From Monday’s intraday high to Tuesday’s low, the Semiconductors Index sank 5.9%. The index had rallied 6.2% at (Nvidia earnings) early Thursday’s highs. The index then sank 10.5% to early-Friday lows, only to rally 5.6% intraday to cut the week’s losses to 5.9%. The MAG7 Index dropped 4%, rallied 5.3%, sank 5.6%, and then rose 3% - to close the week 1.9% lower.
Wild volatility was not limited to tech/AI stocks. The small cap Russell 2000 dropped 2.8%, rallied 3.4%, sank 4.1% and rallied 3.0% - outperforming to end the week down only 0.8%.
De-risking/deleveraging gained momentum this week – at home and abroad. Major equities indices were down 3.9% this week in South Korea, 3.9% in China, 5.1% in Hong Kong, and 3.5% in Taiwan. Over the past six sessions, stocks were down 7.6% in South Korea, 5.3% in Taiwan, and 6.8% in Hong Kong. Japan’s Nikkei 225 Index sank 5.2% in six sessions, with Australian stocks down 3.8%.
In six sessions, Germany’s DAX Index dropped 4.0%, Italy’s MIB 4.7%, Spain’s IBEX35 4.6%, and France’s CAC40 3.0%. From November 13th record highs, Europe’s STOXX 600 Bank Index dropped 5.6% in six sessions. Italy’s bank index sank 6.2%. Financial stocks globally have come under notable pressure. Hong Kong’s China H-Financials Index fell 5.7%, and the MSCI Asia Banks Index dropped 5.4% in six sessions. And after trading to record highs on November 13th, the MSCI World Banks Index reversed 3.7% lower.
Over the past seven sessions, the NYSE Broker/Dealer Index dropped 8.1%. Over this period, Goldman Sachs sank 7.7% and Morgan Stanley dropped 6.9%. Robinhood sank 19.3%, Interactive Brokers 16.0%, XP Inc. 9.6%, LPL Financial 8.7%, Raymond James 7.8%, Charles Schwab 7.4%, BGC 7.0%, StoneX Group 7.0%, and Stifel Financial 6.4%. As for the major banks, JPMorgan dropped 7.0% in seven sessions, State Street 5.6%, Bank of New York Mellon 5.5%, Bank of America 4.7%, and Citigroup 4.1%. Capital One fell 6.4%, and Klarna sank 22.8%.
Markets, especially the major financial stocks globally, have begun to respond to dramatically altered liquidity prospects. Marketplace liquidity is mercurial, especially late in the cycle. Market blowoffs fueled by speculative leverage guarantee acute liquidity instability. On the upside, self-reinforcing speculation and leveraging propagate liquidity overabundance and the perception of endless liquidity. But speculative melt-ups set the stage for sharp reversals, de-risking, and deleveraging.
The liquidity backdrop (and perceptions of prospective liquidity) turns increasingly prone to abrupt shifts. Liquidity over-abundance can quickly transition to waning liquidity. And once market perceptions begin to adjust to a deteriorating liquidity backdrop, the marketplace turns acutely vulnerable to the forces of heightened risk aversion, deleveraging, illiquidity, and market dislocation. This process has begun.
From their September 12th highs (15.99 and 14.99), the stocks of Fannie Mae and Freddie Mac have both dropped 47%. From its October 6th high to Friday’s intraday low (80,554), bitcoin has collapsed 36%. Bitcoin slumped 10.4% this week.
November 21 – Bloomberg (David Pan): “Bitcoin is crashing into dangerous territory — and options-fueled selling is adding to the volatility. The largest cryptocurrency dropped as much as 7.6% on Friday to $80,553, deepening a selloff that’s erased nearly 25% of its value this month. November is now shaping up to be Bitcoin’s worst month since the 2022 collapse of Terra and FTX — a stretch that triggered a cascade of corporate failures across the industry.”
November 21 – Bloomberg (By Jim Silver): “Bill Ackman says ‘forced liquidations and margin calls in crypto’ are leading to selling of Fannie Mae and Freddie Mac shares. ‘I underestimated how much exposure Fannie and Freddie (‘F2’) have to crypto, not on balance sheet, but in their shareholder bases,’ Ackman says… ‘We don’t own bitcoin, but clearly in the short term, we own a stock market proxy for bitcoin’.”
The hedge fund community is the dominant player in a crowded market for Fannie and Freddie shares. I’ll take Ackman’s comment as confirmation that hedge funds have accumulated significant exposures to bitcoin and crypto currencies. De-risking/deleveraging gained important momentum this week. Mounting crypto losses are spurring liquidations from Fannie and Freddie shares to technology and AI stocks to risk assets more generally – and globally.
There is, however, more to this story than simply hedge funds selling Fannie and Freddie shares after suffering crypto losses. Ackman’s Pershing Square Capital reportedly holds a combined 215 million Fannie and Freddie shares. Ackman and others believed they were poised to make billions from the administration’s privatization of these two GSEs, which have been in federal receivership since the Great Financial Crisis. A big score on Fannie and Freddie shares would work wonders for Ackman’s 2026 Pershing Square IPO plans.
November 18 – Bloomberg (Katherine Burton): “Billionaire Bill Ackman said now isn’t the right time for the Treasury to sell its shares of the government-sponsored mortgage giants known as Fannie Mae and Freddie Mac. The Pershing Square Capital Management founder held a presentation on X Tuesday that said it ‘will take significant time’ for the government to ‘deliberately execute’ an initial public offering of its shares of Federal National Mortgage Association and Federal Home Loan Mortgage Corp… Ackman said there are a few steps that should be taken before the government sells its shares because it will take some time to get buy-in from market participants…”
Like AI and crypto Bubbles, a backdrop of market exuberance and liquidity abundance had Fannie and Freddie bonanza imaginations running wild. The administration is keen to inflate the market values of these institutions, while rewarding the President’s hedge fund supporters. Now, a lot of hopes and dreams have begun to fade. Instead of hedge funds capitalizing on privatization, the leveraged speculating community will now look to the GSE’s for crucial market liquidity support.
The good news for the hedge funds is that in receivership, the explicit Treasury guarantee ensures critical crisis-period GSE debt market access. When the administration beckons, the GSEs will surely aggressively expand their balance sheets (purchase MBS and provide other financing mechanisms) to accommodate hedge fund deleveraging. The bad news is that as this scenario plays out, the odds of these institutions morphing into “private” enterprises collapse. It’s unclear why Fannie and Freddie equities securities would hold significant value.
How much trouble the hedge funds are in at this point is an open issue. We know the quant fund community was on their heels even before recent market weakness. Crypto is a significant issue for many funds (Bloomberg: “Wild Ride on Wall Street as the Crypto Crash Spooks Risk Complex”). With funds now scurrying, crowded (long vs. short) “pairs trades” have become a minefield (Friday: small caps up 2.8% vs. Semis up only 0.9%). If the acutely vulnerable tech/AI trade falters here, a major deleveraging would be under way. And a major deleveraging will place all sorts of (highly levered) trades in Harm’s Way, most notably the massive Treasury “basis trade” and “carry trades” globally.
The bottom line: Bubbles are faltering. The financial world is changing, and the value of tens of Trillions of securities is overdue for reassessment and adjustment. This will not go smoothly.
Oracle’s stock dropped another 10.8% this week, boosting losses from September 10th highs to over 40%. The company’s CDS rose another 16 to 118 bps – up from 45 bps on September 10th. Oracle’s stock is down 24% so far this month. In my “periphery to core” analytical framework, I place Oracle at the critical “periphery of the core”. More at the “periphery,” CoreWeave’s 7.4% loss pushed November’s collapse to 46%. CoreWeave’s 9% coupon 2031 bond, which traded at a yield of 7.97% on October 3rd, closed the week at a record 11.23%. Contagion from the “periphery” is now rapidly gravitating to the “core.”
In April, fledgling deleveraging was reversed by a simple “pause” post on Truth Social. After six months of crazy excess, markets became only more speculative, levered, and vulnerable. The administration’s path for sustaining Bubble excess has turned much more challenging. I’ll assume the ongoing crypto collapse has the inner circle on DEFCON1.
November 21 – Bloomberg (Mackenzie Hawkins and Jenny Leonard): “US officials are having early discussions on whether to let Nvidia Corp. sell its H200 artificial intelligence chips to China, according to people familiar…, a contentious potential move that would mark a major win for the world’s most valuable company. President Donald Trump’s team has held internal talks about H200 chip shipments to the Asian country in recent days, said the people, who requested anonymity to discuss a highly sensitive matter. No final decision has been made…”
TACO has been everywhere on the menu of late. And, of course, there remains a formidable “Trump put.” But it’s borderline shocking how significantly the Credit backdrop has deteriorated since April. And it is this extraordinary divergence between six months of wild speculative excess and a rapidly deteriorating Credit backdrop that calls “Trump put” efficacy into question. So important has been another half-year parabolic rise in systemic risk.
So much has changed in six months, including the President. And if it comes down to Trump v. Credit Cycle, my bet’s with Credit. “Wall Street finance” now faces an unfolding crisis of confidence – so-called “private markets” in particular. Characteristics that were so advantageous in stoking “terminal phase excess” are turning disadvantageous.
November 14 – Financial Times (Toby Nangle): “Private markets have been attracting increasing regulatory scrutiny, and for good reason. It’s not just that the level of disclosures is less than what is required in public markets. Or even that valuations of private market assets are more based on models rather than public pricing, robbing regulators of market signals that could inform their work. It’s because private markets have become so big. By value, global private assets under management came to just over $13tn in 2023, having more than doubled in size over the previous five years, according to… Preqin. It estimated that this figure is on track to almost double again by 2030.”
November 17 – Bloomberg (Denitsa Tsekova, Tracy Alloway and Joe Weisenthal): “In markets awash in ‘garbage lending’ and unhealthy valuations, Jeffrey Gundlach is keeping his strategy simple: load up on cash and stay away from private credit… ‘The health of the equity market in the United States, it’s among the least healthy in my entire career,” Gundlach said. ‘The market is incredibly speculative and speculative markets always go to insanely high levels. It happens every time.'The veteran debt investor is concerned the $1.7 trillion private credit market is engaging in ‘garbage lending’ that could tip global markets into their next meltdown… ‘The next big crisis in the financial markets is going to be private credit,’ he said. ‘It has the same trappings as subprime mortgage repackaging had back in 2006.’ That warning sets the stage for Gundlach’s broader critique of market excess, which stretches from risky loans to frothy tech stocks. He sees the clearest signs of speculative behavior in bets on AI and data centers… Gundlach drew parallels to the ‘inflated’ AAA ratings of subprime mortgages in the run-up to the financial crisis and warned that private managers may have an unrealistic assessment of the value of their loans. ‘There’s only two prices for private credit — 100 or zero… It looks like it’s safe because you could sell it any day, but it’s not safe because the price at which you sell will be gapping lower day after day after day’.”
November 19 – Financial Times (Antoine Gara): “Blue Owl has called off a merger between two of its private credit funds after a Financial Times article outlined how the move risked inflicting steep losses on investors in one of the vehicles. The planned merger came against a backdrop of rising scrutiny of the risks that retail investors have taken in pouring hundreds of billions of dollars into private debt funds carrying limited liquidity rights. The private credit group with almost $300bn in assets told investors… it was abandoning a merger between its Blue Owl Capital Corporation II fund, one of the earliest private credit funds for individual investors, and its far larger publicly traded credit fund OBDC. The announcement comes days after the FT reported how investors in Blue Owl Capital Corporation II were being asked to exchange their investments for holdings in OBDC at the stated net asset value of both funds. However, OBDC trades at a 20% discount to its NAV on public markets…”
November 16 – Wall Street Journal (Matt Wirz and Peter Rudegeair): “Not long ago, Blue Owl Capital was an upstart investment firm that lent money to midsize U.S. companies such as Sara Lee Frozen Bakery. These days, the firm is financing massive data centers costing tens of billions of dollars for the likes of Meta and Oracle—a sign of just how quickly Wall Street has become the enabler of America’s artificial-intelligence boom. Fund managers such as Blue Owl amassed trillions of dollars of investing firepower and have been hunting for big deals where they can put that money to work. They found slim pickings for years until a perfect match appeared in AI, which has provided a bigger target than anything in history due to the vast sums tech companies need to ramp up computing power. ‘We’re talking about numbers that are so large, even in the low cases,’ said Blue Owl co-founder Marc Lipschultz. ‘Does it even matter if you keep counting after you get to $1 trillion of capital expenditure in the next couple of years?’”
November 19 – Bloomberg (Rachel Graf and Aaron Weinman): “A portfolio of private credit loans managed by BlackRock Inc. has performed so poorly that the money manager has waived some management fees – a rarity in the credit world. The asset manager funded the loans by selling bonds known as collateralized loan obligations, which means the portfolio has to perform well enough to regularly pass a series of tests. Failing to clear those hurdles can spur BlackRock to take steps to right the ship, through, for example, automatically diverting interest income away from riskier tranches and toward safer securities. In October, the portfolio value declined enough to breach an over-collateralization test, which means the value of the vehicle’s loans was too low compared to the highest-rated bonds.”
November 19 – Financial Times (Toby Nangle): “Close to 37% of North American life insurance investments are allocated to private credit. But private credit encompasses a world of different types of lending — from private placements and commercial real estate lending to asset-based finance and fund finance — in which they have long-standing expertise. Sure, insurers have been upping their exposures for reasons. But has this impeded their liquidity? Getting a sense of how liquidity of the stack is evolving is hard. But Manoj Jethani, Alexander Naumann and team at Moody’s thinks they have some answers. Tl;dr: not brilliantly. The vast majority of the North American US life insurers’ $3.8tn fixed income portfolio carry ratings and are classified as either Level 1 or Level 2 assets — meaning you can either look up their prices on Bloomberg, or work them out pretty easily using a bunch of observable prices. But Level 3 assets? Their valuations are based on unobservable inputs. And around a fifth of US life insurer fixed-income assets are valued on this basis.”
November 20 – Bloomberg (Alexandre Rajbhandari): “No one worries about the insurance industry quite like Tom Gober. From his home office outside of Pittsburgh, the forensic accountant has been tracking, documenting and highlighting the weaknesses of the $9.3 trillion sector responsible for the financial well-being of millions of Americans. ‘I’ve been seeing warning signs for years, and I’ve been very vocal about it,’ Gober, 66, said… More recently, he’s been paying attention to what he says is the most troubling development yet: The influx of private equity’s billions. The industry waves off its critics as needlessly alarmist, always predicting a disaster that never comes. But that mid-October afternoon, Gober’s phone began to light up. Josh Wander, the co-founder of 777 Partners, a private equity firm on Gober’s radar, had been charged with cheating investors and lenders out of almost $500 million — an alleged fraud enabled in part by its opaque and intricate ties with some US insurance companies. For Gober, the possible misbehavior at a small shop is just a symptom.”
This week’s Federal Reserve Bank of Cleveland Financial Stability Conference (“Financial Stability in a Time of Rapid Economic and Technological Change”) was a timely affair.
From Cleveland Fed President Beth Hammack: “The Fed has a strong interest in financial stability, and not only because promoting it is one of our core functions. Financial stability supports our other objectives: fostering a safe and sound banking system, an efficient payments system, community development, and our monetary policy objectives of maximum employment and stable prices.”
“It’s typically at the end of a credit cycle that the riskiest lending is revealed. And as it’s been a long time since we’ve had a full credit cycle, we need to be mindful not to be complacent. Lack of transparency is another issue. Private credit and loans to private firms usually offer less in the way of public financial information compared with bank loans, bond markets, and broadly syndicated loans. Furthermore, private credit loans often include features like payment in kind that can enable riskier lending to less profitable companies.”
Extracts from Governor Lisa Cook’s notably astute presentation, “A Policymaker’s View of Financial Stability.”
“Let’s begin by putting financial-system vulnerabilities into context. The Federal Reserve promotes financial stability in order to support the achievement of its dual mandate of promoting maximum employment and price stability. That is, achieving maximum employment and price stability depends on a stable financial system. We know from history, whether from the distant past—the Great Depression—or from the recent past—the Great Financial Crisis or the Great Recession—that financial crises typically lead to large job losses and high unemployment.”
“Currently, my impression is that there is an increased likelihood of outsized asset price declines… Another potential vulnerability worth watching is the growth of private credit. Fed staff estimate that, over the past five years, private credit has roughly doubled. Whenever we observe such rapid growth in credit over such a short period of time, it draws our attention.”
“We have also seen more complex intermediation chains involving more leveraged players, such as banks and insurance companies, emerge in recent years. Some private firms may also have multiple sources of funding. The increased complexity and the interconnections with leveraged financial entities create more channels through which unexpected losses in private credit could spread to the broader financial system.”
“Another vulnerability I am following carefully is the footprint of hedge funds in the U.S. Treasury market. This footprint has grown substantially over the past few years and recently just exceeded its previous, pre-pandemic peak. My focus relates to the potential for transmitting stress to the U.S. Treasury market, which is critical to the functioning of our financial system… Hedge funds’ holdings of Treasury cash securities—that is, Treasury bills, notes, and bonds—have increased from representing about 4.6% of total Treasury securities outstanding in the first quarter of 2021 to representing 10.3% in the first quarter of this year, just above its pre-pandemic peak of 9.4%.”
“All of these features of relative value strategies can make Treasury market liquidity conditions—and, in the extreme, market functioning—more vulnerable to stress.”
Bloomberg Television’s Jonathan Ferro (Nov. 21, 2025) “Forgive me for coming out with the hawkish hits, but we’ve got another one in the past 24 hours, and it came from (Cleveland Fed President) Beth Hammack: ‘Lowering interest rates to support the labor market risks prolonging this period of elevated inflation and it could also encourage risk-taking in financial markets.' Can we finish on that last point: ‘Risk taking in financial markets. How excessive is it and should it be on the radar of the FOMC?”
Fed governor Stephen Miran: “First of all, as I said before, the excessive inflation is a quirk of the statistical process, and it is a mistake to ask people to lose their jobs as a result of a quirk of a statistical process. On financial markets, I think lots of things affect financial markets. Tax policy does, regulation does, technology like artificial intelligence does. It’s a mistake to conflate the status of financial market with the status of monetary policy, right. Even when you look at a financial market as deeply connected to monetary policy like interest rates, we’ve lived through periods of conundrums, right, where passing through of the Fed funds rate to longer-term interest rates was confusing to people. So, it’s just a mistake to do a one-for-one mapping of these things. I think when you look at financial conditions, the financial condition that matters most for the real economy has been and remains housing, right. And this is an area where financial conditions are not loose. This is an area where financial conditions are still quite tight. Going out getting a mortgage is not a financial condition that I would consider to be excessively easy. And, so, I think it’s a mistake. I think it’s also a mistake, as I said before, to ask people to experience job losses because you think the stock market is too high. I don’t know what the right level for the stock market is. And I think that it’s a very challenging question to be able to answer credibly, and to say that we need to create job losses in order to sort of restore the stock market to some level we think is more reflective of fair value is just not a policy view that I hold.”
Bloomberg’s Lisa Abramowicz: “A lot of people have come on this show and said that right now the Fed is stuck between the conundrum of the k-shaped economy, where you have people at the upper-end doing just fine and supporting consumption, and the people on the lower end who are experiencing a lack of wage gains – and they are experiencing those job losses more significantly. How concerned are you of your dual roles of how to prop up and prevent some of those job losses from really escalating, while at the same time potentially cutting rates would exacerbate that k-shape and only exacerbate what you’re seeing with respect to the wealth divide?”
Miran: “So, Congress didn’t task us with addressing all social problems in the world, with inequality one of them. They tasked us with tackling aggregate maximum employment and stable prices. And, so, therefore, the right policy to take is to stabilize employment and prices. That’s the policy I support.”
If you’re a Fed official these days, you either believe safeguarding financial stability is an overarching responsibility (supporting the dual mandate), or you don’t. Stephen Miran clearly doesn’t. He’s an analytical lightweight and disingenuous. Mortgage Credit, that’s fighting the last war. Beth Hammack and Lisa Cook have it right. In his financial stability presentation, Fed vice chair Philip Jefferson was also spot on: “A stable and resilient financial system is, of course, critical to achieve that dual mandate.”
Most unfortunately, the Fed for way too long created and accommodated excessively loose financial conditions. Central bankers here and abroad have never appreciated that there is no cure for bubbles, other than to not allow them to inflate. A policy focus on serial Bubble reflation has courted disaster. In so many ways, decades of inflationism are coming home to roost.
November 21 – Wall Street Journal (Rachel Louise Ensign and Rachel Wolfe): “America’s middle class is weary. After nearly five years of high prices, many middle-class earners thought life would be more affordable by now. Costs for goods and services are 25% above where they were in 2020. Even though the inflation rate is below its recent 2022 high, certain essentials like coffee, ground beef and car repairs are up markedly this year. ‘Life felt more doable a year and a half ago,’ said Holly Frew, a college communications director… ‘I need to know where the light is at the end of the tunnel’.”
“The Middle Class Is Buckling Under Almost Five Years of Persistent Inflation” is the headline for the above article. The “upper class” is exposed to inflation and bursting Bubbles, though the wealthy generally have the resources to weather the storm. The “lower class,” for the most part, doesn’t have much in the way of assets to lose. This leaves the vast “middle class”, the bedrock of social cohesion and stability, perilously exposed to market losses and deflating asset prices. And to witness society’s dissatisfaction, angst and insecurity at record stock prices and peak Bubble excess portends one destabilizing down-cycle.
An astounding U-turn on “the files.” “Quiet, quiet piggy.” “You’re a terrible person and a terrible reporter.” “Marjorie Traitor Greene.” Elon now MTG. In impatient President, unwilling to maximize pressure on Putin, forcing a 28-point capitulation plan upon a tormented Ukraine. “SEDITIOUS BEHAVIOR, punishable by DEATH!” “I met with a man who’s a very rational person. I met with a man who… really wants to see New York be great again. I’ll really be cheering for him.”
Enough to have your head spinning. Leaves one pondering the greater source of volatility, the markets or our President.
