase a home dropped 6% for the week and were 17% higher than the same week one year ago. Volume, however, is so low that the annual comparison is skewing deceptively high.”
July 29 – Bloomberg (Claire Ballentine): “Home-price growth in the US decelerated in May for the fourth consecutive month. A national gauge of prices rose 2.3% from a year earlier, according to… S&P CoreLogic Case-Shiller. That was the smallest increase since July 2023 and comes after a 2.7% annual increase in April.”
July 30 – Yahoo Finance (Claire Boston): “Home contract signings slumped more than expected in June, the latest sign that the housing market is still essentially frozen. The Pending Home Sales Index slumped 0.8% from May and 2.8% from a year earlier to a reading of 72. A level of 100 is equal to contract activity in 2001… Contract signings fell in all regions of the country on a monthly and annual basis, except the Northeast, where they were flat from 2024 and up 2.1% from May.”
August 1 – Axios (Sami Sparber and Emily Peck): “Real estate prices are all about ‘location, location, location,’ and right now that’s particularly true — in half the country home prices are still going up, and in the other half they're falling. The price data shows that the housing story is more complicated than affordability and still-high mortgage rates… Zoning laws, climate risks and economic vibes also play a big role. Ultimately, this tale of two housing markets is all about supply. In the places facing shortages of available homes, and less newly constructed housing, prices are holding up. But areas in the South, particularly Texas and Florida, that had lots of new construction over the past few years, are seeing prices fall. And it’s not just new homes; existing homeowners in these regions are also looking to sell and leave behind higher insurance costs, and climate risks.”
July 27 – Wall Street Journal (Rebecca Picciotto): “Individual home buyers are largely locked out of the housing market as home prices continue to climb and interest rates remain stuck. But investors are buying, and dominating the market. So far in 2025, investors who buy homes to flip or rent out have made up about 30% of purchases of both existing and newly built single-family homes, the highest share on record… There is also a change in the makeup of single-family residential investors… This buying group was once flooded with large private-equity firms such as Blackstone and Starwood Capital Group. But in the first half of this year, small investors made up about 25% of these home purchases while large investors accounted for about 5% on average… This shift happened mostly because large investors and traditional home buyers have slowed down…”
July 29 – Bloomberg (Jonnelle Marte and Maria Eloisa Capurro): “Upper-income Americans are increasingly falling behind on credit card and auto loan payments, signaling an underlying vulnerability in the US economy as the labor market slows. Delinquencies on such debts from those making at least $150,000 annually have jumped almost 20% over the last two years, faster than for middle- and lower-income borrowers, according to the credit-scoring firm VantageScore…”
July 31 – Bloomberg (Katia Dmitrieva): “President Donald Trump’s reciprocal levies will likely weigh on economic growth and push up prices while hammering the global economy, according to Bloomberg Economics. The tariffs announced Friday, which run from 10% to 41% and mark the highest rates since World War II, would increase the average US duty to 15.2% from 2.3% in 2024, according to analysis by Maeva Cousin, chief trade economist at BE. That would cut US GDP by 1.8% and boost core prices by 1.1% over two to three years…”
China Watch:
July 29 – Bloomberg (Ari Natter): “Sixty times the cement of the Hoover Dam, more steel than 116 Empire State Buildings and enough concrete to build a two-lane highway around the Earth five times — that’s what will go into China’s new $167 billion hydropower project in Tibet. Construction officially began this month on what is set to become one of the biggest infrastructure projects in history. It’s a legacy-defining gamble for President Xi Jinping as he tries to sustainably revive China’s slowing economy, tighten control over a restive region and project power far beyond the country’s borders.”
July 28 – Bloomberg: “China’s government spending has pivoted toward social welfare to a degree unseen for at least a generation, as it runs a record budget deficit with a focus on boosting consumption to cushion the blow from Donald Trump’s tariffs… China announced it will start offering nationwide cash handouts to families as an incentive for couples to have children. While Beijing is channeling less on-budget investment into infrastructure, expenditure that covers outlays ranging from education to employment and social security climbed to nearly 5.7 trillion yuan ($795bn) in the first half — the highest for the period since the data series began in 2007. That represents an increase of 6.4% from a year earlier…”
July 26 – Reuters (Qiaoyi Li, Jenny Su and Farah Master): “China’s industrial profits continued to fall in June…, as entrenched producer deflation put more margin pressure on businesses in the face of subdued domestic demand and lingering global trade uncertainty… Profits at China's industrial firms fell 4.3% in June from a year earlier, following a decline of 9.1% in May, while first-half profits were down 1.8% versus a slide of 1.1% in the period from January to May…”
July 26 – Wall Street Journal: “A pointed question from Chinese leader Xi Jinping asking why local officials insist on crowding into the same industries reflects Beijing’s mounting concerns over excess capacity. ‘When it comes to new projects, it’s always the same few things: artificial intelligence, computing power, and new energy vehicles,’ Xi said… ‘Do all provinces have to develop industries in these areas?’ Xi’s remarks come as Beijing moves to curb excess capacity, an issue that has fueled competition and worsened deflationary pressures.”
