For the week, South Korea’s KOSPI Index sank 11.7%, with Japan’s Nikkei 225 Index down 9.3%, and Taiwan’s TAIEX falling 12.2%.
Your choice: “blue wave” or “blue tsunami.” “Sweeping repudiation.” “Bloodbath.” “Dem-olition.”
“It was epochal and marks a new era in our political history. And for once everyone rushed to name clearly what happened. The morning after the 2026 midterm elections, Florida Gov. Ron DeSantis was searingly blunt. For the Republican Party it was ‘close to an extinction level event.’ Its effects will ‘reverberate for the next decade or more.’ ‘It was a Watergate-level repudiation,’ said Ted Cruz… Ronna McDaniel, Republican National Committee chairman in the first Trump term, told Fox News… the election wasn’t only a Democratic wave, it was ‘a Republican rebellion.’ It wasn’t only the number of Democratic victories, it was their size. It was a night of landslides—James Talarico of Texas by 12, Jon Ossoff of Georgia by 18, Roy Cooper of North Carolina by 20.” WSJ’s Peggy Noonan, November 5, 2026
From various reports: “Republicans lost ground in 99% of the roughly 2,200 counties where most votes had been counted by Wednesday morning, including rich and poor areas, cities, and suburbs.” “Kansas elected a Democrat to the Senate for the first time in 94 years.” “Every majority-Hispanic county that had nearly finished counting swung heavily toward Democrats.” “A Yahoo analysis cites a projected Democratic House popular-vote margin of 14 points, the largest for either party in a midterm since 1974. It also notes that no party had flipped more than nine Senate seats in a midterm since 1958.”
“Democratic support among men under 30 rose from 51% in 2024 to 59% in 2026, and among young women from 61% to 70%.” “CIRCLE found 79% of young Black voters and 71% of young Latino voters backed Democratic House candidates. Young white voters favored Democrats 63% to 34%, after splitting 50% to 48% in 2024.”
The seismic shock registered at an 8.0. A deeply unpopular war. Inflation and affordability crises. And it’s not as though the Democrat Party cruised into the midterms with flattering approval ratings.
The American population is extraordinarily disgruntled – from coast to coast, rural and urban, wealthy, the vast middle class, and the poor. The scourge of inflationism: an explosion that was in the making over decades of insidious price inflation, wealth inequality and corruption. A rapacious tech oligarchy and piggish Wall Street hell-bent on jamming data centers down the throats of communities across the country. The super wealthy (including a notable trillionaire) with the gall to try to buy election results.
The administration had hyped Scott Bessent’s “3-3-3 plan” – 3% GDP, a 3% federal deficit, and 3 million additional barrels of oil daily (that was to pressure inflation lower). They used aggressive deregulation to goose lending, speculation, and economic activity. Crypto unleashed. Most importantly, the over-financed great AI arms race was prodded to propagate completely unchecked.
In short, the Trump administration ran the most pro-Bubble agenda imaginable – recklessly stoking terminal phase excess. Stock prices inflated to record highs, as the economy achieved 3.4% Q3 GDP growth. The unemployment rate dipped to a historically low 4.1% in October. It all worked like magic – except that Bubble inflation had stopped working for the population at large.
It was as if President Trump believed that so long as stock prices climbed and people had jobs, everyone would be content. Nothing else really mattered. Corruption wouldn’t matter. He could proceed with pet projects to his heart’s desire. With a public-pleasing closed border, the President could move aggressively with ICE operations and deportations.
The President and his team misread (ignored, rejected, scorned…) so many things. DOGE and Elon with his chainsaw. Overreach of our courts and justice system, universities, law firms, and late-night comedy. The East Wing of the People’s House, an extravagant Ballroom, The Kennedy Center, Reflecting Pool, and the specter of “Trump” plastered everywhere. Chair Powell, Fed Governor Lisa Cook, and hideous attacks on Federal Reserve independence. The Unrelenting Drumbeat of Chaos.
The administration ridiculed the “No Kings” rallies when they should have recognized that the American population is fiercely opposed to authoritarianism. “Liberation day” and the wielding of tariffs as a fundamental facet of some “unitary executive theory” of ultimate presidential power. Noem, Bondi, Chavez-DeRemer, Gabbard, Pulte, Patel, Hegseth, and Zacharia. The President’s habitual lying made him appear clown-like. Denigrating our allies while cozying up with autocrats Putin and Xi. Siding with the invader Russia at the expense of a democratic Ukraine. Blowing up alliances in Europe and elsewhere. Greenland. Denigrating and picking fights with our Canadian brother. “Lake America.” America, unacceptably, at its most repulsive.
There are many messages from Tuesday’s quake. Likely lost in the pile is America’s silent majority (red, blue, black, Hispanic, young, old, wealthy and needy), all at wit’s end, determined to have its voice heard. Sick and tired of all the disrespect; depleted tolerance for all the nonsense – the lack of focus, the incompetence, graft, malice and ugliness. That’s just not us.
It’s past time for a shift back to American values and principles – including liberty, individual rights, rule of law, checks and balances, pluralism and tolerance, and common decency.
Many of us – Republican, Democrat, and Independent alike – believed our democracy was under the greatest threat in our nation’s storied 250-year history.
Earlier today, I thought to myself, “Good decision. Better late than never.” But I had misread the Drudge Report headline (in big, red letters). He’s not leaving the White House along with Susie Wiles. Stephen Miller is instead the President’s new chief of staff. For those hoping Trump might turn over a new leaf and find some common ground with the Democrat majority - “I look forward to working with you [Dems] for the good of our country” - “We’ll work with the Democrats” – the Miller announcement tempered optimism.
Those of us fearing backlash from an erratic and cornered President, an even more powerful Stephen Miller, is an alarming development. “Ready to Rumble.” “Shot across the bow.” “Declaration of war.”
Hegseth posting with a photo with Steven Miller: “Stand. Fight. Defend the Republic.”
Miller: “The mission now is more clear than ever: Fight with all of our soul to support our President and defend this magnificent Republic.”
Axios: “Trump Still Defiant After a Bruising Week.”
Enough of that.
This week’s developments span much beyond Peggy Noonan’s “epochal and marks a new era in our political history.” Earthquakes corroborate the thesis of epochal and historic cycle transitions – political, social, financial, market, and geopolitical. History might look back and see Tuesday as a cause, when it was more of an effect – a key indicator of seismic change. As for the markets, de-risking/deleveraging gained powerful momentum.