For the Week:
The S&P500 fell 1.9% (up 12.3% y-t-d), and the Dow lost 1.9% (up 8.7%). The Utilities dipped 0.7% (up 16.3%). The Banks declined 1.0% (up 16.2%), and the Broker/Dealers sank 4.9% (up 20.3%). The Transports slipped 0.4% (up 0.7%). The S&P 400 Midcaps dipped 0.7% (up 2.0%), and the small cap Russell 2000 declined 0.8% (up 6.3%). The Nasdaq100 dropped 3.1% (up 15.4%). The Semiconductors sank 5.9% (up 28.6%). The Biotechs jumped 3.5% (up 25.0%). With bullion slipping $19, the HUI gold index fell 3.4% (up 115.6%).
Three-month Treasury bill rates ended the week at 3.735%. Two-year government yields dropped 10 bps to 3.51% (down 73bps y-t-d). Five-year T-note yields fell 11 bps to 3.62% (down 76bps). Ten-year Treasury yields declined nine bps to 4.06% (down 51bps). Long bond yields dipped four bps to 4.71% (down 7bps). Benchmark Fannie Mae MBS yields fell eight bps to 5.14% (down 70bps).
Italian 10-year yields slipped a basis point to 3.46% (down 6bps y-t-d). Greek 10-year yields declined three bps to 3.32% (up 10bps). Spain's 10-year yields dipped two bps to 3.21% (up 15bps). German bund yields declined two bps to 2.70% (up 34bps). French yields added one basis point to 3.47% (up 28bps). The French to German 10-year bond spread widened three to 77 bps. U.K. 10-year gilt yields slipped three bps to 4.55% (down 2bps). U.K.'s FTSE equities index fell 1.6% (up 16.7% y-t-d).
Japan's Nikkei 225 Equities Index sank 3.5% (up 21.9% y-t-d). Japan's 10-year "JGB" yield jumped seven bps to 1.78% (up 68bps y-t-d). France's CAC40 slumped 2.3% (up 8.2%). The German DAX equities index dropped 3.3% (up 16.0%). Spain's IBEX 35 equities index fell 3.2% (up 36.5%). Italy's FTSE MIB index slumped 3.0% (up 24.8%). EM equities were mostly under pressure. Brazil's Bovespa index lost 1.9% (up 28.7%), and Mexico's Bolsa index slipped 0.7% (up 25.0%). South Korea's Kospi was slammed 3.9% (up 60.6%). India's Sensex equities index increased 0.8% (up 8.6%). China's Shanghai Exchange Index sank 3.9% (up 14.4%). Turkey's Borsa Istanbul National 100 index rallied 3.4% (up 11.1%).
Federal Reserve Credit declined $7.3 billion last week to $6.521 TN. Fed Credit was down $2.368 TN from the June 22, 2022, peak. Since the September 11, 2019 restart of QE, Fed Credit expanded $2.795 TN, or 75%. Fed Credit inflated $3.710 TN, or 132%, since November 7, 2012 (680 weeks). Elsewhere, Fed holdings for foreign owners of Treasury, Agency Debt declined $7.6 billion last week to $3.057 TN. "Custody holdings" were down $264 billion y-o-y, or 7.9%.
Total money market fund assets (MMFA) slipped $16 billion to $7.522 TN - with a 13-week surge of $332 billion, or 18% annualized. MMFA were up $873 billion, or 13.1%, y-o-y - and ballooned a historic $2.937 TN, or 64%, since October 26, 2022.
Total Commercial Paper dropped $15.9 billion to $1.300 TN. CP has expanded $212 billion y-t-d and $126 billion, or 10.7%, y-o-y.
Freddie Mac 30-year fixed mortgage rates increased two bps to 6.26% (down 61bps y-o-y). Fifteen-year rates rose five bps to 5.54% (down 48bps). Bankrate's survey of jumbo mortgage borrowing costs had 30-year fixed rates up a basis point to 6.47% (down 85bps).
Currency Watch:
For the week, the U.S. Dollar Index increased 0.9% to 100.18 (down 7.7% y-t-d). On the downside, the Brazilian real declined 2.0%, the Swiss franc 1.8%, the South African rand 1.7%, the Norwegian krone 1.6%, the South Korean won 1.4%, the Australian dollar 1.3%, the New Zealand dollar 1.2%, the Japanese yen 1.2%, the Swedish krona 1.0%, the Mexican peso 1.0%, the euro 0.9%, the Singapore dollar 0.7%, the Canadian dollar 0.6%, and the British pound 0.6%. The Chinese (onshore) renminbi slipped 0.08% versus the dollar (up 2.73% y-t-d).
Commodities Watch:
November 18 – Bloomberg (Yvonne Yue Li): “China added an estimated 15 tons of gold to its forex reserves in September as central banks accelerated their purchases of bullion after a seasonal summer lull, according to Goldman Sach... Analysts including Lina Thomas estimated that central banks globally bought 64 tons of the precious metal in September, more than tripling from the month before.”
The Bloomberg Commodities Index declined 1.4% (up 8.9% y-t-d). Spot Gold slipped 0.5% to $4,065 (up 54.9%). Silver declined 1.1% to $50.0204 (up 73.1%). WTI crude dropped $2.03, or 3.4%, to $58.06 (down 19%). Gasoline sank 6.4% (down 7%), while Natural Gas added 0.3% to $4.58 (up 27%). Copper added 0.7% (up 27%). Wheat was unchanged (down 4%), while Corn declined 1.1% (down 7%). Bitcoin sank $9,810, or 10.4%, to $84,273 (down 10%).
Market Instability Watch:
November 20 – Bloomberg (Caleb Mutua): “Oracle Corp., the once stodgy database giant that’s borrowed tens of billions and tethered its fortunes to the artificial intelligence boom, is quickly emerging as the credit market’s barometer for AI risk. Traders have piled into the company’s credit-default swaps in recent months as Oracle’s massive AI-related spending spree, its central role in a web of interrelated deals, and its weaker credit grades compared with players such as Microsoft Corp. or Alphabet Inc. have made the contracts the market’s preferred way to hedge — and bet against — the AI boom. The price to protect against the company defaulting on its debt for five years tripled in recent months to as high as about 1.11 percentage point a year on Wednesday, or around $111,000 for every $10 million of principal protected…”
November 18 – Bloomberg (Emily Graffeo, Victor Swezey, Brian Smith and Gowri Gurumurthy): “The malaise sweeping financial markets globally is creeping into credit markets. Risk premiums on everything from investment-grade corporates to junk bonds are hovering near their highest levels in weeks. On Monday, investors withdrew about 40% of bond orders on several corporate bond offerings after seeing final pricing, an unusually high level of attrition. A separate investment-grade bond sale was pulled from the market altogether last week, a rarity in that market. In the leveraged loan market, banks have struggled to sell some debt tied to acquisitions.”
November 20 – Reuters (Tom Westbrook and Junko Fujita): “Investors bailing out of the yen and Japan’s government bonds have driven borrowing costs there to record highs, bending markets out of shape and piling pressure on the country’s policymakers as they try to pilot the economy through a rough patch. The selloff, which has also rattled stocks, has been unleashed by a lavish stimulus package - set to be the biggest since COVID-19 - that new Prime Minister Sanae Takaichi is expected to announce on Friday. Her plans will mean yet more borrowing in a quadrillion-yen ($7 trillion) debt market that has been caught off-guard and which no longer enjoys a permanent bid from the central bank or Japan's insurers.”
November 19 – Reuters (Gertrude Chavez-Dreyfuss and Davide Barbuscia): “The cost of U.S. overnight funding in the repo market has stayed stubbornly high and is expected to remain elevated going into year-end despite recent Federal Reserve easing, adding another layer of stress to already fragile financial markets. A spike in repurchase or repo rates signals liquidity is scarce and raises funding costs across the financial system.”
November 18 – Bloomberg (Marcus Ashworth): “Financial plumbing becoming news is rarely a bullish signal. The head of the New York Federal Reserve last week called in the big institutions for an unscheduled meeting prompted by spikes in its standing repo facility — the central bank’s money-market backstop. While that brainstorming put monetary liquidity in the spotlight, the unspoken concern was leverage, especially borrowing by hedge funds. The proliferation of multi-pod hedge funds has brought about a major increase in their share of government bond trading globally. Their use of leverage and low regulatory oversight make them potentially unstable counterparties and so threaten the stability of the benchmark markets for all other financial assets. There’s been much hand-wringing over the scale of the US Treasury bond futures basis trade — a relative-value bet between a cash bond and its equivalent futures contract — but US authorities have done little to address it.”
November 19 – Bloomberg (Alex Harris): “Bond traders have pushed back against Federal Reserve officials urging them to use a key borrowing facility, complicating the central bank’s efforts to ease strains in the $12 trillion market for repurchase agreements. Primary dealers representing Wall Street banks told the officials at a meeting last week that borrowing directly from the central bank still carries a stigma and could be seen as a sign of trouble. That’s one reason they’ve been reluctant to use the Standing Repo Facility (SRF)…”
November 18 – Reuters (Joice Alves, Dhara Ranasinghe and Naomi Rovnick): “Britain’s markets face a major test in next week’s budget, with the outlook for bonds, stocks and sterling all hinging on Finance Minister Rachel Reeves striking the right balance between fiscal restraint and support for growth. Investors were rattled on Friday by news that Reeves has no plans to raise income tax due to improved fiscal forecasts, just days after she appeared to signal a hike to underpin her own financial rules. ‘Markets are looking for signs of credibility through meaningful fiscal consolidation,’ said Laura Cooper, head of macro credit and global investment strategist at Nuveen.”
U.S. Credit Trouble Watch:
November 15 – Bloomberg (Caleb Mutua): “As tech companies gear up to borrow hundreds of billions of dollars to fuel investments in artificial intelligence, lenders and investors are increasingly looking to protect themselves against it all going wrong. Banks and money managers are trading more derivatives that offer payouts if individual tech companies, known as hyperscalers, default on their debt. Demand for credit protection has more than doubled the cost of credit derivatives on Oracle Corp.’s bonds since September. Meanwhile, trading volume for credit default swaps tied to the company jumped to about $4.2 billion over the six weeks ended Nov. 7... That’s up from less than $200 million in the same period last year. ‘We’re seeing renewed interest from clients in single-name CDS discussions, which had waned in recent years,’ said John Servidea, global co-head of investment-grade finance at JPMorgan... ‘Hyperscalers are highly rated, but they’ve really grown as borrowers and people have more exposure, so naturally there is more client dialogue on hedging’.”
November 20 – Bloomberg (Olivia Fishlow, Davide Scigliuzzo, and Ellen DiMauro): “Blue Owl Capital Inc.’s Craig Packer has been something of a mainstay on the New York Stock Exchange in recent years, ringing the opening bell multiple times to toast the private credit giant’s public funds. On Wednesday, minutes after the market opened, his mood was anything but celebratory. Blue Owl had just announced it was scrapping a planned merger of two of its private credit funds, backtracking on a plan revealed Nov. 5 after scrutiny arose over the potential losses some investors would have to swallow as part of the deal. The parent company’s shares had fallen this week to the lowest level since 2023. Packer bemoaned ‘negative articles’ about private credit that caused its stock to sink. When it comes to Blue Owl’s business development companies, the firm’s co-founder said…, ‘there’s no emergency here.’”
November 19 – Bloomberg (The Editors): “The growing list of US credit busts, from subprime auto lender Tricolor Holdings to Broadband Telecom Inc., raises a troubling question: If such ‘cockroaches’ proliferate — if many more enterprises collapse under the weight of excessive debt — who will ultimately bear the losses? If your retirement savings are entrusted to a US life insurer, there’s a growing risk it might be you. Regulators must get a better handle on the problem — and soon. Life insurers manage trillions of dollars on behalf of individuals to whom they’ve promised regular income in old age. This financial service should not be complicated: Invest in high-quality assets that will pay off when customers eventually need their money. Low risk, stable returns. Lately, though, large investment firms have transformed the industry.”
November 16 – Financial Times (Lee Harris and Antoine Gara): “A flood of capital from private credit firms is pushing reinsurers into taking on riskier business through more lightly regulated intermediaries, industry bosses told the Financial Times. Private capital firms have been muscling into the $2tn property and casualty sector with direct acquisitions, and by providing reinsurance capital through asset management agreements. ‘We’re seeing private credit, specifically, being much more aggressive — shifting their focus from the life sector, looking more at casualty,’ Kevin O’Donnell, chief executive of RenaissanceRe, said… ‘Because they’re not a regulated reinsurance company, they can have much more leverage and a different investment appetite… It’s really an arbitrage between the restrictions we have in our investments, and the freedom that they have on theirs’.”
November 20 – Bloomberg: “In just over a decade, Apollo Global Management Inc. has reinvented the once-mundane business of life insurance — reeling in cash and generating profits that have inspired competitors to pursue their own variations of the strategy. That’s creating new risks… Many private equity firms are building their own insurance and annuities units, promising to provide income to everyday Americans in old age. Such firms now control almost $700 billion in life insurance assets. But, increasingly, that includes complex and potentially harder-to-sell investments, such as private and structured credit and other deals arranged by their parent companies’ Wall Street affiliates. Some firms are enthusiastically embracing complex moves offshore that let them take on more risk.”
November 19 – Bloomberg (Rene Ismail): “Publicly-traded business development companies can expect growing pressure next year, with payment-in-kind volume predicted to rise as spreads tighten further, according to a Fitch Ratings report… Shares of BDCs, which package private loans into funds and often trade publicly, have declined in recent months as investor anxiety over the quality of their portfolios is rising following recent defaults. Earlier this month, Fitch stamped a ‘deteriorating’ outlook on BDCs, citing prolonged asset quality pressures from the challenging economic backdrop. BDC bonds have also been sliding in recent weeks, which Fitch says is another sign of investors’ heightened focus on portfolio credit performance heading into the new year.”
November 19 – Bloomberg (Rene Ismail): “Publicly-traded business development companies can expect growing pressure next year, with payment-in-kind volume predicted to rise as spreads tighten further, according to a Fitch Ratings report… Shares of BDCs, which package private loans into funds and often trade publicly, have declined in recent months as investor anxiety over the quality of their portfolios is rising following recent defaults. Earlier this month, Fitch stamped a ‘deteriorating’ outlook on BDCs, citing prolonged asset quality pressures from the challenging economic backdrop. BDC bonds have also been sliding in recent weeks, which Fitch says is another sign of investors’ heightened focus on portfolio credit performance heading into the new year.”
November 19 – Bloomberg (James Crombie): “Credit investors short of things to buy are increasingly mining structured debt for yield. Deteriorating collateral and subprime stress are reasons to be fearful as cash piles in. Even after a recent selloff, value is hard to find in plain vanilla corporate bonds, which are undersupplied and overbid. US securitization is meanwhile running at a furious clip, fueled by artificial intelligence. Sales of asset-backed securities hit $340 billion, the highest since Bloomberg News started tracking it in 2014. Collateralized loan obligations are a top pick, viewed by money managers as ‘bulletproof.’ The repackaging of junk loans as bonds with varying risk is going faster than ever.”
November 17 – Financial Times (Kaye Wiggins): “US prosecutors are investigating a group of telecoms companies after BlackRock’s private credit unit HPS Investment Partners said it lent them hundreds of millions of dollars against receivables that appear to be fake. The Department of Justice is examining entities linked to Bankim Brahmbhatt, a low-profile executive behind a clutch of companies that borrowed large sums from one of the biggest names in private credit, according to two people with knowledge... Funds managed by HPS, which BlackRock bought this year, lent more than $400mn to companies connected to Brahmbhatt. The collateral securing these loans included money that the companies linked to Brahmbhatt said they were due to receive from major telecoms groups.”
November 19 – Bloomberg (Hannah Levitt, Aaron Weinman and Claire Ruckin): “For all the talk of a turf war between banks and private credit, JPMorgan… is dominating on the field — with giant checks that only the biggest US bank can write. Time and again, the firm has overwhelmed private credit managers and Wall Street rivals with substantial financing packages to win coveted debt deals. First it led an $8 billion effort for 3G Capital’s acquisition of Skechers. Then it stepped up $17.5 billion to help Warner Bros. Discovery Inc. split itself in two. But the most audacious of all was JPMorgan’s $20 billion check for the acquisition of Electronic Arts… After Silver Lake Management’s Egon Durban called JPMorgan Chief Executive Officer Jamie Dimon, seeking assurance his bank had the conviction to commit the necessary funds, it took just 11 days to iron out the deal. The fee JPMorgan — and the banks that later joined in — commanded for the effort: around $500 million.”
Global Credit and Financial Bubble Watch:
November 18 – New York Times (Alexandra Stevenson): “As one of the world’s most prolific lenders, China has paid out more than a trillion dollars in loans to the developing world to fund roads in Africa, ports in South America and railroads in Central Asia. But the biggest recipient of its financing over the past two decades has been the United States, where Chinese banks have extended $200 billion in financial support to American companies and projects, according to AidData, a research institute at the College of William and Mary in Williamsburg, Va. The money poured into the construction of pipelines, data centers and airport terminals, and it helped to grease the wheels of corporate financing for U.S. companies like Tesla, Amazon, Disney and Boeing.”
November 18 – Bloomberg (Martha Viotti Beck, Matheus Piovesana, and Daniel Carvalho): “On Monday, Daniel Vorcaro announced a last-ditch rescue deal that appeared to save his floundering Brazilian bank. Hours later, he was arrested at a Sao Paulo airport, where authorities say he was trying to flee the country. Banco Master SA will be liquidated after the latest twist in its saga featured a sweeping corruption probe by Brazilian authorities. Chief Executive Officer Vorcaro and five others were arrested amid allegations that executives fabricated credit instruments and sold them to a lender whose own CEO has now been ousted… The rapid chain of events marked a dramatic new turn for Master, a firm once touted as a rising star in Brazilian finance. Its collapse, regulators and industry rivals say, underscores the urgent need for stronger oversight and tougher rules across the banking system. The firm’s liquidation could cost Brazil’s deposit insurance system, known as FGC, as much as 55 billion reais ($10bn) if other smaller banks are also liquidated…”
First Brands Ramifications Watch:
November 17 – Bloomberg (Davide Scigliuzzo, Eliza Ronalds-Hannon, and Irene Garcia Perez): “The trade finance platform Raistone is looking to sell itself after the collapse of its biggest client, auto-parts supplier First Brands Group. Raistone said it is ‘evaluating strategic alternatives’ due to the ‘liquidity strain’ it has faced since the demise of First Brands… Potential bidders were asked to indicate their interest in an outright sale or an equity recapitalization by Oct. 31. It is not clear what has happened since that deadline. Raistone did not immediately respond to a request for comment.”
Trump Administration Watch:
November 21 – Axios (Dave Lawler): “President Volodymyr Zelensky addressed the Ukrainian people on Friday and said President Trump's 28-point peace plan will force Ukraine to choose between ‘losing our dignity’ or risking the loss of U.S. support. The plan would force Ukraine to accept harsh concessions, including the loss of even more territory than Russia currently controls. Zelensky has told the Trump administration he’s prepared to negotiate, but the White House is pushing him to sign within one week. ‘This is one of the most difficult moments in our history,’ Zelensky said… ‘The pressure on Ukraine is now among the heaviest. Ukraine may now face a very difficult choice: the loss of dignity, or the risk of losing a key partner.’ Zelensky warned that Ukraine faces an ‘extremely harsh winter’ if he spurns Trump’s offer. He said U.S. officials ‘expect an answer from us.’”
November 21 – Bloomberg (Erik Wasson): “Marjorie Taylor Greene, a Georgia Republican who was among President Donald Trump’s strongest allies in Congress before their relationship fell apart, will resign from Congress in January. Her last day in the US House will be Jan. 5… Greene was among the Republicans who led the legislative effort to compel the Justice Department to release the files of sex trafficker Jeffrey Epstein. Her efforts led to a public fallout with Trump, who called her a traitor and said that he would support the ‘right person’ to run against her in next year’s midterm elections.”
November 16 – Wall Street Journal (Alex Leary, Tarini Parti and Justin Lahart): “A proposal to give Americans direct payments of $2,000 or more. An antitrust probe into allegations that meatpacking companies are colluding to drive up beef prices. And a new plan to lower tariffs on coffee, fruit and other popular products. President Trump and his advisers are rushing to try to lower prices for U.S. consumers after voters sent a warning shot to Republicans this month over the high cost of living. Following the recent election, Trump’s aides have urged the president to focus on affordability, and they are drawing up plans to attempt to address voters’ frustrations, according to administration officials.”
November 17 – Axios (Ben Berkowitz): “President Trump… promised the government would pay out $2,000 tariff dividend checks starting around mid-2026. Putting a timetable on the checks is a significant step forward versus just suggesting the idea, which Trump has done multiple times this year. But the dividends would require legislation, Treasury Secretary Scott Bessent said…, and it’s not clear if Congress has the appetite. ‘We’re going to be issuing dividends later on, somewhere prior to, you know, probably the middle of next year, a little bit later than that. Thousands of dollars for individuals of moderate income, middle income,’ Trump said… The potential cost of such a tariff dividend could be huge. If the checks are for individual U.S. citizens and not households, even limiting it to those with low and middle incomes could cost well over $200 billion.”
November 19 – Axios (Jeffrey Cane and Avery Lotz): “President Trump repeated his desire to force Federal Reserve chair Jerome Powell out, telling the U.S.-Saudi Investment Forum on Wednesday that ‘I’d love to fire his ass… grossly incompetent’… Trump has previously said he could justify the Fed chair’s removal for cause and that Powell should be ‘sued for spending $4 billion to build a little building,’ in reference to Fed headquarters renovations going over budget… Treasury Secretary Scott Bessent is leading the search for the next Fed chair. The president, however, appeared critical, if teasing, of Bessent’s efforts. ‘The only thing Scott’s blowing it on is the Fed, because the Fed, the rates are too high,’ Trump said. ‘Scott, if you don't get it fixed fast, I’m going to fire your ass.’”
