Kevin Warsh has also been criticized for his cautious approach to QE. While working closely with Chair Bernanke to implement the Fed’s 2008 Wall Street bailout, he argued in September 2009 that the Fed should begin reversing extraordinary crisis-period liquidity injections. He pushed back in 2010 against Bernanke’s move to restart QE.
From Ben Bernanke’s “Courage to Act”: “Kevin Warsh had substantial reservations... He had supported the first round of securities purchases, begun in the midst of the crisis. Now that financial markets were functioning more normally, he believed that monetary policy was reaching its limits, that additional purchases could pose risks to inflation and financial stability…”
Warsh voted with Bernanke on adopting QE2, but the following week (November 8, 2010) penned a thoughtful op-ed piece for the Wall Street Journal.
Excerpts from “The New Malaise and How to End It: Given what ails the economy, additional monetary policy measures are poor substitutes for more powerful pro-growth policies”:
“Fiscal authorities should resist the temptation to increase government expenditures continually in order to compensate for shortfalls of private consumption and investment.”
“Pro-growth policies include reform of the tax code to make it simpler, more transparent and more conducive to long-term investment. These policies also include real regulatory reform so that firms—financial and otherwise—know the rules, and then succeed or fail.”
“The deleveraging by our households and businesses is not a pattern to be arrested, but good prudence to be celebrated. Larger, more liquid corporate balance sheets and higher personal saving rates are the reasonable and right responses to massive government dissaving and unpredictable government policies. The steep correction in housing markets, while painful, lays the foundation for recovery, far better than the countless programs that have sought to subsidize and temporize the inevitable repricing.”
“Monetary policy also has an important role to play. However, the Federal Reserve is not a repair shop for broken fiscal, trade or regulatory policies. Given what ails us, additional monetary policy measures are poor substitutes for more powerful pro-growth policies. The Fed can lose its hard-earned credibility—and monetary policy can lose its considerable sway—if its policies overpromise or under deliver.”
“The Fed’s increased presence in the market for long-term Treasury securities poses nontrivial risks that bear watching. The prices assigned to Treasury securities—the risk-free rate—are the foundation from which the price of virtually every asset in the world is calculated. As the Fed's balance sheet expands, it becomes more of a price maker than a price taker in the Treasury market.”
“Responsible monetary policy in the current environment requires attention not only to near-term macroeconomic conditions, but also to corollary risks with long-term effects.”
It would be a different world today had the Bernanke Federal Reserve not doubled the Fed’s balance sheet between November 2010 and November 2014. Financial, economic, social, and geopolitical stability would have been better served if the Yellen Fed had not held short-term interest rates below 1% through 2017 – still held below 2% a decade after the crisis. It is possible to imagine global central bankers not trapped by historic speculative leverage and Bubbles.
Kevin Warsh demonstrated sound judgment during an extraordinary period, pushing back against the Fed’s inflationist mindset. Like Powell, I believe he is a man of integrity. And as I pledged when Powell became Fed Chair, I will support Chair Warsh against future assertions of his responsibility for inevitable crisis dynamics and Bubble collapse.
That said, I am much more comfortable with the old Warsh’s analytical and policy framework than New Age Kev.
From his December 16, 2025, WSJ piece, “The Federal Reserve’s Broken Leadership:”
“AI will be a significant disinflationary force, increasing productivity and bolstering American competitiveness.”
I am reminded of the late-nineties Bubble dynamic, when Alan Greenspan adopted analysis that technology, innovation, and the resulting productivity boom had fundamentally increased the economy’s “speed limit.” It was a fateful distraction from precariously loose financial conditions and inflating asset Bubbles – an expedient that rationalized the lack of courage to rein in late-cycle Bubble excess.
Inflation has been above target for five years. There are indications that a historic AI spending boom poses significant inflationary risk (i.e., prices of electricity, semiconductors, copper, commodities, etc.). The unfolding AI arms race and broader capital investment boom unfold these days at a time of relative labor market tightness. In short, it’s a suspicious juncture for Kevin Warsh to morph New Paradigm Dovish.
Warsh: “The Fed should re-examine its great mistakes that led to the great inflation. It should abandon the dogma that inflation is caused when the economy grows too much and workers get paid too much. Inflation is caused when government spends too much and prints too much. Money on Wall Street is too easy, and credit on Main Street is too tight. The Fed’s bloated balance sheet, designed to support the biggest firms in a bygone crisis era, can be reduced significantly. That largesse can be redeployed in the form of lower interest rates to support households and small and medium-size businesses.”
“The Fed is an institution whose reach has extended far beyond its grasp. Fundamental reform of monetary and regulatory policy would unlock the benefits of AI to all Americans. The economy would be stronger. Living standards would be higher. Inflation would fall further. And the Fed will have contributed to a new golden age.”
Warsh, now the seasoned political animal, Thursday said what he had to say in the Oval Office to secure the job. A lot will happen between now and May and beyond, assuming Senator Thom Tillis follows through on his threat to hold up Warsh’s confirmation until the Department of Justice is “completely done” with its Powell investigation. I don’t envy him. He’ll have the President breathing down his neck, while others question his motives and integrity.
January 30 - Wall Street Journal (Alex Leary): “President Trump indicated continued support for the Justice Department's criminal investigation into Federal Reserve Chair Jerome Powell, despite a vow from a key GOP senator to oppose Kevin Warsh’s nomination to replace Powell until the probe is resolved. ‘He’s either incompetent or he… is a crook, and we’ll find out,’ Trump said of Powell on Friday…”
Music to the President’s ears, Warsh has repeatedly called for “regime change” at the Fed. It’s only been one day, but the odds much favor regime change taking hold first in the financial markets. In a week where monetary disorder was in full force, Friday’s instability was unnerving.
After trading intraday Thursday to $5,595, spot gold was 16% lower at Friday’s lows (ended the session down $481, or 8.95%) – the “biggest intraday decline since the early 1980s.” Silver (“a record intraday decline”) made gold look placid. From Thursday’s highs ($121.65) to Friday’s lows ($73.96), Silver collapsed 39% (ended session down $30.50, or 26.36%). Platinum highs to lows registered at 28.4%, with Copper suffering a 12.5% swing. Platinum ended Friday’s session down 16.95%, with Copper losing 4.51%. Other markets take note.
The Semiconductors ended Friday’s session down 4.6% from Thursday's highs (down 3.87% for the session). After trading at 16 in early Thursday trading, the VIX (equities volatility) Index touched 18.5 mid-session Friday. Interestingly, the iShares emerging markets ETF (EEM) dropped 3% from Thursday's highs. The Dollar Index rallied 0.74% Friday, while 10-year Treasury yields were little changed. Market expectations for the year-end fed funds rate declined five bps to 3.11% (implying 53bps of rate reduction).
It was a curious market reaction to the Warsh news. While Kevin Warsh is still described as a “hawk,” markets assume he’ll push for lower rates. He’ll lead a deeply divided FOMC in a period of extraordinary instability – equipped with the experience, skill and demeanor to pull it off. But it’s balance sheet policy that will stir restless nights on Wall Street.
Going back to 2008, Warsh has been skeptical of Fed “money printing.” And, for 18 years, the Fed repeatedly pushed the envelope of QE liquidity injections and market support operations. 2008’s $1 TN morphed into 2010/14’s $2.5 TN, to the pandemic’s $5 TN. Any concern that elevated inflation might restrain the Fed’s printing press was allayed with the response to the March 2023 banking liquidity crisis.
Here's the problem: Pricing across the financial markets now fully discounts open-ended QE. Risk perceptions are monumentally distorted by the assumption that the Fed will do whatever it takes to backstop marketplace liquidity. And the greater speculative Bubbles inflate, the greater market confidence the Fed knows it has no alternative than to respond immediately and aggressively to market instability.
It's only a matter of time before the Fed’s balance sheet gets much larger. With speculative Bubbles over recent years succumbing to blow-off dynamics, to stabilize a serious bout of speculative deleveraging would now require Trillions of QE. The Warsh Fed will surely accommodate, but the key issue will be whether they will open the monetary floodgates fast enough to reverse deleveraging before panic erupts.
Bloomberg (Maria Eloisa Capurro): “According to Warsh, models used by the Fed to interpret economic data are wrong: ‘They believe that inflation is driven by consumers, by wages that are rising too much, and consumers that are spending too much,’ he said. ‘I fundamentally disagree. At the core, I think inflation comes about when the government spends too much and prints too much’.”
On the topic of Fed models, Chair Powell’s press conference offered interesting commentary. In back-to-back seemingly unrelated questions, the Fed Chair was asked about precious metals prices and then about the Fed’s economic models.
CNN’s Matt Egan: “As I'm sure you've noticed, gold and silver prices have experienced historic gains of late, and I’m wondering how much attention, if any, you pay to those moves, and what message you may take from these significant price increases we've seen for precious metals?”
Powell: “Don’t take much message macroeconomically. The argument can be made that we’re losing credibility or something, it’s simply not the case. If you look at where inflation expectations are, our credibility is right where it needs to be. So, we look at those things, we don’t get spun up over particular asset price changes, although we do monitor them, of course.”
Barron’s Nicole Goodkind: “Some prominent critics have charged that the Fed’s economic models are somewhat backward looking, but should be more forward looking, incorporating things like productivity increases from AI. How do you incorporate current and future developments into your analysis and decision-making, and do you have an answer to those critics?”
Powell delivered a somewhat lengthy response, which included “what an economic model can do is it can grind up all the data for the last number of years, 50 years let’s say, and it can identify what are the relationships between variables A, B, C, D and all that kind of thing. And it can tell you if you change one of those variables, this is what should happen in the macroeconomy. That’s just the way it works. However, the structure of the macroeconomy is constantly changing. For example, we hadn’t had a pandemic in 100 years. It wasn’t in the model. And we knew it from the very beginning, it was not in the model. A trade war of this scope, we’d never had that in 100 years… So, it’s very much on our minds, and we are well-aware that higher productivity means higher potential output, and it changes the way you think about potentially inflation growth, labor market, and all those things. That’s all in our models. I mean, if it’s a question of using better models, bring them on. Where are they?”
How can the Fed not view the parabolic rise in precious metals prices as an unmistakable warning of excessively loose conditions and acute monetary disorder? Moreover, econometric models that do not incorporate financial conditions variables will be hopelessly deficient, especially at critical cycle junctures.
It’s surely not what Warsh has in mind with “regime change,” but the Fed’s analytical and policy frameworks need radical reworking.
Economies, markets, and finance undergo momentous change. What’s more, models will never incorporate unpredictable events and developments. And while sources and dynamics change over time, financial conditions always play a central role in system development and stability.
Market and speculative dynamics have come to dictate system financial conditions, rendering econometric models impotent. The Fed will continue to fail in its overarching responsibility of safeguarding system stability until it commits to a major analytical framework overhaul.
It’s difficult to imagine more deeply distorted risk perceptions.
January 27 – Bloomberg (Rose Henderson): “Investor appetite for risk is the highest in five years as optimism about the economy counters geopolitical uncertainty, according to Goldman Sachs… The bank’s risk appetite indicator hit 1.09 last week, the highest since 2021. It’s in the 98th percentile of readings for the gauge dating back to 1991, the strategists wrote... ‘Such elevated levels of risk appetite are rare,’ the Goldman team said, pointing to only six other examples of readings above 1.0. Still, this is not necessarily a signal to turn bearish. ‘Equity returns can be sustained by a supportive macro backdrop,’ they said. Most components of the Goldman index show a positive stance toward risk…”
This most prolonged period of inflationism and Bubble excess has fostered such deep structural maladjustment.
January 29 – Axios (Madison Mills and Sara Fischer): “With AI presenting a looming entry-level job crisis, and more tools available than ever to make a quick buck on your phone, Gen Z is becoming America’s ‘get rich quick’ generation. The American dream is no longer defined by years of hard work paying off with a home and job security. It’s now about hope for a big break after taking bigger risks. The rise of billionaire creators such as MrBeast is also inspiring younger generations to try to build massive wealth by building big followings on social media… The rise of mobile apps for online betting, retail investing and video creation over the last five years has made it easy for young users to access industries that historically required access to a casino, Wall Street trading floor or studio. Online betting is skyrocketing, and it’s not just about sports anymore… Retail investing through apps like Robinhood is soaring as young people view the stock market as another form of income, a bet that has paid off amid the AI-driven rally… Influencer is the top profession that Gen Z says it aspires to, with more than half of Gen Z and millennials in a survey saying they would choose a social media career over any other profession…”
And there’s every reason to anticipate even more precarious Monetary Disorder.
January 24 – Associated Press (Brian Slodysko): “President Donald Trump’s federal housing finance director, Bill Pulte, quietly granted government-backed lenders the authority to nearly double a $200 billion bond purchase that Trump ordered to try to lower mortgage rates, a move that could introduce a new level of risk for the companies. An email obtained by The Associated Press that was sent by the Federal Housing Finance Agency to top officials at Fannie Mae and Freddie Mac eliminated caps that prohibited the lenders from each holding more than $40 billion in mortgage bonds. The Jan. 12 email says that ‘effective immediately’ the new amount of mortgage bonds that they could hold in their portfolios was raised to $225 billion apiece.”
It’s so ironic that Kevin Warsh and Scott Bessent both lament the Fed’s oversized balance sheet. Deleveraging risk is elevated. Crypto deleveraging intensified this week, increasing contagion and liquidity risks across markets. The big tech stocks appear at heightened deleveraging risk. Meanwhile, Treasuries and global bonds remain vulnerable. With Warsh waiting in the wings, Powell must pray that he can get through the end of his term without a major market blowup. Four weeks in, everything points to an unbelievable year.
For the Week:
The S&P500 added 0.3% (up 1.4% y-t-d), while the Dow slipped 0.4% (up 1.7%). The Utilities gained 1.9% (up 1.8%). The Banks jumped 2.0% (up 2.1%), while the Broker/Dealers declined 0.4% (up 4.8%). The Transports increased 0.6% (up 5.4%). The S&P 400 Midcaps fell 1.4% (up 4.0%), and the small cap Russell 2000 slumped 2.1% (up 5.3%). The Nasdaq100 slipped 0.2% (up 1.2%). The Semiconductors increased 0.5% (up 12.9%). The Biotechs dropped 2.9% (up 3.4%). With hyper-volatile bullion trading down $93.59, the HUI gold index sank 11.7% (up 11.4%).
Three-month Treasury bill rates ended the week at 3.5725%. Two-year government yields fell seven bps to 3.52% (up 5bps y-t-d). Five-year T-note yields dipped four bps to 3.79% (up 6bps). Ten-year Treasury yields added a basis point to 4.24% (up 7bps). Long bond yields gained five bps to 4.87% (up 3bps). Benchmark Fannie Mae MBS yields slipped one basis point to 5.00% (down 4bps).
Italian 10-year yields fell six bps to 3.46% (down 10bps y-t-d). Greek 10-year yields declined six bps to 3.45% (up 1bp). Spain's 10-year yields fell six bps to 3.21% (down 8bps). German bund yields were six bps lower at 2.84% (down 1bp). French yields dropped seven bps to 3.43% (down 14bps). The French to German 10-year bond spread narrowed one to 57 bps. U.K. 10-year gilt yields increased a basis point to 4.52% (up 4bps). U.K.’s FTSE equities index added 0.8% (up 2.8% y-t-d).
Japan’s Nikkei 225 Equities Index declined 1.0% (up 5.9% y-t-d). Japan’s 10-year “JGB” yields slipped one basis point to 2.25% (up 19bps y-t-d). France’s CAC40 slipped 0.2% (down 0.3%). The German DAX equities index dropped 1.5% (up 0.2%). Spain’s IBEX 35 equities index jumped 1.9% (up 3.3%). Italy’s FTSE MIB index gained 1.6% (up 1.3%). EM equities were mixed. Brazil’s Bovespa index gained 1.4% (up 12.6%), while Mexico’s Bolsa index declined 0.9% (up 5.0%). South Korea’s Kospi surged another 4.7% (up 24.0%). India’s Sensex equities index increased 0.9% (down 3.5%). China’s Shanghai Exchange Index declined 0.4% (up 3.8%). Turkey’s Borsa Istanbul National 100 index rallied 6.5% (up 22.9%).
Federal Reserve Credit increased $7.8 billion last week to $6.540 TN, with a seven-week rise of $49.7 billion. Fed Credit was down $2.350 TN from the June 22, 2022, peak. Since the September 11, 2019 restart of QE, Fed Credit expanded $2.814 TN, or 75%. Fed Credit inflated $3.729 TN, or 133%, since November 7, 2012 (690 weeks). Elsewhere, Fed holdings for foreign owners of Treasury, Agency Debt jumped $19.5 billion last week to $3.086 TN. “Custody holdings” were down $182 billion y-o-y, or 5.6%.
Total money market fund assets (MMFA) increased $13 billion to $7.712 TN - with a 27-week surge of $639 billion, or 18.1% annualized. MMFA were up $839 billion, or 12.2%, y-o-y - having ballooned a historic $3.127 TN, or 68%, since October 26, 2022.
Total Commercial Paper slipped $1.8 billion to $1.400 TN. CP has expanded $189 billion, or 15.6%, y-o-y.
Freddie Mac 30-year fixed mortgage rates added a basis point to 6.10% (down 85bps y-o-y) - just off the low back to September 2022. Fifteen-year rates rose five bps to 5.49% (down 63bps). Bankrate’s survey of jumbo mortgage borrowing costs had 30-year fixed rates down three bps to 6.43% (down 59bps).