November 6 – Bloomberg (Nishant Kumar, Liza Tetley, and Hema Parmar): “First the AI whiz kids were humbled. Then came the macro shocks. Credit scares followed. Soon, nowhere would be safe for hedge funds. Pain cascaded across the industry in October, as a broad tech selloff collided with a shock election in Brazil and violent protests in France, bruising many of the world’s sharpest money managers. Walleye Capital is returning some cash following its worst monthly performance since March 2020. Greg Coffey’s macro shop, Kirkoswald Asset Management, recorded its worst-ever monthly decline, breaking a 16-month winning streak. Credit fund Arini Capital Management, one of Europe’s fastest-growing hedge funds, lost more than 12% last month alone… And, Said Haidar’s macro hedge fund tumbled 11.5%... For an industry premised on making money no matter the direction of the market, the breadth of the damage is stunning. Strategies designed to behave independently suddenly lost money in lockstep, exposing crowded positions, heavy leverage and vulnerabilities that had been easier to overlook during the long ascent of AI-linked stocks…”
From the above article, key insight from Bruno Schneller, managing partner at multifamily office Erlen Capital Management: “The real danger isn’t the market selloff itself, but the illusion of diversification across hedge funds. I suspect the bigger risk is still ahead: As losses mount, risk managers may force funds to cut exposure, potentially triggering another wave of selling regardless of fundamentals.”
For highly levered and speculative global markets, this week’s instability and chaos portend intensifying cycle transition (global de-risking/deleveraging).
November 6 – Bloomberg: “Hedge fund managers, brokers and wealthy investors in Asia had a hectic Friday as the sharp selloff in equities reignited fears that the unwinding of AI bets is far from over. Money managers fielded worried phone calls as losses rippled through some of the market’s most crowded trades. Wealthy clients from Taiwan to Hong Kong faced margin calls on leveraged bets, according to people familiar… ‘This is as extreme as almost any I have seen since the dot-com bubble,’ said Chris McGuire, who began trading options at the CBOT in 1991… ‘The unwind by equity holders who all appear concentrated in the same stocks or sectors has created more one-way momentum than we have seen for a long time.’”
Global market chaos has been unleashed. First, there was Wednesday’s post-election U.S. equities rally. The MAG7 Index rose 2.2%. The Banks gained 2.4%, with the Broker/Dealers surging 3.2%. The S&P500 advanced 1.6%. In a classic case of the news/analysis following market direction, the election was said to have “removed a major source of uncertainty.” Various sectors (i.e. healthcare and renewables) would supposedly benefit from Democratic leadership. Pressure on the big hyperscalers to reduce investment spending would help allay cash-flow concerns.
Basically, major hedging ahead of a critical election created a decent short squeeze opportunity. Squeeze dynamics proved fleeting, however, with reality biting hard Thursday. The VIX traded above 28 for the first time since April. High yield and emerging market CDS also traded to highs back to April.
But the key dynamic seemed to be wild moves associated with hedge fund de-risking – on both long and short sides. While tech-heavy Asian stocks and indices were hammered, some (heavily shorted) underperformers caught fire. Toyota’s 16.7% Thursday spike was notable. India’s Sensex equities index jumped 2.6% Thursday, with a notable 8.8% gain for the week. Turkish stocks surged 6.7% this week. European Banks (STOXX600) jumped 4.4% in Wednesday trading (up 3.6% for the week). Spanish equities (IBEX) rose 3.8% this week, with major indices up 2.1% in France and 1.1% in Italy.
France’s 10-year yields sank 18 bps Wednesday to 4.77% (closed week down 21 bps at 4.76%). Trading to 165 bps early in the week, the France-to-German yield spread had narrowed to 150 bps by the week’s close. Destabilizing squeeze dynamics were at play throughout European bonds. Italian yields fell 19 bps this week (4.33%), and Greek yields dropped 18 bps (4.11%). UK yields fell 13 bps to 5.15%.
Commodities market volatility was also indicative of hedge fund liquidations. Crude sank 13.6% this week, with unleaded gasoline dropping 12.7%. Copper lost 3.4%. Meanwhile, the precious metals caught fire. Gold and Silver rallied 5.2% and 6.3%.
Currency markets have turned increasingly unstable. The Norwegian krone was hit 2.71%, the Australian dollar 2.35%, the South Korean won 2.20%, and the New Zealand dollar 1.55%. Performance dispersion was notable in EM currencies.
After trading up to 4.96% in Wednesday trading, 10-year Treasury yields were down to 4.81% late Thursday (closed week at 4.86%). Two-year yields swung from 4.62% down to 4.45% in wild Thursday trading. At Wednesday’s peak, the market priced an 85% probability for a Fed rate hike next month. It had dropped to 60% by late Thursday. A much stronger-than-expected jobs report (165k), coupled with rallying stocks, had the probability back up to 78% by Friday’s close.
November 5 – Bloomberg (Kyle Stock and Miquéla V Thornton): “Data center opposition had been building across the country, one moratorium or blocked project at a time. Then, virtually overnight, the midterm election tilted a broad swath of the regulatory map against the AI buildout. Newly elected governors in Ohio, Georgia, Michigan, New Mexico and Texas campaigned on a promise to stop — or at least pause — data center construction statewide, while those in New York and Oregon pledged to prolong pauses already in place… All told, about 40% of pending data center capacity in the US is planned to be built in states where newly elected governors have promised to stop or pause such construction, according to data from Cleanview, a market intelligence company. That’s on top of 46 local ballot measures approved or on track to pass that also stall development…; at least 17 of those are outright bans on large-scale data centers.”
CoreWeave yields (’32) spiked to a record 16.42% in early Friday trading (up 215bps w-t-d), before closing the week at 15.22%. Oracle yields (’36) surged 15 bps Friday – 30 on the week – to 7.89%. Oracle CDS rose 13 this week to 309 bps. Meta yields (’36) rose another seven this week to 6.18% - with spreads to Treasuries widening 14 bps. SpaceX CDS traded to a record 295 bps Thursday (up 12 w-t-d), before closing the week at 285 bps. Tesla CDS surged 21 this week to a record 235 bps (up 60 the past month).
Notable stock losses for the week included CoreWeave 15.4%, Nebius 16.0%, Oracle 11.2%, Tesla 10.4%, and Nvidia 8.8%. All the bullish talk of a healthy rotation from tech to the broader market ignores ramifications of unprecedented leverage and crowding throughout AI and technology generally (stocks and Credit).