November 17 – Wall Street Journal (Santiago Pérez and Silvina Frydlewsky): “Argentina’s Economy Minister Luis Caputo has all the swagger of the brash Wall Street trader that he once was, first for JPMorgan and then at Deutsche Bank. His co-workers have called him the Lionel Messi of finance. Now Caputo is orchestrating the trade of a lifetime, persuading the U.S. government to go all-in on President Javier Milei just when it seemed his economic overhaul of Argentina was in jeopardy. Caputo and Treasury Secretary Scott Bessent… came up with a $20 billion American rescue plan for Argentina… Backstopping Milei’s austerity measures and foreign-exchange policies with the U.S. government’s help will be a high-wire act for both Bessent and Caputo, along with the Argentine central bank and ministries that he has packed with other former JPMorgan executives. ‘The irony of what’s happening now is that both Bessent and Argentina’s JPMorgan boys are no longer on the side of brokerage trading desks,’ said Arturo Porzecanski, an American University economist who closely tracks Argentina. ‘They are now trying to steer the market forces they always rode.’”
November 18 – Bloomberg (Annmarie Hordern and Josh Wingrove): “President Donald Trump said he thinks he’s identified his choice to be the next chair of the Federal Reserve while asserting people are holding him back from firing the central bank’s current leader, Jerome Powell. ‘I think I already know my choice,’ Trump told reporters… ‘I’d love to get the guy currently in there out right now, but people are holding me back’… “We have some surprising names and we have some standard names that everybody’s talking about… And we may go the standard way. It’s nice to every once in a while go politically correct.’”
November 18 – Reuters (Steve Holland): “U.S. President Donald Trump… said he was speaking with various people about the Federal Reserve chairman’s job and had some unexpected candidates on the list of those who might replace Jerome Powell. ‘We have some surprising names and we have some standard names that everybody’s talking about,’ Trump said…”
November 17 – New York Times (Colby Smith and Stacy Cowley): “Top officials at the Federal Reserve’s Washington headquarters and 12 reserve banks received a short memo on Oct. 29 with an unmistakable message. The way the central bank had long monitored and addressed risks across the financial system was in for a drastic overhaul. The memo… contained a list of directives for Fed examiners and supervisory staff across the country that significantly curtailed how closely they scrutinized lenders. It followed a host of changes made by Michelle W. Bowman, a Fed governor, who since becoming vice chair for supervision at the start of the summer had been providing regulatory relief to banks. One day after the memo was sent, Ms. Bowman announced a 30% cut in staff across her division in Washington. Current and former policymakers and legal experts were already worried that those changes would encourage exactly the kind of risk-taking that could sow the seeds for the next crisis.”
November 19 – Bloomberg (Will Wade): “President Donald Trump plans to roll out a ‘Genesis Mission’ as part of an executive order to boost US artificial intelligence efforts on Monday at the White House… The effort is intended to signal that the Trump administration sees the coming AI race as important as the Manhattan Project or space race, Department of Energy Chief of Staff Carl Coe said… ‘We see the Genesis Mission as equivalent,’ Coe said.”
November 18 – Bloomberg (Maria Clara Cobo and Paola Vega Torre): “President Claudia Sheinbaum again ruled out a US military intervention in Mexico, pushing back on the latest suggestion of unilateral action from President Donald Trump. ‘It won’t happen,’ Sheinbaum said emphatically…, responding to the US leader’s comments a day earlier that he may even deploy ground troops to Mexico to combat drug smuggling. Speaking at the White House…, Trump added that he’s ‘not happy’ with Mexico in wide-ranging comments that also touched on possible US military action against Venezuela and Colombia.”
November 15 – Wall Street Journal (Vera Bergengruen, Kejal Vyas and Shelby Holliday): “France denounced the U.S. military strikes on alleged drug boats as a violation of international law. Canada and the Netherlands have stressed they aren’t involved. Colombia has vowed to cut off intelligence cooperation with Washington. Mexico summoned the U.S. ambassador to complain. Two months into the Trump administration’s military campaign against low-level smugglers in the Caribbean and eastern Pacific, the coalition of partners that has long underpinned U.S. antidrug operations in the region is fraying.”
November 18 – Financial Times (Abigail Hauslohner and Andrew England): “Donald Trump dismissed questions about journalist Jamal Khashoggi’s murder…, as he defended his ‘friend’ Saudi Crown Prince Mohammed bin Salman and touted up to $1tn of investment from the kingdom. Speaking alongside Prince Mohammed in the Oval Office, the US president lashed out after reporters asked him about Khashoggi’s killing by Saudi agents. The questioning ‘embarrass[ed]’ the kingdom’s de facto ruler, Trump said, and was an episode ‘he knew nothing about’. ‘A lot of people didn’t like that gentleman you’re talking about,’ Trump added, referring to Khashoggi, a widely respected Saudi journalist.”
November 15 – Wall Street Journal (Gina Heeb, Josh Dawsey and Rebecca Ballhaus): “Bill Pulte marched into the Oval Office this summer and delivered one of his signature performances. Pulte, who heads the Federal Housing Finance Agency, told the president he had identified leakers who were undermining the administration. He was carrying a ‘Ghostbusters’-style poster that featured pictures of administration officials and outside allies, outlined by red circles with lines through their faces… For many in the West Wing, it was classic Pulte: an attention-grabbing move to burrow into President Trump’s good graces by attacking the president’s perceived enemies. Pulte, a 37-year-old heir to a home-building fortune, has emerged as one of the most polarizing figures inside and outside the Trump administration. Referred to by some as ‘Little Trump,’ his job is to oversee mortgage-finance giants Fannie Mae and Freddie Mac, which back nearly half the mortgages in the country.”
China Trade War Watch:
November 17 – Bloomberg (Anna Edney): “A US congressional commission is ringing alarm bells about China’s growing dominance over America’s drug supply, saying it is putting the country’s health in the hands of an adversarial nation. Roughly one-in-four generic drugs taken by Americans rely on key ingredients from China… The often low-cost staples account for 90% of the medicines used by Americans. Some of the ingredients — found in blood thinners, antibiotics and cancer treatments — are produced only in China.”
November 19 – Reuters (Ella Cao and Lewis Jackson): “China imported no soybeans from the U.S. for a second straight month in October even as total imports surged to a record high on purchases from South America, with buyers aiming to avert supply disruptions amid trade tensions with Washington.”
November 19 – Wall Street Journal (Adrià Calatayud and Joshua Kirby): “The Dutch government handed back control of semiconductor manufacturer Nexperia to its Chinese owner, moving toward resolving a spat that had blocked vital chip supply to the auto industry. Dutch Economic Affairs Minister Vincent Karremans said Wednesday that the decision had been made in consultation with the Netherlands’ European and international partners and followed recent meetings with Chinese authorities.”
Trade War Watch:
November 16 – Financial Times (Aime Williams and Andy Bounds): “Donald Trump’s top trade negotiator has warned the EU that trade remains a ‘flashpoint’ with Washington, as US officials grow frustrated at the bloc’s slow pace in cutting tariffs and regulations. Jamieson Greer, the US trade representative, told the Financial Times that the EU’s duties affecting American exports were still too high despite the deal struck… in July. ‘Trade has always been a flashpoint,’ Greer said. ‘They have many regulations and non-tariff barriers that block our exports and reduce our effective market access over there, while we historically have had very broad access for them… It’s quite unbalanced… We did not solve every problem in our relationship with our joint statement from earlier in the year’…”
November 21 – Bloomberg (Daniel Carvalho, Augusta Saraiva and Dayanne Sousa): “From the minute Donald Trump slapped tariffs on Brazil, President Luiz Inacio Lula da Silva bet the US leader was going all-in on a weak hand. The wager paid off Thursday, when Trump limped away from the battle. In an executive order, Trump exempted dozens of Brazilian food products, including coffee and beef, from the 40% increased tariffs he imposed in an ill-fated attempt to help former President Jair Bolsonaro dodge a coup attempt trial. Together with prior exemptions, the move will leave many of the nation’s major exports free from heightened US duties, a victory…”
Constitution Watch:
November 20 – Axios (Andrew Solender): “House Democratic leadership said… they’ve been in touch with the U.S. Capitol Police and the House sergeant-at-arms to protect a group of lawmakers after President Trump appeared to suggest that their comments were ‘punishable by DEATH!’ Trump considerably ramped up the severity of his rhetoric against Democrats… after a group of military veterans serving in Congress released a video encouraging service members to resist unlawful orders. ‘This is really bad, and Dangerous to our Country. Their words cannot be allowed to stand,’ Trump said… on Truth Social. ‘SEDITIOUS BEHAVIOR FROM TRAITORS!!! LOCK THEM UP???’ In a follow-up post, he added: ‘SEDITIOUS BEHAVIOR, punishable by DEATH!’ ‘We unequivocally condemn Donald Trump's disgusting and dangerous death threats,’ House Minority Leader Hakeem Jeffries (D-N.Y.), Minority Whip Katherine Clark (D-Mass.) and Democratic caucus chair Pete Aguilar (D-Calif.) said…”
November 18 – CNBC (Kevin Breuninger): “President Donald Trump… called for ABC’s broadcast license to be revoked as he angrily lashed out at a reporter from the network who asked why he has not released files on notorious sex offender Jeffrey Epstein, his former friend. ‘I think you are a terrible reporter,’ Trump told ABC News White House correspondent Mary Bruce… ‘People are wise to your hoax,’ the president told the reporter. ‘Your crappy company is one of the perpetrators.’ ‘And I’ll tell you something,’ Trump said. ‘I think the license should be taken away from ABC. Because your news is so fake and so wrong.’ ‘We have a great commissioner… who should look at that,’ he added…”
November 17 – Bloomberg (Zoe Tillman and Erik Larson): “Federal Reserve Governor Lisa Cook offered a detailed rebuttal to mortgage fraud allegations made by President Donald Trump and other US officials, arguing in a letter to Attorney General Pam Bondi that the claims ‘fail on even the most cursory look at the facts.’ Cook’s attorney Abbe Lowell sent a letter… to Bondi and Ed Martin, a senior Justice Department official tapped as a ‘special attorney’ to investigate mortgage fraud… The US Supreme Court is set to hear arguments on Jan. 21 on Cook’s challenge to Trump’s move to fire her.”
U.S./Russia/China/Europe/Iran Watch:
November 19 – Bloomberg (Kati Pohjanpalo and Jordan Robertson): “Russia is waging two wars. The first is the live-fire conflict in Ukraine, the second a more covert affair targeting countries that support the government in Kyiv. The toolkit ranges from state-on-state cyberattacks, disinformation and propaganda, to more visible tactics such as arson, sabotage and airspace incursions. This dual strategy, known as hybrid warfare, marries unambiguous brute force with acts of stealth and subterfuge designed to undermine the security and wellbeing of another nation. As Russian President Vladimir Putin struggles to achieve his strategic goals in Ukraine, his government appears to be stepping up hybrid attacks on Ukrainian allies.”
November 16 – Wall Street Journal (Yaroslav Trofimov): “The new nuclear race has begun. But unlike during the Cold War, the U.S. must prepare for two peer rivals rather than one—at a time when it has lost its clear industrial and economic edge. China, which long possessed just a small nuclear force, is catching up fast, while Russia is developing a variety of new-generation systems aimed at American cities. Russian President Vladimir Putin has already used nuclear saber-rattling to throttle American support for Ukraine. He has deployed nuclear weapons to Belarus and, in recent weeks, tested a nuclear-powered missile and a nuclear-powered submarine drone… While Russia and the U.S. are still abiding by some arms-controls limits, such as the New Start treaty that expires in February, China, unconstrained by any commitments, is quietly but rapidly leaping ahead.”
November 18 – Wall Street Journal (Matthew Luxmoore): “Polish officials accused Russia of being behind an explosion on its rail network on Saturday, saying two Ukrainian men had collaborated with Russian security services to carry out the attack, almost causing a packed commuter train to careen off the tracks. Polish Prime Minister Donald Tusk said the blast and another attempted act of sabotage over the weekend were a major escalation by Moscow, which European officials say is waging a shadow war targeting critical infrastructure and civilian and military facilities across the continent. ‘A certain threshold has been crossed,’ Tusk said…, describing the acts as the most serious security threat for Poland since the onset of Russia’s invasion of Ukraine in 2022. ‘Their goal was bringing about a catastrophe on the train line’.”
November 18 – Bloomberg (Andrea Palasciano and Suzanne Lynch): “The European Union’s top diplomat said that Moscow’s aggression against the bloc, including an explosion that occurred in Poland over the weekend, should be considered terrorism. ‘These sabotage acts they are organizing on our territories in different countries are extremely, extremely serious,’ Kaja Kallas, the high representative for foreign affairs at the European Commission, said… She quoted an earlier statement from NATO Secretary General Mark Rutte in February when he said that hybrid incidents committed by Russia should be called ‘state-sponsored terrorism’.”
China vs. Japan Watch:
November 17 – Bloomberg (Karishma Vaswani): “Don’t listen to the China doves claiming the era of Beijing’s wolf warrior diplomacy is over. All it took was a comment on Taiwan from Japan’s new Prime Minister Sanae Takaichi to resurrect it. The latest spat between the historic rivals was triggered by her remarks on Nov. 7, when she said that if military force were to be used in any Taiwan conflict, it could be considered a ‘survival-threatening situation’ for Japan. That legal classification provides justification for Tokyo to deploy its military, consistent with its long-standing foreign policy. Her statement… echoes the sentiments of her political mentor, the late Prime Minister Shinzo Abe. In reaction, China’s consul-general in Osaka, Xue Jian, wrote on X: ‘If you go sticking that filthy neck where it doesn’t belong, it’s gonna get sliced right off. You ready for that?’… Then prominent commentator and former editor of the Global Times, Hu Xijin, called Takaichi ‘an evil witch.’ On Nov. 14, China’s foreign ministry warned that ‘anyone who attempts to challenge the bottom line of the Chinese people will inevitably face a head-on blow from China and will be utterly defeated before the Great Wall of Steel built by the flesh and blood of more than 1.4 billion Chinese people!’”
November 17 – Bloomberg: “Recent comments by Japan’s leader about the possibility of military action around Taiwan show Japan is returning to the path of militarism, Chinese state media said in a commentary, adding that any ‘militarist fantasies’ would blow up in Tokyo’s face. Prime Minister Sanae Takaichi’s statement… ‘sound a stark warning that Japan’s militarist demons are being summoned anew,’ the commentary said. This is ‘the latest symptom of a political project aimed at dragging Japan back toward a dangerous trajectory,’ it added, accusing her of using Taiwan ‘as a pretext to justify Japan’s strategic breakout.’”
November 15 – Bloomberg: “China warned students planning to study in Japan of heightened risks for Chinese citizens in the country as a diplomatic spat sparked by Prime Minister Sanae Takaichi’s comments on Taiwan showed no signs of easing. Chinese students already in Japan and those planning to go there should closely monitor the local security situation, state broadcaster CCTV reported…”
November 16 – Bloomberg (Sakura Murakami and Erica Yokoyama): “China’s recent warning to travelers to avoid Japan and for students already there to exercise caution is unacceptable, a Japanese government spokesperson said... ‘These announcements that hinder bilateral exchanges diverge from the broader direction agreed by our respective leaders to build constructive and stable ties in line with a strategic and mutually beneficial relationship,’ Japan’s Chief Cabinet Secretary Minoru Kihara said... ‘It is not something we can accept.’”
November 18 – Reuters (Liz Lee and John Geddie): “Japan has warned its citizens in China to step up safety precautions and avoid crowded places, amid a deepening dispute between Asia's two largest economies over Japanese Prime Minister Sanae Takaichi's comments on Taiwan.”
November 15 – Financial Times (Leo Lewis and Joe Leahy): “China conducted a coastguard patrol near a group of disputed islands administered by Japan on Sunday, adding further heat to a blazing row between the two countries. Chinese state media has also stepped up warnings to Tokyo that Beijing has prepared ‘substantial countermeasures’ in the dispute, which erupted from unusually blunt comments on Taiwan made earlier this month by Japan’s hawkish new Prime Minister Sanae Takaichi.”
New World Order Watch:
November 19 – Bloomberg (S'thembile Cele and Ntando Thukwana): “The US formally warned South Africa against pushing for a joint statement at this weekend’s Group of 20 summit in Johannesburg that the Trump administration is boycotting, according to a document seen by Bloomberg. The diplomatic standoff is particularly awkward given it’s the first time the continent is hosting a G-20 and South African President Cyril Ramaphosa is passing the baton to US President Donald Trump at the end of this year.”
November 19 – Bloomberg (Danny Lee): “The changes to global trade and supply chains driven by factors including technology and geopolitical risks are likely to persist over the long term, according to FedEx Corp. Chief Executive Officer Raj Subramaniam. ‘There’s a new equilibrium state being formed in this new supply chain pattern and they’re much more regional in nature,’ he said… ‘The industrial economy is going to take a little longer to change. But once it changes, it’s difficult to go back’.”
Ukraine War Watch:
November 20 – Financial Times (Christopher Miller, Fabrice Deprez and Steff Chávez): “The US has formally handed Ukraine a sweeping peace plan drawn up with Moscow to end Russia’s war in the country, President Volodymyr Zelenskyy’s office said… A draft of the 28-point proposal, developed by US and Russian negotiators, envisages major concessions by Kyiv and includes points that cross long-standing red lines for Ukraine. A White House official said… President Donald Trump had endorsed the plan. Zelenskyy, who cannot dismiss the proposal out of hand given Ukraine’s reliance on the US for critical political and military support, has faced increased pressure to get on board with Washington’s initiatives to end the war. According to people with knowledge…, it would require Ukraine to cede land under its control in the eastern Donbas region, cut the size of its armed forces by half and abandon vital categories of weaponry.”
November 19 – Associated Press (Illia Novikov): “A large Russian drone and missile barrage on Ukraine’s western city of Ternopil killed at least 25 people, including three children, authorities said Wednesday… At least 73 people, including 15 children, were injured, emergency services said. At least 19 among those killed were burned alive, including three children aged 5, 7 and 16, Klymenko said. Two dozen people are still unaccounted for…”
Taiwan Watch:
November 16 – Reuters (Yimou Lee): “Taiwan will begin distributing millions of civil defence handbooks to households across the island this week, in an unprecedented effort to prepare residents for potential emergencies, including the possibility of a Chinese attack. The handbook, unveiled in September, includes for the first time instructions on what to do if citizens encounter enemy soldiers and stresses that any claims of Taiwan’s surrender should be considered false. It also provides guidance on locating bomb shelters and preparing emergency kits.”
November 20 – Wall Street Journal (Editorial Board): “One of the biggest questions in global affairs is whether President Trump is chasing a grand bargain with Beijing’s Xi Jinping—and at what cost to the United States. So it’s good news that the Administration is showing that America won’t be bullied from defending its Pacific interests, with an arms sale to our friends in Taiwan. The Defense Security Cooperation Agency has notified Congress of a $330 million potential arms sale for the island democracy. Items include spare parts for fighter jets and transport aircraft, as well as U.S. technical and logistics support. But more important than the details is that this marks the Administration’s first sale to Taiwan in Mr. Trump’s second term.”
November 17 – Reuters: “China defence ministry said… it has lodged representations with the United States over its arms sale to Taiwan, vowing to take ‘all necessary’ measures to defend national sovereignty and territorial integrity. ‘We urge the U.S. side to immediately stop its egregious practice of arming Taiwan and avoid undermining the development of relations between the two countries and militaries,’ defence ministry spokesperson Zhang Xiaogang said…”
November 19 – Bloomberg (Alastair Gale): “The US has Japan’s back in its dispute with China over remarks made by Prime Minister Sanae Takaichi about Taiwan, US Ambassador to Japan George Glass said…, adding that some of the reaction from Beijing has been ‘outrageous.’ ‘This is a classic case of Chinese economic coercion, and I just want to say directly from the president and from myself and from the embassy for the Prime Minister, we have her back,’ Glass said after a meeting with Japanese Foreign Minister Toshimitsu Motegi. ‘While Beijing appears intent on fanning the flames of discord, the US-Japan alliance is focused on ensuring that peace and prosper spirit thrive in the region’ Glass said.”
November 19 – Wall Street Journal (Lingling Wei): “Mao Zedong once said that China must wield both the pen and the gun against its adversaries. It is a strategy China is now intensifying for Taiwan. With its so-called pen, China’s state television is preparing the domestic Chinese population for a new phase of pressure against Taiwan. Its prime-time slot is filled with a new historical drama, ‘The Silent Honor,’ which lionizes Communist Party agents operating in Taiwan after the Nationalists fled to the island in 1949 following their loss of the civil war to Mao’s forces. The series frames the agents’ espionage—and eventual execution—as martyrdom for the cause of ‘unification.’ In a parallel move suggesting a top-down mandate to reorient cultural output toward national struggle, state-owned drama troupes are receiving approval only for war-themed plays, said people briefed on the matter, while other genres are being rejected. This domestic messaging is an intensification of an already amped-up atmosphere of Taiwan reunification rhetoric in China. And it is being matched by the gun.”
AI Bubble/Arms Race Watch:
November 18 – Reuters (Sam Tabahriti): “Alphabet Chief Executive Sundar Pichai said no company would be unscathed if the artificial intelligence boom collapses, as soaring valuations and heavy investment in the sector fuel concerns of a bubble. Pichai said… the current wave of AI investment was an ‘extraordinary moment’ but acknowledged ‘elements of irrationality’ in the market, echoing warnings of ‘irrational exuberance’ during the dotcom era… Asked about how Google would cope with a potential bursting of a bubble, Pichai said he thought it could weather the storm but added: ‘I think no company is going to be immune, including us.’”