Currency Watch:
January 27 – Financial Times (Ian Smith and Mercedes Ruehl): “The Swiss franc has surged to its strongest level against the US dollar in more than a decade, as a stampede into what traders are calling currency markets’ last ‘reliable’ haven poses an increasing problem for the Swiss National Bank. The Alpine currency is already up more than 3% this year…, after a 14% gain last year, as political risks drive investors to look for alternatives to the US currency. That has taken the franc to its strongest against both the dollar and the euro since a shock appreciation in 2015.”
January 25 – Reuters: “China’s yuan climbed to a new 32-month high against the dollar on Monday as the central bank continued its recent practice of carefully guiding the currency stronger by lifting the official midpoint guidance to manage the pace of appreciation.”
For the week, the U.S. Dollar Index declined 0.6% to 96.991 (down 1.4% y-t-d). On the upside, the South Korean won increased 1.6%, the Norwegian krone 1.4%, the New Zealand dollar 1.2%, the Australian dollar 1.0%, the Swiss franc 0.9%, the Canadian dollar 0.6%, the Japanese yen 0.6%, the Brazilian real 0.4%, the British pound 0.3%, the Swedish krona 0.3%, the euro 0.2%, and the Singapore dollar 0.2%. On the downside, the Mexican peso declined 0.6%, and the Mexican peso slipped 0.1%. China's (onshore) renminbi slipped 0.06% versus the dollar (up 0.45% y-t-d).
Commodities Watch:
January 27 – Bloomberg (Yihui Xie): “Gold steadied after seven days of gains, with traders digesting a record-breaking rally fueled by US dollar weakness and a flight from sovereign bonds and currencies. Bullion was near $5,160 an ounce, having risen 3.4% on Tuesday — its biggest one-day gain since April. President Donald Trump said he was not concerned about a drop in the value of the dollar that has dragged the world’s premier reserve currency to its weakest level in nearly four years.”
The Bloomberg Commodities Index added 0.9% (up 10.0% y-t-d). Spot Gold fell 1.9% to $4,894 (up 13.3%). Silver sank 17.5% to $85.1994 (up 18.9%). WTI crude rallied $3.90, or 6.4%, to $65.21 (up 14%). Gasoline jumped 4.8% (up 13%), while Natural Gas sank 18.4% to $4.354 (up 18%). Copper slipped 0.2% (up 4%). Wheat gained 1.5% (up 6%), while Corn slipped 0.6% (down 6%). Bitcoin sank $5,500, or 6.2%, to $83,760 (down 4.4%).
Market Instability Watch:
January 27 – Reuters (Ismail Shakil, Costas Pitas, Chuck Mikolajczak and Bhargav Acharya): “U.S. President Donald Trump… said the value of the dollar is great when asked whether he thought it had declined too much... ‘No, I think it’s great, the value of the dollar… dollar’s doing great,’ Trump said when asked… if he thought the value of the dollar had declined too much. Losses in the dollar index accelerated after Trump’s comments, hitting a session low of 95.566 and the lowest since February 2022. ‘If you look at China and Japan, I used to fight like hell with them, because they always wanted to devalue,’ Trump said.”
January 27 – Bloomberg (Carter Johnson, Greg Ritchie and Anya Andrianova): “Traders in the $9.5 trillion-per-day currency markets are wagering on further losses in the dollar as US policy risks and a resurgent yen drag the world’s primary reserve currency to its weakest level in nearly four years. The Bloomberg Dollar Spot Index is logging its steepest four-day drop since President Donald Trump unveiled his sweeping tariffs in April, and investors are paying the highest price on record to hedge against a deeper selloff. The greenback was already on its back foot entering January, coming off its worst year since 2017.”
January 25 – Bloomberg (Mia Glass, Ruth Carson, and John Cheng): “Days after Japanese bonds crashed, sending tremors through global financial markets, traders were still stunned by the speed and breadth of it all. A quarter-point surge in yields ‘in a single session,’ marveled Pramol Dhawan, a fund manager at Pacific Investment Management Co., ‘let that sink in.’ In the Japanese government bond market of old, it would take weeks — sometimes months — for yields to eke out, tick by tick, a move of that magnitude. For most of the 21st century, the JGB market was so steady — and interest rates were stuck at such rock-bottom levels — that Tokyo was viewed by investors around the world as a source of both cheap funding and of stability during times of global turmoil. Last week’s selloff, accompanied by dramatic swings in the yen, made clear those days are over. Inflation, long dormant in Japan, has taken hold and, moreover, Prime Minister Sanae Takaichi is pushing fiscal stimulus plans that would swell a government debt pile that is already uncomfortably large.”
January 27 – Bloomberg (Brendan Murray): “In less than three weeks, President Donald Trump has issued four sweeping tariff threats that, in normal times, would rattle investors, unnerve CEOs and send economists rushing to revise their growth forecasts for the targeted countries. Instead, financial markets and C-suite executives have mostly shrugged off Trump’s latest warnings involving Iran’s trading partners, Greenland’s supporters, Canada and South Korea, seeing them as merely words intended to gain leverage or change behavior — nothing he’d actually carry out. According to a new Bloomberg Economics analysis, it’s not quite that Trump always chickens out. More precisely, BE found, he only follows through about a quarter of the time. About 43% of threats were withdrawn — sometimes with a perceived win declared by Trump — or haven’t been imposed yet.”
January 29 – Bloomberg (Abhishek Vishnoi, Bernadette Toh, and Harry Suhartono): “Just days ago, Indonesia’s stock market was riding high. The benchmark index hit a record close last week, and a $1 trillion valuation seemed within sight. Then came the shock. A warning from MSCI Inc. about a possible market downgrade sparked what at one point was the worst two-day rout in nearly three decades… The benchmark plunged as much as 10% on Thursday, prompting authorities to step in… ‘It went from calm to chaos very fast, signaling a crisis of confidence,’ said John Foo, founder of Southeast Asia-focused Valverde Investment Partners Pte.”
U.S. and Global Credit Excess Watch:
January 25 – Wall Street Journal (Tom Fairless): “This year, global growth is being brought to you by the government. Rocked by an avalanche of growth-sapping shocks, countries around the world are tearing up savings plans and rolling out large fiscal stimulus packages financed by bumper budget deficits. From slow-growing Europe to the U.S. and parts of Asia, where multitrillion-dollar investments in artificial intelligence are fueling demand, the spending spree is expected to boost economic growth and jobs in the near term. Global growth could accelerate to a 3% annual rate over the next six months as a result, according to JPMorgan. This could be a risky strategy at a time of low unemployment and higher interest rates, economists say.”
January 26 – Bloomberg (Alice Gledhill): “Hedge fund Bridgewater Associates favors stocks over bonds given the risks posed by governments ramping up public spending and the inflationary impact of artificial intelligence. The… firm’s co-chief investment officers warned that increasing sovereign bond sales to finance ‘self-sufficiency, defense, and infrastructure’ risks testing the limits of the market’s appetite to absorb so much debt. ‘It depends on how willing buyers are to hold an ever-expanding supply of debt and what it takes to entice the next marginal buyer,’ Bob Prince, Greg Jensen and Karen Karniol-Tambour wrote... There is ‘no magic number’ that determines what level of debt or deficit is sustainable, but many developed world economies are ‘getting dangerously close’ to such limits.”
January 29 – Bloomberg (Ying Luthra and Kevin Kingsbury): “Sales of US investment-grade corporate bonds have smashed January’s prior record and exceeded $200 billion for just the sixth month ever… Syndicate desks came into 2026 anticipating a record start to the year for US high-grade issuance, predicting at least $200 billion for January. The month just exceeded September’s volume on Thursday, to rank in the top five months of all-time. This month’s volume of $208.4 billion is currently 12% above last year’s total.”
January 26 – Financial Times (Michelle Chan): “Big Tech companies are on track to dominate borrowing in the US bond market, in a shift that could expose some of the world’s safest securities to greater risk from AI. By 2030, half of the 10 largest borrowers in the US investment-grade corporate bond market will be so-called hyperscalers — companies such as Alphabet, Amazon, Meta, Microsoft and Oracle that are building colossal data centres — according to Apollo Global Management. Until now, the major borrowers in the league table have mostly been big banks and telecom companies, meaning that credit investors are largely insulated from shocks in the tech-dominated stock market. Investors have grown increasingly concerned that the gap between runaway capital expenditure on AI and the returns it generates could amount to a bubble that ultimately hits both equities and the credit market... ‘What appears diversified across issuers and sectors increasingly represents a single macro trade on AI,’ Apollo analysts wrote… Morgan Stanley estimates that hyperscalers and their adjacent companies will raise $400bn from the US high-grade market in 2026, a dramatic increase from $170bn last year and just $44bn in 2024.”
January 26 – Bloomberg (Abhinav Ramnarayan, Aaron Weinman, and Jeannine Amodeo): “Junk-debt sales on both sides of the Atlantic surged on Monday as firms took advantage of easing geopolitical tensions… Some 30 deals worth about $39 billion swooped on the US leveraged loan market — mainly to reprice existing loans or refinance debt — in the busiest day since July… In Europe, nine borrowers turned to the region’s junk-bond market for deals and another four high-yield bonds launched in the US…, which announced the first unsecured junk bond from a high-yield issuer for a local airline since the pandemic.”
January 25 – Bloomberg (Aaron Weinman and Rachel Graf): “Some of the best performing US debt in the first weeks of this year is the lowest rated, implying that corporate defaults are low on the list of investor fears now. Debt rated in the CCC tier, the lowest ratings that commonly trade in the US, gained 1.15% this year through Thursday’s close... That’s better than just about every other kind of US debt, including other types of junk bonds. Treasuries are down about 0.2%...”
January 28 – New York Times (Talmon Joseph Smith): “Across America, state and local governments have been selling bonds at a record clip to finance projects like airports, roads and utilities. They have found a deep pool of buyers keen on realizing the tax-exemption benefits from holding this municipal debt… Borrowing in the municipal bond market surpassed $500 billion last year, breaking the $498 billion record set in 2024. The ‘muni market’ is now worth well over $4 trillion... ‘People really don’t understand how big this market is and how it impacts a lot of things that everybody does every day,’ said Mike Bartolotta, an executive managing director and co-head of public finance at Hilltop Securities, a firm that specializes in municipal sales…”
January 28 – Axios (Madison Mills): “U.S. companies are pulling future borrowing into the present, racing to refinance debt while credit remains cheap… ‘Corporate bonds aren’t scarce anymore — and now expectations are high,’ the credit strategy team at BNP Paribas wrote…, lowering its credit outlook to neutral from bullish. Credit spreads… are near their tightest levels since the 1990s. Investors think that owning corporate debt is really safe… Credit is priced for perfection just as risks to corporate debt are mounting. Firms are refinancing at the highest rate since 2020, according to Dealogic.”
U.S. Credit Trouble Watch:
January 23 – Bloomberg (Silla Brush and Davide Scigliuzzo): “A BlackRock Inc. private debt fund expects to mark down the net value of its assets 19% after a string of troubled loans weighed on results, marking the latest sign of pressure in the private credit market. BlackRock TCP Capital Corp., a publicly traded middle-market lending fund, expects to cut its net asset value per share… The fund has struggled in part because of its exposure to e-commerce aggregators — companies that buy and manage Amazon.com Inc. sellers — as well as troubled home improvement company Renovo Home Partners, which has filed for bankruptcy with plans to liquidate.”
January 26 – Bloomberg (Davide Scigliuzzo and Laura Benitez): “Apollo Global Management Inc. took a loss on a portion of a $170 million asset-backed financing for Amazon brand aggregator Perch that was written off to zero, a rare stumble for a strategy touted as one of private credit’s safest and most promising… Apollo’s setback is notable, however, because the firm held only indirect exposure to Perch through a layered structure that included additional protections not afforded to other lenders, the people said.”
January 29 – Bloomberg (Silas Brown, Olivia Fishlow and Ellen DiMauro): “Investors pulled around 15.4% of net assets from one of Blue Owl Capital Inc.’s tech-focused funds, following the vehicle’s decision to dramatically increase the amount investors could withdraw earlier this month.”
January 26 – Wall Street Journal (Alicia McElhaney): “Bankrupt auto-parts supplier First Brands is shutting down parts of its North American business after top lenders resisted providing additional funding to keep it afloat. First Brands said… it has started winding down Brake Parts, aftermarket parts maker Cardone and spark plug manufacturer Autolite. It will keep operating the remaining businesses, including those that make filters, wipers, pumps, lighting and other accessories as it seeks buyers, the company said.”
January 29 – Bloomberg (James Crombie): “Investors underestimate the hazards when chasing fat yields in private credit, according to Pacific Investment Management Co. ‘There’s a lot of additional credit risk that people are often taking in some of these private situations that you kind of turn a blind eye to,’ said Christian Stracke, the $2.3 trillion asset manager’s president… Private debt traditionally focuses on smaller companies, which tend to have less financial flexibility and more limited disclosure than those accessing public markets. Its higher sector concentration and lack of price transparency are cause for concern, Stracke said. Loans to weaker companies signed earlier this decade when interest rates were near zero are becoming stressed as the debt comes due.”
January 26 – Financial Times (Alexandra Heal and Euan Healy): “Private credit firms sold a record amount of debt to themselves last year as the buyout sector’s slowdown pushed them to find new ways to generate cash from loans to companies owned by private equity. Private lenders struck so-called continuation deals worth $15bn globally in 2025, up from almost $4bn the previous year, according to… Jefferies. Such deals involve fund managers establishing new vehicles to buy loans from their old funds. Many of the rolled-over loans were originally extended to finance leveraged buyouts by private equity managers, Jefferies said, but were taking longer than expected to be repaid due to a lack of deals.”
Trump Administration Watch:
January 26 – Axios (Madison Mills): “Investors are confronting a different world, marked by the Trump administration’s aggressive push for a new global order, renewed attacks on the Federal Reserve, increasingly controversial immigration actions and much more. It’s not even the end of the first month of the year. Throw out your 2026 outlooks… Since the beginning of the year, investors have been met with: Venezuela: The capture of Nicolás Maduro led to a spike in volatility and a drop in energy prices. Greenland: President Trump threatened to take control of Greenland and then proposed additional tariffs on European nations… The carry trade: Japanese bond yields spiked, hurting one of the most lucrative trades used by Wall Street to turn profits. Trump vs. Powell: The Department of Justice launched an investigation into Federal Reserve chair Jerome Powell, sparking concerns about Fed independence… Canada vs. the U.S.: Canadian Prime Minister Mark Carney dropped tariffs on Chinese EVs and said that ‘not every partner will share all our values’ in a speech at Davos… Trump vs. corporate America: The president is suing the nation's largest bank, JPMorgan, and its CEO, Jamie Dimon, for $5 billion. The immigration crackdown. The killing of two people in Minnesota has triggered a response from the CEOs of the largest public companies in the state, which could signal the start of a return to corporate activism.”
January 28 – Financial Times (Claire Jones, Ian Smith and Kate Duguid): “The US currency rebounded on Wednesday after US Treasury secretary Scott Bessent said Washington was still pursuing a ‘strong dollar policy’ and was not planning an intervention to boost the Japanese yen. The dollar jumped as much as 0.9% against the euro and 1% against the yen after Bessent said… he expected the US currency to appreciate. ‘The US always has a strong dollar policy, but a strong dollar policy means setting the right fundamentals,’ Bessent said, adding that the administration’s policies were making the US ‘the best place to come’. ‘If we have sound policies, the money will flow in and we are bringing down our trade deficit, so automatically that should lead to more dollar strength over time,’ Bessent said.”
January 28 – Reuters (Andrea Shalal and Susan Heavey): “The U.S. has a strong dollar policy and that means setting the right fundamentals, U.S. Treasury Secretary Scott Bessent said…, while denying that Washington was intervening in currency markets to support the Japanese yen. Asked… if the U.S. was intervening to strengthen the yen, Bessent said, ‘Absolutely not’.”
January 29 – Associated Press (Steve Peoples): “No longer confined to the partisans and activists, the fierce backlash against Donald Trump’s immigration crackdown has begun to break out across American culture, spanning the worlds of business, sports and entertainment. Bruce Springsteen released a new song… that slammed ‘Trump’s federal thugs.’ OpenAI chief executive Sam Altman told employees that ‘what’s happening with ICE is going too far’… And lifestyle icon Martha Stewart lamented that ‘we can be attacked and even killed.’ ‘Things must and have to change quickly and peacefully,’ Stewart wrote to her 2.9 million… followers…”
January 25 – Axios (Andrew Solender): “The Department of Homeland Security is coming under unprecedented scrutiny from Congress in the wake of the fatal shooting of Alex Pretti, with Democratic attacks more strident and Republican defenses more muted than ever before. The growing tension could result in a government shutdown, politically charged hearings and even an impeachment vote. More and more Democrats are signing onto Rep. Robin Kelly's (D-Ill.) articles of impeachment against DHS Secretary Kristi Noem… Senate Democrats are threatening to allow a partial government shutdown next week unless a DHS funding bill is altered with language reining in the agency.”
January 26 – Bloomberg: “Acting President Delcy Rodríguez said Venezuela has ‘had enough’ of US interference as the government faces growing pushback from public-sector groups and leftist parties over plans to overhaul the oil industry. ‘Enough of Washington’s orders to Venezuelan politicians, let Venezuelan politics resolve our differences and conflicts,’ Rodríguez said while addressing state oil workers in Anzoátegui state... ‘Enough of foreign powers.’ Rodríguez and her brother Jorge Rodríguez, the president of the National Assembly, stepped up their rhetoric over the weekend as the government tries to balance conflicting demands from its supporters and the US administration of Donald Trump.”