November 6 – Financial Times (Ian Smith, Emily Herbert, Costas Mourselas and Harriet Clarfelt): “Wall Street’s surge to record highs this year in the face of war in the Middle East and spiralling borrowing costs has been powered by a single investment idea — a relentless boost to stocks from the AI boom. After weeks of warning signals from credit markets, that dominant market narrative spectacularly combusted on Thursday in a $3.2tn rout sparked by the political fallout from the US midterm elections. The sell-off was fuelled, investors say, by a brutal unwind of leveraged tech positions that had built up among hedge funds — with some hacking back their exposure at the fastest rate since Covid-19… ‘It’s like a chemical reaction,’ said one senior equities banker. ‘You have one, two, three elements, and then there’s an explosion. The election was the explosive element.’”
I fear a chemical reaction in its initial phase. The “big one” will challenge the Richter Scale. And Thursday was a precipice on the horizon kind of day. Meanwhile, especially post-election, there is extraordinary ambiguity associated with so-called Fed and Trump “puts.” Deleveraging is at the cusp of unleashing abrupt financial conditions tightening. But, at present, general Credit conditions remain loose, economic activity hot, and inflation persistently elevated.
November 5 – Bloomberg (Courtney Subramanian): “President Donald Trump blamed Democrats for the losses in Americans’ 401(k) portfolios as the selloff in technology and artificial intelligence-related stocks deepened after his Republican Party suffered widespread losses in Tuesday’s midterm elections. ‘Such a sad thing to watch!’ the president said in a post… ‘It took us so much work to get us to a level that no one has ever seen before, and then this.’ ‘Your 401(k)s have, therefore, dropped. Remember, it wasn’t Republicans, it was Dumocrats,’ the president said… In another post, the president wrote that the market rout occurred because Democrats ‘had a big Tuesday — So sad to see, you only have yourselves to blame!’”
For the Week:
The S&P500 dropped 2.7% (up 7.8% y-t-d), and the Dow declined 0.9% (up 6.7%). The Utilities were little changed (up 4.2%). The Banks fell 1.0% (up 3.7%), while the Broker/Dealers added 0.4% (up 7.1%). The Transports lost 2.7% (up 13.9%). The S&P 400 Midcaps declined 1.6% (up 9.0%), and the small cap Russell 2000 fell 2.1% (up 11.0%). The Nasdaq100 dropped 4.9% (up 6.9%). The Semiconductors sank 12.1% (up 32.6%). The Biotechs slumped 4.5% (up 29.6%). With bullion recovering $202, the HUI gold index rallied 13.5% (up 5.1%).
Three-month Treasury bill rates ended the week at 4.00%. Two-year government yields fell eight bps to 4.51% (up 104bps y-t-d). Five-year T-note yields declined seven bps to 4.64% (up 92bps). Ten-year Treasury yields fell seven bps to 4.86% (up 69bps). Long bond yields dipped four bps to 5.27% (up 42bps). Benchmark Fannie Mae MBS yields dropped nine bps to 5.96% (up 92bps).
Italian 10-year yields sank 19 bps to 4.33% (up 78bps y-t-d). Greek 10-year yields fell 18 bps to 4.11% (up 67bps). Spain's 10-year yields dropped 12 bps to 3.83% (up 54bps). German bund yields declined seven bps to 3.25% (up 40bps). French yields sank 21 bps to 4.76% (up 119bps). The French to German 10-year bond spread narrowed a notable 14 to 151 bps. U.K. 10-year gilt yields dropped 13 bps to 5.15% (up 68bps). U.K.’s FTSE equities index slipped 0.5% (up 7.4% y-t-d).
Japan’s Nikkei 225 Equities Index sank 9.3% (up 14.1% y-t-d). Japan’s 10-year “JGB” yields dropped 13 bps to 2.65% (up 59bps y-t-d). France’s CAC40 rose 2.1% (unchanged). The German DAX equities index was little changed (up 5.4%). Spain’s IBEX 35 equities index surged 3.8% (up 11.9%). Italy’s FTSE MIB index gained 1.1% (up 11.4%). EM equities were mixed. Brazil’s Bovespa added 0.3% (up 4.6%), and Mexico’s Bolsa index rose 2.3% (up 10.9%). South Korea’s Kospi sank 11.7% (up 20.1%). India’s Sensex equities index surged 8.8% (down 4.9%). China’s Shanghai Exchange Index recovered 1.4% (down 8.1%). Turkey’s Borsa Istanbul National 100 index jumped 6.7% (up 2.0%).
Federal Reserve Credit last week declined $4.3 billion to $6.702 TN, with a 47-week expansion of $211 billion. Fed Credit was down $2.188 TN from the June 22, 2022, peak. Since the September 11, 2019 restart of QE, Fed Credit has expanded $2.975 TN, or 80%. Fed Credit inflated $3.891 TN, or 130%, since November 7, 2012 (730 weeks). Elsewhere, NY Fed holdings for foreign owners of Treasury, Agency Debt dropped $21.8 billion last week to $2.820 TN - the low back to August 2010. “Custody holdings” were down $269 billion y-o-y, or 8.7%.
Total money market fund assets (MMFA) surged $114 billion to a record $8.016 TN. MMFA were up $481 billion, or 6.4%, y-o-y - having ballooned a historic $3.384 TN, or 73%, since October 26, 2022.
Total Commercial Paper gained $4.3 billion to $1.503 TN - the high back to 2009. CP increased $181 billion, or 13.7%, y-o-y.
Freddie Mac 30-year fixed mortgage rates declined six bps to 7.18% (up 96bps y-o-y). Fifteen-year rates slipped three bps to 6.57% (up 107bps). Bankrate’s survey of jumbo mortgage borrowing costs had the 30-year fixed rate down nine bps to 7.34% (up 92bps).
Currency Watch:
November 1 – Bloomberg (Erica Yokoyama): “Japanese authorities are prepared to respond if currency market movements become disorderly, acting in accordance with a standing pact with her US counterpart, Finance Minister Satsuki Katayama said… ‘If there are disorderly movements or excessively speculative moves, we will take action,’ Katayama told reporters... ‘We have also been coordinating and holding discussions with the US quite frequently, and I expect we will continue to respond in that way,’ she said.”