November 17 – Financial Times (Bryce Elder): “It’s too soon to be talking about the Curse of OpenAI, but we’re going to anyway. Since September 10, when Oracle announced a $300bn deal with the chatbot maker, its stock has shed $315bn* in market value: OK, yes, it’s a gross simplification to just look at market cap. But equivalents to Oracle shares are little changed over the same period (Nasdaq Composite, Microsoft, Dow Jones US Software Index), so the $60bn loss figure is not entirely wrong. Oracle’s ‘astonishing quarter’ really has cost it nearly as much as one General Motors, or two Kraft Heinz. Investor unease stems from Big Red betting a debt-financed data farm on OpenAI…”
November 19 – Financial Times (Louis Ashworth): “OpenAI is committed to spending about $1.4 trillion on data centres over the next decade or so. It accounts for about two-thirds of unfulfilled contracts at Oracle, which is valued at about $630bn, and two-fifths of unfulfilled contracts at CoreWeave, which is valued around $36bn. It has around $375bn of unfulfilled contracts with Microsoft… Its latest funding round implies OpenAI has a market cap of about $500bn, which would make it a top-twenty S&P 500 company. Recent reporting by Reuters suggests the company may aim to IPO at a valuation of about $1 trillion in the coming years. It is at the centre of an extraordinarily-complicated mesh of financial agreements…”
November 19 – Yahoo Finance (Diana Olick): “Nvidia’s latest AI partnership with Microsoft and Anthropic underscores the chipmaker’s torrid pace of dealmaking this year, even as circular artificial intelligence agreements have set off alarm bells among investors. Nvidia invested $23.7 billion in firms in the space through 59 deals between the start of 2025 and Monday… For the entirety of 2024, Nvidia inked a total of 54 deals worth $22.8 billion. Nvidia’s investments in AI firms — totaling roughly $53 billion and amounting to 170 deals between 2020 and 2025 — span the entire AI ecosystem, ranging from large language model developers such as OpenAI and Cohere to ‘neoclouds’ like Lambda and CoreWeave, which specialize in AI services and compete with the chipmaker’s Big Tech customers.”
November 19 – CNBC (Ari Levy and Kif Leswing): “Two months ago Nvidia CEO Jensen Huang and OpenAI CEO Sam Altman stood side by side in San Jose, California, to announce a historic agreement between the two leaders in artificial intelligence. Nvidia would invest $100 billion over a number of years, starting in 2026, as OpenAI’s AI supercomputing facilities come online… But in Nvidia’s quarterly financial report…, the chipmaker reminded investors that there’s a big difference between an announcement and a contract. ‘There is no assurance that we will enter into definitive agreements with respect to the OpenAI opportunity or other potential investments, or that any investment will be completed on expected terms,’ Nvidia said…”
November 18 – Wall Street Journal (Jennifer Hiller): “Mike Alfred had become convinced by 2021 that he was on to a great idea: building huge data centers for bitcoin mining in some of the loneliest spots in Texas. The investor found kindred spirits at a bitcoin-focused data-center developer, now called IREN, and joined its board. They were among the few who saw locations like Childress, a tiny city in the Texas Panhandle with a population of 5,700, as ripe for massive infrastructure investment. By the following year, the vision appeared flawed. During the crypto winter that culminated in the collapse of Sam Bankman-Fried’s FTX exchange, IREN shares tumbled toward $1. Now, the company’s fortunes have reversed—and Microsoft is coming to Childress. Earlier this month, the software giant signed a $9.7 billion cloud-services contract with IREN to expand its rural data-center site to process Microsoft’s workloads for artificial intelligence.”
Bursting Crypto Bubble Watch:
November 19 – Bloomberg (David Pan): “The Bitcoin bounce never came — and now leveraged traders are trapped. After peaking around $126,000 in early October, Bitcoin has dropped nearly 30% — breaking through key thresholds, spooking ETF investors, and rattling holders big and small. One group in particular remains exposed: traders who bet on a rebound — and now find themselves underwater while paying for it. That pressure is building, with the world’s largest cryptocurrency sinking back toward $89,500 in Wednesday trading... On offshore exchanges like Binance, open interest in Bitcoin perpetual futures — the most popular venue for leveraged speculation — surged by more than 36,000 tokens last week, equivalent to over $3.3 billion. It was the biggest weekly jump since April…”
November 19 – Reuters (Manya Saini and Niket Nishant): “Investors pulled roughly $523 million from BlackRock's flagship iShares Bitcoin Trust on Tuesday…, marking the fund’s largest single-day withdrawal since its launch… IBIT, the largest spot bitcoin ETF, has attracted strong investor demand since its launch in January 2024 and has been central to the crypto ETF boom… IBIT, which has over $73 billion in assets, has fallen 19% quarter-to-date.”
November 21 – Bloomberg (Tasos Vossos and Judy Lagrou): “The plunging value of Bitcoin is piling pressure on the securities Strategy Inc. has been issuing in bulk to buy the asset, raising questions about the financing model of the world’s largest crypto treasury firm. Prices across the several preferred stock series sold by the… firm have been falling this week, in line with a slump in Bitcoin’s value. A $1.2 billion 10% issue that was priced at 85 cents on the dollar in June is now down to 66 cents, pushing up the yield to 15%...”
November 20 – Bloomberg (Judy Lagrou): “Michael Saylor’s Strategy Inc. is among the most exposed to the crypto slump — and now faces the real risk of being dropped from the benchmark indices that have underpinned its presence in mainstream portfolios. In a note this week, analysts at JPMorgan… warned that Strategy could lose its place in the likes of MSCI USA and Nasdaq 100. As much as $2.8 billion could exit if MSCI moves ahead — and billions more if other index providers follow suit.”
November 18 – Wall Street Journal (Vicky Ge Huang and Caitlin Ostroff): “The rally in crypto prices this year was boosted by a large heap of debt, with traders using leverage to amplify their gains. Now, after a punishing selloff in the past two weeks, the dangers of those bets are becoming apparent. Investors have never had more ways to place complex wagers on crypto. In some cases, people can put down $1 of their own money to gain exposure to $100 of bitcoin. It is a strategy that can produce windfall profits—when the market breaks the borrower’s way. If it goes in the wrong direction, traders can be on the hook for big losses and can see their holdings liquidated if they don’t post sufficient funds.”
November 16 – Yahoo Finance (Brian Sozzi): “I didn’t expect the hardcore crypto bulls to roll up to Yahoo Finance Invest this week and say they are terrified about the sharp pullback in prices… Eric Trump, executive vice president, The Trump Organization: ‘I laugh honestly [at questions on the recent pullback]. Like, I literally laugh because it’s almost like not a serious question. Bitcoin exactly two years ago today was at $36,500. And what are we sitting at? You know, $102,000, $103,000, $105,000. We’re dancing in that region. It was well over $120,000. So you had what, almost a 200% return in a two-year period of time. And then people talk about the volatility of bitcoin. Hey, I’ll take that volatility. Give me more volatility if I can get more return. And I think that’s how crypto people are wired. If you can’t handle volatility, stay out of cryptocurrency and don’t bother. But you know, go into Treasurys where you’re going to have zero volatility and you’re going to click away at you know 3% returns… Embrace volatility. Embrace the future’… Michael Saylor, executive chairman, Strategy: ‘We’re in the digital gold rush, and 2035 is the .99 year. That means that 99% of all bitcoin will have been mined in the year 2035. If you want bitcoin, you need to get it between now and then. Because the last 1% of bitcoin comes out over 100 years. There’s no doubt in my mind, bitcoin will be a larger asset class than gold by the year 2035.’”
November 17 – Bloomberg (Judy Lagrou): “Michael Saylor doubled down on the digital-asset treasury model that he pioneered during last week’s crypto market rout. Strategy Inc. revealed it bought $835.6 million in Bitcoin in the seven days ended Sunday, the largest purchase of the original cryptocurrency by the firm since July. That brought its total holdings to 649,870 tokens worth roughly $61.7 billion… The company appeared to finance the majority of the purchases with the proceeds of an euro-denominated preferred offering that closed last week.”
November 17 – Financial Times (George Steer and Jill R Shah): “More than $1tn has been wiped from the cryptocurrency market in the past six weeks as concerns about lofty tech valuations and the path of US interest rates have fuelled a sell-off in speculative assets. The total market value of more than 18,000 coins tracked by data provider CoinGecko has tumbled 25% since a market peak on October 6, wiping about $1.2tn from their combined capitalisation. The price of bitcoin has dropped about 28% over the same period to $91,700… Losses for traders in high-octane leveraged bets over the past month have accelerated the pace of the selling, analysts say.”
November 17 – Bloomberg (Sidhartha Shukla): “The crypto market selloff shows no signs of abating, and some of the riskiest tokens are bearing the brunt of it. The MarketVector Digital Assets 100 Small-Cap Index, which tracks the 50 smallest digital assets in a basket of 100, fell to its lowest level since November 2020 on Sunday before paring some losses… So-called altcoins, a barometer of risk appetite in the most speculative corners of crypto, have trailed their larger counterparts by a wide margin since early 2024.”
Bubble and Mania Watch:
November 18 – Bloomberg (Aisha S Gani): “Klarna Group Plc reported record revenue that beat estimates for its third quarter, while setting aside more provisions for credit losses, in its first set of earnings since going public. The… payments firm generated $903 million in revenue for the three months through September, up 26% on a year ago… Still, Klarna posted a net loss of $95 million, as the firm set aside more money for potentially souring loans. The company said provisions represented 0.72% of gross merchandise volume, up from 0.44% a year ago. Provisions for loan losses came in at $235 million… Klarna shares plunged as much as 10% in early trading in New York, the biggest drop since its debut in September.”
November 19 – Wall Street Journal (Jessica Flint): “San Francisco is back after pandemic-related struggles—and growing up. Affluent young families demanding space have elevated the 94127 ZIP Code, which is anchored by the walkable West Portal village center and encompasses desirable residential neighborhoods such as St. Francis Wood. This west side pocket reliably offers a rare San Francisco luxury: detached single-family homes with yards. The suburbia-in-the-city lifestyle has recently propelled the ZIP Code to rival historically more expensive city enclaves. In October, its $2.5 million median listing price was second only to the $2.7 million median in premiere address Pacific Heights…”
November 19 – Bloomberg (Maxwell Adler): “A surge in artificial intelligence stock prices has boosted California’s tax collections by about $11 billion, yet the state’s deficit is still on track to swell to about $18 billion next fiscal year, officials said. The state’s Legislative Analyst’s Office said… that despite sluggish job growth and flat consumer spending, the state’s general-fund revenue has climbed well above expectations as a run-up in AI-related stocks delivered outsized capital gains to California’s wealthiest.”
November 20 – Bloomberg (Daniel Cancel and Anna J Kaiser): “Banco Master SA, the failed Brazilian bank at the center of a swirling financial scandal, made waves of a different sort last year, when it paid record rent for the last available office space in Miami’s most exclusive skyscraper. Now, instead of moving in, Master Chief Executive Officer Daniel Vorcaro is in custody after local authorities said he was trying to flee Brazil, where the central bank ordered that his company be liquidated. Had things worked out differently, Vorcaro would have been rubbing elbows with executives from Citadel Securities, Microsoft Corp. and Thoma Bravo — fellow tenants at 830 Brickell Plaza in Miami’s financial district.”
Inflation Watch:
November 17 – CBS (Mary Cunningham): “A growing share of lower-income Americans are struggling to get by financially as their wages fail to keep up with inflation, according to a recent analysis. Roughly 29% of lower-income households are living paycheck to paycheck, up slightly from 2024 and from 27.1% in 2023, data from the Bank of America Institute shows. The financial firm defines that as spending more than 95% of household income on necessities such as housing, gasoline, groceries, utility bills and internet service. In 2025, nearly a quarter of all U.S. households lived paycheck to paycheck, Bank of America estimates.”
November 14 – Associated Press (Marc Levy): “The forecasts are eye-popping: utilities saying they’ll need two or three times more electricity within a few years to power massive new data centers that are feeding a fast-growing AI economy. But the challenges — some say the impossibility — of building new power plants to meet that demand so quickly has set off alarm bells for lawmakers, policymakers and regulators who wonder if those utility forecasts can be trusted. One burning question is whether the forecasts are based on data center projects that may never get built — eliciting concern that regular ratepayers could be stuck with the bill to build unnecessary power plants and grid infrastructure at a cost of billions of dollars.”
November 14 – Wall Street Journal (Konrad Putzier): “Sharp price increases in coffee, beef, bananas and other household items over the past year have fueled widespread frustration with the rising cost of living. The Trump administration’s efforts to walk back tariffs on these and other goods could ease the pressure, economists say. Average retail prices for ground roast coffee are up more than 40% in the past year as of September… Average retail prices for ground beef and bananas have increased by 11.5% and 8.6% since September 2024—well ahead of the overall inflation rate of about 3%.”
November 14 – Financial Times (Susannah Savage): “If there is one consumer product whose prices Donald Trump should be attuned to, it is steak. In the US, the average price of a pound of ground beef reached a record $6.32 in August — up 13% in a year — while uncooked steaks averaged $12.22 per pound, an 11% rise. Steakhouses have lifted menu prices, trimmed portions or both. In Britain, beef prices have climbed nearly 25% over the past year, making it one of five staples — along with butter, milk, chocolate and coffee — that together accounted for roughly 40% of the increase in food prices…”
November 19 – Bloomberg (Paulina Cachero): “Skyrocketing insurance costs are threatening New York City’s affordable housing stock. The landlords who own more than 450,000 of the city’s rent-stabilized apartments saw insurance expenses grow 150% from 2019 to 2025, far outpacing every other major cost, according to… New York University’s Furman Center. The rapid rise in insurance premiums is just one of the pressures on housing in New York, part of a broader affordability crisis that helped Zohran Mamdani win the city’s highest office earlier this month.”
Federal Reserve Watch:
November 19 – New York Times (Colby Smith): “Many officials at the Federal Reserve did not think the central bank should lower interest rates in December when they voted last month for a second cut in a row, according to minutes from October’s meeting. The record of the latest gathering…, highlighted a divide that has only deepened since officials opted for a quarter-point cut that brought interest rates down to a range of 3.75% to 4%... ‘In discussing the near-term course of monetary policy, participants expressed strongly differing views about what policy decision would most likely be appropriate at the committee’s December meeting,’ the minutes said.”
November 20 – Bloomberg (Jonnelle Marte): “Federal Reserve Bank of Cleveland President Beth Hammack said lowering interest rates to support the labor market could extend the period of above-target inflation and increase financial stability risks. Recent stock market gains and easy credit conditions add to the danger by encouraging investors to take more risk, Hammack said... ‘Lowering interest rates to support the labor market risks prolonging this period of elevated inflation, and it could also encourage risk-taking in financial markets,’ Hammack said... ‘This means that whenever the next downturn comes, it could be larger than it otherwise would have been, with a larger impact on the economy.’”
November 21 – CNBC (Jeff Cox): “New York Federal Reserve President John Williams said… he expects the central bank can lower its key interest rate from here as labor market weakness poses a bigger economic threat than higher inflation. With divisions in the central bank running high over the future of rates, Williams took the side of the doves who still see policy as a bit restrictive when it comes to economic growth. ‘I view monetary policy as being modestly restrictive, although somewhat less so than before our recent actions,’ he said… ‘Therefore, I still see room for a further adjustment in the near term to the target range for the federal funds rate to move the stance of policy closer to the range of neutral, thereby maintaining the balance between the achievement of our two goals’.”
November 20 – Bloomberg (Katanga Johnson): “Federal Reserve Governor Lisa Cook said officials should monitor how unexpected losses in private credit may spread to the broader US financial system due to the ‘increased complexity and the interconnections’ with leveraged firms. Cook said… she is focused on what could be learned from increased usage of payment-in-kind arrangements as seen in recent bankruptcies. ‘The likelihood of observing additional cases like those recently in the news increases when size of exposure and level of complexity in these arrangements are not transparent, when a sector experiences periods of rapid growth, and when these arrangements have not been through a full credit cycle,’ Cook said…”
November 17 – Wall Street Journal (Matt Grossman): “Federal Reserve Gov. Philip Jefferson said… the Fed should move cautiously with any further rate cuts to avoid undermining its anti-inflation efforts. After two quarter-point rate reductions so far in 2025, the Fed’s policy stance is ‘still somewhat restrictive, but we have moved it closer to its neutral level that neither restricts nor stimulates the economy,’ Jefferson… said… ‘The evolving balance of risks underscores the need to proceed slowly as we approach the neutral rate,’ he added.”
November 20 – Bloomberg (Enda Curran): “Add one more to the number of Federal Reserve officials signaling fresh discomfort over inflation. Fed Governor Michael Barr… said the US central bank needs to proceed with caution in considering additional interest-rate cuts. ‘I am concerned that we’re seeing inflation still at around 3% and our target is 2%, and we’re committed to getting to that 2% target,’ Barr said. ‘So we need to be careful and cautious now about monetary policy, because we want to make sure that we’re achieving both sides of our mandate.’”
November 17 – Reuters (Howard Schneider): “The data available during the recent U.S. government shutdown shows the job market near stall speed, with state unemployment claims rising slightly, layoff numbers increasing, and no evidence of building wage pressures, facts that warrant another quarter-percentage-point interest rate cut when the U.S. central bank meets next month, Federal Reserve Governor Christopher Waller said… ‘The labor market is still weak and near stall speed,’ Waller said… Meanwhile, inflation, once the likely temporary impact of tariffs is excluded, ‘is relatively close’ to the Fed's 2% target, Waller said… ‘I am not worried about inflation accelerating or inflation expectations rising significantly… My focus is on the labor market, and after months of weakening, it is unlikely that the September jobs report later this week or any other data in the next few weeks would change my view that another cut is in order’…”
November 15 – Axios (Courtenay Brown): “Former Federal Reserve governor Adriana Kugler was referred for investigation earlier this year for allegedly breaking the central bank's stock trading rules, per new financial disclosures… The documents provide a backdrop for Kugler's surprise resignation in August… Kugler, appointed by former President Biden in 2023, was the subject of an ethics probe, according to annual disclosures published by the U.S. Office of Government Ethics.”
November 19 – Reuters (Michael S. Derby): “Federal Reserve Governor Stephen Miran said… easing financial firms’ regulatory burden could allow the U.S. central bank to shrink the size of its balance sheet again in the future. ‘As we make more progress peeling back regulations, I expect the optimal level of reserves may drop below where it is now, at least relative to GDP or the size of the banking system,’ Miran said… Before shrinking Fed holdings further, ‘we first have to get the regulations right and ensure that bank balance sheets are flexible enough for an environment with a smaller Federal Reserve footprint’.”
U.S. Economic Bubble Watch:
November 20 – CNBC (Jeff Cox): “The U.S. economy added substantially more jobs than expected in September, according to a long-awaited report… Nonfarm payrolls increased by 119,000 in the month, up from the 4,000 jobs lost in August following a downward revision. The… consensus estimate for September was 50,000. The July total also was revised down to 72,000, a decrease of 7,000 from the prior release. In addition…, the unemployment rate edged higher to 4.4%, the highest it’s been since October 2021. Average hourly earnings increased 0.2% for the month and 3.8% from a year ago, compared to respective forecasts for 0.3% and 3.7%.”
November 17 – Wall Street Journal (Editorial Board): “Corporate CEOs are keeping their heads down these days, lest they get chopped off by the Trump Administration. So last week’s remarks by Ford Motor CEO Jim Farley deserve credit for candor, as well as for the public service of telling politicians a hard truth about the American labor force. Mr. Farley told a podcast… he can’t find enough skilled mechanics to run his auto plants. Specifically, Ford can’t fill 5,000 mechanic jobs that pay $120,000 a year. ‘We are in trouble in our country. We are not talking about this enough,’ Mr. Farley said. ‘We have over a million openings in critical jobs, emergency services, trucking, factory workers, plumbers, electricians and tradesmen.’ He said Ford is struggling to hire mechanics at salaries that Ivy League grads might envy. ‘A bay with a lift and tools and no one to work in it—are you kidding me? Nope,’ Mr. Farley lamented. ‘We do not have trade schools’ in this country.”
November 18 – Bloomberg (Jarrell Dillard): “US companies shed 2,500 jobs per week on average in the four weeks ended Nov. 1, according to data released… by ADP Research. The figures suggest the labor market lost momentum in late October, though the pace of employment losses appeared to slow heading into November.”
November 18 – Axios (Emily Peck): “The rolling uncertainty of 2025 is giving the country’s smallest businesses the biggest headaches. Small companies employ nearly half of all U.S. workers, and are an engine of job growth for the economy. Weakness in the small business sector ‘is a concern when you think of the U.S. labor force in its entirety,’ ADP chief economist Nela Richardson told reporters... Small- and medium-sized firms both shed jobs in October, per ADP's most recent report; larger companies gained workers. A few things are happening here. For starters, small businesses are less able to ride the tariff roller coaster… Small firms are more credit-constrained — especially compared to the biggest firms.”
November 19 – CNBC (Diana Olick): “Mortgage rates rose for the third consecutive week, causing demand from both current homeowners and potential homebuyers to drop… Applications for a mortgage to purchase a home fell 2% for the week and were 26% higher than the same week one year ago. Purchase demand has hovered around the same level for several months…”
November 20 – Bloomberg (Michael Sasso): “Sales of previously owned homes in the US rose in October to the fastest pace in eight months, as buyers took advantage of lower mortgage rates and gained the upper hand over sellers in some markets. Contract closings climbed 1.2% to an annual rate of 4.1 million last month… Economists… expected a rate of 4.08 million. The median sales price gained 2.1% from a year ago to $415,200, extending a run of year-over-year price increases dating back to mid-2023. The uptick in October sales… was the second straight and points to a housing market showing some signs of life…”
November 17 – Yahoo Finance (Claire Boston): “Home values are falling for more than half of the nation, the biggest share in more than a decade, when the US was still struggling to claw out of the Great Recession. As of October, 53% of homes in the country had lost value in the past year, according to Zillow... Nationally, home price appreciation has been roughly flat, but that figure masks large regional disparities. Home prices are falling in much of the Southeast and parts of the West, while they’re rising in many cities in the Midwest and Northeast… More than 80% of homes in the Florida cities of Jacksonville, Orlando, and Tampa have also lost value, along with 87% in Dallas and 86% in San Antonio.”
November 19 – Associated Press (Paul Wiseman): “The U.S. trade deficit fell by nearly 24% in August as President Donald Trump’s sweeping global tariffs pushed imports lower… The gap between what the United States buys from other countries and what it sells them fell to $59.6 billion in August, from $78.2 billion in July. Imports of goods and services dropped 5% to $340.4 billion in August from July when U.S. companies were stocking up on foreign products before Trump finalized taxes on products from almost every country on earth. Those levies went into effect Aug. 7. U.S. exports blipped up 0.1% in August to $280.8 billion.”