January 26 – Wall Street Journal (Anna Wilde Mathews and Christopher Weaver): “The Trump administration is proposing roughly flat rates for Medicare insurers next year, an update that falls well short of Wall Street expectations… Shares of UnitedHealth Group, the biggest Medicare insurer by membership, fell more than 9% in after-hours trading… Rival Medicare insurer Humana’s shares were down 12% and CVS Health fell more than 9%. The Medicare agency is also proposing to eliminate a lucrative industry billing practice that has raised concerns with government watchdogs and was among the tactics examined in reporting by the Journal on Medicare insurers.”
January 29 – Bloomberg (Justin Sink and Eric Martin): “US President Donald Trump authorized his administration to slap tariffs on goods from countries that provide oil to Cuba, tightening the squeeze on the communist-run government he wants to see replaced. Trump signed an executive order that will first identify which countries provide Cuba with oil, and then decide what additional export duties should be imposed. ‘The Government of Cuba has taken extraordinary actions that harm and threaten the United States,’ Trump wrote… ‘The regime aligns itself with — and provides support for — numerous hostile countries, transnational terrorist groups, and malign actors adverse to the United States’.”
January 28 – Financial Times (Jude Webber, Joe Daniels and Lauren Fedor): “Cuba only has enough oil to last 15 to 20 days at current levels of demand and domestic production, according to data company Kpler, after its sole remaining supplier Mexico appeared to cancel a shipment while the US blocked deliveries from Venezuela. Unless deliveries resume, Cuba could face sharp rationing, with much of the country already suffering near-daily blackouts. While inventories have been lower at times in the recent past, US President Donald Trump has vowed to choke off oil to the communist island… ‘They have a major crisis on their hands’ if more deliveries do not arrive in the coming weeks, said Jorge Piñón, an oil expert at the University of Texas.”
January 27 – Wall Street Journal (Michael R. Gordon): “President Trump warned… his administration would no longer support Iraq if Nouri al-Maliki is named the country’s next prime minister. ‘I’m hearing that the Great Country of Iraq might make a very bad choice by reinstalling Nouri al-Maliki as Prime Minister,’ Trump wrote… Because of Maliki’s policies and ideologies, Trump added, ‘if elected, the United States of America will no longer help Iraq and, if we are not there to help, Iraq has ZERO chance of Success, Prosperity or Freedom.’ Maliki, a powerful Shiite politician, served as Iraq’s prime minister from 2006 to 2014.”
January 29 – CNBC (Kevin Breuninger): “President Donald Trump, his two eldest sons, and his family business sued the Internal Revenue Service and the U.S. Treasury Department over alleged leaks of their confidential tax information… The plaintiffs seek at least $10 billion in damages, according to the lawsuit in Miami federal court. The civil complaint alleges that the IRS and Treasury failed in their obligation to prevent the leak of those tax records by former IRS employee Charles ‘Chaz’ Littlejohn in 2019 and 2020. In addition to Trump, the plaintiffs are his sons, Donald Trump Jr. and Eric Trump, and the Trump Organization, which the sons run.”
January 25 – Bloomberg (Lananh Nguyen): “U.S. President Donald Trump’s lawsuit against JPMorgan… and its CEO Jamie Dimon highlights a growing, and politically fraught, conflict in the administration’s policy agenda for Wall Street, with big banks scoring wins but also facing setbacks… ‘The industry is losing as many battles as it wins on big issues and the constant pressure and random nature of developments is taking its toll,’ said Todd Baker, a senior fellow at Columbia University.”
Constitution Watch:
January 30 – Associated Press (Jaimie Ding, Alanna Durkin Richer and Eric Tucker): “Journalist Don Lemon was released from custody Friday after he was arrested and hit with federal civil rights charges over his coverage of an anti-immigration enforcement protest that disrupted a service at a Minnesota church. Lemon was arrested overnight in Los Angeles, while another independent journalist and two protest participants were arrested in Minnesota… ‘I will not be silenced.’ ‘I have spent my entire career covering the news. I will not stop now,’ Lemon said. ‘In fact there is no more important time than right now, this very moment, for a free and independent media that shines a light on the truth and holds those in power accountable’.”
Canada Watch:
January 25 – Wall Street Journal (Paul Vieira): “Prime Minister Mark Carney came into office almost a year ago trying to build warm relations with President Trump. Now, he is playing hardball. By resolving a trade dispute with China and issuing a call-to-arms against economic coercion at Davos…, the former central-banker governor known for his calculated caution is taking Canada into a high-stakes gambit… He may not have a choice, the analysts said. Carney has tried to appease Trump with strengthened border security, fentanyl-trafficking deterrence, ramping up military spending and dropping a digital tax affecting U.S. tech companies. None of it has worked, and he needs leverage going into negotiations this year to redo the U.S.-Mexico-Canada free-trade agreement, or USMCA, that underpins the country’s economy.”
January 27 – Wall Street Journal (Paul Vieira): “Canadian Prime Minister Mark Carney said he spoke to President Trump and told him he stands by his remarks last week issuing a call-to-arms among smaller powers against economic coercion… Carney’s speech at the World Economic Forum… didn’t identify the U.S. or Trump, but was widely interpreted as a rebuke to Trump’s policies on using American economic and military might to achieve geopolitical goals. The remarks offered a template for countries on countering this pressure. ‘To be absolutely clear, and I said this to the president: ‘I meant what I said in Davos,’’ Carney said… about his… conversation with Trump. ‘It was a broader set of issues, and Canada was the first country to understand the change in U.S. trade policy that he initiated, and we’re responding to that’.”
January 29 – Wall Street Journal (Paul Vieira): “Canadian Prime Minister Mark Carney called on the Trump administration to respect his country’s sovereignty after a group advocating for Alberta’s secession from Canada said it had met with State Department officials about the province’s future. Last week, Treasury Secretary Scott Bessent weighed in on the province’s political future, saying he was aware of a bid by some citizens to hold a referendum on independence and added that the oil-rich western Canadian province would be ‘a natural partner’ for the U.S. The future of Alberta marks the latest source of tension between Washington and Ottawa…”
January 25 – Associated Press (Michelle L. Price and Rob Gillies): “President Donald Trump… threatened to impose a 100% tariff on goods imported from Canada if America’s northern neighbor went ahead with its China trade deal, intensifying a feud with Prime Minister Mark Carney, a rising voice in the West’s pushback to Trump’s new world order. Trump said… that if Carney ‘thinks he is going to make Canada a ‘Drop Off Port’ for China to send goods and products into the United States, he is sorely mistaken’.”
New World Order Watch:
January 27 – Reuters (Mike Dolan): “Donald Trump’s Greenland tariff threat and U-turn last week may have been a watershed for the world’s ‘middle powers.’ For them, rebooting globalization - with or without Washington - now looks far more realistic than it did during last year's trade shock. This year, the U.S. president has shifted from using tariffs mainly to air long‑standing trade grievances to wielding them as tools of territorial and military leverage. And for the first time, that strategy has met firm resistance and credible retaliation, forcing a climbdown. Equally important, Europe, Canada and other economies are ploughing ahead with trade liberalisation of their own, even as the U.S. retreats into protectionism and an increasingly aggressive trade posture. If Trump's aim is to extricate the U.S. from a multilateral rules-based trade system and replace it with a purely transactional one, few now believe they can dissuade him. But the rest of the globe seems determined not to follow - and still believes it can preserve much of what Trump is trying to dismantle. Fast positioning himself as the torchbearer for what he terms the ‘middle powers,’ Canada's Prime Minister Mark Carney offered a clear alternative to Trump's vision at the World Economic Forum in Davos...”
January 29 – Politico (Nette Nostlinger): “German Chancellor Friedrich Merz warned that Europe will not withstand a new era of rising great-power imperialism unless it embraces the logic of hard power. ‘We will only be able to implement our ideas in the world, at least in part, if we ourselves learn to speak the language of power politics, if we ourselves become a European power,’ Merz said… during a speech in Germany’s federal parliament. Merz’s comments build on a speech the chancellor gave last week at the World Economic Forum in Davos in which he warned of a ‘radically changing’ U.S. and ‘a new world of great powers being built on power, on strength, and when it comes to it, on force’.”
January 25 – Wall Street Journal (Alistair MacDonald and Cristina Gallardo): “President Trump’s overtures about acquiring Greenland are now reviving questions among the U.S.’s North Atlantic Treaty Organization allies over whether Europe can make enough of its own weapons to fight independently of America. Defense analysts and lawmakers mainly conclude yes, but not just yet. The continent’s once-sclerotic defense industry is churning out drones, tanks, ammunition and other weaponry at its fastest pace in decades… The cost of replacing current U.S. military equipment and personnel in Europe would be around $1 trillion, according to the International Institute for Strategic Studies think tank. Some holes remain in the region’s manufacturing capability, including stealth fighters, long-range missiles and satellite intelligence.”
January 24 – Bloomberg (Frances Schwartzkopff): “Vegemite, the yeasty spread from Australia, gets a passing green checkmark. So does a French bottle of Chateauneuf-du-Pape. But Diet Coke, a favorite of President Donald Trump? To that, a popular new mobile app in Denmark assigns a failing red X — a message to shoppers to put that American stuff back on the shelf. Denmark… is tired of feeling pushed around. So Danes are turning to mobile apps to scan everyday products and boycott those associated with the US.”
January 26 – Wall Street Journal (Kim Mackraelin and Max Colchester): “U.S. trading partners, feeling burned by an unpredictable and transactional White House, are reassessing China in a drive to lessen their longstanding reliance on America. From Canada to Europe and South Korea, America’s postwar allies are scouring the globe for alternative markets. Some are weighing closer ties to China, the world’s second-largest economy after the U.S., even as they worry about Beijing’s economic and military might and the risk of U.S. retaliation.”
January 28 – Axios (Josephine Walker): “A quarter of young Americans think China has more global power and influence than the U.S., compared to 12% of Americans ages 65 and older, according to a new Carnegie Endowment for International Peace survey. Political dysfunction, economic pressures and cultural exchanges are helping to reshape how young Americans measure global power — and America’s place in it. ‘Younger Americans are much less likely to see the U.S. as uniquely exceptional,’ Craig Kafura of the Chicago Council on Global Affairs tells Axios.”
Greenland Watch:
January 26 – Financial Times (Julie Rademacher): “What is unfolding in Greenland is not just a dispute over borders or bases. It is a clash of world views. Donald Trump’s reported deal, agreed with Nato secretary-general Mark Rutte, represents a form of diplomacy entirely alien to Greenlandic culture. Trump claims the deal includes mineral rights. No Nato chief has or would discuss mineral deals on behalf of one of its members. It falls outside Nato’s mandate and legitimacy. Negotiating over Greenlanders’ heads feels less like policy and more like cultural vandalism — an affront to a society that views land as kin, not commodity. Greenlandic society is built on values that clash sharply with modern American political culture: collectivism over individualism, trust over spectacle, continuity over disruption, modesty over hyperbole, and nature as an intrinsic value — not a resource to be ‘unlocked’.”
Iran Watch:
January 28 – Financial Times (Steff Chávez): “The USS Abraham Lincoln, one of the US’s 11 aircraft carriers, entered Middle Eastern waters this week after an 11-day transit from the South China Sea… Accompanying the vessel… were three guided-missile destroyers — part of the ‘beautiful armada’ the US president has ordered towards Iran. It is the largest build-up of US military assets in the region since B-2 bombers dropped 30,000lb bombs on three of the Islamic Republic’s nuclear facilities in June last year. ‘This looks like the US is planning to use military force’, both offensively and defensively, said Seth Jones, a former Pentagon and US special operations official. ‘What is less clear [are] the objectives’.”
January 24 – Associated Press (Elena Becatoros): “The commander of Iran’s paramilitary Revolutionary Guard, which was key in putting down recent nationwide protests in a crackdown that left thousands dead, warned that his force is ‘more ready than ever, finger on the trigger,’ as U.S. warships headed toward the Middle East. Nournews, a news outlet close to Iran’s Supreme National Security Council, reported on its Telegram channel that the commander, Gen. Mohammad Pakpour, warned the United States and Israel ‘to avoid any miscalculation.’ ‘The Islamic Revolutionary Guard and dear Iran stand more ready than ever, finger on the trigger, to execute the orders and directives of the Commander-in-Chief,’ Nournews quoted Pakpour as saying.”
January 28 – Wall Street Journal (Laurence Norman and Dov Lieber): “Israel pounded Iran’s military in June’s 12-day war, but the regime emerged from the bruising conflict with much of its arsenal of thousands of ballistic missiles intact… Tehran has an estimated 2,000 midrange ballistic missiles that can reach across the region and strike as far as Israel. It also has significant stockpiles of short-range missiles capable of reaching U.S. bases in the Gulf and ships in the straits of Hormuz… Iran also has significant stockpiles of antiship cruise missiles and torpedo boats, as well as many drones that can threaten U.S. ships.”
January 27 – Associated Press (John Gambrell): “Two Iranian-backed militias in the Mideast are signaling their willingness to launch new attacks, likely trying to back Iran… Yemen’s Iranian-backed Houthi rebels… hinted they were ready to resume attacks on shipping in the Red Sea. That came just after Iraq’s Kataib Hezbollah paramilitary group, long supported by Iran’s paramilitary Revolutionary Guard, issued a direct threat… toward any attack targeting Iran, warning a ‘total war’ in the region would be a result. The statements came as the entire region is mired in a tense waiting game to see if Trump will strike.”
January 28 – Associated Press (Jon Gambrell): “Iranian officials reached out to the wider Middle East on Wednesday over the threat of a possible U.S. military strike on the country, while the value of Iran’s currency reached a new low… Two nations, Saudi Arabia and the United Arab Emirates, have signaled they won’t allow their airspace to be used for any attack. But America has moved the USS Abraham Lincoln and several guided missile destroyers into the region, which can be used to launch attacks from the sea. Iran’s currency… fell to a record low of 1.6 million to $1… Its value has been plunging since late last year, and is down from about 32,000 to $1 a decade ago.”
January 29 – Reuters (Parisa Hafezi): “Plainclothes Iranian security forces have rounded up thousands of people in a campaign of mass arrests and intimidation to deter further protests after crushing the bloodiest unrest since the 1979 Islamic Revolution, sources told Reuters. Modest protests that began last month in Tehran’s Grand Bazaar over economic hardship unleashed long-suppressed wider grievances and swiftly escalated into the gravest existential threat to Iran’s Shi’ite theocracy in nearly five decades, with protesters commonly calling for ruling clerics to step down.”
Trade War Watch:
January 27 – Associated Press (Paul Wiseman): “President Donald Trump has strong-armed many of America’s biggest trading partners into pledging trillions of dollars of investment in the United States. But a study… raises doubts about whether the money will actually materialize and questions how it would be spent if it did. ‘How realistic are these commitments?’ write Gregory Auclair and Adnan Mazarei of the Peterson Institute for International Economics… ‘The short answer is that they are clouded with uncertainty.’ They looked at more than $5 trillion in investment commitments made last year by the European Union, Japan, South Korea, Taiwan, Switzerland, Liechtenstein and the Persian Gulf states of Saudi Arabia, Qatar, Bahrain and the United Arab Emirates. Trump used the threat of punitive tariffs – import taxes – to pry concessions out of those trading partners, including the investment pledges.”
January 27 – Yahoo Finance (Ben Werschkul): “A new trade deal between India and Europe is just the latest pact announced in less than a month’s time that doesn’t involve the United States. Long-delayed European plans for increasing trade with a bloc of South American nations also took a step forward, as has a limited trade deal between Canada and China to cut tariffs on electric vehicles and canola oil… European Commission President Ursula von der Leyen on Tuesday called the EU-India pact ‘the mother of all deals’… ‘This is only the beginning,’ von der Leyen wrote on X. ‘I think… you could see an increasing number of alliances between other countries around the world as we get used to this kind of multifaceted world where economies can't be completely dependent on the US anymore,’ said Seema Shah, Principal Asset Management chief global strategist…”
January 26 – Financial Times (Aime Williams and Daniel Tudor): “Donald Trump has said he will increase tariffs on South Korea to 25% in response to Seoul’s slow pace in enacting the trade deal it struck with the US last year. In a post…, the US president said the increase would apply to all goods covered by his ‘reciprocal’ tariffs, along with cars, lumber and pharmaceutical goods. ‘Our Trade Deals are very important to America,’ Trump wrote… He added: ‘South Korea’s Legislature is not living up to its Deal with the United States’.”
January 27 – Wall Street Journal (Gavin Bade and Amrith Ramkumar): “The Trump administration is warning South Korea not to target tech companies with discriminatory regulations and investigations, its latest effort to protect U.S. internet platforms as it threatens higher tariffs on the country.”
January 25 – Bloomberg (Erik Hertzberg): “President Donald Trump’s new tariff threats signal an early escalation in what’s expected to be months of posturing as the US, Canada and Mexico prepare to review their trade pact this year. On Saturday, Trump criticized Mark Carney for expanding economic ties with China, saying the prime minister would be ‘sorely mistaken’ to think the US will allow Canada to be a ‘drop off port’ for Chinese goods. He threatened 100% tariffs on the northern nation if it reaches a trade deal with China. Canada’s minister in charge of US trade, Dominic LeBlanc, pushed back, saying there was ‘no pursuit of a free trade agreement with China’.”