For the week, the U.S. Dollar Index added 0.3% to 102.241 (up 4.0% y-t-d). On the upside, the South African rand increased 1.0%, the Mexican peso 0.9%, and the Swiss franc 0.6%. On the downside, the Norwegian krone declined 2.7%, the Australian dollar 2.4%, the South Korean won 2.2%, the New Zealand dollar 1.6%, the Brazilian real 1.3%, the Canadian dollar 1.1%, the Swedish krona 0.7%, the Japanese yen 0.6%, the Singapore dollar 0.3%, the British pound 0.3%, and the euro 0.2%. China's (onshore) renminbi declined 0.29% versus the dollar (up 4.70% y-t-d).
Commodities Watch:
November 2 – Bloomberg (Jack Ryan): “Central banks bought gold at the fastest pace since the end of 2024 in the third quarter, even as the metal faced pressure from higher oil prices and interest rates. The institutions accumulated a net 321 tons in the three months through September, the World Gold Council said… After a slow start to 2026, that brought the estimate for year-to-date buying to 675 tons, slightly ahead of the same period a year earlier. The figures underscore how central banks… have remained a key support to prices in an otherwise tepid market.”
The Bloomberg Commodities Index sank 4.6% (up 22.8% y-t-d). Spot Gold rallied 5.2% to $4,076 (down 5.6%). Silver recovered 6.3% to $52.1758 (down 27.2%). WTI Crude sank $14.18, or 13.6%, to $89.94 (up 57%). Gasoline slumped 12.7% (up 61%), while Natural Gas rallied 3.6% to $3.002 (down 19%). Copper dropped 3.4% (up 10%). Wheat declined 1.7% (up 17%), while Corn increased 0.3% (unchanged). Bitcoin lost $1,060 or 1.4%, to $75,720 (down 13.6%).
Market Instability Watch:
November 5 – Wall Street Journal (David Uberti, Jack Pitcher and Hannah Erin Lang): “Two days after the midterm elections swept a bloc of artificial-intelligence skeptics into power, the new reality slammed into Wall Street. Thursday’s stock-market wipeout left few corners of the tech sector unscathed… Traders making highly leveraged bets got crushed, but so did those who doubted a recent pullback in AI stocks would get worse… ‘It seems like the rug is getting pulled out from under it,’ said Jonathan Corpina, senior managing partner at Meridian Equity Partners. ‘The market continues to be extremely fragile with all this uncertainty in front of us.’ By Thursday afternoon, some $1 trillion of the Magnificent Seven group of tech giants’ collective market value had vanished. The PHLX Semiconductor index posted its worst day since the depths of the pandemic. The Nasdaq composite stumbled…, shedding an estimated $2.5 trillion in total market value. That was the biggest drop in the benchmark’s history.”
November 5 – Financial Times (Kate Duguid, George Steer, Harriet Clarfelt, Ian Smith and Emily Herbert): “US stocks shed more than $3tn in a day of chaotic trading which saw the tech-heavy Nasdaq 100 plunge 6.4% after Democrats’ sweeping midterm election victory upended Wall Street’s mammoth AI bet. The market value drop on the S&P 1500 Composite index, a broad basket of America’s publicly traded companies, was the biggest on records stretching to the turn of the millennium…”
November 5 – Yahoo Finance (David Hollerith): “Retail investors dumped US stocks on Thursday at a pace not seen since the onset of the COVID-19 pandemic, breaking with their typical market-down-day habit of ‘buying the dip.’ Everyday investors sold a net $265 million in individual US stocks…, according to Vanda Research, the biggest single-day net selling spree since March 17, 2020, when retail investors pulled $502 million from individual stocks.”
November 5 – Bloomberg (Faseeh Mangi): “Asian markets are notching fresh grim milestones as the artificial intelligence selloff deepened following the Democrats’ decisive midterm election win. Tech-heavy markets are bearing the brunt of the rout, with Japan’s Nikkei 225 Stock Average and Taiwan’s Taiex Index entering technical bear markets. South Korea’s Kospi gauge plunged as much as 8.8% at one point, triggering a trading halt and briefly falling below the closely watched 5,000 level… ‘The sheer violence and breadth of the selloff suggest this is more than routine profit-taking, but a deeper reassessment of the AI investment thesis that has underpinned much of the global equity rally,’ said Hebe Chen, market analyst at Vantage Global Prime. ‘Asia’s semiconductor-heavy markets could now face some of the strongest headwinds, with crowded positioning and deep exposure to global AI supply chains leaving them particularly vulnerable to another wave of selling.’”
U.S. Credit Trouble Watch:
November 3 – Financial Times (Editorial Board): “Credit winter has not come quite yet for the AI investment boom — but it is certainly getting colder out there as the leaves fall. Alphabet, Meta and Oracle returned to debt markets this week to sell tens of billions of dollars of additional bonds for access to chips and data centres, adding to a surge in such borrowing this year already estimated at about half a trillion dollars. The hyperscalers are, though, paying notably more than just a few months ago… On Monday, Oracle sold $10bn in bonds with coupons of 7 to more than 8.5%, up from 5 to 7% in an issue in February — though shareholders also took a hit, with a concurrent $10bn share sale. Alphabet, Google’s parent, issued 19-year euro-denominated bonds with a coupon of over 5.2% as part of a €6bn sale this week, up from 4.5% for selling debt of the same maturity and currency in May…”
November 5 – Bloomberg (Josie Reich and Scarlet Fu): “Hedge funds have been heavy sellers over the last few weeks of debt related to the artificial intelligence buildout, according to Andrzej Skiba, head of BlueBay US fixed income at RBC Global Asset Management. ‘We have seen a massive hedge fund capitulation within the space,’ Skiba said... ‘We have seen positions being collapsed, lots of selling actually going through the market.’ A roughly $500 million portfolio of data center loans has been put up for sale, in a rare auction…”
November 4 – Bloomberg (Bei Hu and Echo Wong): “Some of the world’s biggest hedge funds warned that risks are growing in private credit, adding to debate about how rising interest rates will impact the asset class after scrutiny intensified this year. Private credit is currently facing bigger problems than the public market due to higher interest rates, slowing business growth and a wall of debt coming due in 2027 and 2028, Tony Yoseloff, chief investment officer of Davidson Kempner Capital Management, said… Adding to those risks, about a third of US private credit loans have followed private equity money into the software industry over the last few years, Yoseloff said. ‘It’s a software story. It’s a rate story. It’s an overvaluation story,’ he said.”