November 16 – Financial Times (Andrew Jack): “American universities have suffered one of the sharpest ever declines in foreign enrolments in the face of tough policies from President Donald Trump, with the number of new international students falling 17% this year. A survey of 825 US higher education institutions showed 57% reported falling new enrolments by foreign students… The results raise concerns over the impact on universities of declining tuition revenue, along with the less tangible effect that having fewer foreign students will have on innovation and economic growth.”
China Watch:
November 17 – Bloomberg: “China’s broad fiscal spending slumped in October by the most since at least 2021, crippling a key driver of investment and economic growth. The combined expenditure in China’s two main budgets — the general public account and the government-managed fund book — tumbled 19% in October from a year earlier to 2.37 trillion yuan ($334bn)… The plunge reflects an evolution of government policies and underlines waning fiscal support for the world’s second-largest economy, which lost steam across the board last month.”
November 19 – Bloomberg: “China is considering new measures to turn around its struggling property market, as concerns mount that a further weakening of the sector will threaten to destabilize its financial system, according to people familiar… Policymakers including the housing ministry are considering a slew of options, such as providing new homebuyers mortgage subsidies for the first time nationwide… Other measures being floated include raising income tax rebates for mortgage borrowers and lowering home transaction costs…”
November 17 – Bloomberg (Trista Xinyi Luo): “Creditors owed about $150 billion by defaulted Chinese developers are finally getting a fuller, though by no means complete, picture of what small part of that total they may claw back. The latest example is Country Garden Holdings Co., one of the biggest casualties of China’s real estate crisis… It unveiled more details… on its restructuring plan including a proposal to issue as much as $13 billion of mandatory convertible bonds. The details suggest that the various groups of offshore creditors could recover anywhere in the range of 10% to 24% of the $14.1 billion of debt they held…”
November 17 – Bloomberg (Apple Ka Ying Li, Pearl Liu, and Kari Soo Lindberg): “Hong Kong bankers and regulators are signaling growing concern over the city’s deepest real estate downturn since the Asian financial crisis. In recent months, the de facto central bank here has intensified scrutiny of lenders’ decisions on distressed loans. It has called banks more frequently to gauge their willingness to extend credit lines to even smaller developers. And bankers are increasingly reassessing the lofty valuations assigned to collateral that backs hundreds of billions of dollars of property loans.”
Europe Watch:
November 17 – Wall Street Journal (Paul Hannon): “Threats to the stability of the eurozone’s financial system remain ‘elevated’ despite a series of agreements between the U.S. and its trading partners, European Central Bank Vice President Luis de Guindos said... ‘The potential for policy shocks to disrupt the international order poses significant risks of geoeconomic and regulatory fragmentation across the globe, while ongoing geopolitical tensions make more frequent and impactful adverse tail events increasingly likely,’ he said. De Guindos said the eurozone’s financial system could be weakened by ‘disorderly currency swings’ with their origins in U.S. markets.”
November 19 – Bloomberg (Irina Anghel): “House prices in Kensington and Chelsea fell by almost £160,000 ($210,000) in the year to September, as the capital’s housing market reels from expected tax hikes… The Office for National Statistics said… prices of sold homes in the largely-affluent borough, known as K&C, dropped 11.3%, alongside a 14.4% plunge in Westminster. House prices in the two boroughs combined are above £1 million on average. Across London as a whole, home values fell by more than £10,000 ($13,100) in the year to September… A typical home in the capital is now worth £556,000, down 1.8%.”
Japan Watch:
November 21 – Wall Street Journal (Megumi Fujikawa): “Japan’s cabinet has approved $135 billion of stimulus to help households cope with rising living costs and boost economic growth, firing off the first fiscal salvo under new Prime Minister Sanae Takaichi. The Takaichi administration… signed off on the package totaling 21.3 trillion yen, equivalent to $135.27 billion. At the heart of the proposal are measures to support households under financial strain, a key issue for Japanese voters. The new government, which took power last month, has pledged to tackle those issues.”
November 18 – Financial Times (Leo Lewis and Ian Smith): “Japan’s long-term borrowing costs have surged to their highest in decades, in an intensifying ‘Takaichi trade’ that the new administration will unveil a much larger fiscal spending package than originally expected. Yields on the benchmark 10-year bonds, which move inversely to price, climbed as much as 0.04 percentage points to 1.78% on Wednesday — the highest level since June 2008 in the global financial crisis… The sell-off extended to longer-dated notes. Yields on 30-year JGBs rose to a record intraday high of 3.35%. Driving the rise in JGB yields, said traders, were signs that the government of Prime Minister Sanae Takaichi was preparing a huge supplementary budget of at least ¥25tn ($161bn) as she seeks to make good on pledges to boost the economy and protect households from rising prices. ‘There is a fear in the market that the stance of the government is now pretty dovish. It may be an overreaction today, but the market clearly thinks that the government is going to have to issue longer-dated bonds to fund its spending plans,’ said Shoki Omori, chief desk strategist at Mizuho.”
November 18 – Bloomberg (Erica Yokoyama): “Japan’s Finance Minister Satsuki Katayama said she confirmed the need to monitor market movements with Bank of Japan Governor Kazuo Ueda and Growth Strategy Minister Minoru Kiuchi... ‘We confirmed that the three of us will do our utmost to manage policy toward stable inflation and sustainable economic growth,’ Katayama told reporters… ‘We also reaffirmed that we will monitor market developments with a high sense of urgency and communicate with markets closely.’”
November 18 – Bloomberg (John Cheng and Mia Glass): “Japanese government bonds extended losses after results of a 20-year debt sale signaled that investors are still cautious about extra supply ahead of Prime Minister Sanae Takaichi’s first economic package. The 20-year yield rose 3 bps to 2.815%, its highest since 1999… The bid-to-cover ratio, an indication of demand, was 3.28 versus 3.56 at last month’s sale.”
November 17 – Bloomberg (Momoka Yokoyama, Alice French and Eru Ishikawa): “Japanese stocks and government bonds extended losses on Tuesday, as sentiment cooled on concerns about a diplomatic spat between Tokyo and Beijing and fiscal health at home. The Nikkei 225 index fell 3.2%, the biggest drop since April 9, while the yield for the 40-year government bond jumped as much as 8 bps to 3.68%, its highest level since the securities debuted in 2007. ‘There’s rising uncertainty about government finances, as well as nerves around Japan’s relationship with China,’ said Tomo Kinoshita, global market strategist at Invesco Asset Management Japan Ltd. ‘Overall market sentiment is worsening, and it’s fueling a ‘sell Japan’ movement,’ he added.”
November 17 – Bloomberg (Toru Fujioka): “Governor Kazuo Ueda told Prime Minister Sanae Takaichi that the Bank of Japan is in the process of slowly dialing back its easing support for the economy, signaling his unshaken intention to carefully raise rates. ‘The mechanism for inflation and wages to grow together is recovering,’ Ueda told reporters… after his first bilateral meeting with the premier. ‘Given this, I told the prime minister that we are in the process of making gradual adjustments to the degree of monetary easing.’ The two met at a time when investors are seeking clarity over Takaichi’s stance on monetary policy and await details of an economic package expected to be unveiled this week.”
November 16 – Bloomberg (Toru Fujioka): “Japan’s economic contraction over the summer will support Prime Minister Sanae Takaichi’s case to compile an ambitious stimulus package even as the central bank stays on track for a rate hike in coming months. Japan’s real gross domestic product shrank by 1.8% on an annualized basis in the three months through September, the first decline in six quarters…”
November 16 – Bloomberg (John Cheng): “Goldman Sachs… sees a return of Japan’s fiscal risk premium as investors grow wary of a larger-than-expected stimulus package, putting pressure on longer-maturity sovereign bonds and the yen. Concerns are growing that the Japanese government may back away from its pledge to balance its budget each year and meet its long-term fiscal goals, strategists including George Cole wrote... ‘Even if the eventual outcome turns out to be less extreme than feared, the market’s heightened sensitivity around fiscal concerns suggests any path to ultimate relief could be a bumpy one,’ the US investment bank said.”
Emerging Market Watch:
November 16 – Bloomberg (Marcus Wong, Carolina Wilson and Srinivasan Sivabalan): “Some of the year’s most popular emerging-market trades such as betting on the Brazilian real and stocks linked to artificial intelligence are becoming a source of concern as money managers warn of risks from overcrowding… ‘Investors are too complacent on emerging markets,’ said Brendan McKenna, an emerging-market economist and FX strategist at Wells Fargo... ‘FX valuations, for most if not all, are stretched and not capturing a lot of the risks hovering over markets. They can continue to perform well in the near-term, but I do feel a correction will be unavoidable’.”
November 19 – Bloomberg (Rachel Gamarski and Giovanna Bellotti Azevedo): “A handful of Brazilian companies are disclosing exposure to Banco Master SA following the liquidation of the troubled lender and the arrest of its chief executive amid a sweeping corruption probe. Health-care provider Oncoclinicas reported holding 433 million reais ($81.1 million) in Master time deposits…”
November 20 – Bloomberg (Ntando Thukwana): “The boom in artificial intelligence stocks is creating a risk of a bubble, which could threaten emerging markets, South Africa’s central bank Governor Lesetja Kganyago said… ‘Despite the promise of AI, there are signs of a bubble inflating,’ Kganyago said… after the central bank cut its policy rate by 25 bps. ‘With lower rates, and cheap credit even for riskier borrowers, financial markets appear vulnerable to a correction. If that happens, emerging markets could suffer from spillovers.’”
Leveraged Speculation Watch:
November 18 – Financial Times (Joseph Cotterill and Costas Mourselas): “Bets on Argentina delivered profits for a group of emerging market and distressed debt hedge funds last month, as the US bailed out Javier Milei’s government and voters backed his party in critical elections. Funds such as Shiprock Capital, ProMeritum and Amia Capital benefited from double-digit rallies in Argentina’s US dollar bonds and other assets in October… The bets on Argentina’s swift turnaround come in a standout year for many EM hedge funds that have also gained as the weaker US dollar has boosted currencies across the developing world.”
Social, Political, Environmental, Cybersecurity Instability Watch:
November 16 – Axios (Sam Sabin): “The dam for foreign spies automating cyberattacks with AI tools is officially broken. Imagine a world where Chinese spies can tamper with a U.S. water system or steal a major AI vendor’s plans for its next model upgrade — all with just a few clicks. That future is no longer hypothetical. ‘Guys wake the f up,’ Sen. Chris Murphy said on X. ‘This is going to destroy us — sooner than we think — if we don’t make AI regulation a national priority tomorrow.’ Anthropic this week uncovered what it says is the first documented case of a fully automated cyberattack. Suspected Chinese state hackers used Claude Code to target about 30 organizations — including tech firms, banks, chemical manufacturers, and government agencies — and successfully broke into several. Earlier this month, Google said it had seen Russian military hackers using AI to write malware scripts aimed at Ukrainian entities.”
The S&P500 fell 1.9% (up 12.3% y-t-d), and the Dow lost 1.9% (up 8.7%). The Utilities dipped 0.7% (up 16.3%). The Banks declined 1.0% (up 16.2%), and the Broker/Dealers sank 4.9% (up 20.3%). The Transports slipped 0.4% (up 0.7%). The S&P 400 Midcaps dipped 0.7% (up 2.0%), and the small cap Russell 2000 declined 0.8% (up 6.3%). The Nasdaq100 dropped 3.1% (up 15.4%). The Semiconductors sank 5.9% (up 28.6%). The Biotechs jumped 3.5% (up 25.0%). With bullion slipping $19, the HUI gold index fell 3.4% (up 115.6%).
Three-month Treasury bill rates ended the week at 3.735%. Two-year government yields dropped 10 bps to 3.51% (down 73bps y-t-d). Five-year T-note yields fell 11 bps to 3.62% (down 76bps). Ten-year Treasury yields declined nine bps to 4.06% (down 51bps). Long bond yields dipped four bps to 4.71% (down 7bps). Benchmark Fannie Mae MBS yields fell eight bps to 5.14% (down 70bps).
Italian 10-year yields slipped a basis point to 3.46% (down 6bps y-t-d). Greek 10-year yields declined three bps to 3.32% (up 10bps). Spain's 10-year yields dipped two bps to 3.21% (up 15bps). German bund yields declined two bps to 2.70% (up 34bps). French yields added one basis point to 3.47% (up 28bps). The French to German 10-year bond spread widened three to 77 bps. U.K. 10-year gilt yields slipped three bps to 4.55% (down 2bps). U.K.'s FTSE equities index fell 1.6% (up 16.7% y-t-d).
Japan's Nikkei 225 Equities Index sank 3.5% (up 21.9% y-t-d). Japan's 10-year "JGB" yield jumped seven bps to 1.78% (up 68bps y-t-d). France's CAC40 slumped 2.3% (up 8.2%). The German DAX equities index dropped 3.3% (up 16.0%). Spain's IBEX 35 equities index fell 3.2% (up 36.5%). Italy's FTSE MIB index slumped 3.0% (up 24.8%). EM equities were mostly under pressure. Brazil's Bovespa index lost 1.9% (up 28.7%), and Mexico's Bolsa index slipped 0.7% (up 25.0%). South Korea's Kospi was slammed 3.9% (up 60.6%). India's Sensex equities index increased 0.8% (up 8.6%). China's Shanghai Exchange Index sank 3.9% (up 14.4%). Turkey's Borsa Istanbul National 100 index rallied 3.4% (up 11.1%).
Federal Reserve Credit declined $7.3 billion last week to $6.521 TN. Fed Credit was down $2.368 TN from the June 22, 2022, peak. Since the September 11, 2019 restart of QE, Fed Credit expanded $2.795 TN, or 75%. Fed Credit inflated $3.710 TN, or 132%, since November 7, 2012 (680 weeks). Elsewhere, Fed holdings for foreign owners of Treasury, Agency Debt declined $7.6 billion last week to $3.057 TN. "Custody holdings" were down $264 billion y-o-y, or 7.9%.
Total money market fund assets (MMFA) slipped $16 billion to $7.522 TN - with a 13-week surge of $332 billion, or 18% annualized. MMFA were up $873 billion, or 13.1%, y-o-y - and ballooned a historic $2.937 TN, or 64%, since October 26, 2022.
Total Commercial Paper dropped $15.9 billion to $1.300 TN. CP has expanded $212 billion y-t-d and $126 billion, or 10.7%, y-o-y.
Freddie Mac 30-year fixed mortgage rates increased two bps to 6.26% (down 61bps y-o-y). Fifteen-year rates rose five bps to 5.54% (down 48bps). Bankrate's survey of jumbo mortgage borrowing costs had 30-year fixed rates up a basis point to 6.47% (down 85bps).
Currency Watch:
For the week, the U.S. Dollar Index increased 0.9% to 100.18 (down 7.7% y-t-d). On the downside, the Brazilian real declined 2.0%, the Swiss franc 1.8%, the South African rand 1.7%, the Norwegian krone 1.6%, the South Korean won 1.4%, the Australian dollar 1.3%, the New Zealand dollar 1.2%, the Japanese yen 1.2%, the Swedish krona 1.0%, the Mexican peso 1.0%, the euro 0.9%, the Singapore dollar 0.7%, the Canadian dollar 0.6%, and the British pound 0.6%. The Chinese (onshore) renminbi slipped 0.08% versus the dollar (up 2.73% y-t-d).
Commodities Watch:
November 18 – Bloomberg (Yvonne Yue Li): “China added an estimated 15 tons of gold to its forex reserves in September as central banks accelerated their purchases of bullion after a seasonal summer lull, according to Goldman Sach... Analysts including Lina Thomas estimated that central banks globally bought 64 tons of the precious metal in September, more than tripling from the month before.”
The Bloomberg Commodities Index declined 1.4% (up 8.9% y-t-d). Spot Gold slipped 0.5% to $4,065 (up 54.9%). Silver declined 1.1% to $50.0204 (up 73.1%). WTI crude dropped $2.03, or 3.4%, to $58.06 (down 19%). Gasoline sank 6.4% (down 7%), while Natural Gas added 0.3% to $4.58 (up 27%). Copper added 0.7% (up 27%). Wheat was unchanged (down 4%), while Corn declined 1.1% (down 7%). Bitcoin sank $9,810, or 10.4%, to $84,273 (down 10%).
Market Instability Watch:
November 20 – Bloomberg (Caleb Mutua): “Oracle Corp., the once stodgy database giant that’s borrowed tens of billions and tethered its fortunes to the artificial intelligence boom, is quickly emerging as the credit market’s barometer for AI risk. Traders have piled into the company’s credit-default swaps in recent months as Oracle’s massive AI-related spending spree, its central role in a web of interrelated deals, and its weaker credit grades compared with players such as Microsoft Corp. or Alphabet Inc. have made the contracts the market’s preferred way to hedge — and bet against — the AI boom. The price to protect against the company defaulting on its debt for five years tripled in recent months to as high as about 1.11 percentage point a year on Wednesday, or around $111,000 for every $10 million of principal protected…”
November 18 – Bloomberg (Emily Graffeo, Victor Swezey, Brian Smith and Gowri Gurumurthy): “The malaise sweeping financial markets globally is creeping into credit markets. Risk premiums on everything from investment-grade corporates to junk bonds are hovering near their highest levels in weeks. On Monday, investors withdrew about 40% of bond orders on several corporate bond offerings after seeing final pricing, an unusually high level of attrition. A separate investment-grade bond sale was pulled from the market altogether last week, a rarity in that market. In the leveraged loan market, banks have struggled to sell some debt tied to acquisitions.”
November 20 – Reuters (Tom Westbrook and Junko Fujita): “Investors bailing out of the yen and Japan’s government bonds have driven borrowing costs there to record highs, bending markets out of shape and piling pressure on the country’s policymakers as they try to pilot the economy through a rough patch. The selloff, which has also rattled stocks, has been unleashed by a lavish stimulus package - set to be the biggest since COVID-19 - that new Prime Minister Sanae Takaichi is expected to announce on Friday. Her plans will mean yet more borrowing in a quadrillion-yen ($7 trillion) debt market that has been caught off-guard and which no longer enjoys a permanent bid from the central bank or Japan's insurers.”
November 19 – Reuters (Gertrude Chavez-Dreyfuss and Davide Barbuscia): “The cost of U.S. overnight funding in the repo market has stayed stubbornly high and is expected to remain elevated going into year-end despite recent Federal Reserve easing, adding another layer of stress to already fragile financial markets. A spike in repurchase or repo rates signals liquidity is scarce and raises funding costs across the financial system.”
November 18 – Bloomberg (Marcus Ashworth): “Financial plumbing becoming news is rarely a bullish signal. The head of the New York Federal Reserve last week called in the big institutions for an unscheduled meeting prompted by spikes in its standing repo facility — the central bank’s money-market backstop. While that brainstorming put monetary liquidity in the spotlight, the unspoken concern was leverage, especially borrowing by hedge funds. The proliferation of multi-pod hedge funds has brought about a major increase in their share of government bond trading globally. Their use of leverage and low regulatory oversight make them potentially unstable counterparties and so threaten the stability of the benchmark markets for all other financial assets. There’s been much hand-wringing over the scale of the US Treasury bond futures basis trade — a relative-value bet between a cash bond and its equivalent futures contract — but US authorities have done little to address it.”
November 19 – Bloomberg (Alex Harris): “Bond traders have pushed back against Federal Reserve officials urging them to use a key borrowing facility, complicating the central bank’s efforts to ease strains in the $12 trillion market for repurchase agreements. Primary dealers representing Wall Street banks told the officials at a meeting last week that borrowing directly from the central bank still carries a stigma and could be seen as a sign of trouble. That’s one reason they’ve been reluctant to use the Standing Repo Facility (SRF)…”
November 18 – Reuters (Joice Alves, Dhara Ranasinghe and Naomi Rovnick): “Britain’s markets face a major test in next week’s budget, with the outlook for bonds, stocks and sterling all hinging on Finance Minister Rachel Reeves striking the right balance between fiscal restraint and support for growth. Investors were rattled on Friday by news that Reeves has no plans to raise income tax due to improved fiscal forecasts, just days after she appeared to signal a hike to underpin her own financial rules. ‘Markets are looking for signs of credibility through meaningful fiscal consolidation,’ said Laura Cooper, head of macro credit and global investment strategist at Nuveen.”
U.S. Credit Trouble Watch:
November 15 – Bloomberg (Caleb Mutua): “As tech companies gear up to borrow hundreds of billions of dollars to fuel investments in artificial intelligence, lenders and investors are increasingly looking to protect themselves against it all going wrong. Banks and money managers are trading more derivatives that offer payouts if individual tech companies, known as hyperscalers, default on their debt. Demand for credit protection has more than doubled the cost of credit derivatives on Oracle Corp.’s bonds since September. Meanwhile, trading volume for credit default swaps tied to the company jumped to about $4.2 billion over the six weeks ended Nov. 7... That’s up from less than $200 million in the same period last year. ‘We’re seeing renewed interest from clients in single-name CDS discussions, which had waned in recent years,’ said John Servidea, global co-head of investment-grade finance at JPMorgan... ‘Hyperscalers are highly rated, but they’ve really grown as borrowers and people have more exposure, so naturally there is more client dialogue on hedging’.”
November 20 – Bloomberg (Olivia Fishlow, Davide Scigliuzzo, and Ellen DiMauro): “Blue Owl Capital Inc.’s Craig Packer has been something of a mainstay on the New York Stock Exchange in recent years, ringing the opening bell multiple times to toast the private credit giant’s public funds. On Wednesday, minutes after the market opened, his mood was anything but celebratory. Blue Owl had just announced it was scrapping a planned merger of two of its private credit funds, backtracking on a plan revealed Nov. 5 after scrutiny arose over the potential losses some investors would have to swallow as part of the deal. The parent company’s shares had fallen this week to the lowest level since 2023. Packer bemoaned ‘negative articles’ about private credit that caused its stock to sink. When it comes to Blue Owl’s business development companies, the firm’s co-founder said…, ‘there’s no emergency here.’”