July 28 – Bloomberg: “Chinese households became more pessimistic last quarter and their view of the jobs market fell to the worst ever, according to a survey by the central bank, a worry for an economy that risks a slowdown ahead after growing faster than the government’s target for much of this year. Consumers turned increasingly negative about income, employment, and prices in April-June, the poll showed.”
July 30 – Wall Street Journal: “Chinese leaders signaled they would refrain from rolling out more major stimulus for now, as authorities pivot to addressing excess capacity in the economy. Instead of announcing more policy support to bolster growth, the ruling Communist Party’s Politburo… pledged… to better execute policies that are already in place…”
Europe Watch:
July 28 – Financial Times: “Germany and France hit out at the long-awaited EU-US trade deal…, warning it would wound the bloc’s economy, as the euro slid against the dollar. German Chancellor Friedrich Merz said the agreement… would cause ‘considerable damage’ to his country, Europe and the US itself. ‘Not only will there be a higher inflation rate, but it will also affect transatlantic trade overall,’ Merz said, in a striking rebuke of the deal negotiated by European Commission President Ursula von der Leyen… ‘This result cannot satisfy us,’ Merz added. ‘But it was the best result achievable in a given situation.’ France’s Prime Minister François Bayrou said the deal marked a ‘dark day’, adding that the EU had ‘resigned itself into submission’.”
July 31 – Wall Street Journal (Joshua Kirby and Ed Frankl): “Unemployment remained at historic lows in the eurozone at the end of the second quarter, adding to signs of economic resilience and cementing the likelihood that the European Central Bank will keep holding interest rates in place. The jobless rate stood at 6.2% in June in the 20-member currency area, unchanged from a revised May estimate and matching historically low levels…”
July 30 – Financial Times (Anne-Sylvaine Chassany): “Germany’s finance minister Lars Klingbeil has warned that a €170bn budget shortfall poses a ‘massive challenge’ to the ruling coalition even as Europe’s largest economy embarks on a debt-funded splurge to bolster its military and modernise its infrastructure. In March, Germany relaxed its constitutional borrowing limit to enable increased defence spending and to set up a €500bn special fund for its ageing infrastructure… However, the constitutional rule that limits net borrowing to 0.35% of GDP annually continues to apply to other areas of the federal budget.”
Japan Watch:
July 31 – Wall Street Journal (Megumi Fujikawa): “The Bank of Japan left policy settings unchanged… but raised its price outlook, fueling expectations for an interest-rate increase as a trade agreement with the U.S. helped clear some uncertainties. The central bank held its policy rate steady at 0.5%, where it has remained since its last hike in January… The bank’s policy board now expects consumer inflation, excluding volatile fresh food prices, to reach 2.7% in the year ending March 2026, up from a previous forecast of 2.2%...”
Leveraged Speculation Watch:
July 30 – Bloomberg (Lu Wang): “It’s a regulator’s nightmare: Hedge funds unleash AI bots on stock and bond exchanges — but they don’t just compete, they collude. Instead of battling for returns, they fix prices, hoard profits, and sideline human traders. Now, a trio of researchers say that scenario is far from science fiction. In simulations designed to mimic real-world markets, trading agents powered by artificial intelligence formed price-fixing cartels — without explicit instruction. Even with relatively simple programming, the bots chose to collude when left to their own devices, raising fresh alarms for market watchdogs. Put another way, AI bots don’t need to be evil — or even particularly smart — to rig the market. Left alone, they’ll learn it themselves. ‘You can get these fairly simple-minded AI algorithms to collude’ without being prompted, Itay Goldstein, one of the researchers and a finance professor at the Wharton School of University of Pennsylvania, said in an interview. ‘It looks very pervasive, either when the market is very noisy or when the market is not noisy.’”