November 2 – Bloomberg (Libby Cherry and Nick Heubeck): “Around an eighth of firms whose loans are held by US business-development companies are seeing a wide disparity in how the debt is being priced, according to academic research. The share of borrowers held by two or more managers whose marks differ by five points or more increased to 12.3% as of June 30, compared to 9.3% a year earlier, according to the analysis by the Frankfurt School of Finance & Management.”
Global Credit Bubble Watch:
November 2 – Financial Times (Robin Wigglesworth): “Credit-default swaps have been making a steady comeback in recent years… But it has taken the AI frenzy to really get the market rocking again. CDS on a lot of big technology companies didn’t even exist a few years ago, but really took off this summer, as MainFT’s Ramsay Hodgson and Euan Healy wrote a few weeks ago: Investors are racing to buy credit default swaps to protect their portfolios in the event the AI boom unravels, sending trading volumes surging for an instrument that shot to prominence during the global financial crisis. The wave of borrowing to finance trillions of dollars of AI infrastructure spending is fuelling demand for these insurance-like derivatives, which pay out if the company they are tied to defaults on its debt.”
November 4 – Yahoo Finance (Jake Conley): “The five major hyperscalers leading the global AI boom have collectively spent hundreds of billions of dollars in 2026, pouring money into the infrastructure build-out underpinning the AI trade. Those same companies — Alphabet, Amazon, Meta, Microsoft, and Oracle — have also racked up roughly $3.2 trillion in commitments that don’t show up on their balance sheets, according to Goldman Sachs, adding another layer to the massive spending by the companies financing AI. That level of financial commitment, credit analyst Amanda Lynam said in a note to clients, means debt is likely to remain a crucial source of financing for the AI trade.”
November 3 – Financial Times (Antoine Gara): “Apollo Global lent a record $114bn in the third quarter, pouring premiums from its insurance clients into the AI borrowing boom at an increasingly frenzied pace. Lending volumes at the… private capital group jumped more than 50% from the second quarter, with deals including a chip-financing transaction for Anthropic and a $500bn financing effort for chipmaker Nvidia. Apollo has now lent more than $350bn over the past 12 months — nearly a third more than the year before — in volumes that rival those of large commercial banks such as HSBC and Citigroup. The private capital group funds its lending by investing the premiums of its insurance clients, predominantly its in-house life insurer Athene.”
November 3 – Bloomberg (Laura Benitez): “Apollo Global Management Inc. said it plans to take a more defensive approach to its investments tied to artificial intelligence, as the asset manager plows billions into financing the infrastructure buildout underpinning the technology. ‘We know that society will use dramatically more computing power in the future,’ that demand for chips will remain strong, ‘and that AI capabilities are improving at an extraordinary rate,’ Apollo President Jim Zelter said… ‘What we don’t know is how pricing and economics will evolve.’”
November 5 – Bloomberg (Jorgelina Do Rosario): “Emerging economies’ external debt climbed to a record $9.4 trillion in 2025, according to the World Bank, boosted in part by the poorest nations facing borrowing cost levels unseen since the 1980s. Lower-income countries paid an average of 8.2% when taking fresh private loans and 9.4% in new bond issuance last year, the bank said, referring to the countries that can get grants and concessional financing from the lender. For developing nations with stronger economies, the interest rate on new bonds averaged 5.5%.”
November 3 – Bloomberg (Chunzi Xu): “A global AI-debt selloff is spreading to Canada as a wave of deals by Alphabet Inc. and other tech titans flood the small market, amplifying the country’s exposure to foreign credit swings. Sales of maple bonds, or debt sold by global companies in Canadian dollars, have soared to a record C$52 billion ($37bn) this year, more than double the previous mark set in 2021…”
November 3 – Bloomberg (Esteban Duarte): “Significant risk transfers are on track for a sixth consecutive year of record sales, with banks using the instruments to hedge a wider array of exposures even as investors demand better terms. SRT sales hit $28.2 billion in the first nine months, according to… Crescent Capital Group LP… That activity keeps the market on track to surpass the previous annual record of $41 billion reached in 2025…”
Global Credit and Crisis Watch:
November 1 – Financial Times (Ruchir Sharma): “When bond yields surged in recent months, analysts just shrugged, saying the AI boom would thrive regardless. This is classic bubble logic. The price of money always matters, and there is good reason to believe that is true now more than ever. Global debt is at record levels, much of it accumulating on government books. This is good news short term (governments are typically the last fortress to fall) but bad news in the end (governments will be in no position to deliver stimulus or bailouts). The pool of available capital is more limited than it was in the booms of the late 1990s and 2000s, because this time companies must compete with governments for money. That sets the stage for a rapid liquidity squeeze. Steeper rates threaten to trap corporations between higher borrowing costs and increasingly wary lenders.”
November 1 – Financial Times (Euan Healy): “A prolonged rout in the riskiest parts of the global market for junk debt is sending shockwaves through credit markets, driving some of its most active investors to steep losses as lenders lose faith in the world’s most vulnerable corporate borrowers… Spooked investors have dumped exposure to the market’s most distressed companies as a result, causing bond and loan prices to plummet for some of the largest high-yield borrowers in Europe and the US. Yields of CCC-rated borrowers — the lowest rung of junk debt — have climbed rapidly to more than 21% in Europe and 18% in the US as prices have plummeted, up from about 16% and 15% at the beginning of the year.”
Leveraged Speculation Watch:
November 2 – Wall Street Journal (Peter Rudegeair): “Paul Singer’s Elliott Investment Management compared the current state of the markets, laden with debt-fueled risk-taking and bubbling with hype over new technologies, to the Roaring ‘20s that preceded the Great Depression. ‘At present, virtually every alarm bell warning of a substantial bear market ahead is ringing,’ the $80 billion hedge-fund firm wrote in an October investor letter… While Elliott is prepping for potentially historic upheaval, its performance is lagging behind the broader hedge-fund industry.”