November 19 – Bloomberg (The Editors): “The growing list of US credit busts, from subprime auto lender Tricolor Holdings to Broadband Telecom Inc., raises a troubling question: If such ‘cockroaches’ proliferate — if many more enterprises collapse under the weight of excessive debt — who will ultimately bear the losses? If your retirement savings are entrusted to a US life insurer, there’s a growing risk it might be you. Regulators must get a better handle on the problem — and soon. Life insurers manage trillions of dollars on behalf of individuals to whom they’ve promised regular income in old age. This financial service should not be complicated: Invest in high-quality assets that will pay off when customers eventually need their money. Low risk, stable returns. Lately, though, large investment firms have transformed the industry.”
November 16 – Financial Times (Lee Harris and Antoine Gara): “A flood of capital from private credit firms is pushing reinsurers into taking on riskier business through more lightly regulated intermediaries, industry bosses told the Financial Times. Private capital firms have been muscling into the $2tn property and casualty sector with direct acquisitions, and by providing reinsurance capital through asset management agreements. ‘We’re seeing private credit, specifically, being much more aggressive — shifting their focus from the life sector, looking more at casualty,’ Kevin O’Donnell, chief executive of RenaissanceRe, said… ‘Because they’re not a regulated reinsurance company, they can have much more leverage and a different investment appetite… It’s really an arbitrage between the restrictions we have in our investments, and the freedom that they have on theirs’.”
November 20 – Bloomberg: “In just over a decade, Apollo Global Management Inc. has reinvented the once-mundane business of life insurance — reeling in cash and generating profits that have inspired competitors to pursue their own variations of the strategy. That’s creating new risks… Many private equity firms are building their own insurance and annuities units, promising to provide income to everyday Americans in old age. Such firms now control almost $700 billion in life insurance assets. But, increasingly, that includes complex and potentially harder-to-sell investments, such as private and structured credit and other deals arranged by their parent companies’ Wall Street affiliates. Some firms are enthusiastically embracing complex moves offshore that let them take on more risk.”
November 19 – Bloomberg (Rene Ismail): “Publicly-traded business development companies can expect growing pressure next year, with payment-in-kind volume predicted to rise as spreads tighten further, according to a Fitch Ratings report… Shares of BDCs, which package private loans into funds and often trade publicly, have declined in recent months as investor anxiety over the quality of their portfolios is rising following recent defaults. Earlier this month, Fitch stamped a ‘deteriorating’ outlook on BDCs, citing prolonged asset quality pressures from the challenging economic backdrop. BDC bonds have also been sliding in recent weeks, which Fitch says is another sign of investors’ heightened focus on portfolio credit performance heading into the new year.”
November 19 – Bloomberg (Rene Ismail): “Publicly-traded business development companies can expect growing pressure next year, with payment-in-kind volume predicted to rise as spreads tighten further, according to a Fitch Ratings report… Shares of BDCs, which package private loans into funds and often trade publicly, have declined in recent months as investor anxiety over the quality of their portfolios is rising following recent defaults. Earlier this month, Fitch stamped a ‘deteriorating’ outlook on BDCs, citing prolonged asset quality pressures from the challenging economic backdrop. BDC bonds have also been sliding in recent weeks, which Fitch says is another sign of investors’ heightened focus on portfolio credit performance heading into the new year.”
November 19 – Bloomberg (James Crombie): “Credit investors short of things to buy are increasingly mining structured debt for yield. Deteriorating collateral and subprime stress are reasons to be fearful as cash piles in. Even after a recent selloff, value is hard to find in plain vanilla corporate bonds, which are undersupplied and overbid. US securitization is meanwhile running at a furious clip, fueled by artificial intelligence. Sales of asset-backed securities hit $340 billion, the highest since Bloomberg News started tracking it in 2014. Collateralized loan obligations are a top pick, viewed by money managers as ‘bulletproof.’ The repackaging of junk loans as bonds with varying risk is going faster than ever.”
November 17 – Financial Times (Kaye Wiggins): “US prosecutors are investigating a group of telecoms companies after BlackRock’s private credit unit HPS Investment Partners said it lent them hundreds of millions of dollars against receivables that appear to be fake. The Department of Justice is examining entities linked to Bankim Brahmbhatt, a low-profile executive behind a clutch of companies that borrowed large sums from one of the biggest names in private credit, according to two people with knowledge... Funds managed by HPS, which BlackRock bought this year, lent more than $400mn to companies connected to Brahmbhatt. The collateral securing these loans included money that the companies linked to Brahmbhatt said they were due to receive from major telecoms groups.”
November 19 – Bloomberg (Hannah Levitt, Aaron Weinman and Claire Ruckin): “For all the talk of a turf war between banks and private credit, JPMorgan… is dominating on the field — with giant checks that only the biggest US bank can write. Time and again, the firm has overwhelmed private credit managers and Wall Street rivals with substantial financing packages to win coveted debt deals. First it led an $8 billion effort for 3G Capital’s acquisition of Skechers. Then it stepped up $17.5 billion to help Warner Bros. Discovery Inc. split itself in two. But the most audacious of all was JPMorgan’s $20 billion check for the acquisition of Electronic Arts… After Silver Lake Management’s Egon Durban called JPMorgan Chief Executive Officer Jamie Dimon, seeking assurance his bank had the conviction to commit the necessary funds, it took just 11 days to iron out the deal. The fee JPMorgan — and the banks that later joined in — commanded for the effort: around $500 million.”
Global Credit and Financial Bubble Watch:
November 18 – New York Times (Alexandra Stevenson): “As one of the world’s most prolific lenders, China has paid out more than a trillion dollars in loans to the developing world to fund roads in Africa, ports in South America and railroads in Central Asia. But the biggest recipient of its financing over the past two decades has been the United States, where Chinese banks have extended $200 billion in financial support to American companies and projects, according to AidData, a research institute at the College of William and Mary in Williamsburg, Va. The money poured into the construction of pipelines, data centers and airport terminals, and it helped to grease the wheels of corporate financing for U.S. companies like Tesla, Amazon, Disney and Boeing.”
November 18 – Bloomberg (Martha Viotti Beck, Matheus Piovesana, and Daniel Carvalho): “On Monday, Daniel Vorcaro announced a last-ditch rescue deal that appeared to save his floundering Brazilian bank. Hours later, he was arrested at a Sao Paulo airport, where authorities say he was trying to flee the country. Banco Master SA will be liquidated after the latest twist in its saga featured a sweeping corruption probe by Brazilian authorities. Chief Executive Officer Vorcaro and five others were arrested amid allegations that executives fabricated credit instruments and sold them to a lender whose own CEO has now been ousted… The rapid chain of events marked a dramatic new turn for Master, a firm once touted as a rising star in Brazilian finance. Its collapse, regulators and industry rivals say, underscores the urgent need for stronger oversight and tougher rules across the banking system. The firm’s liquidation could cost Brazil’s deposit insurance system, known as FGC, as much as 55 billion reais ($10bn) if other smaller banks are also liquidated…”
First Brands Ramifications Watch:
November 17 – Bloomberg (Davide Scigliuzzo, Eliza Ronalds-Hannon, and Irene Garcia Perez): “The trade finance platform Raistone is looking to sell itself after the collapse of its biggest client, auto-parts supplier First Brands Group. Raistone said it is ‘evaluating strategic alternatives’ due to the ‘liquidity strain’ it has faced since the demise of First Brands… Potential bidders were asked to indicate their interest in an outright sale or an equity recapitalization by Oct. 31. It is not clear what has happened since that deadline. Raistone did not immediately respond to a request for comment.”
Trump Administration Watch:
November 21 – Axios (Dave Lawler): “President Volodymyr Zelensky addressed the Ukrainian people on Friday and said President Trump's 28-point peace plan will force Ukraine to choose between ‘losing our dignity’ or risking the loss of U.S. support. The plan would force Ukraine to accept harsh concessions, including the loss of even more territory than Russia currently controls. Zelensky has told the Trump administration he’s prepared to negotiate, but the White House is pushing him to sign within one week. ‘This is one of the most difficult moments in our history,’ Zelensky said… ‘The pressure on Ukraine is now among the heaviest. Ukraine may now face a very difficult choice: the loss of dignity, or the risk of losing a key partner.’ Zelensky warned that Ukraine faces an ‘extremely harsh winter’ if he spurns Trump’s offer. He said U.S. officials ‘expect an answer from us.’”
November 21 – Bloomberg (Erik Wasson): “Marjorie Taylor Greene, a Georgia Republican who was among President Donald Trump’s strongest allies in Congress before their relationship fell apart, will resign from Congress in January. Her last day in the US House will be Jan. 5… Greene was among the Republicans who led the legislative effort to compel the Justice Department to release the files of sex trafficker Jeffrey Epstein. Her efforts led to a public fallout with Trump, who called her a traitor and said that he would support the ‘right person’ to run against her in next year’s midterm elections.”
November 16 – Wall Street Journal (Alex Leary, Tarini Parti and Justin Lahart): “A proposal to give Americans direct payments of $2,000 or more. An antitrust probe into allegations that meatpacking companies are colluding to drive up beef prices. And a new plan to lower tariffs on coffee, fruit and other popular products. President Trump and his advisers are rushing to try to lower prices for U.S. consumers after voters sent a warning shot to Republicans this month over the high cost of living. Following the recent election, Trump’s aides have urged the president to focus on affordability, and they are drawing up plans to attempt to address voters’ frustrations, according to administration officials.”
November 17 – Axios (Ben Berkowitz): “President Trump… promised the government would pay out $2,000 tariff dividend checks starting around mid-2026. Putting a timetable on the checks is a significant step forward versus just suggesting the idea, which Trump has done multiple times this year. But the dividends would require legislation, Treasury Secretary Scott Bessent said…, and it’s not clear if Congress has the appetite. ‘We’re going to be issuing dividends later on, somewhere prior to, you know, probably the middle of next year, a little bit later than that. Thousands of dollars for individuals of moderate income, middle income,’ Trump said… The potential cost of such a tariff dividend could be huge. If the checks are for individual U.S. citizens and not households, even limiting it to those with low and middle incomes could cost well over $200 billion.”
November 19 – Axios (Jeffrey Cane and Avery Lotz): “President Trump repeated his desire to force Federal Reserve chair Jerome Powell out, telling the U.S.-Saudi Investment Forum on Wednesday that ‘I’d love to fire his ass… grossly incompetent’… Trump has previously said he could justify the Fed chair’s removal for cause and that Powell should be ‘sued for spending $4 billion to build a little building,’ in reference to Fed headquarters renovations going over budget… Treasury Secretary Scott Bessent is leading the search for the next Fed chair. The president, however, appeared critical, if teasing, of Bessent’s efforts. ‘The only thing Scott’s blowing it on is the Fed, because the Fed, the rates are too high,’ Trump said. ‘Scott, if you don't get it fixed fast, I’m going to fire your ass.’”
November 17 – Wall Street Journal (Santiago Pérez and Silvina Frydlewsky): “Argentina’s Economy Minister Luis Caputo has all the swagger of the brash Wall Street trader that he once was, first for JPMorgan and then at Deutsche Bank. His co-workers have called him the Lionel Messi of finance. Now Caputo is orchestrating the trade of a lifetime, persuading the U.S. government to go all-in on President Javier Milei just when it seemed his economic overhaul of Argentina was in jeopardy. Caputo and Treasury Secretary Scott Bessent… came up with a $20 billion American rescue plan for Argentina… Backstopping Milei’s austerity measures and foreign-exchange policies with the U.S. government’s help will be a high-wire act for both Bessent and Caputo, along with the Argentine central bank and ministries that he has packed with other former JPMorgan executives. ‘The irony of what’s happening now is that both Bessent and Argentina’s JPMorgan boys are no longer on the side of brokerage trading desks,’ said Arturo Porzecanski, an American University economist who closely tracks Argentina. ‘They are now trying to steer the market forces they always rode.’”
November 18 – Bloomberg (Annmarie Hordern and Josh Wingrove): “President Donald Trump said he thinks he’s identified his choice to be the next chair of the Federal Reserve while asserting people are holding him back from firing the central bank’s current leader, Jerome Powell. ‘I think I already know my choice,’ Trump told reporters… ‘I’d love to get the guy currently in there out right now, but people are holding me back’… “We have some surprising names and we have some standard names that everybody’s talking about… And we may go the standard way. It’s nice to every once in a while go politically correct.’”
November 18 – Reuters (Steve Holland): “U.S. President Donald Trump… said he was speaking with various people about the Federal Reserve chairman’s job and had some unexpected candidates on the list of those who might replace Jerome Powell. ‘We have some surprising names and we have some standard names that everybody’s talking about,’ Trump said…”
November 17 – New York Times (Colby Smith and Stacy Cowley): “Top officials at the Federal Reserve’s Washington headquarters and 12 reserve banks received a short memo on Oct. 29 with an unmistakable message. The way the central bank had long monitored and addressed risks across the financial system was in for a drastic overhaul. The memo… contained a list of directives for Fed examiners and supervisory staff across the country that significantly curtailed how closely they scrutinized lenders. It followed a host of changes made by Michelle W. Bowman, a Fed governor, who since becoming vice chair for supervision at the start of the summer had been providing regulatory relief to banks. One day after the memo was sent, Ms. Bowman announced a 30% cut in staff across her division in Washington. Current and former policymakers and legal experts were already worried that those changes would encourage exactly the kind of risk-taking that could sow the seeds for the next crisis.”
November 19 – Bloomberg (Will Wade): “President Donald Trump plans to roll out a ‘Genesis Mission’ as part of an executive order to boost US artificial intelligence efforts on Monday at the White House… The effort is intended to signal that the Trump administration sees the coming AI race as important as the Manhattan Project or space race, Department of Energy Chief of Staff Carl Coe said… ‘We see the Genesis Mission as equivalent,’ Coe said.”
November 18 – Bloomberg (Maria Clara Cobo and Paola Vega Torre): “President Claudia Sheinbaum again ruled out a US military intervention in Mexico, pushing back on the latest suggestion of unilateral action from President Donald Trump. ‘It won’t happen,’ Sheinbaum said emphatically…, responding to the US leader’s comments a day earlier that he may even deploy ground troops to Mexico to combat drug smuggling. Speaking at the White House…, Trump added that he’s ‘not happy’ with Mexico in wide-ranging comments that also touched on possible US military action against Venezuela and Colombia.”
November 15 – Wall Street Journal (Vera Bergengruen, Kejal Vyas and Shelby Holliday): “France denounced the U.S. military strikes on alleged drug boats as a violation of international law. Canada and the Netherlands have stressed they aren’t involved. Colombia has vowed to cut off intelligence cooperation with Washington. Mexico summoned the U.S. ambassador to complain. Two months into the Trump administration’s military campaign against low-level smugglers in the Caribbean and eastern Pacific, the coalition of partners that has long underpinned U.S. antidrug operations in the region is fraying.”
November 18 – Financial Times (Abigail Hauslohner and Andrew England): “Donald Trump dismissed questions about journalist Jamal Khashoggi’s murder…, as he defended his ‘friend’ Saudi Crown Prince Mohammed bin Salman and touted up to $1tn of investment from the kingdom. Speaking alongside Prince Mohammed in the Oval Office, the US president lashed out after reporters asked him about Khashoggi’s killing by Saudi agents. The questioning ‘embarrass[ed]’ the kingdom’s de facto ruler, Trump said, and was an episode ‘he knew nothing about’. ‘A lot of people didn’t like that gentleman you’re talking about,’ Trump added, referring to Khashoggi, a widely respected Saudi journalist.”
November 15 – Wall Street Journal (Gina Heeb, Josh Dawsey and Rebecca Ballhaus): “Bill Pulte marched into the Oval Office this summer and delivered one of his signature performances. Pulte, who heads the Federal Housing Finance Agency, told the president he had identified leakers who were undermining the administration. He was carrying a ‘Ghostbusters’-style poster that featured pictures of administration officials and outside allies, outlined by red circles with lines through their faces… For many in the West Wing, it was classic Pulte: an attention-grabbing move to burrow into President Trump’s good graces by attacking the president’s perceived enemies. Pulte, a 37-year-old heir to a home-building fortune, has emerged as one of the most polarizing figures inside and outside the Trump administration. Referred to by some as ‘Little Trump,’ his job is to oversee mortgage-finance giants Fannie Mae and Freddie Mac, which back nearly half the mortgages in the country.”
China Trade War Watch:
November 17 – Bloomberg (Anna Edney): “A US congressional commission is ringing alarm bells about China’s growing dominance over America’s drug supply, saying it is putting the country’s health in the hands of an adversarial nation. Roughly one-in-four generic drugs taken by Americans rely on key ingredients from China… The often low-cost staples account for 90% of the medicines used by Americans. Some of the ingredients — found in blood thinners, antibiotics and cancer treatments — are produced only in China.”
November 19 – Reuters (Ella Cao and Lewis Jackson): “China imported no soybeans from the U.S. for a second straight month in October even as total imports surged to a record high on purchases from South America, with buyers aiming to avert supply disruptions amid trade tensions with Washington.”
November 19 – Wall Street Journal (Adrià Calatayud and Joshua Kirby): “The Dutch government handed back control of semiconductor manufacturer Nexperia to its Chinese owner, moving toward resolving a spat that had blocked vital chip supply to the auto industry. Dutch Economic Affairs Minister Vincent Karremans said Wednesday that the decision had been made in consultation with the Netherlands’ European and international partners and followed recent meetings with Chinese authorities.”
Trade War Watch:
November 16 – Financial Times (Aime Williams and Andy Bounds): “Donald Trump’s top trade negotiator has warned the EU that trade remains a ‘flashpoint’ with Washington, as US officials grow frustrated at the bloc’s slow pace in cutting tariffs and regulations. Jamieson Greer, the US trade representative, told the Financial Times that the EU’s duties affecting American exports were still too high despite the deal struck… in July. ‘Trade has always been a flashpoint,’ Greer said. ‘They have many regulations and non-tariff barriers that block our exports and reduce our effective market access over there, while we historically have had very broad access for them… It’s quite unbalanced… We did not solve every problem in our relationship with our joint statement from earlier in the year’…”
November 21 – Bloomberg (Daniel Carvalho, Augusta Saraiva and Dayanne Sousa): “From the minute Donald Trump slapped tariffs on Brazil, President Luiz Inacio Lula da Silva bet the US leader was going all-in on a weak hand. The wager paid off Thursday, when Trump limped away from the battle. In an executive order, Trump exempted dozens of Brazilian food products, including coffee and beef, from the 40% increased tariffs he imposed in an ill-fated attempt to help former President Jair Bolsonaro dodge a coup attempt trial. Together with prior exemptions, the move will leave many of the nation’s major exports free from heightened US duties, a victory…”
Constitution Watch:
November 20 – Axios (Andrew Solender): “House Democratic leadership said… they’ve been in touch with the U.S. Capitol Police and the House sergeant-at-arms to protect a group of lawmakers after President Trump appeared to suggest that their comments were ‘punishable by DEATH!’ Trump considerably ramped up the severity of his rhetoric against Democrats… after a group of military veterans serving in Congress released a video encouraging service members to resist unlawful orders. ‘This is really bad, and Dangerous to our Country. Their words cannot be allowed to stand,’ Trump said… on Truth Social. ‘SEDITIOUS BEHAVIOR FROM TRAITORS!!! LOCK THEM UP???’ In a follow-up post, he added: ‘SEDITIOUS BEHAVIOR, punishable by DEATH!’ ‘We unequivocally condemn Donald Trump's disgusting and dangerous death threats,’ House Minority Leader Hakeem Jeffries (D-N.Y.), Minority Whip Katherine Clark (D-Mass.) and Democratic caucus chair Pete Aguilar (D-Calif.) said…”
November 18 – CNBC (Kevin Breuninger): “President Donald Trump… called for ABC’s broadcast license to be revoked as he angrily lashed out at a reporter from the network who asked why he has not released files on notorious sex offender Jeffrey Epstein, his former friend. ‘I think you are a terrible reporter,’ Trump told ABC News White House correspondent Mary Bruce… ‘People are wise to your hoax,’ the president told the reporter. ‘Your crappy company is one of the perpetrators.’ ‘And I’ll tell you something,’ Trump said. ‘I think the license should be taken away from ABC. Because your news is so fake and so wrong.’ ‘We have a great commissioner… who should look at that,’ he added…”
November 17 – Bloomberg (Zoe Tillman and Erik Larson): “Federal Reserve Governor Lisa Cook offered a detailed rebuttal to mortgage fraud allegations made by President Donald Trump and other US officials, arguing in a letter to Attorney General Pam Bondi that the claims ‘fail on even the most cursory look at the facts.’ Cook’s attorney Abbe Lowell sent a letter… to Bondi and Ed Martin, a senior Justice Department official tapped as a ‘special attorney’ to investigate mortgage fraud… The US Supreme Court is set to hear arguments on Jan. 21 on Cook’s challenge to Trump’s move to fire her.”
U.S./Russia/China/Europe/Iran Watch:
November 19 – Bloomberg (Kati Pohjanpalo and Jordan Robertson): “Russia is waging two wars. The first is the live-fire conflict in Ukraine, the second a more covert affair targeting countries that support the government in Kyiv. The toolkit ranges from state-on-state cyberattacks, disinformation and propaganda, to more visible tactics such as arson, sabotage and airspace incursions. This dual strategy, known as hybrid warfare, marries unambiguous brute force with acts of stealth and subterfuge designed to undermine the security and wellbeing of another nation. As Russian President Vladimir Putin struggles to achieve his strategic goals in Ukraine, his government appears to be stepping up hybrid attacks on Ukrainian allies.”