Social, Political, Environmental, Cybersecurity Instability Watch:
July 28 – Associated Press (Mead Gruver and Matt O’Brien): “An artificial intelligence data center that would use more electricity than every home in Wyoming combined before expanding to as much as five times that size will be built soon near Cheyenne, according to the city’s mayor. ‘It’s a game changer. It’s huge,’ Mayor Patrick Collins said…”
July 29 – Associated Press (Matthew Daly): “President Donald Trump’s administration… proposed revoking a scientific finding that has long been the central basis for U.S. action to regulate greenhouse gas emissions and fight climate change. The proposed Environmental Protection Agency rule would rescind a 2009 declaration that determined that carbon dioxide and other greenhouse gases endanger public health and welfare. The ‘endangerment finding’ is the legal underpinning of a host of climate regulations under the Clean Air Act for motor vehicles, power plants and other pollution sources that are heating the planet. Repealing the finding ‘will be the largest deregulatory action in the history of America,’ EPA Administrator Lee Zeldin said… ‘There are people who, in the name of climate change, are willing to bankrupt the country,’ Zeldin said...”
July 30 – Bloomberg (Ari Natter): “The Trump administration is considering halting all wind development on federal lands and in federal waters as the president expands his campaign against the renewable energy source he’s long criticized. Interior Secretary Doug Burgum… ordered a comprehensive review of the agency’s approval process for wind projects… The order… is sure to further spook renewables investors and developers already reeling from the administration’s attack on clean energy.”
July 30 – Bloomberg (Shoko Oda and Sing Yee Ong): “A city in western Japan set a new national temperature record…, as scorching weather puts people at risk of heat stroke and strains power grids. Tamba City, in Hyogo prefecture, posted a high of 41.2C (106F) on Wednesday... That beats the previous all-time high of 41.1C set in Hamamatsu, Shizuoka prefecture, in 2020 and Kumagaya, Saitama prefecture, in 2018.”
China Watch:
July 29 – Bloomberg (Ari Natter): “Sixty times the cement of the Hoover Dam, more steel than 116 Empire State Buildings and enough concrete to build a two-lane highway around the Earth five times — that’s what will go into China’s new $167 billion hydropower project in Tibet. Construction officially began this month on what is set to become one of the biggest infrastructure projects in history. It’s a legacy-defining gamble for President Xi Jinping as he tries to sustainably revive China’s slowing economy, tighten control over a restive region and project power far beyond the country’s borders.”
July 28 – Bloomberg: “China’s government spending has pivoted toward social welfare to a degree unseen for at least a generation, as it runs a record budget deficit with a focus on boosting consumption to cushion the blow from Donald Trump’s tariffs… China announced it will start offering nationwide cash handouts to families as an incentive for couples to have children. While Beijing is channeling less on-budget investment into infrastructure, expenditure that covers outlays ranging from education to employment and social security climbed to nearly 5.7 trillion yuan ($795bn) in the first half — the highest for the period since the data series began in 2007. That represents an increase of 6.4% from a year earlier…”
July 26 – Reuters (Qiaoyi Li, Jenny Su and Farah Master): “China’s industrial profits continued to fall in June…, as entrenched producer deflation put more margin pressure on businesses in the face of subdued domestic demand and lingering global trade uncertainty… Profits at China's industrial firms fell 4.3% in June from a year earlier, following a decline of 9.1% in May, while first-half profits were down 1.8% versus a slide of 1.1% in the period from January to May…”
July 26 – Wall Street Journal: “A pointed question from Chinese leader Xi Jinping asking why local officials insist on crowding into the same industries reflects Beijing’s mounting concerns over excess capacity. ‘When it comes to new projects, it’s always the same few things: artificial intelligence, computing power, and new energy vehicles,’ Xi said… ‘Do all provinces have to develop industries in these areas?’ Xi’s remarks come as Beijing moves to curb excess capacity, an issue that has fueled competition and worsened deflationary pressures.”
July 28 – Bloomberg: “Chinese households became more pessimistic last quarter and their view of the jobs market fell to the worst ever, according to a survey by the central bank, a worry for an economy that risks a slowdown ahead after growing faster than the government’s target for much of this year. Consumers turned increasingly negative about income, employment, and prices in April-June, the poll showed.”
July 30 – Wall Street Journal: “Chinese leaders signaled they would refrain from rolling out more major stimulus for now, as authorities pivot to addressing excess capacity in the economy. Instead of announcing more policy support to bolster growth, the ruling Communist Party’s Politburo… pledged… to better execute policies that are already in place…”
Europe Watch:
July 28 – Financial Times: “Germany and France hit out at the long-awaited EU-US trade deal…, warning it would wound the bloc’s economy, as the euro slid against the dollar. German Chancellor Friedrich Merz said the agreement… would cause ‘considerable damage’ to his country, Europe and the US itself. ‘Not only will there be a higher inflation rate, but it will also affect transatlantic trade overall,’ Merz said, in a striking rebuke of the deal negotiated by European Commission President Ursula von der Leyen… ‘This result cannot satisfy us,’ Merz added. ‘But it was the best result achievable in a given situation.’ France’s Prime Minister François Bayrou said the deal marked a ‘dark day’, adding that the EU had ‘resigned itself into submission’.”