November 3 – Bloomberg (Nishant Kumar and David Ramli): “Many of the world’s biggest hedge funds extended their losses last month, as a sell off in technology stocks, a government bond meltdown and Brazil’s shock election combined to deliver widespread volatility and one of the broadest declines since the coronavirus pandemic. Millennium Management’s multistrategy hedge fund lost 2.3% in October... Marshall Wace’s Eureka hedge fund declined 5.4% last month, shrinking year-to-date gains to 5.3%... A series of shocks roiled markets in October, with violent protests in France worsening a selloff in government bonds while renewed AI jitters and disappointing earnings drove declines in technology stocks. Currency markets were also hit, with Brazil’s election causing major price moves…”
November 5 – Bloomberg (Hema Parmar): “Tiger Global Management and Whale Rock Capital Management were among stock-picking hedge funds that were pummeled last month as concerns over AI investments roiled markets. The October rout fueled an 8.5% decline for Tiger’s hedge fund… Whale Rock’s flagship fund, which bets on stocks and private companies, tumbled about 8%, paring its 2026 gain to roughly 34%... Meanwhile, Dan Sundheim’s D1 Capital Partners lost 4.4% last month in its stock portfolio…”
November 5 – Bloomberg (Hema Parmar): “Rob Pohly’s Samlyn Capital is dismissing senior analysts after selling off its exposure to nearly every industry except global financials, as it pivots to focus on that sector. The $7 billion equity hedge fund dumped stocks across sectors including industrials, technology and retail weeks ago, before the more recent market selloff that’s caused carnage across the hedge fund universe, according to people familiar with the matter. The fund tumbled about 5% year-to-date through October…”
November 5 – Bloomberg (Nishant Kumar): “Value Aligned Research Advisors, a hedge fund that has been all-in on the AI trade, tumbled 33% last month as those stocks faced a painful reckoning. The firm, which has operated a portfolio similar to Leopold Aschenbrenner’s Situational Awareness, told investors with Class C shares that its fund was still up 13% for the year…”
November 2 – Bloomberg (Liza Tetley and Nishant Kumar): “Millennium Management is redeeming more than $1.5 billion of leveraged cash from two external hedge funds that the multistrategy investment firm backed last year. Izzy Englander’s firm withdrew more than $1 billion of leveraged capital from event-driven hedge fund Troluce Capital Advisors… The firm is also pulling $500 million of leveraged capital from Jack Land’s Axebrook Capital…”
Iran War Watch:
November 4 – Reuters (Ahmed Tolba): “Iran’s Islamic Revolutionary Guard Corps said… two oil tankers and a tugboat had caught fire in separate incidents after attempting to use unauthorised routes through the Strait of Hormuz. One tanker struck a mine while attempting to cross a passage south of the strait, while another supertanker caught fire while exiting the route in the eastern part of the waterway, the IRGC said. A tugboat that approached the second vessel to help extinguish the fire also caught fire.”
November 4 – Wall Street Journal (Summer Said, Benoit Faucon and Georgi Kantchev): “Iran is using everything in its arsenal to try to stop the flow of oil leaving the Strait of Hormuz, resorting to guerrilla tactics to shore up the regime’s fast-eroding position in the conflict and pile pressure on the Trump administration... Tehran has launched bomb-laden undersea drones, fired rocket-propelled grenades and deployed crews to attach limpet mines to ships over recent weeks, part of an asymmetric campaign targeting vessels that shuttle oil out of the Persian Gulf to waiting tankers… The U.S. military runs near-daily operations to help ships… get out of the strait while maintaining its blockade on Iran… The Islamic Republic’s battle to block that escape route has become a shadow war inside the wider U.S.-Iran conflict, with a direct impact on global energy prices as American forces have struck back.”
October 31 – Financial Times (Najmeh Bozorgmehr): “Ayatollah Mojtaba Khamenei has warned that Iran’s response to any renewed US-Israeli attacks would be ‘immediate, effective’ and ‘without any geographical limitations’. ‘Should the enemies once again embark on military or terrorist attacks, it will be the armed forces of the Islamic republic and the Iranian nation who will determine the time and conditions for ending it,’ Iran’s supreme leader said in a meeting with commanders… Khamenei added that the ‘data bank of targets should be updated so that the armed forces could hit all kinds of financial and non-financial assets of the US-Zionist enemies’.”
October 31 – Axios (Barak Ravid): “Iran’s Supreme Leader Mojtaba Khamenei told the country’s top three military commanders that a renewed attack by the U.S. and Israel ‘must be met with an immediate and effective response, without geographical limitation in order to achieve ‘maximum deterrence,’ according to a statement from his office. This is the first publicly disclosed meeting between Khamenei and all the top commanders of Iran's armed forces since the war began.”
November 5 – Axios (Thomas Novelly): “Iran is using space to land big blows against U.S. forces in the Middle East. Despite the U.S. bombing Iran’s key space-related facilities, the nation is still seen as an ‘emerging’ space power, according to a Pentagon intel report. Iran took offensive actions against U.S. space capabilities during Operation Epic Fury… Iran has several land-based jamming systems that can degrade space-based GPS, the DIA report said. In September, the U.S. Transportation Department warned of ‘significant’ interference to global navigation systems in the Strait of Hormuz. U.S. officials are also alarmed about Iran’s use of space intelligence to more accurately strike key military sites. ‘Space is accessible and affordable today,’ Brig. Gen. Todd Benson, Space Forces Central commander, said… ‘It used to be that you had to be a world power to have any space capability or access to space.’”
October 31 – Associated Press (M. Reo, Samy Madgy and Konstantin Toropin): “Iran’s strikes on more than two dozen U.S. bases in the Middle East focused on early-warning systems before hitting aircraft and buildings, causing billions of dollars in equipment damage, according to an Associated Press analysis. The AP independently verified damage to American targets using satellite imagery from multiple providers and spoke to four regional officials who were briefed or have firsthand knowledge of what was hit. The AP found that, through August, more than 115 drone or missile strikes claimed by Iran or Iranian-backed militias damaged or destroyed structures on 26 military bases and other sites with U.S. equipment.”
November 5 – Financial Times (Max Seddon and Miles Johnson): “Russia agreed to supply Iran with 90 launchers for the advanced guided missiles widely used by its forces in Ukraine, a sign of Moscow’s military support for Tehran despite the demands of its own sputtering war effort. A production schedule for 2024 and 2025 from a major Russian defence manufacturer… details an export order for the helicopter-mounted launchers to a buyer identified by a code name… to refer to Iran. The order… shows how the two allies have strengthened their military ties since Russia’s invasion of Ukraine in 2022. Western intelligence officials say Russia and Iran have further deepened their partnership during the war in the Middle East this year…”
Iran War Ramifications Watch:
November 2 – Wall Street Journal (Summer Said, Benoit Faucon, Anat Peled and Alexander Ward): “America’s Gulf allies are steeling themselves for a heavy U.S. bombardment of Iran that they expect to trigger a vicious cycle of retaliation against their own economic and civilian infrastructure as early as this week. The Trump administration and Arab mediators are making a number of efforts to reach a negotiated end to the conflict. But the lack of progress paired with U.S. and Iranian threats of especially ferocious fighting if the conflict resurges are heightening concerns across the region. President Trump has been leaning toward a large postelection attack that could target Iranian infrastructure and nuclear sites, but hasn’t decided whether to go ahead…”
November 5 – Wall Street Journal (Jon Gambrell, Summer Said and Saleh al-Batati): “After Yemen’s Iran-backed Houthi rebels attacked Saudi Arabian oil tankers in the Red Sea and seized territory commanding the strategic Bab al-Mandeb chokepoint, the kingdom reached out to the group to see what it would take to arrive at a negotiated halt to the hostilities. The answer it got back: $51 billion. The Houthis said that was the sum needed to cover the cost of years of Saudi strikes and a long blockade… For good measure, the Houthis would want the kingdom to officially recognize the militants as the rulers of Yemen, effectively accepting an Iranian-armed adversary on its southern border. The demands hammered home how Saudi Arabia faces only bad options as it tries to find a way out of the conflict it started more than a decade ago when it intervened against the Houthis in Yemen’s civil war.”