January 26 – Reuters (David Ljunggren): “A review of the U.S.-Mexico-Canada free trade deal that is due to start later this year will be robust, Canadian Prime Minister Mark Carney said... Carney said some of the critical comments that Trump has made in recent days should be viewed in the context of the USMCA talks. The three-nation pact came into effect in July 2020. Trump, who has frequently mused about annexation, last week said Canada ‘lives because of the United States’ and… threatened to impose a 100% tariff on all Canadian imports if Ottawa concluded a trade deal with China. ‘We are entering soon a negotiation, a review, formally, of the USMCA… it will be a robust review, is the expectation,’ Carney told reporters. ‘The President is a strong negotiator, and I think some of these comments and positioning should be viewed in the broader context of that’.”
U.S./Russia/China/Europe/Iran Watch:
January 23 – Wall Street Journal (James T. Areddy): “When Venezuela booted out American oil companies in a nationalization campaign nearly two decades ago, China stepped in. Now, Beijing’s foothold there is in doubt as the U.S. asserts new power over Venezuela’s oil patch. Chinese government-owned oil companies hold claims to more than 4 billion barrels of Venezuelan oil, nearly five times as much as the only U.S. major that today produces in the South American nation, Chevron. Beijing’s production deals, oil rigs and debt-backed supply arrangements have long bought it enormous sway in Venezuela… The Chinese producers expanded their claims in the aftermath of a 2007 Venezuelan nationalization drive that pushed out Exxon Mobil and ConocoPhillips. China quickly emerged as a financier, equipment supplier and political partner in what Caracas called an ‘iron brotherhood’ that until now insulated it from U.S. pressure.”
January 27 – Politico (Victor Jack): “Mark Rutte has one overriding mission as NATO secretary-general: Stop Donald Trump from blowing up the alliance. That focus is now putting the former Dutch prime minister on a collision course with the very European capitals he once worked alongside — and has left NATO bruised even after he successfully talked Trump down from his threats to annex Greenland. The strain was on full display Monday in the European Parliament, where Rutte bluntly defended the superpower’s primacy in the alliance. ‘If anyone thinks here… that the European Union or Europe as a whole can defend itself without the U.S., keep on dreaming,’ he told lawmakers. ‘You can’t’.”
January 29 – Reuters (Andrew Macaskill): “Britain and China hailed a reset in relations…, after Prime Minister Keir Starmer and President Xi Jinping pledged greater cooperation on trade, investment and technology to the mutual benefit of both countries. With Western leaders reeling from the unpredictability of… Donald Trump, Starmer became just the latest to head to China, where he called for a ‘more sophisticated relationship’ with improved market access, lower tariffs and investment deals. Hosting a British leader for the first time in eight years, Beijing agreed to 30 days’ visa-free access for Britons and to halve Chinese tariffs on whisky, while UK drugmaker AstraZeneca announced a $15 billion investment into China.”
AI Bubble/Arms Race Watch:
January 28 – New York Times (Natallie Rocha): “Microsoft said… it continued to spend heavily on data centers for artificial intelligence with $37.5 billion in capital expenditures in its most recent quarter, up about 65% from the same period a year ago. The company reported that revenue in the quarter was $81.3 billion, up 17% from… last year. Microsoft’s profits were $38.5 billion, up 60%...”
January 28 – Reuters (Wayne Cole): “Who knew building AI would cost so much. Results from Microsoft and Meta showed truly nose-bleeding amounts being spent on capex, with the former splashing out almost $38 billion in the quarter, up two-thirds on the previous year. Meta boosted its capital spending plans for this year by 73% to a range between $115 billion and $135 billion.”
January 29 – Financial Times (Bryce Elder): “Internet companies are in denial about getting fat. The advertising silos and data miners of 10 years ago are now infrastructure-heavy and capital-intensive, but their reporting has yet to adjust to the rapid weight gain. This mismatch may become harder to ignore as the value of their spending is written off. Morgan Stanley forecasts that, collectively, Microsoft, Oracle, Meta Platforms and Alphabet could book more than $680bn in depreciation charges over the next four years. Its estimates are even higher than those put forward by Michael ‘The Big Short’ Burry, who calls earnings inflation by lowballed depreciation charges ‘one of the most common frauds of the modern era’.”
January 30 – Bloomberg (Nick Turner): “Nvidia Corp.’s negotiations to invest as much as $100 billion in OpenAI have broken down, the Wall Street Journal reported, exposing a potential rift between two of the most powerful companies in the artificial intelligence industry. The discussions stalled after some inside Nvidia expressed concerns about the transaction…”
January 29 – Reuters (Juby Babu and Krystal Hu): “Amazon is in talks to invest dozens of billions in ChatGPT-maker OpenAI and the figure could be as high as $50 billion, a source told Reuters… The discussion is still in the early stages… Big Tech companies and investors such as SoftBank Group Corp are racing to forge partnerships with OpenAI - which is spending heavily on data centers - betting that closer ties with the artificial-intelligence startup would give them a competitive edge in the AI race.”
January 28 – Financial Times (Song Jung-a): “The world’s two largest memory-chip makers have said they will increase capital spending ‘substantially’ this year as they expect the AI boom to exacerbate the shortage of semiconductors. But Samsung Electronics and SK Hynix warned… the outlays would not come fast enough to improve supply in the short term, as heightened demand for memory chips from AI data centres tests their capacity. ‘We are planning a substantial increase in our capital expenditure in 2026 as AI-driven demand is likely to continue,’ said Kim Jae-june, executive vice-president of Samsung’s memory business. ‘But supply shortages are likely to worsen as capacity expansion is expected to be limited this year and next’.”
January 26 – Bloomberg (Naureen S Malik): “The largest US grid operator was granted authority to divert power destined for data centers to households, hospitals and other customers to prevent rolling blackouts as an extreme cold snap strains electricity supplies. An order signed by Energy Secretary Chris Wright… authorized PJM Interconnection LLC to direct data centers, factories and other large facilities to switch on back-up generators to reduce their burden on the grid and free up more electricity supplies.”
January 26 – Axios (Jim VandeHei and Mike Allen): “Anthropic CEO Dario Amodei, the architect of the most powerful and popular AI system for global business, is warning of the imminent ‘real danger’ that super-human intelligence will cause civilization-level damage absent smart, speedy intervention. In a 38-page essay, shared with us in advance of Monday’s publication, Amodei writes: ‘I believe we are entering a rite of passage, both turbulent and inevitable, which will test who we are as a species.’ ‘Humanity is about to be handed almost unimaginable power, and it is deeply unclear whether our social, political, and technological systems possess the maturity to wield it’.”
January 26 – New York Times (Jennifer Valentino-DeVries and Kashmir Hill): “Julia Sheffield, a psychologist who specializes in treating people with delusions, is difficult to rattle. But she was unnerved last summer when patients began telling her about their conversations with A.I. chatbots. One woman, who had no history of mental illness, asked ChatGPT for advice on a major purchase she had been fretting about. After days of the bot validating her worries, she became convinced that businesses were colluding to have her investigated by the government. Another patient came to believe that a romantic crush was sending her secret spiritual messages. Yet another thought he had stumbled onto a world-changing invention. By the end of the year, Dr. Sheffield had seen seven such patients at Vanderbilt University Medical Center in Nashville. Although she is accustomed to treating people with mental instability, Dr. Sheffield was disturbed that this new technology seemed to tip people from simply having eccentric thoughts into full-on delusions.”
Bubble and Mania Watch:
January 29 – Wall Street Journal (Katherine Clarke): “In 2025, the U.S. housing market continued to be mired in a slump… But at the ultra high-end of the market, a very different narrative unfolded: Ultraluxury real-estate sales, which have boomed in much of the country for the last few years, got even stronger. The nation’s top 10 luxury markets… collectively posted more than 1,600 sales in that price range in 2025, roughly 32% more than the previous year and a nearly 24% increase in dollar volume to $28.6 billion, according to… Compass… Los Angeles delivered the most dramatic year-over-year surge: There were 292 sales of $10 million and above in L.A. County, a jump of almost 54% from 2024, the report shows. Those sales totaled roughly $5.36 billion, a 61% spike in dollar volume from the previous year.”
January 26 – Bloomberg (Heidi Taksdal Skjeseth): “Norway’s $2.1 trillion sovereign wealth fund has to raise its preparedness to handle growing geopolitical risks, a government-appointed advisory panel said. There’s growing evidence of instruments such as tariffs, financial sanctions and trade controls being used to achieve geopolitical goals, a three-member panel of experts said… ‘The political risk to which the fund’s investments are exposed abroad is increasing,’ the panel said, pointing out that the size and visibility of the fund further raises such risks. ‘The fund may ultimately be subject to increased taxation, regulatory intervention and even confiscation’.”
January 26 – Bloomberg (Rose Henderson and Francine Lacqua): “Demand for exchange-traded products focused on European equities was so strong in 2025 that they attracted a ‘decade in a year’ of inflows, according to BlackRock Inc.’s Ursula Marchioni. These funds attracted $92 billion last year, close to the $94 billion they cumulatively received between 2014 and 2024, Marchioni, head of investment and portfolio solutions for EMEA at the world’s largest asset manager, said…”
Crypto Watch:
January 29 – Bloomberg (David Pan and Muyao Shen): “Bitcoin’s ‘digital gold’ promise is unraveling as traders forgo the token for surging metals, hurting a narrative that once defined the asset’s macro appeal. The shift is visible not just in asset moves, but in where capital is moving — from traditional funds to blockchain-based trading venues. Over the past week, precious metal funds soaked up $1.4 billion in fresh cash while Bitcoin-linked funds saw roughly $300 million in withdrawals… At the same time, spot gold surged past $5,500, and silver broke $118 per ounce, fueled by a four-year low in the dollar and geopolitical stress.”
January 28 – Financial Times (Nikou Asgari): “A record $158bn of digital tokens was sent to crypto wallets controlled by criminals last year… The amount pulled in by illicit crypto wallets marked a 145% rise on 2024, according to… blockchain intelligence company TRM Labs. Criminal flows had been falling for the previous three consecutive years. TRM attributed the sharp rise to ‘intensified sanctions designations, increased use of crypto by nation-state actors’ and improved blockchain tracking technology.”
Inflation Watch:
January 30 – Associated Press (Paul Wiseman): “U.S. wholesale prices rose a hotter-than-expected 0.5% in December. The… producer price index — which measures inflation before it hits consumers — rose from November to December at the fastest pace in three months and faster than the 0.3% economists had forecast. Compared to December 2024, producer prices were up 3% last month, which was in line with what forecasters expected. Services prices were up 0.7% from November, the biggest increase since July…”
January 29 – Bloomberg: “Copper surged by the most in more than 16 years as metals extended a dramatic start to the year fueled by a wave of intense speculative trading in China. Chinese investors are piling into metals as they ride a powerful wave of momentum that has lifted everything from tin to silver to record highs… Prices gained as much as 10.1% to trade above $14,400 a ton for the first time ever. The industrial metal, which is used in almost every electrical application, has risen about 25% since the start of December.”
January 25 – Wall Street Journal (Rachel Louise Ensign): “Millions of Americans are starting to see their monthly health-insurance bills rise, a new pressure point for a nation still frustrated with the high cost of living. Many of those facing the most substantial dollar increases are middle-income Americans who buy health insurance through the marketplaces set up by the government’s Affordable Care Act… Expanded subsidies for those insured under the ACA expired on Dec. 31… That shutdown ended with no resolution on the subsidies, and lawmakers haven’t passed legislation to revive them. Now, the newly calculated insurance bills are coming due, and Americans are having to figure out how to pay up, or go without.”
January 29 – Bloomberg (Miquéla V Thornton): “The price of health care tops the US public’s long list of economic worries ahead of the midterm elections, according to new polling data… Two-thirds of Americans report worrying about health care more than groceries, utilities, gas or housing, according to… health policy research firm KFF. Over half of adults said the cost of their health care increased this year, with the majority saying Congress did the ‘wrong thing’ by not extending Affordable Care Act credits... More than four in 10 voters intend to cast their ballots with their health insurance bills top of mind this November, KFF’s report showed.”
January 29 – Bloomberg (Alice French): “The fastest-selling game console of all time may not be enough to shelter Nintendo Co.’s stock from growing investor fears about skyrocketing memory prices… Prices of dynamic random access memory and flash-storage modules used in Nintendo’s devices jumped dramatically in the December quarter… And shortages are only projected to grow. For 2026, the average selling price of DRAM is expected to jump by 120%, while NAND prices may grow 90%, according to Citigroup analysts Peter Lee, Jayden Oh and Josh Yang… The… company may have to raise the retail price of the Switch 2 by 15% to offset rising memory costs…”
Federal Reserve Watch:
January 30 – Bloomberg (Magan Crane, Jonathan Ferro, Annmarie Hordern and Lisa Abramowicz): “Republican Senator Thom Tillis reiterated his intention to block Kevin Warsh from becoming chairman of the Federal Reserve until a criminal investigation into renovations at the Fed is stopped, despite his belief that the nomination is a good one… Tillis praised the pick but said he wouldn’t allow it to move forward for now. ‘I am pleased with the nominee; I think that by most accounts he’s well regarded,’ the North Carolina senator said. ‘But we still have to clear the current matter,’ he said of the investigation into Powell’s testimony on renovations at the Federal Reserve building in Washington, calling it a ‘frivolous prosecution’.”
January 25 – Wall Street Journal (Dylan Tokar and Nick Timiraos): “In September, President Trump’s pick to oversee banking supervision at the Federal Reserve met with the top officials from the central bank’s 12 regional districts and delivered a rebuke. The staff of the Fed’s quasi-independent regional banks are the ones who conduct most of its banking exams... Michelle Bowman, the Fed’s vice chair for supervision, wanted a new direction for supervision, in part to ease the burden on banks. Some regional examiners apparently hadn’t received the message. Bowman made clear that, notwithstanding the Fed’s sometimes opaque chain of command, she was in charge and expected examiners to get on board… Some of those present left unhappy with the message and what they took as a dressing-down, the people said.”
U.S. Economic Bubble Watch:
January 29 – Associated Press (Matt Ott): “U.S. applications for unemployment benefits inched down modestly last week, remaining at historically healthy levels… Applications for jobless aid for the week ending Jan. 24 fell by 1,000 to 209,000 from the previous week’s number which was revised upward by 10,000… The total number of Americans filing for jobless benefits for the previous week ending Jan. 17 fell by 38,000 to 1.83 million, the government said. That’s the fewest since Sept. 21, 2024.”
January 26 – Financial Times (Taylor Nicole Rogers): “Unemployed Americans are taking longer to find new jobs than at any point in the past four years… It now takes an average of more than 11 weeks for an unemployed person in the US to find a new job, the longest since 2021, according to… labour department data. Some 26% of the 7.5mn unemployed actively searching for work have been looking for more than six months.”
January 29 – CNBC (Jeff Cox): “The U.S. deficit with its global trading partners nearly doubled in November as the shortfall with the European Union swelled… Following a month where the trade deficit hit its lowest level since early 2009, it shot up to $56.8 billion, an increase of 94.6% from October. Of that gain, about one-third came with the European Union, where the goods deficit rose by $8.2 billion. The goods deficit with China decreased by about $1 billion to $13.9 billion. On a year-over-year basis, the deficit through November stood at $839.5 billion, or about 4% higher than the same period in 2024.”
January 27 – Associated Press (Matt Ott): “U.S. consumer confidence declined sharply in January, hitting the lowest level since 2014 as Americans grow increasingly concerned about their financial prospects. The Conference Board said… its consumer confidence index cratered 9.7 points to 84.5 in January, falling below even the lowest readings during the COVID-19 pandemic. A measure of Americans’ short-term expectations for their income, business conditions and the job market tumbled 9.5 points to 65.1… ‘Confidence collapsed in January, as consumer concerns about both the present situation and expectations for the future deepened,’ said Dana Peterson, the Conference Board’s chief economist. ‘All five components of the index deteriorated, driving the overall index to its lowest level since May 2014 — surpassing its COVID19 pandemic depths’.”
January 26 – Bloomberg (Lucia Mutikani): “New orders for key U.S.-manufactured capital goods increased more than expected in November, suggesting business spending on equipment maintained a steady growth pace in the fourth quarter. Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, rose 0.7% after a downwardly revised 0.3% gain in October…”
January 27 – CNBC (Diana Olick): “Serious headwinds in the housing market and the broader economy are tanking home sales at an alarming rate. More than 40,000 signed home purchase agreements were canceled in December, representing 16.3% of all homes that went under contract, according to Redfin… That’s up from 14.9% in December 2024. It’s also the highest share since Redfin began tracking the metric in 2017. ‘High housing costs and rising inventory have made homebuyers more selective,’ said Chen Zhao, head of economics research at Redfin. ‘Home sellers outnumber buyers by a record margin, meaning the buyers who are in the market have options and may walk away if they believe they can find a better or more affordable home’.”
January 28 – CNBC (Diana Olick): “After dropping sharply, mortgage interest rates rose last week for the first time in a month. That pushed total mortgage demand down 8.5% compared with the previous week… Applications for a mortgage to purchase a home were essentially flat, down 0.4% from one week earlier and 18% higher year over year. Homebuyers are still facing a very pricey market. There is more supply than last year, but most of it is on the high end.”
China Watch:
January 26 – Wall Street Journal (Austin Ramzy): “Decades of spending increases have helped China build one of the world’s most substantial militaries, stirring fears that it could seize Taiwan or provoke a clash over territorial disputes with neighbors such as Japan or the Philippines. But the chief victim of the buildup of China’s military so far has been its own elite, as Chinese leader Xi Jinping has purged a swath of top generals accused of corruption and disloyalty… ‘Money spent very quickly on the military corrupts very quickly,’ said Dennis Wilder, a senior fellow at Georgetown University and former U.S. intelligence officer.”