November 16 – Wall Street Journal (Yaroslav Trofimov): “The new nuclear race has begun. But unlike during the Cold War, the U.S. must prepare for two peer rivals rather than one—at a time when it has lost its clear industrial and economic edge. China, which long possessed just a small nuclear force, is catching up fast, while Russia is developing a variety of new-generation systems aimed at American cities. Russian President Vladimir Putin has already used nuclear saber-rattling to throttle American support for Ukraine. He has deployed nuclear weapons to Belarus and, in recent weeks, tested a nuclear-powered missile and a nuclear-powered submarine drone… While Russia and the U.S. are still abiding by some arms-controls limits, such as the New Start treaty that expires in February, China, unconstrained by any commitments, is quietly but rapidly leaping ahead.”
November 18 – Wall Street Journal (Matthew Luxmoore): “Polish officials accused Russia of being behind an explosion on its rail network on Saturday, saying two Ukrainian men had collaborated with Russian security services to carry out the attack, almost causing a packed commuter train to careen off the tracks. Polish Prime Minister Donald Tusk said the blast and another attempted act of sabotage over the weekend were a major escalation by Moscow, which European officials say is waging a shadow war targeting critical infrastructure and civilian and military facilities across the continent. ‘A certain threshold has been crossed,’ Tusk said…, describing the acts as the most serious security threat for Poland since the onset of Russia’s invasion of Ukraine in 2022. ‘Their goal was bringing about a catastrophe on the train line’.”
November 18 – Bloomberg (Andrea Palasciano and Suzanne Lynch): “The European Union’s top diplomat said that Moscow’s aggression against the bloc, including an explosion that occurred in Poland over the weekend, should be considered terrorism. ‘These sabotage acts they are organizing on our territories in different countries are extremely, extremely serious,’ Kaja Kallas, the high representative for foreign affairs at the European Commission, said… She quoted an earlier statement from NATO Secretary General Mark Rutte in February when he said that hybrid incidents committed by Russia should be called ‘state-sponsored terrorism’.”
China vs. Japan Watch:
November 17 – Bloomberg (Karishma Vaswani): “Don’t listen to the China doves claiming the era of Beijing’s wolf warrior diplomacy is over. All it took was a comment on Taiwan from Japan’s new Prime Minister Sanae Takaichi to resurrect it. The latest spat between the historic rivals was triggered by her remarks on Nov. 7, when she said that if military force were to be used in any Taiwan conflict, it could be considered a ‘survival-threatening situation’ for Japan. That legal classification provides justification for Tokyo to deploy its military, consistent with its long-standing foreign policy. Her statement… echoes the sentiments of her political mentor, the late Prime Minister Shinzo Abe. In reaction, China’s consul-general in Osaka, Xue Jian, wrote on X: ‘If you go sticking that filthy neck where it doesn’t belong, it’s gonna get sliced right off. You ready for that?’… Then prominent commentator and former editor of the Global Times, Hu Xijin, called Takaichi ‘an evil witch.’ On Nov. 14, China’s foreign ministry warned that ‘anyone who attempts to challenge the bottom line of the Chinese people will inevitably face a head-on blow from China and will be utterly defeated before the Great Wall of Steel built by the flesh and blood of more than 1.4 billion Chinese people!’”
November 17 – Bloomberg: “Recent comments by Japan’s leader about the possibility of military action around Taiwan show Japan is returning to the path of militarism, Chinese state media said in a commentary, adding that any ‘militarist fantasies’ would blow up in Tokyo’s face. Prime Minister Sanae Takaichi’s statement… ‘sound a stark warning that Japan’s militarist demons are being summoned anew,’ the commentary said. This is ‘the latest symptom of a political project aimed at dragging Japan back toward a dangerous trajectory,’ it added, accusing her of using Taiwan ‘as a pretext to justify Japan’s strategic breakout.’”
November 15 – Bloomberg: “China warned students planning to study in Japan of heightened risks for Chinese citizens in the country as a diplomatic spat sparked by Prime Minister Sanae Takaichi’s comments on Taiwan showed no signs of easing. Chinese students already in Japan and those planning to go there should closely monitor the local security situation, state broadcaster CCTV reported…”
November 16 – Bloomberg (Sakura Murakami and Erica Yokoyama): “China’s recent warning to travelers to avoid Japan and for students already there to exercise caution is unacceptable, a Japanese government spokesperson said... ‘These announcements that hinder bilateral exchanges diverge from the broader direction agreed by our respective leaders to build constructive and stable ties in line with a strategic and mutually beneficial relationship,’ Japan’s Chief Cabinet Secretary Minoru Kihara said... ‘It is not something we can accept.’”
November 18 – Reuters (Liz Lee and John Geddie): “Japan has warned its citizens in China to step up safety precautions and avoid crowded places, amid a deepening dispute between Asia's two largest economies over Japanese Prime Minister Sanae Takaichi's comments on Taiwan.”
November 15 – Financial Times (Leo Lewis and Joe Leahy): “China conducted a coastguard patrol near a group of disputed islands administered by Japan on Sunday, adding further heat to a blazing row between the two countries. Chinese state media has also stepped up warnings to Tokyo that Beijing has prepared ‘substantial countermeasures’ in the dispute, which erupted from unusually blunt comments on Taiwan made earlier this month by Japan’s hawkish new Prime Minister Sanae Takaichi.”
New World Order Watch:
November 19 – Bloomberg (S'thembile Cele and Ntando Thukwana): “The US formally warned South Africa against pushing for a joint statement at this weekend’s Group of 20 summit in Johannesburg that the Trump administration is boycotting, according to a document seen by Bloomberg. The diplomatic standoff is particularly awkward given it’s the first time the continent is hosting a G-20 and South African President Cyril Ramaphosa is passing the baton to US President Donald Trump at the end of this year.”
November 19 – Bloomberg (Danny Lee): “The changes to global trade and supply chains driven by factors including technology and geopolitical risks are likely to persist over the long term, according to FedEx Corp. Chief Executive Officer Raj Subramaniam. ‘There’s a new equilibrium state being formed in this new supply chain pattern and they’re much more regional in nature,’ he said… ‘The industrial economy is going to take a little longer to change. But once it changes, it’s difficult to go back’.”
Ukraine War Watch:
November 20 – Financial Times (Christopher Miller, Fabrice Deprez and Steff Chávez): “The US has formally handed Ukraine a sweeping peace plan drawn up with Moscow to end Russia’s war in the country, President Volodymyr Zelenskyy’s office said… A draft of the 28-point proposal, developed by US and Russian negotiators, envisages major concessions by Kyiv and includes points that cross long-standing red lines for Ukraine. A White House official said… President Donald Trump had endorsed the plan. Zelenskyy, who cannot dismiss the proposal out of hand given Ukraine’s reliance on the US for critical political and military support, has faced increased pressure to get on board with Washington’s initiatives to end the war. According to people with knowledge…, it would require Ukraine to cede land under its control in the eastern Donbas region, cut the size of its armed forces by half and abandon vital categories of weaponry.”
November 19 – Associated Press (Illia Novikov): “A large Russian drone and missile barrage on Ukraine’s western city of Ternopil killed at least 25 people, including three children, authorities said Wednesday… At least 73 people, including 15 children, were injured, emergency services said. At least 19 among those killed were burned alive, including three children aged 5, 7 and 16, Klymenko said. Two dozen people are still unaccounted for…”
Taiwan Watch:
November 16 – Reuters (Yimou Lee): “Taiwan will begin distributing millions of civil defence handbooks to households across the island this week, in an unprecedented effort to prepare residents for potential emergencies, including the possibility of a Chinese attack. The handbook, unveiled in September, includes for the first time instructions on what to do if citizens encounter enemy soldiers and stresses that any claims of Taiwan’s surrender should be considered false. It also provides guidance on locating bomb shelters and preparing emergency kits.”
November 20 – Wall Street Journal (Editorial Board): “One of the biggest questions in global affairs is whether President Trump is chasing a grand bargain with Beijing’s Xi Jinping—and at what cost to the United States. So it’s good news that the Administration is showing that America won’t be bullied from defending its Pacific interests, with an arms sale to our friends in Taiwan. The Defense Security Cooperation Agency has notified Congress of a $330 million potential arms sale for the island democracy. Items include spare parts for fighter jets and transport aircraft, as well as U.S. technical and logistics support. But more important than the details is that this marks the Administration’s first sale to Taiwan in Mr. Trump’s second term.”
November 17 – Reuters: “China defence ministry said… it has lodged representations with the United States over its arms sale to Taiwan, vowing to take ‘all necessary’ measures to defend national sovereignty and territorial integrity. ‘We urge the U.S. side to immediately stop its egregious practice of arming Taiwan and avoid undermining the development of relations between the two countries and militaries,’ defence ministry spokesperson Zhang Xiaogang said…”
November 19 – Bloomberg (Alastair Gale): “The US has Japan’s back in its dispute with China over remarks made by Prime Minister Sanae Takaichi about Taiwan, US Ambassador to Japan George Glass said…, adding that some of the reaction from Beijing has been ‘outrageous.’ ‘This is a classic case of Chinese economic coercion, and I just want to say directly from the president and from myself and from the embassy for the Prime Minister, we have her back,’ Glass said after a meeting with Japanese Foreign Minister Toshimitsu Motegi. ‘While Beijing appears intent on fanning the flames of discord, the US-Japan alliance is focused on ensuring that peace and prosper spirit thrive in the region’ Glass said.”
November 19 – Wall Street Journal (Lingling Wei): “Mao Zedong once said that China must wield both the pen and the gun against its adversaries. It is a strategy China is now intensifying for Taiwan. With its so-called pen, China’s state television is preparing the domestic Chinese population for a new phase of pressure against Taiwan. Its prime-time slot is filled with a new historical drama, ‘The Silent Honor,’ which lionizes Communist Party agents operating in Taiwan after the Nationalists fled to the island in 1949 following their loss of the civil war to Mao’s forces. The series frames the agents’ espionage—and eventual execution—as martyrdom for the cause of ‘unification.’ In a parallel move suggesting a top-down mandate to reorient cultural output toward national struggle, state-owned drama troupes are receiving approval only for war-themed plays, said people briefed on the matter, while other genres are being rejected. This domestic messaging is an intensification of an already amped-up atmosphere of Taiwan reunification rhetoric in China. And it is being matched by the gun.”
AI Bubble/Arms Race Watch:
November 18 – Reuters (Sam Tabahriti): “Alphabet Chief Executive Sundar Pichai said no company would be unscathed if the artificial intelligence boom collapses, as soaring valuations and heavy investment in the sector fuel concerns of a bubble. Pichai said… the current wave of AI investment was an ‘extraordinary moment’ but acknowledged ‘elements of irrationality’ in the market, echoing warnings of ‘irrational exuberance’ during the dotcom era… Asked about how Google would cope with a potential bursting of a bubble, Pichai said he thought it could weather the storm but added: ‘I think no company is going to be immune, including us.’”
November 17 – Financial Times (Bryce Elder): “It’s too soon to be talking about the Curse of OpenAI, but we’re going to anyway. Since September 10, when Oracle announced a $300bn deal with the chatbot maker, its stock has shed $315bn* in market value: OK, yes, it’s a gross simplification to just look at market cap. But equivalents to Oracle shares are little changed over the same period (Nasdaq Composite, Microsoft, Dow Jones US Software Index), so the $60bn loss figure is not entirely wrong. Oracle’s ‘astonishing quarter’ really has cost it nearly as much as one General Motors, or two Kraft Heinz. Investor unease stems from Big Red betting a debt-financed data farm on OpenAI…”
November 19 – Financial Times (Louis Ashworth): “OpenAI is committed to spending about $1.4 trillion on data centres over the next decade or so. It accounts for about two-thirds of unfulfilled contracts at Oracle, which is valued at about $630bn, and two-fifths of unfulfilled contracts at CoreWeave, which is valued around $36bn. It has around $375bn of unfulfilled contracts with Microsoft… Its latest funding round implies OpenAI has a market cap of about $500bn, which would make it a top-twenty S&P 500 company. Recent reporting by Reuters suggests the company may aim to IPO at a valuation of about $1 trillion in the coming years. It is at the centre of an extraordinarily-complicated mesh of financial agreements…”
November 19 – Yahoo Finance (Diana Olick): “Nvidia’s latest AI partnership with Microsoft and Anthropic underscores the chipmaker’s torrid pace of dealmaking this year, even as circular artificial intelligence agreements have set off alarm bells among investors. Nvidia invested $23.7 billion in firms in the space through 59 deals between the start of 2025 and Monday… For the entirety of 2024, Nvidia inked a total of 54 deals worth $22.8 billion. Nvidia’s investments in AI firms — totaling roughly $53 billion and amounting to 170 deals between 2020 and 2025 — span the entire AI ecosystem, ranging from large language model developers such as OpenAI and Cohere to ‘neoclouds’ like Lambda and CoreWeave, which specialize in AI services and compete with the chipmaker’s Big Tech customers.”
November 19 – CNBC (Ari Levy and Kif Leswing): “Two months ago Nvidia CEO Jensen Huang and OpenAI CEO Sam Altman stood side by side in San Jose, California, to announce a historic agreement between the two leaders in artificial intelligence. Nvidia would invest $100 billion over a number of years, starting in 2026, as OpenAI’s AI supercomputing facilities come online… But in Nvidia’s quarterly financial report…, the chipmaker reminded investors that there’s a big difference between an announcement and a contract. ‘There is no assurance that we will enter into definitive agreements with respect to the OpenAI opportunity or other potential investments, or that any investment will be completed on expected terms,’ Nvidia said…”
November 18 – Wall Street Journal (Jennifer Hiller): “Mike Alfred had become convinced by 2021 that he was on to a great idea: building huge data centers for bitcoin mining in some of the loneliest spots in Texas. The investor found kindred spirits at a bitcoin-focused data-center developer, now called IREN, and joined its board. They were among the few who saw locations like Childress, a tiny city in the Texas Panhandle with a population of 5,700, as ripe for massive infrastructure investment. By the following year, the vision appeared flawed. During the crypto winter that culminated in the collapse of Sam Bankman-Fried’s FTX exchange, IREN shares tumbled toward $1. Now, the company’s fortunes have reversed—and Microsoft is coming to Childress. Earlier this month, the software giant signed a $9.7 billion cloud-services contract with IREN to expand its rural data-center site to process Microsoft’s workloads for artificial intelligence.”
Bursting Crypto Bubble Watch:
November 19 – Bloomberg (David Pan): “The Bitcoin bounce never came — and now leveraged traders are trapped. After peaking around $126,000 in early October, Bitcoin has dropped nearly 30% — breaking through key thresholds, spooking ETF investors, and rattling holders big and small. One group in particular remains exposed: traders who bet on a rebound — and now find themselves underwater while paying for it. That pressure is building, with the world’s largest cryptocurrency sinking back toward $89,500 in Wednesday trading... On offshore exchanges like Binance, open interest in Bitcoin perpetual futures — the most popular venue for leveraged speculation — surged by more than 36,000 tokens last week, equivalent to over $3.3 billion. It was the biggest weekly jump since April…”
November 19 – Reuters (Manya Saini and Niket Nishant): “Investors pulled roughly $523 million from BlackRock's flagship iShares Bitcoin Trust on Tuesday…, marking the fund’s largest single-day withdrawal since its launch… IBIT, the largest spot bitcoin ETF, has attracted strong investor demand since its launch in January 2024 and has been central to the crypto ETF boom… IBIT, which has over $73 billion in assets, has fallen 19% quarter-to-date.”
November 21 – Bloomberg (Tasos Vossos and Judy Lagrou): “The plunging value of Bitcoin is piling pressure on the securities Strategy Inc. has been issuing in bulk to buy the asset, raising questions about the financing model of the world’s largest crypto treasury firm. Prices across the several preferred stock series sold by the… firm have been falling this week, in line with a slump in Bitcoin’s value. A $1.2 billion 10% issue that was priced at 85 cents on the dollar in June is now down to 66 cents, pushing up the yield to 15%...”
November 20 – Bloomberg (Judy Lagrou): “Michael Saylor’s Strategy Inc. is among the most exposed to the crypto slump — and now faces the real risk of being dropped from the benchmark indices that have underpinned its presence in mainstream portfolios. In a note this week, analysts at JPMorgan… warned that Strategy could lose its place in the likes of MSCI USA and Nasdaq 100. As much as $2.8 billion could exit if MSCI moves ahead — and billions more if other index providers follow suit.”
November 18 – Wall Street Journal (Vicky Ge Huang and Caitlin Ostroff): “The rally in crypto prices this year was boosted by a large heap of debt, with traders using leverage to amplify their gains. Now, after a punishing selloff in the past two weeks, the dangers of those bets are becoming apparent. Investors have never had more ways to place complex wagers on crypto. In some cases, people can put down $1 of their own money to gain exposure to $100 of bitcoin. It is a strategy that can produce windfall profits—when the market breaks the borrower’s way. If it goes in the wrong direction, traders can be on the hook for big losses and can see their holdings liquidated if they don’t post sufficient funds.”
November 16 – Yahoo Finance (Brian Sozzi): “I didn’t expect the hardcore crypto bulls to roll up to Yahoo Finance Invest this week and say they are terrified about the sharp pullback in prices… Eric Trump, executive vice president, The Trump Organization: ‘I laugh honestly [at questions on the recent pullback]. Like, I literally laugh because it’s almost like not a serious question. Bitcoin exactly two years ago today was at $36,500. And what are we sitting at? You know, $102,000, $103,000, $105,000. We’re dancing in that region. It was well over $120,000. So you had what, almost a 200% return in a two-year period of time. And then people talk about the volatility of bitcoin. Hey, I’ll take that volatility. Give me more volatility if I can get more return. And I think that’s how crypto people are wired. If you can’t handle volatility, stay out of cryptocurrency and don’t bother. But you know, go into Treasurys where you’re going to have zero volatility and you’re going to click away at you know 3% returns… Embrace volatility. Embrace the future’… Michael Saylor, executive chairman, Strategy: ‘We’re in the digital gold rush, and 2035 is the .99 year. That means that 99% of all bitcoin will have been mined in the year 2035. If you want bitcoin, you need to get it between now and then. Because the last 1% of bitcoin comes out over 100 years. There’s no doubt in my mind, bitcoin will be a larger asset class than gold by the year 2035.’”
November 17 – Bloomberg (Judy Lagrou): “Michael Saylor doubled down on the digital-asset treasury model that he pioneered during last week’s crypto market rout. Strategy Inc. revealed it bought $835.6 million in Bitcoin in the seven days ended Sunday, the largest purchase of the original cryptocurrency by the firm since July. That brought its total holdings to 649,870 tokens worth roughly $61.7 billion… The company appeared to finance the majority of the purchases with the proceeds of an euro-denominated preferred offering that closed last week.”
November 17 – Financial Times (George Steer and Jill R Shah): “More than $1tn has been wiped from the cryptocurrency market in the past six weeks as concerns about lofty tech valuations and the path of US interest rates have fuelled a sell-off in speculative assets. The total market value of more than 18,000 coins tracked by data provider CoinGecko has tumbled 25% since a market peak on October 6, wiping about $1.2tn from their combined capitalisation. The price of bitcoin has dropped about 28% over the same period to $91,700… Losses for traders in high-octane leveraged bets over the past month have accelerated the pace of the selling, analysts say.”
November 17 – Bloomberg (Sidhartha Shukla): “The crypto market selloff shows no signs of abating, and some of the riskiest tokens are bearing the brunt of it. The MarketVector Digital Assets 100 Small-Cap Index, which tracks the 50 smallest digital assets in a basket of 100, fell to its lowest level since November 2020 on Sunday before paring some losses… So-called altcoins, a barometer of risk appetite in the most speculative corners of crypto, have trailed their larger counterparts by a wide margin since early 2024.”
Bubble and Mania Watch:
November 18 – Bloomberg (Aisha S Gani): “Klarna Group Plc reported record revenue that beat estimates for its third quarter, while setting aside more provisions for credit losses, in its first set of earnings since going public. The… payments firm generated $903 million in revenue for the three months through September, up 26% on a year ago… Still, Klarna posted a net loss of $95 million, as the firm set aside more money for potentially souring loans. The company said provisions represented 0.72% of gross merchandise volume, up from 0.44% a year ago. Provisions for loan losses came in at $235 million… Klarna shares plunged as much as 10% in early trading in New York, the biggest drop since its debut in September.”
November 19 – Wall Street Journal (Jessica Flint): “San Francisco is back after pandemic-related struggles—and growing up. Affluent young families demanding space have elevated the 94127 ZIP Code, which is anchored by the walkable West Portal village center and encompasses desirable residential neighborhoods such as St. Francis Wood. This west side pocket reliably offers a rare San Francisco luxury: detached single-family homes with yards. The suburbia-in-the-city lifestyle has recently propelled the ZIP Code to rival historically more expensive city enclaves. In October, its $2.5 million median listing price was second only to the $2.7 million median in premiere address Pacific Heights…”
November 19 – Bloomberg (Maxwell Adler): “A surge in artificial intelligence stock prices has boosted California’s tax collections by about $11 billion, yet the state’s deficit is still on track to swell to about $18 billion next fiscal year, officials said. The state’s Legislative Analyst’s Office said… that despite sluggish job growth and flat consumer spending, the state’s general-fund revenue has climbed well above expectations as a run-up in AI-related stocks delivered outsized capital gains to California’s wealthiest.”
November 20 – Bloomberg (Daniel Cancel and Anna J Kaiser): “Banco Master SA, the failed Brazilian bank at the center of a swirling financial scandal, made waves of a different sort last year, when it paid record rent for the last available office space in Miami’s most exclusive skyscraper. Now, instead of moving in, Master Chief Executive Officer Daniel Vorcaro is in custody after local authorities said he was trying to flee Brazil, where the central bank ordered that his company be liquidated. Had things worked out differently, Vorcaro would have been rubbing elbows with executives from Citadel Securities, Microsoft Corp. and Thoma Bravo — fellow tenants at 830 Brickell Plaza in Miami’s financial district.”
Inflation Watch:
November 17 – CBS (Mary Cunningham): “A growing share of lower-income Americans are struggling to get by financially as their wages fail to keep up with inflation, according to a recent analysis. Roughly 29% of lower-income households are living paycheck to paycheck, up slightly from 2024 and from 27.1% in 2023, data from the Bank of America Institute shows. The financial firm defines that as spending more than 95% of household income on necessities such as housing, gasoline, groceries, utility bills and internet service. In 2025, nearly a quarter of all U.S. households lived paycheck to paycheck, Bank of America estimates.”