November 3 – New York Times (Erika Solomon): “From pulpits at Friday prayers to street rallies, Iranian clerics and officials are increasingly urging the country’s leaders to reverse their longtime pledge not to pursue nuclear weapons. This demand, once seen as a fringe position held by hard-liners, is moving into mainstream public debate, and the shift could have dramatic consequences for Iran, whose government has for decades argued that its nuclear program was solely for peaceful purposes. ‘We must be equipped with nuclear weapons — so that we can fight the criminal America with strength, God willing,’ Ali Sepahvand, the Friday prayer leader in Iran’s western city of Kuhdasht, said…”
Trump Administration Watch:
November 4 – Axios (Josephine Walker): “President Trump said Republicans would have won… midterm elections had he been on the ballot. After raging on social media before major races were called, Trump reacted to the results for the first time Tuesday night… ‘I wasn’t on the Ballot and if I was, we would have won IN A LANDSLIDE! Thank you for your attention to this matter,’ he wrote… In a separate post, he said he was ‘going to become a Political Pundit, both good and bad, on the reasons these Candidates won and lost!’”
November 5 – Wall Street Journal (Philip Wegmann): “The White House delivered a warning to conservative groups on Thursday: We’re watching you. Two days after voters rebuked President Trump and his party, the administration moved to hold together a coalition that was beginning to splinter. The White House Office of Public Liaison, which works with outside groups, sent a memo to more than 3,000 conservative organizations that laid out a list of Trump’s accomplishments in office and pledged to prevent newly ascendant Democrats from reversing them. The memo concluded with a sentence that was highlighted in yellow. ‘As always, we are monitoring statements, press releases, and media engagements from your organizations,’ the memo said.”
November 2 – Axios (Barak Ravid): “President Trump told Axios… he’s ‘in no rush’ to decide whether to resume fighting in Iran. The midterm elections have been seen as an inflection point for Trump on whether to unleash a massive bombing campaign to try to bring the war to an end. But it appears the president, at least for now, will continue on dual tracks — letting negotiations play out while preparing to go back to war if he concludes a deal isn’t reachable. ‘One way or the other, we will do something, but there is no rush. We crippled them financially. They have no money, no gasoline and their people are getting very tired of it,’ Trump said…”
November 5 – Axios (Barak Ravid): “President Trump has conceded that the Iran war cost Republicans dearly in the midterms. Now he must decide whether to cut his losses and reach a deal — or double down and go back to bombing. All of Trump’s options are problematic: The first is to strike. But going back to war would be highly unpopular — keeping gas prices high and probably not yielding a better military result. Another is to negotiate. But if Iranian officals refuse to make concessions — or, sensing weakness after the president’s political loss, up their demands — Trump will have a hard time reaching a deal. The third is to ‘strangle,’ as aides put it. This would mean sticking with the status quo — the naval blockade coupled with crippling economic sanctions that leave the Iranian regime to ‘rot’ — while continuing to test its appetite for a deal. This path, however, could take months to show progress. The president has said for weeks he would end the war one way or another after the election.”
November 5 – Associated Press (Aamer Mdhani, Linley Sanders, Samy Magdy and Matthew Lee): “As he takes stock of his Republican Party’s midterm drubbing, President Donald Trump now faces the difficult question of what to do about his unpopular 8-month-old war against Iran. For weeks, Trump has threatened to return to a full-scale bombardment of Iran once the U.S. elections were in the rearview mirror if Tehran did not come to a settlement under terms acceptable to him. In his first comments… after Democrats’ resounding election victory… Trump largely agreed with Vice President JD Vance, who publicly ruminated on the war being a catastrophe for Republicans. And in an Oval Office exchange…, Trump suggested that the election losses aren’t weighing on his calculations. ‘If we have to do the rest of the Iran thing, we’re very much locked in,’ Trump said.”
November 2 – Financial Times (James Shotter, Neri Zilber, Andrew England and Mehul Srivastava): “Israeli Prime Minister Benjamin Netanyahu is pushing US President Donald Trump for a swift resumption of the US-Israeli war against Iran after elections in the US this week, according to people familiar... In a call on Saturday, Netanyahu urged Trump to restart the fighting after Tuesday’s midterm elections, but the US president has yet to make a decision…”
November 4 – Financial Times (Joe Miller, Michael Taffe and George Hammond): “Silicon Valley billionaires who courted Donald Trump and donated more than $600mn to Republican candidates suffered heavy losses in the US midterm elections… Donors including Elon Musk, who alone dumped more than $470mn into various House and Senate races, gave Republicans a huge fundraising advantage going into the vote — the most expensive in US history. Nearly half of Musk’s spending went to support Ken Paxton, the scandal-plagued Texas Republican who lost to Democrat James Talarico…”
November 4 – Financial Times (Jamie Smyth and Alice Hancock): “Donald Trump’s controversial gambit to import Russian diesel to the US ahead of the midterm elections appears to be unravelling, with two of the first tankers initially destined for the US abruptly veering off course. The apparent diversion came as the diesel supply picture further deteriorated in the US, with new data showing inventories falling below 100mn barrels for the first time in more than two decades. The supply squeeze threatened to weigh further on a fuel that serves as the lifeblood of the US economy.”