January 28 – Bloomberg: “China’s armed forces are in the midst of one of the most sweeping shakeups of the Xi Jinping era, with a steady stream of senior generals vanishing from public view or being formally purged. A corruption crackdown that started in mid-2023 has spiraled into a campaign that has taken down defense ministers, commanders and multiple members of the Central Military Commission…, effectively hollowing out the leadership Xi put in place only a few years ago. Events took a dramatic turn in January when the Defense Ministry announced that two of China’s most senior generals — Vice Chairman Zhang Youxia, long seen as Xi’s most trusted military ally, and fellow CMC member Liu Zhenli — were under investigation, leaving the military’s top decision-making body effectively reduced to just two figures, including Xi himself.”
January 24 – Financial Times (Kathrin Hille and Demetri Sevastopulo): “China is investigating the two remaining leaders of its armed forces who had survived previous purges, in a move that leaves President Xi Jinping in sole operational control of the People’s Liberation Army. The Chinese Communist Party is probing General Zhang Youxia, vice-chair of the Central Military Commission, and General Liu Zhenli, CMC member and chief of the PLA’s joint staff, for suspected ‘serious discipline violations and violations of the law’, the defence ministry said…”
January 29 – Bloomberg: “January 29 – Bloomberg (Abhishek Vishnoi, Bernadette Toh, and Harry Suhartono): “China indicated that an anti-graft purge roiling the People’s Liberation Army won’t impede its plans for eventually taking control of self-run Taiwan, while also brushing aside doubts about the effectiveness of its military in the wake of the ouster of top generals. While ‘peaceful reunification’ is China’s guiding principle, ‘we never renounce the use of force in resolving the Taiwan question, and the PLA will never allow anyone to separate Taiwan from its motherland,’ Defense Ministry spokesman Jiang Bin said… ‘Eventually China will be reunified,’ the senior colonel added.”
January 27 – Bloomberg: “China is undertaking an energy-building boom unlike anything the world has ever seen, as Beijing seeks to ensure supply for power-hungry facilities that are key to dominating emerging industries of the future. The nation added 543 gigawatts of new capacity across all technologies last year… That’s 12% more than all the power plants combined in India as of the end of 2024. The generation China has added since the end of 2021 is also larger than the entire US system.”
January 29 – Wall Street Journal: “More than a dozen Chinese provinces have cut their economic growth targets for the year, stoking speculation that Beijing will follow suit and set a lower national goal for 2026. Among the 20 Chinese provinces that have announced targets for 2026, 13 regions set lower goals, according to… Citi... Those that set their sights lower included major manufacturing powerhouses Guangdong and Zhejiang.”
January 26 – Bloomberg (Matthew Hill): “China is lending less to Africa than it collects in repayments, redefining its relationship with the continent toward trade, smaller-scale investment and wider use of its currency. The world’s biggest manufacturing nation swung from providing $30.4 billion in net funding to Africa in the five years through 2014 to receiving $22.1 billion in net repayments over the past five years — a reversal of about $52 billion over the past decade — according to analysis by ONE Data... China is now a ‘net extractor,’ the report said.”
Central Banker Watch:
January 28 – Wall Street Journal (Paul Vieira): “The Bank of Canada… kept its policy rate unchanged at 2.25% for the second straight time, and warned that the level of uncertainty stemming from U.S. trade policy and geopolitical risks has ramped up… As it did in December, the central bank said the policy rate was at an appropriate level to support growth and keep inflation close to its 2% target, so long as the economy evolved in line with its forecast.”
January 27 – Wall Street Journal (James Glynn): “Australia’s consumer price growth remained elevated in the final quarter of 2025, strongly signaling that the central bank will raise interest rates next week… The consumer-price index rose 0.6% in the fourth quarter of last year, with annual CPI inflation rising to 3.6% from 3.2% in the third quarter. Worryingly for the Reserve Bank of Australia, core inflation beat market expectations in the fourth quarter, adding to concerns that inflation is continuing to move up and away from its 2.5% target. Trimmed mean CPI rose by 0.9% on-quarter, marking the second consecutive above-target print…”
Europe Watch:
January 26 – Financial Times (Sam Jones): “Germany will ‘strike back’ against foreign hackers with retaliatory attacks to destroy digital infrastructure abroad, the country’s interior minister has said. ‘We are constantly experiencing cyber attacks — on institutions, infrastructure and companies. The attacks often originate from groups that have connections to state intelligence services and are financed by them,’ said Alexander Dobrindt, a senior member of chancellor Friedrich Merz’s cabinet… ‘We cannot accept this. We will enable countermeasures and set the threshold for them low. And we will show a willingness to use such instruments. In short, we will strike back, even abroad’.”
Japan Watch:
January 26 – Bloomberg (Lisa Du): “Tokyo’s new condominium prices rose to a record in 2025, driven by ballooning construction costs, supply constraints and more expensive luxury apartments hitting the market. The average price of a new apartment for sale in the Japanese capital and surrounding areas rose 17% to ¥91.8 million ($596,000), according to… the Real Estate Economic Institute. Prices had fallen slightly in 2024 after increasing for five years in a row. Home values in Tokyo have been on an upward trend as a weak yen increases costs of imported raw materials and a labor shortage adds to construction expenses. The supply of new apartments in the Tokyo metropolitan area fell 4.5% to the lowest in more than 50 years…, adding to price pressures in a market that has been dominated by high-end projects.”
Leveraged Speculation Watch:
January 23 – Wall Street Journal (Peter Rudegeair): “Hedge funds are back on top of Wall Street’s pecking order. Performance in 2025 across hedge funds was the best it has been in over a decade… Last year, pension plans, endowments and other clients put more money into hedge funds than in any year since 2007, according to… HFR. The recent stretch of strong returns is making hedge funds the most favored asset class for institutions that allocate money to outside investment firms, according to a Goldman Sachs survey…”
Social, Political, Environmental, Cybersecurity Instability Watch:
January 27 – New York Times (Adam Satariano, Paul Mozur and Karen Weise): “In 2020, Brad Smith, Microsoft’s president, outlined an ambitious plan to conserve water at the company’s growing fleet of data centers... He pledged to cut use, support wetland restoration projects and deploy new water-saving technologies. ‘Water is essential to life,’ Mr. Smith said. Then came the artificial intelligence boom, which caused a construction spree for even more data centers to develop and deploy the technology. Now Microsoft is privately projecting its water use will surge. By just how much is a moving target. Internal forecasts that Microsoft made last year… show the company expected its annual water needs for roughly 100 data center complexes worldwide to more than triple this decade to 28 billion liters in 2030. That compares with 7.9 billion liters in 2020 and 10.4 billion liters in 2024.”
The S&P500 added 0.3% (up 1.4% y-t-d), while the Dow slipped 0.4% (up 1.7%). The Utilities gained 1.9% (up 1.8%). The Banks jumped 2.0% (up 2.1%), while the Broker/Dealers declined 0.4% (up 4.8%). The Transports increased 0.6% (up 5.4%). The S&P 400 Midcaps fell 1.4% (up 4.0%), and the small cap Russell 2000 slumped 2.1% (up 5.3%). The Nasdaq100 slipped 0.2% (up 1.2%). The Semiconductors increased 0.5% (up 12.9%). The Biotechs dropped 2.9% (up 3.4%). With hyper-volatile bullion trading down $93.59, the HUI gold index sank 11.7% (up 11.4%).
Three-month Treasury bill rates ended the week at 3.5725%. Two-year government yields fell seven bps to 3.52% (up 5bps y-t-d). Five-year T-note yields dipped four bps to 3.79% (up 6bps). Ten-year Treasury yields added a basis point to 4.24% (up 7bps). Long bond yields gained five bps to 4.87% (up 3bps). Benchmark Fannie Mae MBS yields slipped one basis point to 5.00% (down 4bps).
Italian 10-year yields fell six bps to 3.46% (down 10bps y-t-d). Greek 10-year yields declined six bps to 3.45% (up 1bp). Spain's 10-year yields fell six bps to 3.21% (down 8bps). German bund yields were six bps lower at 2.84% (down 1bp). French yields dropped seven bps to 3.43% (down 14bps). The French to German 10-year bond spread narrowed one to 57 bps. U.K. 10-year gilt yields increased a basis point to 4.52% (up 4bps). U.K.’s FTSE equities index added 0.8% (up 2.8% y-t-d).
Japan’s Nikkei 225 Equities Index declined 1.0% (up 5.9% y-t-d). Japan’s 10-year “JGB” yields slipped one basis point to 2.25% (up 19bps y-t-d). France’s CAC40 slipped 0.2% (down 0.3%). The German DAX equities index dropped 1.5% (up 0.2%). Spain’s IBEX 35 equities index jumped 1.9% (up 3.3%). Italy’s FTSE MIB index gained 1.6% (up 1.3%). EM equities were mixed. Brazil’s Bovespa index gained 1.4% (up 12.6%), while Mexico’s Bolsa index declined 0.9% (up 5.0%). South Korea’s Kospi surged another 4.7% (up 24.0%). India’s Sensex equities index increased 0.9% (down 3.5%). China’s Shanghai Exchange Index declined 0.4% (up 3.8%). Turkey’s Borsa Istanbul National 100 index rallied 6.5% (up 22.9%).
Federal Reserve Credit increased $7.8 billion last week to $6.540 TN, with a seven-week rise of $49.7 billion. Fed Credit was down $2.350 TN from the June 22, 2022, peak. Since the September 11, 2019 restart of QE, Fed Credit expanded $2.814 TN, or 75%. Fed Credit inflated $3.729 TN, or 133%, since November 7, 2012 (690 weeks). Elsewhere, Fed holdings for foreign owners of Treasury, Agency Debt jumped $19.5 billion last week to $3.086 TN. “Custody holdings” were down $182 billion y-o-y, or 5.6%.
Total money market fund assets (MMFA) increased $13 billion to $7.712 TN - with a 27-week surge of $639 billion, or 18.1% annualized. MMFA were up $839 billion, or 12.2%, y-o-y - having ballooned a historic $3.127 TN, or 68%, since October 26, 2022.
Total Commercial Paper slipped $1.8 billion to $1.400 TN. CP has expanded $189 billion, or 15.6%, y-o-y.
Freddie Mac 30-year fixed mortgage rates added a basis point to 6.10% (down 85bps y-o-y) - just off the low back to September 2022. Fifteen-year rates rose five bps to 5.49% (down 63bps). Bankrate’s survey of jumbo mortgage borrowing costs had 30-year fixed rates down three bps to 6.43% (down 59bps).
Currency Watch:
January 27 – Financial Times (Ian Smith and Mercedes Ruehl): “The Swiss franc has surged to its strongest level against the US dollar in more than a decade, as a stampede into what traders are calling currency markets’ last ‘reliable’ haven poses an increasing problem for the Swiss National Bank. The Alpine currency is already up more than 3% this year…, after a 14% gain last year, as political risks drive investors to look for alternatives to the US currency. That has taken the franc to its strongest against both the dollar and the euro since a shock appreciation in 2015.”
January 25 – Reuters: “China’s yuan climbed to a new 32-month high against the dollar on Monday as the central bank continued its recent practice of carefully guiding the currency stronger by lifting the official midpoint guidance to manage the pace of appreciation.”
For the week, the U.S. Dollar Index declined 0.6% to 96.991 (down 1.4% y-t-d). On the upside, the South Korean won increased 1.6%, the Norwegian krone 1.4%, the New Zealand dollar 1.2%, the Australian dollar 1.0%, the Swiss franc 0.9%, the Canadian dollar 0.6%, the Japanese yen 0.6%, the Brazilian real 0.4%, the British pound 0.3%, the Swedish krona 0.3%, the euro 0.2%, and the Singapore dollar 0.2%. On the downside, the Mexican peso declined 0.6%, and the Mexican peso slipped 0.1%. China's (onshore) renminbi slipped 0.06% versus the dollar (up 0.45% y-t-d).
Commodities Watch:
January 27 – Bloomberg (Yihui Xie): “Gold steadied after seven days of gains, with traders digesting a record-breaking rally fueled by US dollar weakness and a flight from sovereign bonds and currencies. Bullion was near $5,160 an ounce, having risen 3.4% on Tuesday — its biggest one-day gain since April. President Donald Trump said he was not concerned about a drop in the value of the dollar that has dragged the world’s premier reserve currency to its weakest level in nearly four years.”
The Bloomberg Commodities Index added 0.9% (up 10.0% y-t-d). Spot Gold fell 1.9% to $4,894 (up 13.3%). Silver sank 17.5% to $85.1994 (up 18.9%). WTI crude rallied $3.90, or 6.4%, to $65.21 (up 14%). Gasoline jumped 4.8% (up 13%), while Natural Gas sank 18.4% to $4.354 (up 18%). Copper slipped 0.2% (up 4%). Wheat gained 1.5% (up 6%), while Corn slipped 0.6% (down 6%). Bitcoin sank $5,500, or 6.2%, to $83,760 (down 4.4%).
Market Instability Watch:
January 27 – Reuters (Ismail Shakil, Costas Pitas, Chuck Mikolajczak and Bhargav Acharya): “U.S. President Donald Trump… said the value of the dollar is great when asked whether he thought it had declined too much... ‘No, I think it’s great, the value of the dollar… dollar’s doing great,’ Trump said when asked… if he thought the value of the dollar had declined too much. Losses in the dollar index accelerated after Trump’s comments, hitting a session low of 95.566 and the lowest since February 2022. ‘If you look at China and Japan, I used to fight like hell with them, because they always wanted to devalue,’ Trump said.”
January 27 – Bloomberg (Carter Johnson, Greg Ritchie and Anya Andrianova): “Traders in the $9.5 trillion-per-day currency markets are wagering on further losses in the dollar as US policy risks and a resurgent yen drag the world’s primary reserve currency to its weakest level in nearly four years. The Bloomberg Dollar Spot Index is logging its steepest four-day drop since President Donald Trump unveiled his sweeping tariffs in April, and investors are paying the highest price on record to hedge against a deeper selloff. The greenback was already on its back foot entering January, coming off its worst year since 2017.”
January 25 – Bloomberg (Mia Glass, Ruth Carson, and John Cheng): “Days after Japanese bonds crashed, sending tremors through global financial markets, traders were still stunned by the speed and breadth of it all. A quarter-point surge in yields ‘in a single session,’ marveled Pramol Dhawan, a fund manager at Pacific Investment Management Co., ‘let that sink in.’ In the Japanese government bond market of old, it would take weeks — sometimes months — for yields to eke out, tick by tick, a move of that magnitude. For most of the 21st century, the JGB market was so steady — and interest rates were stuck at such rock-bottom levels — that Tokyo was viewed by investors around the world as a source of both cheap funding and of stability during times of global turmoil. Last week’s selloff, accompanied by dramatic swings in the yen, made clear those days are over. Inflation, long dormant in Japan, has taken hold and, moreover, Prime Minister Sanae Takaichi is pushing fiscal stimulus plans that would swell a government debt pile that is already uncomfortably large.”
January 27 – Bloomberg (Brendan Murray): “In less than three weeks, President Donald Trump has issued four sweeping tariff threats that, in normal times, would rattle investors, unnerve CEOs and send economists rushing to revise their growth forecasts for the targeted countries. Instead, financial markets and C-suite executives have mostly shrugged off Trump’s latest warnings involving Iran’s trading partners, Greenland’s supporters, Canada and South Korea, seeing them as merely words intended to gain leverage or change behavior — nothing he’d actually carry out. According to a new Bloomberg Economics analysis, it’s not quite that Trump always chickens out. More precisely, BE found, he only follows through about a quarter of the time. About 43% of threats were withdrawn — sometimes with a perceived win declared by Trump — or haven’t been imposed yet.”
January 29 – Bloomberg (Abhishek Vishnoi, Bernadette Toh, and Harry Suhartono): “Just days ago, Indonesia’s stock market was riding high. The benchmark index hit a record close last week, and a $1 trillion valuation seemed within sight. Then came the shock. A warning from MSCI Inc. about a possible market downgrade sparked what at one point was the worst two-day rout in nearly three decades… The benchmark plunged as much as 10% on Thursday, prompting authorities to step in… ‘It went from calm to chaos very fast, signaling a crisis of confidence,’ said John Foo, founder of Southeast Asia-focused Valverde Investment Partners Pte.”
U.S. and Global Credit Excess Watch:
January 25 – Wall Street Journal (Tom Fairless): “This year, global growth is being brought to you by the government. Rocked by an avalanche of growth-sapping shocks, countries around the world are tearing up savings plans and rolling out large fiscal stimulus packages financed by bumper budget deficits. From slow-growing Europe to the U.S. and parts of Asia, where multitrillion-dollar investments in artificial intelligence are fueling demand, the spending spree is expected to boost economic growth and jobs in the near term. Global growth could accelerate to a 3% annual rate over the next six months as a result, according to JPMorgan. This could be a risky strategy at a time of low unemployment and higher interest rates, economists say.”