July 31 – Wall Street Journal (Joshua Kirby and Ed Frankl): “Unemployment remained at historic lows in the eurozone at the end of the second quarter, adding to signs of economic resilience and cementing the likelihood that the European Central Bank will keep holding interest rates in place. The jobless rate stood at 6.2% in June in the 20-member currency area, unchanged from a revised May estimate and matching historically low levels…”
July 30 – Financial Times (Anne-Sylvaine Chassany): “Germany’s finance minister Lars Klingbeil has warned that a €170bn budget shortfall poses a ‘massive challenge’ to the ruling coalition even as Europe’s largest economy embarks on a debt-funded splurge to bolster its military and modernise its infrastructure. In March, Germany relaxed its constitutional borrowing limit to enable increased defence spending and to set up a €500bn special fund for its ageing infrastructure… However, the constitutional rule that limits net borrowing to 0.35% of GDP annually continues to apply to other areas of the federal budget.”
Japan Watch:
July 31 – Wall Street Journal (Megumi Fujikawa): “The Bank of Japan left policy settings unchanged… but raised its price outlook, fueling expectations for an interest-rate increase as a trade agreement with the U.S. helped clear some uncertainties. The central bank held its policy rate steady at 0.5%, where it has remained since its last hike in January… The bank’s policy board now expects consumer inflation, excluding volatile fresh food prices, to reach 2.7% in the year ending March 2026, up from a previous forecast of 2.2%...”
Leveraged Speculation Watch:
July 30 – Bloomberg (Lu Wang): “It’s a regulator’s nightmare: Hedge funds unleash AI bots on stock and bond exchanges — but they don’t just compete, they collude. Instead of battling for returns, they fix prices, hoard profits, and sideline human traders. Now, a trio of researchers say that scenario is far from science fiction. In simulations designed to mimic real-world markets, trading agents powered by artificial intelligence formed price-fixing cartels — without explicit instruction. Even with relatively simple programming, the bots chose to collude when left to their own devices, raising fresh alarms for market watchdogs. Put another way, AI bots don’t need to be evil — or even particularly smart — to rig the market. Left alone, they’ll learn it themselves. ‘You can get these fairly simple-minded AI algorithms to collude’ without being prompted, Itay Goldstein, one of the researchers and a finance professor at the Wharton School of University of Pennsylvania, said in an interview. ‘It looks very pervasive, either when the market is very noisy or when the market is not noisy.’”
Social, Political, Environmental, Cybersecurity Instability Watch:
July 28 – Associated Press (Mead Gruver and Matt O’Brien): “An artificial intelligence data center that would use more electricity than every home in Wyoming combined before expanding to as much as five times that size will be built soon near Cheyenne, according to the city’s mayor. ‘It’s a game changer. It’s huge,’ Mayor Patrick Collins said…”
July 29 – Associated Press (Matthew Daly): “President Donald Trump’s administration… proposed revoking a scientific finding that has long been the central basis for U.S. action to regulate greenhouse gas emissions and fight climate change. The proposed Environmental Protection Agency rule would rescind a 2009 declaration that determined that carbon dioxide and other greenhouse gases endanger public health and welfare. The ‘endangerment finding’ is the legal underpinning of a host of climate regulations under the Clean Air Act for motor vehicles, power plants and other pollution sources that are heating the planet. Repealing the finding ‘will be the largest deregulatory action in the history of America,’ EPA Administrator Lee Zeldin said… ‘There are people who, in the name of climate change, are willing to bankrupt the country,’ Zeldin said...”
July 30 – Bloomberg (Ari Natter): “The Trump administration is considering halting all wind development on federal lands and in federal waters as the president expands his campaign against the renewable energy source he’s long criticized. Interior Secretary Doug Burgum… ordered a comprehensive review of the agency’s approval process for wind projects… The order… is sure to further spook renewables investors and developers already reeling from the administration’s attack on clean energy.”
July 30 – Bloomberg (Shoko Oda and Sing Yee Ong): “A city in western Japan set a new national temperature record…, as scorching weather puts people at risk of heat stroke and strains power grids. Tamba City, in Hyogo prefecture, posted a high of 41.2C (106F) on Wednesday... That beats the previous all-time high of 41.1C set in Hamamatsu, Shizuoka prefecture, in 2020 and Kumagaya, Saitama prefecture, in 2018.”