November 14 – Associated Press (Marc Levy): “The forecasts are eye-popping: utilities saying they’ll need two or three times more electricity within a few years to power massive new data centers that are feeding a fast-growing AI economy. But the challenges — some say the impossibility — of building new power plants to meet that demand so quickly has set off alarm bells for lawmakers, policymakers and regulators who wonder if those utility forecasts can be trusted. One burning question is whether the forecasts are based on data center projects that may never get built — eliciting concern that regular ratepayers could be stuck with the bill to build unnecessary power plants and grid infrastructure at a cost of billions of dollars.”
November 14 – Wall Street Journal (Konrad Putzier): “Sharp price increases in coffee, beef, bananas and other household items over the past year have fueled widespread frustration with the rising cost of living. The Trump administration’s efforts to walk back tariffs on these and other goods could ease the pressure, economists say. Average retail prices for ground roast coffee are up more than 40% in the past year as of September… Average retail prices for ground beef and bananas have increased by 11.5% and 8.6% since September 2024—well ahead of the overall inflation rate of about 3%.”
November 14 – Financial Times (Susannah Savage): “If there is one consumer product whose prices Donald Trump should be attuned to, it is steak. In the US, the average price of a pound of ground beef reached a record $6.32 in August — up 13% in a year — while uncooked steaks averaged $12.22 per pound, an 11% rise. Steakhouses have lifted menu prices, trimmed portions or both. In Britain, beef prices have climbed nearly 25% over the past year, making it one of five staples — along with butter, milk, chocolate and coffee — that together accounted for roughly 40% of the increase in food prices…”
November 19 – Bloomberg (Paulina Cachero): “Skyrocketing insurance costs are threatening New York City’s affordable housing stock. The landlords who own more than 450,000 of the city’s rent-stabilized apartments saw insurance expenses grow 150% from 2019 to 2025, far outpacing every other major cost, according to… New York University’s Furman Center. The rapid rise in insurance premiums is just one of the pressures on housing in New York, part of a broader affordability crisis that helped Zohran Mamdani win the city’s highest office earlier this month.”
Federal Reserve Watch:
November 19 – New York Times (Colby Smith): “Many officials at the Federal Reserve did not think the central bank should lower interest rates in December when they voted last month for a second cut in a row, according to minutes from October’s meeting. The record of the latest gathering…, highlighted a divide that has only deepened since officials opted for a quarter-point cut that brought interest rates down to a range of 3.75% to 4%... ‘In discussing the near-term course of monetary policy, participants expressed strongly differing views about what policy decision would most likely be appropriate at the committee’s December meeting,’ the minutes said.”
November 20 – Bloomberg (Jonnelle Marte): “Federal Reserve Bank of Cleveland President Beth Hammack said lowering interest rates to support the labor market could extend the period of above-target inflation and increase financial stability risks. Recent stock market gains and easy credit conditions add to the danger by encouraging investors to take more risk, Hammack said... ‘Lowering interest rates to support the labor market risks prolonging this period of elevated inflation, and it could also encourage risk-taking in financial markets,’ Hammack said... ‘This means that whenever the next downturn comes, it could be larger than it otherwise would have been, with a larger impact on the economy.’”
November 21 – CNBC (Jeff Cox): “New York Federal Reserve President John Williams said… he expects the central bank can lower its key interest rate from here as labor market weakness poses a bigger economic threat than higher inflation. With divisions in the central bank running high over the future of rates, Williams took the side of the doves who still see policy as a bit restrictive when it comes to economic growth. ‘I view monetary policy as being modestly restrictive, although somewhat less so than before our recent actions,’ he said… ‘Therefore, I still see room for a further adjustment in the near term to the target range for the federal funds rate to move the stance of policy closer to the range of neutral, thereby maintaining the balance between the achievement of our two goals’.”
November 20 – Bloomberg (Katanga Johnson): “Federal Reserve Governor Lisa Cook said officials should monitor how unexpected losses in private credit may spread to the broader US financial system due to the ‘increased complexity and the interconnections’ with leveraged firms. Cook said… she is focused on what could be learned from increased usage of payment-in-kind arrangements as seen in recent bankruptcies. ‘The likelihood of observing additional cases like those recently in the news increases when size of exposure and level of complexity in these arrangements are not transparent, when a sector experiences periods of rapid growth, and when these arrangements have not been through a full credit cycle,’ Cook said…”
November 17 – Wall Street Journal (Matt Grossman): “Federal Reserve Gov. Philip Jefferson said… the Fed should move cautiously with any further rate cuts to avoid undermining its anti-inflation efforts. After two quarter-point rate reductions so far in 2025, the Fed’s policy stance is ‘still somewhat restrictive, but we have moved it closer to its neutral level that neither restricts nor stimulates the economy,’ Jefferson… said… ‘The evolving balance of risks underscores the need to proceed slowly as we approach the neutral rate,’ he added.”
November 20 – Bloomberg (Enda Curran): “Add one more to the number of Federal Reserve officials signaling fresh discomfort over inflation. Fed Governor Michael Barr… said the US central bank needs to proceed with caution in considering additional interest-rate cuts. ‘I am concerned that we’re seeing inflation still at around 3% and our target is 2%, and we’re committed to getting to that 2% target,’ Barr said. ‘So we need to be careful and cautious now about monetary policy, because we want to make sure that we’re achieving both sides of our mandate.’”
November 17 – Reuters (Howard Schneider): “The data available during the recent U.S. government shutdown shows the job market near stall speed, with state unemployment claims rising slightly, layoff numbers increasing, and no evidence of building wage pressures, facts that warrant another quarter-percentage-point interest rate cut when the U.S. central bank meets next month, Federal Reserve Governor Christopher Waller said… ‘The labor market is still weak and near stall speed,’ Waller said… Meanwhile, inflation, once the likely temporary impact of tariffs is excluded, ‘is relatively close’ to the Fed's 2% target, Waller said… ‘I am not worried about inflation accelerating or inflation expectations rising significantly… My focus is on the labor market, and after months of weakening, it is unlikely that the September jobs report later this week or any other data in the next few weeks would change my view that another cut is in order’…”
November 15 – Axios (Courtenay Brown): “Former Federal Reserve governor Adriana Kugler was referred for investigation earlier this year for allegedly breaking the central bank's stock trading rules, per new financial disclosures… The documents provide a backdrop for Kugler's surprise resignation in August… Kugler, appointed by former President Biden in 2023, was the subject of an ethics probe, according to annual disclosures published by the U.S. Office of Government Ethics.”
November 19 – Reuters (Michael S. Derby): “Federal Reserve Governor Stephen Miran said… easing financial firms’ regulatory burden could allow the U.S. central bank to shrink the size of its balance sheet again in the future. ‘As we make more progress peeling back regulations, I expect the optimal level of reserves may drop below where it is now, at least relative to GDP or the size of the banking system,’ Miran said… Before shrinking Fed holdings further, ‘we first have to get the regulations right and ensure that bank balance sheets are flexible enough for an environment with a smaller Federal Reserve footprint’.”
U.S. Economic Bubble Watch:
November 20 – CNBC (Jeff Cox): “The U.S. economy added substantially more jobs than expected in September, according to a long-awaited report… Nonfarm payrolls increased by 119,000 in the month, up from the 4,000 jobs lost in August following a downward revision. The… consensus estimate for September was 50,000. The July total also was revised down to 72,000, a decrease of 7,000 from the prior release. In addition…, the unemployment rate edged higher to 4.4%, the highest it’s been since October 2021. Average hourly earnings increased 0.2% for the month and 3.8% from a year ago, compared to respective forecasts for 0.3% and 3.7%.”
November 17 – Wall Street Journal (Editorial Board): “Corporate CEOs are keeping their heads down these days, lest they get chopped off by the Trump Administration. So last week’s remarks by Ford Motor CEO Jim Farley deserve credit for candor, as well as for the public service of telling politicians a hard truth about the American labor force. Mr. Farley told a podcast… he can’t find enough skilled mechanics to run his auto plants. Specifically, Ford can’t fill 5,000 mechanic jobs that pay $120,000 a year. ‘We are in trouble in our country. We are not talking about this enough,’ Mr. Farley said. ‘We have over a million openings in critical jobs, emergency services, trucking, factory workers, plumbers, electricians and tradesmen.’ He said Ford is struggling to hire mechanics at salaries that Ivy League grads might envy. ‘A bay with a lift and tools and no one to work in it—are you kidding me? Nope,’ Mr. Farley lamented. ‘We do not have trade schools’ in this country.”
November 18 – Bloomberg (Jarrell Dillard): “US companies shed 2,500 jobs per week on average in the four weeks ended Nov. 1, according to data released… by ADP Research. The figures suggest the labor market lost momentum in late October, though the pace of employment losses appeared to slow heading into November.”
November 18 – Axios (Emily Peck): “The rolling uncertainty of 2025 is giving the country’s smallest businesses the biggest headaches. Small companies employ nearly half of all U.S. workers, and are an engine of job growth for the economy. Weakness in the small business sector ‘is a concern when you think of the U.S. labor force in its entirety,’ ADP chief economist Nela Richardson told reporters... Small- and medium-sized firms both shed jobs in October, per ADP's most recent report; larger companies gained workers. A few things are happening here. For starters, small businesses are less able to ride the tariff roller coaster… Small firms are more credit-constrained — especially compared to the biggest firms.”
November 19 – CNBC (Diana Olick): “Mortgage rates rose for the third consecutive week, causing demand from both current homeowners and potential homebuyers to drop… Applications for a mortgage to purchase a home fell 2% for the week and were 26% higher than the same week one year ago. Purchase demand has hovered around the same level for several months…”
November 20 – Bloomberg (Michael Sasso): “Sales of previously owned homes in the US rose in October to the fastest pace in eight months, as buyers took advantage of lower mortgage rates and gained the upper hand over sellers in some markets. Contract closings climbed 1.2% to an annual rate of 4.1 million last month… Economists… expected a rate of 4.08 million. The median sales price gained 2.1% from a year ago to $415,200, extending a run of year-over-year price increases dating back to mid-2023. The uptick in October sales… was the second straight and points to a housing market showing some signs of life…”
November 17 – Yahoo Finance (Claire Boston): “Home values are falling for more than half of the nation, the biggest share in more than a decade, when the US was still struggling to claw out of the Great Recession. As of October, 53% of homes in the country had lost value in the past year, according to Zillow... Nationally, home price appreciation has been roughly flat, but that figure masks large regional disparities. Home prices are falling in much of the Southeast and parts of the West, while they’re rising in many cities in the Midwest and Northeast… More than 80% of homes in the Florida cities of Jacksonville, Orlando, and Tampa have also lost value, along with 87% in Dallas and 86% in San Antonio.”
November 19 – Associated Press (Paul Wiseman): “The U.S. trade deficit fell by nearly 24% in August as President Donald Trump’s sweeping global tariffs pushed imports lower… The gap between what the United States buys from other countries and what it sells them fell to $59.6 billion in August, from $78.2 billion in July. Imports of goods and services dropped 5% to $340.4 billion in August from July when U.S. companies were stocking up on foreign products before Trump finalized taxes on products from almost every country on earth. Those levies went into effect Aug. 7. U.S. exports blipped up 0.1% in August to $280.8 billion.”
November 16 – Financial Times (Andrew Jack): “American universities have suffered one of the sharpest ever declines in foreign enrolments in the face of tough policies from President Donald Trump, with the number of new international students falling 17% this year. A survey of 825 US higher education institutions showed 57% reported falling new enrolments by foreign students… The results raise concerns over the impact on universities of declining tuition revenue, along with the less tangible effect that having fewer foreign students will have on innovation and economic growth.”
China Watch:
November 17 – Bloomberg: “China’s broad fiscal spending slumped in October by the most since at least 2021, crippling a key driver of investment and economic growth. The combined expenditure in China’s two main budgets — the general public account and the government-managed fund book — tumbled 19% in October from a year earlier to 2.37 trillion yuan ($334bn)… The plunge reflects an evolution of government policies and underlines waning fiscal support for the world’s second-largest economy, which lost steam across the board last month.”
November 19 – Bloomberg: “China is considering new measures to turn around its struggling property market, as concerns mount that a further weakening of the sector will threaten to destabilize its financial system, according to people familiar… Policymakers including the housing ministry are considering a slew of options, such as providing new homebuyers mortgage subsidies for the first time nationwide… Other measures being floated include raising income tax rebates for mortgage borrowers and lowering home transaction costs…”
November 17 – Bloomberg (Trista Xinyi Luo): “Creditors owed about $150 billion by defaulted Chinese developers are finally getting a fuller, though by no means complete, picture of what small part of that total they may claw back. The latest example is Country Garden Holdings Co., one of the biggest casualties of China’s real estate crisis… It unveiled more details… on its restructuring plan including a proposal to issue as much as $13 billion of mandatory convertible bonds. The details suggest that the various groups of offshore creditors could recover anywhere in the range of 10% to 24% of the $14.1 billion of debt they held…”
November 17 – Bloomberg (Apple Ka Ying Li, Pearl Liu, and Kari Soo Lindberg): “Hong Kong bankers and regulators are signaling growing concern over the city’s deepest real estate downturn since the Asian financial crisis. In recent months, the de facto central bank here has intensified scrutiny of lenders’ decisions on distressed loans. It has called banks more frequently to gauge their willingness to extend credit lines to even smaller developers. And bankers are increasingly reassessing the lofty valuations assigned to collateral that backs hundreds of billions of dollars of property loans.”
Europe Watch:
November 17 – Wall Street Journal (Paul Hannon): “Threats to the stability of the eurozone’s financial system remain ‘elevated’ despite a series of agreements between the U.S. and its trading partners, European Central Bank Vice President Luis de Guindos said... ‘The potential for policy shocks to disrupt the international order poses significant risks of geoeconomic and regulatory fragmentation across the globe, while ongoing geopolitical tensions make more frequent and impactful adverse tail events increasingly likely,’ he said. De Guindos said the eurozone’s financial system could be weakened by ‘disorderly currency swings’ with their origins in U.S. markets.”
November 19 – Bloomberg (Irina Anghel): “House prices in Kensington and Chelsea fell by almost £160,000 ($210,000) in the year to September, as the capital’s housing market reels from expected tax hikes… The Office for National Statistics said… prices of sold homes in the largely-affluent borough, known as K&C, dropped 11.3%, alongside a 14.4% plunge in Westminster. House prices in the two boroughs combined are above £1 million on average. Across London as a whole, home values fell by more than £10,000 ($13,100) in the year to September… A typical home in the capital is now worth £556,000, down 1.8%.”
Japan Watch:
November 21 – Wall Street Journal (Megumi Fujikawa): “Japan’s cabinet has approved $135 billion of stimulus to help households cope with rising living costs and boost economic growth, firing off the first fiscal salvo under new Prime Minister Sanae Takaichi. The Takaichi administration… signed off on the package totaling 21.3 trillion yen, equivalent to $135.27 billion. At the heart of the proposal are measures to support households under financial strain, a key issue for Japanese voters. The new government, which took power last month, has pledged to tackle those issues.”
November 18 – Financial Times (Leo Lewis and Ian Smith): “Japan’s long-term borrowing costs have surged to their highest in decades, in an intensifying ‘Takaichi trade’ that the new administration will unveil a much larger fiscal spending package than originally expected. Yields on the benchmark 10-year bonds, which move inversely to price, climbed as much as 0.04 percentage points to 1.78% on Wednesday — the highest level since June 2008 in the global financial crisis… The sell-off extended to longer-dated notes. Yields on 30-year JGBs rose to a record intraday high of 3.35%. Driving the rise in JGB yields, said traders, were signs that the government of Prime Minister Sanae Takaichi was preparing a huge supplementary budget of at least ¥25tn ($161bn) as she seeks to make good on pledges to boost the economy and protect households from rising prices. ‘There is a fear in the market that the stance of the government is now pretty dovish. It may be an overreaction today, but the market clearly thinks that the government is going to have to issue longer-dated bonds to fund its spending plans,’ said Shoki Omori, chief desk strategist at Mizuho.”
November 18 – Bloomberg (Erica Yokoyama): “Japan’s Finance Minister Satsuki Katayama said she confirmed the need to monitor market movements with Bank of Japan Governor Kazuo Ueda and Growth Strategy Minister Minoru Kiuchi... ‘We confirmed that the three of us will do our utmost to manage policy toward stable inflation and sustainable economic growth,’ Katayama told reporters… ‘We also reaffirmed that we will monitor market developments with a high sense of urgency and communicate with markets closely.’”
November 18 – Bloomberg (John Cheng and Mia Glass): “Japanese government bonds extended losses after results of a 20-year debt sale signaled that investors are still cautious about extra supply ahead of Prime Minister Sanae Takaichi’s first economic package. The 20-year yield rose 3 bps to 2.815%, its highest since 1999… The bid-to-cover ratio, an indication of demand, was 3.28 versus 3.56 at last month’s sale.”
November 17 – Bloomberg (Momoka Yokoyama, Alice French and Eru Ishikawa): “Japanese stocks and government bonds extended losses on Tuesday, as sentiment cooled on concerns about a diplomatic spat between Tokyo and Beijing and fiscal health at home. The Nikkei 225 index fell 3.2%, the biggest drop since April 9, while the yield for the 40-year government bond jumped as much as 8 bps to 3.68%, its highest level since the securities debuted in 2007. ‘There’s rising uncertainty about government finances, as well as nerves around Japan’s relationship with China,’ said Tomo Kinoshita, global market strategist at Invesco Asset Management Japan Ltd. ‘Overall market sentiment is worsening, and it’s fueling a ‘sell Japan’ movement,’ he added.”
November 17 – Bloomberg (Toru Fujioka): “Governor Kazuo Ueda told Prime Minister Sanae Takaichi that the Bank of Japan is in the process of slowly dialing back its easing support for the economy, signaling his unshaken intention to carefully raise rates. ‘The mechanism for inflation and wages to grow together is recovering,’ Ueda told reporters… after his first bilateral meeting with the premier. ‘Given this, I told the prime minister that we are in the process of making gradual adjustments to the degree of monetary easing.’ The two met at a time when investors are seeking clarity over Takaichi’s stance on monetary policy and await details of an economic package expected to be unveiled this week.”
November 16 – Bloomberg (Toru Fujioka): “Japan’s economic contraction over the summer will support Prime Minister Sanae Takaichi’s case to compile an ambitious stimulus package even as the central bank stays on track for a rate hike in coming months. Japan’s real gross domestic product shrank by 1.8% on an annualized basis in the three months through September, the first decline in six quarters…”
November 16 – Bloomberg (John Cheng): “Goldman Sachs… sees a return of Japan’s fiscal risk premium as investors grow wary of a larger-than-expected stimulus package, putting pressure on longer-maturity sovereign bonds and the yen. Concerns are growing that the Japanese government may back away from its pledge to balance its budget each year and meet its long-term fiscal goals, strategists including George Cole wrote... ‘Even if the eventual outcome turns out to be less extreme than feared, the market’s heightened sensitivity around fiscal concerns suggests any path to ultimate relief could be a bumpy one,’ the US investment bank said.”
Emerging Market Watch:
November 16 – Bloomberg (Marcus Wong, Carolina Wilson and Srinivasan Sivabalan): “Some of the year’s most popular emerging-market trades such as betting on the Brazilian real and stocks linked to artificial intelligence are becoming a source of concern as money managers warn of risks from overcrowding… ‘Investors are too complacent on emerging markets,’ said Brendan McKenna, an emerging-market economist and FX strategist at Wells Fargo... ‘FX valuations, for most if not all, are stretched and not capturing a lot of the risks hovering over markets. They can continue to perform well in the near-term, but I do feel a correction will be unavoidable’.”
November 19 – Bloomberg (Rachel Gamarski and Giovanna Bellotti Azevedo): “A handful of Brazilian companies are disclosing exposure to Banco Master SA following the liquidation of the troubled lender and the arrest of its chief executive amid a sweeping corruption probe. Health-care provider Oncoclinicas reported holding 433 million reais ($81.1 million) in Master time deposits…”
November 20 – Bloomberg (Ntando Thukwana): “The boom in artificial intelligence stocks is creating a risk of a bubble, which could threaten emerging markets, South Africa’s central bank Governor Lesetja Kganyago said… ‘Despite the promise of AI, there are signs of a bubble inflating,’ Kganyago said… after the central bank cut its policy rate by 25 bps. ‘With lower rates, and cheap credit even for riskier borrowers, financial markets appear vulnerable to a correction. If that happens, emerging markets could suffer from spillovers.’”
Leveraged Speculation Watch:
November 18 – Financial Times (Joseph Cotterill and Costas Mourselas): “Bets on Argentina delivered profits for a group of emerging market and distressed debt hedge funds last month, as the US bailed out Javier Milei’s government and voters backed his party in critical elections. Funds such as Shiprock Capital, ProMeritum and Amia Capital benefited from double-digit rallies in Argentina’s US dollar bonds and other assets in October… The bets on Argentina’s swift turnaround come in a standout year for many EM hedge funds that have also gained as the weaker US dollar has boosted currencies across the developing world.”
Social, Political, Environmental, Cybersecurity Instability Watch:
November 16 – Axios (Sam Sabin): “The dam for foreign spies automating cyberattacks with AI tools is officially broken. Imagine a world where Chinese spies can tamper with a U.S. water system or steal a major AI vendor’s plans for its next model upgrade — all with just a few clicks. That future is no longer hypothetical. ‘Guys wake the f up,’ Sen. Chris Murphy said on X. ‘This is going to destroy us — sooner than we think — if we don’t make AI regulation a national priority tomorrow.’ Anthropic this week uncovered what it says is the first documented case of a fully automated cyberattack. Suspected Chinese state hackers used Claude Code to target about 30 organizations — including tech firms, banks, chemical manufacturers, and government agencies — and successfully broke into several. Earlier this month, Google said it had seen Russian military hackers using AI to write malware scripts aimed at Ukrainian entities.”