January 26 – Bloomberg (Alice Gledhill): “Hedge fund Bridgewater Associates favors stocks over bonds given the risks posed by governments ramping up public spending and the inflationary impact of artificial intelligence. The… firm’s co-chief investment officers warned that increasing sovereign bond sales to finance ‘self-sufficiency, defense, and infrastructure’ risks testing the limits of the market’s appetite to absorb so much debt. ‘It depends on how willing buyers are to hold an ever-expanding supply of debt and what it takes to entice the next marginal buyer,’ Bob Prince, Greg Jensen and Karen Karniol-Tambour wrote... There is ‘no magic number’ that determines what level of debt or deficit is sustainable, but many developed world economies are ‘getting dangerously close’ to such limits.”
January 29 – Bloomberg (Ying Luthra and Kevin Kingsbury): “Sales of US investment-grade corporate bonds have smashed January’s prior record and exceeded $200 billion for just the sixth month ever… Syndicate desks came into 2026 anticipating a record start to the year for US high-grade issuance, predicting at least $200 billion for January. The month just exceeded September’s volume on Thursday, to rank in the top five months of all-time. This month’s volume of $208.4 billion is currently 12% above last year’s total.”
January 26 – Financial Times (Michelle Chan): “Big Tech companies are on track to dominate borrowing in the US bond market, in a shift that could expose some of the world’s safest securities to greater risk from AI. By 2030, half of the 10 largest borrowers in the US investment-grade corporate bond market will be so-called hyperscalers — companies such as Alphabet, Amazon, Meta, Microsoft and Oracle that are building colossal data centres — according to Apollo Global Management. Until now, the major borrowers in the league table have mostly been big banks and telecom companies, meaning that credit investors are largely insulated from shocks in the tech-dominated stock market. Investors have grown increasingly concerned that the gap between runaway capital expenditure on AI and the returns it generates could amount to a bubble that ultimately hits both equities and the credit market... ‘What appears diversified across issuers and sectors increasingly represents a single macro trade on AI,’ Apollo analysts wrote… Morgan Stanley estimates that hyperscalers and their adjacent companies will raise $400bn from the US high-grade market in 2026, a dramatic increase from $170bn last year and just $44bn in 2024.”
January 26 – Bloomberg (Abhinav Ramnarayan, Aaron Weinman, and Jeannine Amodeo): “Junk-debt sales on both sides of the Atlantic surged on Monday as firms took advantage of easing geopolitical tensions… Some 30 deals worth about $39 billion swooped on the US leveraged loan market — mainly to reprice existing loans or refinance debt — in the busiest day since July… In Europe, nine borrowers turned to the region’s junk-bond market for deals and another four high-yield bonds launched in the US…, which announced the first unsecured junk bond from a high-yield issuer for a local airline since the pandemic.”
January 25 – Bloomberg (Aaron Weinman and Rachel Graf): “Some of the best performing US debt in the first weeks of this year is the lowest rated, implying that corporate defaults are low on the list of investor fears now. Debt rated in the CCC tier, the lowest ratings that commonly trade in the US, gained 1.15% this year through Thursday’s close... That’s better than just about every other kind of US debt, including other types of junk bonds. Treasuries are down about 0.2%...”
January 28 – New York Times (Talmon Joseph Smith): “Across America, state and local governments have been selling bonds at a record clip to finance projects like airports, roads and utilities. They have found a deep pool of buyers keen on realizing the tax-exemption benefits from holding this municipal debt… Borrowing in the municipal bond market surpassed $500 billion last year, breaking the $498 billion record set in 2024. The ‘muni market’ is now worth well over $4 trillion... ‘People really don’t understand how big this market is and how it impacts a lot of things that everybody does every day,’ said Mike Bartolotta, an executive managing director and co-head of public finance at Hilltop Securities, a firm that specializes in municipal sales…”
January 28 – Axios (Madison Mills): “U.S. companies are pulling future borrowing into the present, racing to refinance debt while credit remains cheap… ‘Corporate bonds aren’t scarce anymore — and now expectations are high,’ the credit strategy team at BNP Paribas wrote…, lowering its credit outlook to neutral from bullish. Credit spreads… are near their tightest levels since the 1990s. Investors think that owning corporate debt is really safe… Credit is priced for perfection just as risks to corporate debt are mounting. Firms are refinancing at the highest rate since 2020, according to Dealogic.”
U.S. Credit Trouble Watch:
January 23 – Bloomberg (Silla Brush and Davide Scigliuzzo): “A BlackRock Inc. private debt fund expects to mark down the net value of its assets 19% after a string of troubled loans weighed on results, marking the latest sign of pressure in the private credit market. BlackRock TCP Capital Corp., a publicly traded middle-market lending fund, expects to cut its net asset value per share… The fund has struggled in part because of its exposure to e-commerce aggregators — companies that buy and manage Amazon.com Inc. sellers — as well as troubled home improvement company Renovo Home Partners, which has filed for bankruptcy with plans to liquidate.”
January 26 – Bloomberg (Davide Scigliuzzo and Laura Benitez): “Apollo Global Management Inc. took a loss on a portion of a $170 million asset-backed financing for Amazon brand aggregator Perch that was written off to zero, a rare stumble for a strategy touted as one of private credit’s safest and most promising… Apollo’s setback is notable, however, because the firm held only indirect exposure to Perch through a layered structure that included additional protections not afforded to other lenders, the people said.”
January 29 – Bloomberg (Silas Brown, Olivia Fishlow and Ellen DiMauro): “Investors pulled around 15.4% of net assets from one of Blue Owl Capital Inc.’s tech-focused funds, following the vehicle’s decision to dramatically increase the amount investors could withdraw earlier this month.”
January 26 – Wall Street Journal (Alicia McElhaney): “Bankrupt auto-parts supplier First Brands is shutting down parts of its North American business after top lenders resisted providing additional funding to keep it afloat. First Brands said… it has started winding down Brake Parts, aftermarket parts maker Cardone and spark plug manufacturer Autolite. It will keep operating the remaining businesses, including those that make filters, wipers, pumps, lighting and other accessories as it seeks buyers, the company said.”
January 29 – Bloomberg (James Crombie): “Investors underestimate the hazards when chasing fat yields in private credit, according to Pacific Investment Management Co. ‘There’s a lot of additional credit risk that people are often taking in some of these private situations that you kind of turn a blind eye to,’ said Christian Stracke, the $2.3 trillion asset manager’s president… Private debt traditionally focuses on smaller companies, which tend to have less financial flexibility and more limited disclosure than those accessing public markets. Its higher sector concentration and lack of price transparency are cause for concern, Stracke said. Loans to weaker companies signed earlier this decade when interest rates were near zero are becoming stressed as the debt comes due.”
January 26 – Financial Times (Alexandra Heal and Euan Healy): “Private credit firms sold a record amount of debt to themselves last year as the buyout sector’s slowdown pushed them to find new ways to generate cash from loans to companies owned by private equity. Private lenders struck so-called continuation deals worth $15bn globally in 2025, up from almost $4bn the previous year, according to… Jefferies. Such deals involve fund managers establishing new vehicles to buy loans from their old funds. Many of the rolled-over loans were originally extended to finance leveraged buyouts by private equity managers, Jefferies said, but were taking longer than expected to be repaid due to a lack of deals.”
Trump Administration Watch:
January 26 – Axios (Madison Mills): “Investors are confronting a different world, marked by the Trump administration’s aggressive push for a new global order, renewed attacks on the Federal Reserve, increasingly controversial immigration actions and much more. It’s not even the end of the first month of the year. Throw out your 2026 outlooks… Since the beginning of the year, investors have been met with: Venezuela: The capture of Nicolás Maduro led to a spike in volatility and a drop in energy prices. Greenland: President Trump threatened to take control of Greenland and then proposed additional tariffs on European nations… The carry trade: Japanese bond yields spiked, hurting one of the most lucrative trades used by Wall Street to turn profits. Trump vs. Powell: The Department of Justice launched an investigation into Federal Reserve chair Jerome Powell, sparking concerns about Fed independence… Canada vs. the U.S.: Canadian Prime Minister Mark Carney dropped tariffs on Chinese EVs and said that ‘not every partner will share all our values’ in a speech at Davos… Trump vs. corporate America: The president is suing the nation's largest bank, JPMorgan, and its CEO, Jamie Dimon, for $5 billion. The immigration crackdown. The killing of two people in Minnesota has triggered a response from the CEOs of the largest public companies in the state, which could signal the start of a return to corporate activism.”
January 28 – Financial Times (Claire Jones, Ian Smith and Kate Duguid): “The US currency rebounded on Wednesday after US Treasury secretary Scott Bessent said Washington was still pursuing a ‘strong dollar policy’ and was not planning an intervention to boost the Japanese yen. The dollar jumped as much as 0.9% against the euro and 1% against the yen after Bessent said… he expected the US currency to appreciate. ‘The US always has a strong dollar policy, but a strong dollar policy means setting the right fundamentals,’ Bessent said, adding that the administration’s policies were making the US ‘the best place to come’. ‘If we have sound policies, the money will flow in and we are bringing down our trade deficit, so automatically that should lead to more dollar strength over time,’ Bessent said.”
January 28 – Reuters (Andrea Shalal and Susan Heavey): “The U.S. has a strong dollar policy and that means setting the right fundamentals, U.S. Treasury Secretary Scott Bessent said…, while denying that Washington was intervening in currency markets to support the Japanese yen. Asked… if the U.S. was intervening to strengthen the yen, Bessent said, ‘Absolutely not’.”
January 29 – Associated Press (Steve Peoples): “No longer confined to the partisans and activists, the fierce backlash against Donald Trump’s immigration crackdown has begun to break out across American culture, spanning the worlds of business, sports and entertainment. Bruce Springsteen released a new song… that slammed ‘Trump’s federal thugs.’ OpenAI chief executive Sam Altman told employees that ‘what’s happening with ICE is going too far’… And lifestyle icon Martha Stewart lamented that ‘we can be attacked and even killed.’ ‘Things must and have to change quickly and peacefully,’ Stewart wrote to her 2.9 million… followers…”
January 25 – Axios (Andrew Solender): “The Department of Homeland Security is coming under unprecedented scrutiny from Congress in the wake of the fatal shooting of Alex Pretti, with Democratic attacks more strident and Republican defenses more muted than ever before. The growing tension could result in a government shutdown, politically charged hearings and even an impeachment vote. More and more Democrats are signing onto Rep. Robin Kelly's (D-Ill.) articles of impeachment against DHS Secretary Kristi Noem… Senate Democrats are threatening to allow a partial government shutdown next week unless a DHS funding bill is altered with language reining in the agency.”
January 26 – Bloomberg: “Acting President Delcy Rodríguez said Venezuela has ‘had enough’ of US interference as the government faces growing pushback from public-sector groups and leftist parties over plans to overhaul the oil industry. ‘Enough of Washington’s orders to Venezuelan politicians, let Venezuelan politics resolve our differences and conflicts,’ Rodríguez said while addressing state oil workers in Anzoátegui state... ‘Enough of foreign powers.’ Rodríguez and her brother Jorge Rodríguez, the president of the National Assembly, stepped up their rhetoric over the weekend as the government tries to balance conflicting demands from its supporters and the US administration of Donald Trump.”
January 26 – Wall Street Journal (Anna Wilde Mathews and Christopher Weaver): “The Trump administration is proposing roughly flat rates for Medicare insurers next year, an update that falls well short of Wall Street expectations… Shares of UnitedHealth Group, the biggest Medicare insurer by membership, fell more than 9% in after-hours trading… Rival Medicare insurer Humana’s shares were down 12% and CVS Health fell more than 9%. The Medicare agency is also proposing to eliminate a lucrative industry billing practice that has raised concerns with government watchdogs and was among the tactics examined in reporting by the Journal on Medicare insurers.”
January 29 – Bloomberg (Justin Sink and Eric Martin): “US President Donald Trump authorized his administration to slap tariffs on goods from countries that provide oil to Cuba, tightening the squeeze on the communist-run government he wants to see replaced. Trump signed an executive order that will first identify which countries provide Cuba with oil, and then decide what additional export duties should be imposed. ‘The Government of Cuba has taken extraordinary actions that harm and threaten the United States,’ Trump wrote… ‘The regime aligns itself with — and provides support for — numerous hostile countries, transnational terrorist groups, and malign actors adverse to the United States’.”
January 28 – Financial Times (Jude Webber, Joe Daniels and Lauren Fedor): “Cuba only has enough oil to last 15 to 20 days at current levels of demand and domestic production, according to data company Kpler, after its sole remaining supplier Mexico appeared to cancel a shipment while the US blocked deliveries from Venezuela. Unless deliveries resume, Cuba could face sharp rationing, with much of the country already suffering near-daily blackouts. While inventories have been lower at times in the recent past, US President Donald Trump has vowed to choke off oil to the communist island… ‘They have a major crisis on their hands’ if more deliveries do not arrive in the coming weeks, said Jorge Piñón, an oil expert at the University of Texas.”
January 27 – Wall Street Journal (Michael R. Gordon): “President Trump warned… his administration would no longer support Iraq if Nouri al-Maliki is named the country’s next prime minister. ‘I’m hearing that the Great Country of Iraq might make a very bad choice by reinstalling Nouri al-Maliki as Prime Minister,’ Trump wrote… Because of Maliki’s policies and ideologies, Trump added, ‘if elected, the United States of America will no longer help Iraq and, if we are not there to help, Iraq has ZERO chance of Success, Prosperity or Freedom.’ Maliki, a powerful Shiite politician, served as Iraq’s prime minister from 2006 to 2014.”
January 29 – CNBC (Kevin Breuninger): “President Donald Trump, his two eldest sons, and his family business sued the Internal Revenue Service and the U.S. Treasury Department over alleged leaks of their confidential tax information… The plaintiffs seek at least $10 billion in damages, according to the lawsuit in Miami federal court. The civil complaint alleges that the IRS and Treasury failed in their obligation to prevent the leak of those tax records by former IRS employee Charles ‘Chaz’ Littlejohn in 2019 and 2020. In addition to Trump, the plaintiffs are his sons, Donald Trump Jr. and Eric Trump, and the Trump Organization, which the sons run.”
January 25 – Bloomberg (Lananh Nguyen): “U.S. President Donald Trump’s lawsuit against JPMorgan… and its CEO Jamie Dimon highlights a growing, and politically fraught, conflict in the administration’s policy agenda for Wall Street, with big banks scoring wins but also facing setbacks… ‘The industry is losing as many battles as it wins on big issues and the constant pressure and random nature of developments is taking its toll,’ said Todd Baker, a senior fellow at Columbia University.”
Constitution Watch:
January 30 – Associated Press (Jaimie Ding, Alanna Durkin Richer and Eric Tucker): “Journalist Don Lemon was released from custody Friday after he was arrested and hit with federal civil rights charges over his coverage of an anti-immigration enforcement protest that disrupted a service at a Minnesota church. Lemon was arrested overnight in Los Angeles, while another independent journalist and two protest participants were arrested in Minnesota… ‘I will not be silenced.’ ‘I have spent my entire career covering the news. I will not stop now,’ Lemon said. ‘In fact there is no more important time than right now, this very moment, for a free and independent media that shines a light on the truth and holds those in power accountable’.”
Canada Watch:
January 25 – Wall Street Journal (Paul Vieira): “Prime Minister Mark Carney came into office almost a year ago trying to build warm relations with President Trump. Now, he is playing hardball. By resolving a trade dispute with China and issuing a call-to-arms against economic coercion at Davos…, the former central-banker governor known for his calculated caution is taking Canada into a high-stakes gambit… He may not have a choice, the analysts said. Carney has tried to appease Trump with strengthened border security, fentanyl-trafficking deterrence, ramping up military spending and dropping a digital tax affecting U.S. tech companies. None of it has worked, and he needs leverage going into negotiations this year to redo the U.S.-Mexico-Canada free-trade agreement, or USMCA, that underpins the country’s economy.”
January 27 – Wall Street Journal (Paul Vieira): “Canadian Prime Minister Mark Carney said he spoke to President Trump and told him he stands by his remarks last week issuing a call-to-arms among smaller powers against economic coercion… Carney’s speech at the World Economic Forum… didn’t identify the U.S. or Trump, but was widely interpreted as a rebuke to Trump’s policies on using American economic and military might to achieve geopolitical goals. The remarks offered a template for countries on countering this pressure. ‘To be absolutely clear, and I said this to the president: ‘I meant what I said in Davos,’’ Carney said… about his… conversation with Trump. ‘It was a broader set of issues, and Canada was the first country to understand the change in U.S. trade policy that he initiated, and we’re responding to that’.”
January 29 – Wall Street Journal (Paul Vieira): “Canadian Prime Minister Mark Carney called on the Trump administration to respect his country’s sovereignty after a group advocating for Alberta’s secession from Canada said it had met with State Department officials about the province’s future. Last week, Treasury Secretary Scott Bessent weighed in on the province’s political future, saying he was aware of a bid by some citizens to hold a referendum on independence and added that the oil-rich western Canadian province would be ‘a natural partner’ for the U.S. The future of Alberta marks the latest source of tension between Washington and Ottawa…”
January 25 – Associated Press (Michelle L. Price and Rob Gillies): “President Donald Trump… threatened to impose a 100% tariff on goods imported from Canada if America’s northern neighbor went ahead with its China trade deal, intensifying a feud with Prime Minister Mark Carney, a rising voice in the West’s pushback to Trump’s new world order. Trump said… that if Carney ‘thinks he is going to make Canada a ‘Drop Off Port’ for China to send goods and products into the United States, he is sorely mistaken’.”
New World Order Watch:
January 27 – Reuters (Mike Dolan): “Donald Trump’s Greenland tariff threat and U-turn last week may have been a watershed for the world’s ‘middle powers.’ For them, rebooting globalization - with or without Washington - now looks far more realistic than it did during last year's trade shock. This year, the U.S. president has shifted from using tariffs mainly to air long‑standing trade grievances to wielding them as tools of territorial and military leverage. And for the first time, that strategy has met firm resistance and credible retaliation, forcing a climbdown. Equally important, Europe, Canada and other economies are ploughing ahead with trade liberalisation of their own, even as the U.S. retreats into protectionism and an increasingly aggressive trade posture. If Trump's aim is to extricate the U.S. from a multilateral rules-based trade system and replace it with a purely transactional one, few now believe they can dissuade him. But the rest of the globe seems determined not to follow - and still believes it can preserve much of what Trump is trying to dismantle. Fast positioning himself as the torchbearer for what he terms the ‘middle powers,’ Canada's Prime Minister Mark Carney offered a clear alternative to Trump's vision at the World Economic Forum in Davos...”
January 29 – Politico (Nette Nostlinger): “German Chancellor Friedrich Merz warned that Europe will not withstand a new era of rising great-power imperialism unless it embraces the logic of hard power. ‘We will only be able to implement our ideas in the world, at least in part, if we ourselves learn to speak the language of power politics, if we ourselves become a European power,’ Merz said… during a speech in Germany’s federal parliament. Merz’s comments build on a speech the chancellor gave last week at the World Economic Forum in Davos in which he warned of a ‘radically changing’ U.S. and ‘a new world of great powers being built on power, on strength, and when it comes to it, on force’.”
January 25 – Wall Street Journal (Alistair MacDonald and Cristina Gallardo): “President Trump’s overtures about acquiring Greenland are now reviving questions among the U.S.’s North Atlantic Treaty Organization allies over whether Europe can make enough of its own weapons to fight independently of America. Defense analysts and lawmakers mainly conclude yes, but not just yet. The continent’s once-sclerotic defense industry is churning out drones, tanks, ammunition and other weaponry at its fastest pace in decades… The cost of replacing current U.S. military equipment and personnel in Europe would be around $1 trillion, according to the International Institute for Strategic Studies think tank. Some holes remain in the region’s manufacturing capability, including stealth fighters, long-range missiles and satellite intelligence.”
January 24 – Bloomberg (Frances Schwartzkopff): “Vegemite, the yeasty spread from Australia, gets a passing green checkmark. So does a French bottle of Chateauneuf-du-Pape. But Diet Coke, a favorite of President Donald Trump? To that, a popular new mobile app in Denmark assigns a failing red X — a message to shoppers to put that American stuff back on the shelf. Denmark… is tired of feeling pushed around. So Danes are turning to mobile apps to scan everyday products and boycott those associated with the US.”
January 26 – Wall Street Journal (Kim Mackraelin and Max Colchester): “U.S. trading partners, feeling burned by an unpredictable and transactional White House, are reassessing China in a drive to lessen their longstanding reliance on America. From Canada to Europe and South Korea, America’s postwar allies are scouring the globe for alternative markets. Some are weighing closer ties to China, the world’s second-largest economy after the U.S., even as they worry about Beijing’s economic and military might and the risk of U.S. retaliation.”
January 28 – Axios (Josephine Walker): “A quarter of young Americans think China has more global power and influence than the U.S., compared to 12% of Americans ages 65 and older, according to a new Carnegie Endowment for International Peace survey. Political dysfunction, economic pressures and cultural exchanges are helping to reshape how young Americans measure global power — and America’s place in it. ‘Younger Americans are much less likely to see the U.S. as uniquely exceptional,’ Craig Kafura of the Chicago Council on Global Affairs tells Axios.”
Greenland Watch:
January 26 – Financial Times (Julie Rademacher): “What is unfolding in Greenland is not just a dispute over borders or bases. It is a clash of world views. Donald Trump’s reported deal, agreed with Nato secretary-general Mark Rutte, represents a form of diplomacy entirely alien to Greenlandic culture. Trump claims the deal includes mineral rights. No Nato chief has or would discuss mineral deals on behalf of one of its members. It falls outside Nato’s mandate and legitimacy. Negotiating over Greenlanders’ heads feels less like policy and more like cultural vandalism — an affront to a society that views land as kin, not commodity. Greenlandic society is built on values that clash sharply with modern American political culture: collectivism over individualism, trust over spectacle, continuity over disruption, modesty over hyperbole, and nature as an intrinsic value — not a resource to be ‘unlocked’.”
Iran Watch:
January 28 – Financial Times (Steff Chávez): “The USS Abraham Lincoln, one of the US’s 11 aircraft carriers, entered Middle Eastern waters this week after an 11-day transit from the South China Sea… Accompanying the vessel… were three guided-missile destroyers — part of the ‘beautiful armada’ the US president has ordered towards Iran. It is the largest build-up of US military assets in the region since B-2 bombers dropped 30,000lb bombs on three of the Islamic Republic’s nuclear facilities in June last year. ‘This looks like the US is planning to use military force’, both offensively and defensively, said Seth Jones, a former Pentagon and US special operations official. ‘What is less clear [are] the objectives’.”
January 24 – Associated Press (Elena Becatoros): “The commander of Iran’s paramilitary Revolutionary Guard, which was key in putting down recent nationwide protests in a crackdown that left thousands dead, warned that his force is ‘more ready than ever, finger on the trigger,’ as U.S. warships headed toward the Middle East. Nournews, a news outlet close to Iran’s Supreme National Security Council, reported on its Telegram channel that the commander, Gen. Mohammad Pakpour, warned the United States and Israel ‘to avoid any miscalculation.’ ‘The Islamic Revolutionary Guard and dear Iran stand more ready than ever, finger on the trigger, to execute the orders and directives of the Commander-in-Chief,’ Nournews quoted Pakpour as saying.”
January 28 – Wall Street Journal (Laurence Norman and Dov Lieber): “Israel pounded Iran’s military in June’s 12-day war, but the regime emerged from the bruising conflict with much of its arsenal of thousands of ballistic missiles intact… Tehran has an estimated 2,000 midrange ballistic missiles that can reach across the region and strike as far as Israel. It also has significant stockpiles of short-range missiles capable of reaching U.S. bases in the Gulf and ships in the straits of Hormuz… Iran also has significant stockpiles of antiship cruise missiles and torpedo boats, as well as many drones that can threaten U.S. ships.”
January 27 – Associated Press (John Gambrell): “Two Iranian-backed militias in the Mideast are signaling their willingness to launch new attacks, likely trying to back Iran… Yemen’s Iranian-backed Houthi rebels… hinted they were ready to resume attacks on shipping in the Red Sea. That came just after Iraq’s Kataib Hezbollah paramilitary group, long supported by Iran’s paramilitary Revolutionary Guard, issued a direct threat… toward any attack targeting Iran, warning a ‘total war’ in the region would be a result. The statements came as the entire region is mired in a tense waiting game to see if Trump will strike.”
January 28 – Associated Press (Jon Gambrell): “Iranian officials reached out to the wider Middle East on Wednesday over the threat of a possible U.S. military strike on the country, while the value of Iran’s currency reached a new low… Two nations, Saudi Arabia and the United Arab Emirates, have signaled they won’t allow their airspace to be used for any attack. But America has moved the USS Abraham Lincoln and several guided missile destroyers into the region, which can be used to launch attacks from the sea. Iran’s currency… fell to a record low of 1.6 million to $1… Its value has been plunging since late last year, and is down from about 32,000 to $1 a decade ago.”
January 29 – Reuters (Parisa Hafezi): “Plainclothes Iranian security forces have rounded up thousands of people in a campaign of mass arrests and intimidation to deter further protests after crushing the bloodiest unrest since the 1979 Islamic Revolution, sources told Reuters. Modest protests that began last month in Tehran’s Grand Bazaar over economic hardship unleashed long-suppressed wider grievances and swiftly escalated into the gravest existential threat to Iran’s Shi’ite theocracy in nearly five decades, with protesters commonly calling for ruling clerics to step down.”
Trade War Watch:
January 27 – Associated Press (Paul Wiseman): “President Donald Trump has strong-armed many of America’s biggest trading partners into pledging trillions of dollars of investment in the United States. But a study… raises doubts about whether the money will actually materialize and questions how it would be spent if it did. ‘How realistic are these commitments?’ write Gregory Auclair and Adnan Mazarei of the Peterson Institute for International Economics… ‘The short answer is that they are clouded with uncertainty.’ They looked at more than $5 trillion in investment commitments made last year by the European Union, Japan, South Korea, Taiwan, Switzerland, Liechtenstein and the Persian Gulf states of Saudi Arabia, Qatar, Bahrain and the United Arab Emirates. Trump used the threat of punitive tariffs – import taxes – to pry concessions out of those trading partners, including the investment pledges.”
January 27 – Yahoo Finance (Ben Werschkul): “A new trade deal between India and Europe is just the latest pact announced in less than a month’s time that doesn’t involve the United States. Long-delayed European plans for increasing trade with a bloc of South American nations also took a step forward, as has a limited trade deal between Canada and China to cut tariffs on electric vehicles and canola oil… European Commission President Ursula von der Leyen on Tuesday called the EU-India pact ‘the mother of all deals’… ‘This is only the beginning,’ von der Leyen wrote on X. ‘I think… you could see an increasing number of alliances between other countries around the world as we get used to this kind of multifaceted world where economies can't be completely dependent on the US anymore,’ said Seema Shah, Principal Asset Management chief global strategist…”
January 26 – Financial Times (Aime Williams and Daniel Tudor): “Donald Trump has said he will increase tariffs on South Korea to 25% in response to Seoul’s slow pace in enacting the trade deal it struck with the US last year. In a post…, the US president said the increase would apply to all goods covered by his ‘reciprocal’ tariffs, along with cars, lumber and pharmaceutical goods. ‘Our Trade Deals are very important to America,’ Trump wrote… He added: ‘South Korea’s Legislature is not living up to its Deal with the United States’.”
January 27 – Wall Street Journal (Gavin Bade and Amrith Ramkumar): “The Trump administration is warning South Korea not to target tech companies with discriminatory regulations and investigations, its latest effort to protect U.S. internet platforms as it threatens higher tariffs on the country.”
January 25 – Bloomberg (Erik Hertzberg): “President Donald Trump’s new tariff threats signal an early escalation in what’s expected to be months of posturing as the US, Canada and Mexico prepare to review their trade pact this year. On Saturday, Trump criticized Mark Carney for expanding economic ties with China, saying the prime minister would be ‘sorely mistaken’ to think the US will allow Canada to be a ‘drop off port’ for Chinese goods. He threatened 100% tariffs on the northern nation if it reaches a trade deal with China. Canada’s minister in charge of US trade, Dominic LeBlanc, pushed back, saying there was ‘no pursuit of a free trade agreement with China’.”
January 26 – Reuters (David Ljunggren): “A review of the U.S.-Mexico-Canada free trade deal that is due to start later this year will be robust, Canadian Prime Minister Mark Carney said... Carney said some of the critical comments that Trump has made in recent days should be viewed in the context of the USMCA talks. The three-nation pact came into effect in July 2020. Trump, who has frequently mused about annexation, last week said Canada ‘lives because of the United States’ and… threatened to impose a 100% tariff on all Canadian imports if Ottawa concluded a trade deal with China. ‘We are entering soon a negotiation, a review, formally, of the USMCA… it will be a robust review, is the expectation,’ Carney told reporters. ‘The President is a strong negotiator, and I think some of these comments and positioning should be viewed in the broader context of that’.”
U.S./Russia/China/Europe/Iran Watch:
January 23 – Wall Street Journal (James T. Areddy): “When Venezuela booted out American oil companies in a nationalization campaign nearly two decades ago, China stepped in. Now, Beijing’s foothold there is in doubt as the U.S. asserts new power over Venezuela’s oil patch. Chinese government-owned oil companies hold claims to more than 4 billion barrels of Venezuelan oil, nearly five times as much as the only U.S. major that today produces in the South American nation, Chevron. Beijing’s production deals, oil rigs and debt-backed supply arrangements have long bought it enormous sway in Venezuela… The Chinese producers expanded their claims in the aftermath of a 2007 Venezuelan nationalization drive that pushed out Exxon Mobil and ConocoPhillips. China quickly emerged as a financier, equipment supplier and political partner in what Caracas called an ‘iron brotherhood’ that until now insulated it from U.S. pressure.”
January 27 – Politico (Victor Jack): “Mark Rutte has one overriding mission as NATO secretary-general: Stop Donald Trump from blowing up the alliance. That focus is now putting the former Dutch prime minister on a collision course with the very European capitals he once worked alongside — and has left NATO bruised even after he successfully talked Trump down from his threats to annex Greenland. The strain was on full display Monday in the European Parliament, where Rutte bluntly defended the superpower’s primacy in the alliance. ‘If anyone thinks here… that the European Union or Europe as a whole can defend itself without the U.S., keep on dreaming,’ he told lawmakers. ‘You can’t’.”
January 29 – Reuters (Andrew Macaskill): “Britain and China hailed a reset in relations…, after Prime Minister Keir Starmer and President Xi Jinping pledged greater cooperation on trade, investment and technology to the mutual benefit of both countries. With Western leaders reeling from the unpredictability of… Donald Trump, Starmer became just the latest to head to China, where he called for a ‘more sophisticated relationship’ with improved market access, lower tariffs and investment deals. Hosting a British leader for the first time in eight years, Beijing agreed to 30 days’ visa-free access for Britons and to halve Chinese tariffs on whisky, while UK drugmaker AstraZeneca announced a $15 billion investment into China.”
AI Bubble/Arms Race Watch:
January 28 – New York Times (Natallie Rocha): “Microsoft said… it continued to spend heavily on data centers for artificial intelligence with $37.5 billion in capital expenditures in its most recent quarter, up about 65% from the same period a year ago. The company reported that revenue in the quarter was $81.3 billion, up 17% from… last year. Microsoft’s profits were $38.5 billion, up 60%...”
January 28 – Reuters (Wayne Cole): “Who knew building AI would cost so much. Results from Microsoft and Meta showed truly nose-bleeding amounts being spent on capex, with the former splashing out almost $38 billion in the quarter, up two-thirds on the previous year. Meta boosted its capital spending plans for this year by 73% to a range between $115 billion and $135 billion.”
January 29 – Financial Times (Bryce Elder): “Internet companies are in denial about getting fat. The advertising silos and data miners of 10 years ago are now infrastructure-heavy and capital-intensive, but their reporting has yet to adjust to the rapid weight gain. This mismatch may become harder to ignore as the value of their spending is written off. Morgan Stanley forecasts that, collectively, Microsoft, Oracle, Meta Platforms and Alphabet could book more than $680bn in depreciation charges over the next four years. Its estimates are even higher than those put forward by Michael ‘The Big Short’ Burry, who calls earnings inflation by lowballed depreciation charges ‘one of the most common frauds of the modern era’.”
January 30 – Bloomberg (Nick Turner): “Nvidia Corp.’s negotiations to invest as much as $100 billion in OpenAI have broken down, the Wall Street Journal reported, exposing a potential rift between two of the most powerful companies in the artificial intelligence industry. The discussions stalled after some inside Nvidia expressed concerns about the transaction…”
January 29 – Reuters (Juby Babu and Krystal Hu): “Amazon is in talks to invest dozens of billions in ChatGPT-maker OpenAI and the figure could be as high as $50 billion, a source told Reuters… The discussion is still in the early stages… Big Tech companies and investors such as SoftBank Group Corp are racing to forge partnerships with OpenAI - which is spending heavily on data centers - betting that closer ties with the artificial-intelligence startup would give them a competitive edge in the AI race.”
January 28 – Financial Times (Song Jung-a): “The world’s two largest memory-chip makers have said they will increase capital spending ‘substantially’ this year as they expect the AI boom to exacerbate the shortage of semiconductors. But Samsung Electronics and SK Hynix warned… the outlays would not come fast enough to improve supply in the short term, as heightened demand for memory chips from AI data centres tests their capacity. ‘We are planning a substantial increase in our capital expenditure in 2026 as AI-driven demand is likely to continue,’ said Kim Jae-june, executive vice-president of Samsung’s memory business. ‘But supply shortages are likely to worsen as capacity expansion is expected to be limited this year and next’.”
January 26 – Bloomberg (Naureen S Malik): “The largest US grid operator was granted authority to divert power destined for data centers to households, hospitals and other customers to prevent rolling blackouts as an extreme cold snap strains electricity supplies. An order signed by Energy Secretary Chris Wright… authorized PJM Interconnection LLC to direct data centers, factories and other large facilities to switch on back-up generators to reduce their burden on the grid and free up more electricity supplies.”
January 26 – Axios (Jim VandeHei and Mike Allen): “Anthropic CEO Dario Amodei, the architect of the most powerful and popular AI system for global business, is warning of the imminent ‘real danger’ that super-human intelligence will cause civilization-level damage absent smart, speedy intervention. In a 38-page essay, shared with us in advance of Monday’s publication, Amodei writes: ‘I believe we are entering a rite of passage, both turbulent and inevitable, which will test who we are as a species.’ ‘Humanity is about to be handed almost unimaginable power, and it is deeply unclear whether our social, political, and technological systems possess the maturity to wield it’.”
January 26 – New York Times (Jennifer Valentino-DeVries and Kashmir Hill): “Julia Sheffield, a psychologist who specializes in treating people with delusions, is difficult to rattle. But she was unnerved last summer when patients began telling her about their conversations with A.I. chatbots. One woman, who had no history of mental illness, asked ChatGPT for advice on a major purchase she had been fretting about. After days of the bot validating her worries, she became convinced that businesses were colluding to have her investigated by the government. Another patient came to believe that a romantic crush was sending her secret spiritual messages. Yet another thought he had stumbled onto a world-changing invention. By the end of the year, Dr. Sheffield had seen seven such patients at Vanderbilt University Medical Center in Nashville. Although she is accustomed to treating people with mental instability, Dr. Sheffield was disturbed that this new technology seemed to tip people from simply having eccentric thoughts into full-on delusions.”
Bubble and Mania Watch:
January 29 – Wall Street Journal (Katherine Clarke): “In 2025, the U.S. housing market continued to be mired in a slump… But at the ultra high-end of the market, a very different narrative unfolded: Ultraluxury real-estate sales, which have boomed in much of the country for the last few years, got even stronger. The nation’s top 10 luxury markets… collectively posted more than 1,600 sales in that price range in 2025, roughly 32% more than the previous year and a nearly 24% increase in dollar volume to $28.6 billion, according to… Compass… Los Angeles delivered the most dramatic year-over-year surge: There were 292 sales of $10 million and above in L.A. County, a jump of almost 54% from 2024, the report shows. Those sales totaled roughly $5.36 billion, a 61% spike in dollar volume from the previous year.”
January 26 – Bloomberg (Heidi Taksdal Skjeseth): “Norway’s $2.1 trillion sovereign wealth fund has to raise its preparedness to handle growing geopolitical risks, a government-appointed advisory panel said. There’s growing evidence of instruments such as tariffs, financial sanctions and trade controls being used to achieve geopolitical goals, a three-member panel of experts said… ‘The political risk to which the fund’s investments are exposed abroad is increasing,’ the panel said, pointing out that the size and visibility of the fund further raises such risks. ‘The fund may ultimately be subject to increased taxation, regulatory intervention and even confiscation’.”
January 26 – Bloomberg (Rose Henderson and Francine Lacqua): “Demand for exchange-traded products focused on European equities was so strong in 2025 that they attracted a ‘decade in a year’ of inflows, according to BlackRock Inc.’s Ursula Marchioni. These funds attracted $92 billion last year, close to the $94 billion they cumulatively received between 2014 and 2024, Marchioni, head of investment and portfolio solutions for EMEA at the world’s largest asset manager, said…”
Crypto Watch:
January 29 – Bloomberg (David Pan and Muyao Shen): “Bitcoin’s ‘digital gold’ promise is unraveling as traders forgo the token for surging metals, hurting a narrative that once defined the asset’s macro appeal. The shift is visible not just in asset moves, but in where capital is moving — from traditional funds to blockchain-based trading venues. Over the past week, precious metal funds soaked up $1.4 billion in fresh cash while Bitcoin-linked funds saw roughly $300 million in withdrawals… At the same time, spot gold surged past $5,500, and silver broke $118 per ounce, fueled by a four-year low in the dollar and geopolitical stress.”
January 28 – Financial Times (Nikou Asgari): “A record $158bn of digital tokens was sent to crypto wallets controlled by criminals last year… The amount pulled in by illicit crypto wallets marked a 145% rise on 2024, according to… blockchain intelligence company TRM Labs. Criminal flows had been falling for the previous three consecutive years. TRM attributed the sharp rise to ‘intensified sanctions designations, increased use of crypto by nation-state actors’ and improved blockchain tracking technology.”
Inflation Watch:
January 30 – Associated Press (Paul Wiseman): “U.S. wholesale prices rose a hotter-than-expected 0.5% in December. The… producer price index — which measures inflation before it hits consumers — rose from November to December at the fastest pace in three months and faster than the 0.3% economists had forecast. Compared to December 2024, producer prices were up 3% last month, which was in line with what forecasters expected. Services prices were up 0.7% from November, the biggest increase since July…”
January 29 – Bloomberg: “Copper surged by the most in more than 16 years as metals extended a dramatic start to the year fueled by a wave of intense speculative trading in China. Chinese investors are piling into metals as they ride a powerful wave of momentum that has lifted everything from tin to silver to record highs… Prices gained as much as 10.1% to trade above $14,400 a ton for the first time ever. The industrial metal, which is used in almost every electrical application, has risen about 25% since the start of December.”
January 25 – Wall Street Journal (Rachel Louise Ensign): “Millions of Americans are starting to see their monthly health-insurance bills rise, a new pressure point for a nation still frustrated with the high cost of living. Many of those facing the most substantial dollar increases are middle-income Americans who buy health insurance through the marketplaces set up by the government’s Affordable Care Act… Expanded subsidies for those insured under the ACA expired on Dec. 31… That shutdown ended with no resolution on the subsidies, and lawmakers haven’t passed legislation to revive them. Now, the newly calculated insurance bills are coming due, and Americans are having to figure out how to pay up, or go without.”
January 29 – Bloomberg (Miquéla V Thornton): “The price of health care tops the US public’s long list of economic worries ahead of the midterm elections, according to new polling data… Two-thirds of Americans report worrying about health care more than groceries, utilities, gas or housing, according to… health policy research firm KFF. Over half of adults said the cost of their health care increased this year, with the majority saying Congress did the ‘wrong thing’ by not extending Affordable Care Act credits... More than four in 10 voters intend to cast their ballots with their health insurance bills top of mind this November, KFF’s report showed.”
January 29 – Bloomberg (Alice French): “The fastest-selling game console of all time may not be enough to shelter Nintendo Co.’s stock from growing investor fears about skyrocketing memory prices… Prices of dynamic random access memory and flash-storage modules used in Nintendo’s devices jumped dramatically in the December quarter… And shortages are only projected to grow. For 2026, the average selling price of DRAM is expected to jump by 120%, while NAND prices may grow 90%, according to Citigroup analysts Peter Lee, Jayden Oh and Josh Yang… The… company may have to raise the retail price of the Switch 2 by 15% to offset rising memory costs…”
Federal Reserve Watch:
January 30 – Bloomberg (Magan Crane, Jonathan Ferro, Annmarie Hordern and Lisa Abramowicz): “Republican Senator Thom Tillis reiterated his intention to block Kevin Warsh from becoming chairman of the Federal Reserve until a criminal investigation into renovations at the Fed is stopped, despite his belief that the nomination is a good one… Tillis praised the pick but said he wouldn’t allow it to move forward for now. ‘I am pleased with the nominee; I think that by most accounts he’s well regarded,’ the North Carolina senator said. ‘But we still have to clear the current matter,’ he said of the investigation into Powell’s testimony on renovations at the Federal Reserve building in Washington, calling it a ‘frivolous prosecution’.”
January 25 – Wall Street Journal (Dylan Tokar and Nick Timiraos): “In September, President Trump’s pick to oversee banking supervision at the Federal Reserve met with the top officials from the central bank’s 12 regional districts and delivered a rebuke. The staff of the Fed’s quasi-independent regional banks are the ones who conduct most of its banking exams... Michelle Bowman, the Fed’s vice chair for supervision, wanted a new direction for supervision, in part to ease the burden on banks. Some regional examiners apparently hadn’t received the message. Bowman made clear that, notwithstanding the Fed’s sometimes opaque chain of command, she was in charge and expected examiners to get on board… Some of those present left unhappy with the message and what they took as a dressing-down, the people said.”
U.S. Economic Bubble Watch:
January 29 – Associated Press (Matt Ott): “U.S. applications for unemployment benefits inched down modestly last week, remaining at historically healthy levels… Applications for jobless aid for the week ending Jan. 24 fell by 1,000 to 209,000 from the previous week’s number which was revised upward by 10,000… The total number of Americans filing for jobless benefits for the previous week ending Jan. 17 fell by 38,000 to 1.83 million, the government said. That’s the fewest since Sept. 21, 2024.”
January 26 – Financial Times (Taylor Nicole Rogers): “Unemployed Americans are taking longer to find new jobs than at any point in the past four years… It now takes an average of more than 11 weeks for an unemployed person in the US to find a new job, the longest since 2021, according to… labour department data. Some 26% of the 7.5mn unemployed actively searching for work have been looking for more than six months.”
January 29 – CNBC (Jeff Cox): “The U.S. deficit with its global trading partners nearly doubled in November as the shortfall with the European Union swelled… Following a month where the trade deficit hit its lowest level since early 2009, it shot up to $56.8 billion, an increase of 94.6% from October. Of that gain, about one-third came with the European Union, where the goods deficit rose by $8.2 billion. The goods deficit with China decreased by about $1 billion to $13.9 billion. On a year-over-year basis, the deficit through November stood at $839.5 billion, or about 4% higher than the same period in 2024.”
January 27 – Associated Press (Matt Ott): “U.S. consumer confidence declined sharply in January, hitting the lowest level since 2014 as Americans grow increasingly concerned about their financial prospects. The Conference Board said… its consumer confidence index cratered 9.7 points to 84.5 in January, falling below even the lowest readings during the COVID-19 pandemic. A measure of Americans’ short-term expectations for their income, business conditions and the job market tumbled 9.5 points to 65.1… ‘Confidence collapsed in January, as consumer concerns about both the present situation and expectations for the future deepened,’ said Dana Peterson, the Conference Board’s chief economist. ‘All five components of the index deteriorated, driving the overall index to its lowest level since May 2014 — surpassing its COVID19 pandemic depths’.”
January 26 – Bloomberg (Lucia Mutikani): “New orders for key U.S.-manufactured capital goods increased more than expected in November, suggesting business spending on equipment maintained a steady growth pace in the fourth quarter. Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, rose 0.7% after a downwardly revised 0.3% gain in October…”
January 27 – CNBC (Diana Olick): “Serious headwinds in the housing market and the broader economy are tanking home sales at an alarming rate. More than 40,000 signed home purchase agreements were canceled in December, representing 16.3% of all homes that went under contract, according to Redfin… That’s up from 14.9% in December 2024. It’s also the highest share since Redfin began tracking the metric in 2017. ‘High housing costs and rising inventory have made homebuyers more selective,’ said Chen Zhao, head of economics research at Redfin. ‘Home sellers outnumber buyers by a record margin, meaning the buyers who are in the market have options and may walk away if they believe they can find a better or more affordable home’.”
January 28 – CNBC (Diana Olick): “After dropping sharply, mortgage interest rates rose last week for the first time in a month. That pushed total mortgage demand down 8.5% compared with the previous week… Applications for a mortgage to purchase a home were essentially flat, down 0.4% from one week earlier and 18% higher year over year. Homebuyers are still facing a very pricey market. There is more supply than last year, but most of it is on the high end.”
China Watch:
January 26 – Wall Street Journal (Austin Ramzy): “Decades of spending increases have helped China build one of the world’s most substantial militaries, stirring fears that it could seize Taiwan or provoke a clash over territorial disputes with neighbors such as Japan or the Philippines. But the chief victim of the buildup of China’s military so far has been its own elite, as Chinese leader Xi Jinping has purged a swath of top generals accused of corruption and disloyalty… ‘Money spent very quickly on the military corrupts very quickly,’ said Dennis Wilder, a senior fellow at Georgetown University and former U.S. intelligence officer.”
January 28 – Bloomberg: “China’s armed forces are in the midst of one of the most sweeping shakeups of the Xi Jinping era, with a steady stream of senior generals vanishing from public view or being formally purged. A corruption crackdown that started in mid-2023 has spiraled into a campaign that has taken down defense ministers, commanders and multiple members of the Central Military Commission…, effectively hollowing out the leadership Xi put in place only a few years ago. Events took a dramatic turn in January when the Defense Ministry announced that two of China’s most senior generals — Vice Chairman Zhang Youxia, long seen as Xi’s most trusted military ally, and fellow CMC member Liu Zhenli — were under investigation, leaving the military’s top decision-making body effectively reduced to just two figures, including Xi himself.”
January 24 – Financial Times (Kathrin Hille and Demetri Sevastopulo): “China is investigating the two remaining leaders of its armed forces who had survived previous purges, in a move that leaves President Xi Jinping in sole operational control of the People’s Liberation Army. The Chinese Communist Party is probing General Zhang Youxia, vice-chair of the Central Military Commission, and General Liu Zhenli, CMC member and chief of the PLA’s joint staff, for suspected ‘serious discipline violations and violations of the law’, the defence ministry said…”
January 29 – Bloomberg: “January 29 – Bloomberg (Abhishek Vishnoi, Bernadette Toh, and Harry Suhartono): “China indicated that an anti-graft purge roiling the People’s Liberation Army won’t impede its plans for eventually taking control of self-run Taiwan, while also brushing aside doubts about the effectiveness of its military in the wake of the ouster of top generals. While ‘peaceful reunification’ is China’s guiding principle, ‘we never renounce the use of force in resolving the Taiwan question, and the PLA will never allow anyone to separate Taiwan from its motherland,’ Defense Ministry spokesman Jiang Bin said… ‘Eventually China will be reunified,’ the senior colonel added.”
January 27 – Bloomberg: “China is undertaking an energy-building boom unlike anything the world has ever seen, as Beijing seeks to ensure supply for power-hungry facilities that are key to dominating emerging industries of the future. The nation added 543 gigawatts of new capacity across all technologies last year… That’s 12% more than all the power plants combined in India as of the end of 2024. The generation China has added since the end of 2021 is also larger than the entire US system.”
January 29 – Wall Street Journal: “More than a dozen Chinese provinces have cut their economic growth targets for the year, stoking speculation that Beijing will follow suit and set a lower national goal for 2026. Among the 20 Chinese provinces that have announced targets for 2026, 13 regions set lower goals, according to… Citi... Those that set their sights lower included major manufacturing powerhouses Guangdong and Zhejiang.”
January 26 – Bloomberg (Matthew Hill): “China is lending less to Africa than it collects in repayments, redefining its relationship with the continent toward trade, smaller-scale investment and wider use of its currency. The world’s biggest manufacturing nation swung from providing $30.4 billion in net funding to Africa in the five years through 2014 to receiving $22.1 billion in net repayments over the past five years — a reversal of about $52 billion over the past decade — according to analysis by ONE Data... China is now a ‘net extractor,’ the report said.”
Central Banker Watch:
January 28 – Wall Street Journal (Paul Vieira): “The Bank of Canada… kept its policy rate unchanged at 2.25% for the second straight time, and warned that the level of uncertainty stemming from U.S. trade policy and geopolitical risks has ramped up… As it did in December, the central bank said the policy rate was at an appropriate level to support growth and keep inflation close to its 2% target, so long as the economy evolved in line with its forecast.”
January 27 – Wall Street Journal (James Glynn): “Australia’s consumer price growth remained elevated in the final quarter of 2025, strongly signaling that the central bank will raise interest rates next week… The consumer-price index rose 0.6% in the fourth quarter of last year, with annual CPI inflation rising to 3.6% from 3.2% in the third quarter. Worryingly for the Reserve Bank of Australia, core inflation beat market expectations in the fourth quarter, adding to concerns that inflation is continuing to move up and away from its 2.5% target. Trimmed mean CPI rose by 0.9% on-quarter, marking the second consecutive above-target print…”
Europe Watch:
January 26 – Financial Times (Sam Jones): “Germany will ‘strike back’ against foreign hackers with retaliatory attacks to destroy digital infrastructure abroad, the country’s interior minister has said. ‘We are constantly experiencing cyber attacks — on institutions, infrastructure and companies. The attacks often originate from groups that have connections to state intelligence services and are financed by them,’ said Alexander Dobrindt, a senior member of chancellor Friedrich Merz’s cabinet… ‘We cannot accept this. We will enable countermeasures and set the threshold for them low. And we will show a willingness to use such instruments. In short, we will strike back, even abroad’.”
Japan Watch:
January 26 – Bloomberg (Lisa Du): “Tokyo’s new condominium prices rose to a record in 2025, driven by ballooning construction costs, supply constraints and more expensive luxury apartments hitting the market. The average price of a new apartment for sale in the Japanese capital and surrounding areas rose 17% to ¥91.8 million ($596,000), according to… the Real Estate Economic Institute. Prices had fallen slightly in 2024 after increasing for five years in a row. Home values in Tokyo have been on an upward trend as a weak yen increases costs of imported raw materials and a labor shortage adds to construction expenses. The supply of new apartments in the Tokyo metropolitan area fell 4.5% to the lowest in more than 50 years…, adding to price pressures in a market that has been dominated by high-end projects.”
Leveraged Speculation Watch:
January 23 – Wall Street Journal (Peter Rudegeair): “Hedge funds are back on top of Wall Street’s pecking order. Performance in 2025 across hedge funds was the best it has been in over a decade… Last year, pension plans, endowments and other clients put more money into hedge funds than in any year since 2007, according to… HFR. The recent stretch of strong returns is making hedge funds the most favored asset class for institutions that allocate money to outside investment firms, according to a Goldman Sachs survey…”
Social, Political, Environmental, Cybersecurity Instability Watch:
January 27 – New York Times (Adam Satariano, Paul Mozur and Karen Weise): “In 2020, Brad Smith, Microsoft’s president, outlined an ambitious plan to conserve water at the company’s growing fleet of data centers... He pledged to cut use, support wetland restoration projects and deploy new water-saving technologies. ‘Water is essential to life,’ Mr. Smith said. Then came the artificial intelligence boom, which caused a construction spree for even more data centers to develop and deploy the technology. Now Microsoft is privately projecting its water use will surge. By just how much is a moving target. Internal forecasts that Microsoft made last year… show the company expected its annual water needs for roughly 100 data center complexes worldwide to more than triple this decade to 28 billion liters in 2030. That compares with 7.9 billion liters in 2020 and 10.4 billion liters in 2024.”