Trade War Watch:
November 1 – Reuters (Allison Lampert and Gram Slattery): “US President Donald Trump said… his administration has the ‘concept’ of a new trade deal with Canada while Prime Minister Mark Carney said the two leaders had a good conversation on the future of trade between their countries. ‘I spoke to him again yesterday, and we have the concept of a deal that’s going to be great for our farmers, great for our country, and we’ll be fine for that,’ Trump told reporters…”
November 3 – Bloomberg (Thomas Seal): “Canadian Prime Minister Mark Carney said the US is ‘asking less’ and ‘offering more’ in trade negotiations, as the neighboring nations once again work on a potential deal after a previous round of talks collapsed. ‘Some of our red lines have clearly shifted, around language, around culture, around sovereignty, our ability to have trade deals. In other words, those are now off the table. That’s very welcome,’ Carney told reporters…”
November 2 – Financial Times (Zijing Wu, Demetri Sevastopulo and Eleanor Olcott): “Nvidia is ordering its data centre partners to reduce exposure to Chinese customers in a move that further restrains China’s ability to keep up with US rivals as the race between the world’s two AI superpowers intensifies. In recent months, the world’s largest chipmaker has told cloud computing clients that they must now sell at least 51% of their services to non-Chinese companies… There had been no previous restrictions.”
Constitution Watch:
November 2 – Bloomberg (Katy O'Donnell and Erin Schilling): “The nation’s top housing regulator took ‘unprecedented’ steps to hinder investigations by its inspector general, the watchdog told lawmakers in a report… The accusations – delivered in the Office of Inspector General’s semiannual report to Congress – are the latest escalation in a feud between Federal Housing Finance Agency Director Bill Pulte and his congressionally mandated overseers. Pulte announced on social media in September that he would be slashing the OIG budget by more than 60%... ‘OIG’s Office of Evaluations was unable to publish three reports’ over the six months ending Sept. 30 ‘due to FHFA’s refusal to provide enterprise records and information when requested,’ according to the report.”
Budget Watch:
November 5 – Bloomberg (Elizabeth Stanton): “The US government borrowed a record $839 billion in a single week via its sales of Treasury bills and notes — both to repay holders of maturing debt and to raise the additional capital needed to finance the federal deficit. Auctions of bills, floating-rate notes and Treasuries due in two, five and seven years conducted from Oct. 26-30 eclipsed the previous weekly record of $795 billion, set in the same period a year ago…”
U.S./Russia/China/Europe/Iran Watch:
November 4 – Financial Times (Henry Foy, Laura Pitel, Anne-Sylvaine Chassany, Barney Jopson and David Sheppard): “European politicians hailed Donald Trump’s sweeping defeat in the US midterm elections… as a chance to moderate fractious transatlantic relations, with Spain’s prime minister cheering the results as the ‘crumbling’ of a ‘far-right wave’. The US president’s first two years of his second term have deeply undermined relations with Europe, as his mercurial attitude to Nato, trade war against Brussels and pro-Russian stance towards the war in Ukraine upended decades of transatlantic beliefs on the continent. Politicians from across the EU’s centrist and leftwing parties cheered the Democratic victory that hands Trump’s opponents control of Congress. However, they were split over its potential impact on foreign policy, cautioning that Europe should not temper efforts to de-risk its reliance on Washington.”
November 3 – Politico (Sonja Rijnen): “U.S. President Donald Trump called Greenland the greatest gift the United States had ever received… ‘Remember, [Europe] just gave the United States the greatest gift we were ever given. Do you know what it was? Greenland. We just got Greenland, you know that, right?’ he said during a broadcast about Tuesday’s midterm elections… Someone else on the call quickly clarified that Trump was referring to ‘a military deal.’”
November 3 – Wall Street Journal (Alexander Osipovich, Rory Jones and Patricia Kowsmann): “The U.S. has tried for years to cut off its adversaries from the world’s financial system. But money from places such as Iran and Russia has kept on flowing—in large part thanks to banks in China, people familiar… say. The challenge is exemplified by a little-known regional bank in eastern China, which in recent years emerged as a key conduit for Iranian and Russian financial transactions, according to former U.S. officials… The funds were used to buy Chinese goods in violation of Western sanctions, including some with potential military applications… The bank, Zhejiang Chouzhou Commercial Bank, was flagged internally by U.S. officials during both the Biden and Trump administrations…”
Ukraine War Watch:
November 3 – Financial Times (Fabrice Deprez): “A massive Russian drone and missile attack targeted Ukrainian energy infrastructure across the country overnight on Tuesday, as Moscow ratchets up its deadly air campaign ahead of winter. More than a dozen energy facilities were hit across nine regions… ‘Ukraine must be helped to defend its skies, otherwise Russia will never stop its missile strikes,’ Volodymyr Zelenskyy pleaded…”
November 3 – Wall Street Journal (Anastasiia Malenko): “A Russian airstrike killed at least 31 people, with nearly 50 more missing, at a school in southern Ukraine where humanitarian aid was being handed out on Monday… Another 73 people were injured in a Russian missile strike on a hospital in the city of Kharkiv on Tuesday, as Moscow continued to intensify its attacks on civilian locations.”
November 2 – Associated Press (Samya Kullab): “The furnaces are cold, the factory floor deserted, and twisted metal litters the grounds of Kamet Steel, a vast industrial complex that once helped power Ukraine’s economy but closed after a Russian attack. Across the country, grain — a key export — piles up in fields and silos as farmers struggle to find routes safe from airstrikes and wait for prices to rise. Russia’s intensified air campaign is slowly strangling Ukraine’s economy, targeting industrial and energy plants and the logistics networks, railways and export routes that keep it afloat.”
November 1 – Bloomberg (Daryna Krasnolutska and Alberto Nardelli): “The Russian military suffered record casualties in Ukraine last month while also ceding some territory to Kyiv’s forces, according to Western intelligence data and President Volodymyr Zelenskyy. More than 54,000 Russian troops were killed and heavily wounded in October, the most since the full-scale invasion began almost five years ago…”
New World (Dis)Order Watch:
November 2 – Reuters (Tom Balmforth and Luiza Ilie): “After seven strikes on cargo ships near NATO members Romania and Bulgaria last month, the US-led military alliance said it would deploy maritime patrol aircraft, radars and drones to bolster its eastern flank in the Black Sea. Three days later, on October 23, another ship was struck just outside Romanian waters. And last week a Greek container ship was sunk by naval drones in Bulgaria’s exclusive economic zone. Unabating attacks show how the escalating maritime war between Russia and Ukraine is expanding into a major challenge for NATO in the Black Sea that has left littoral member states such as Romania and Bulgaria exposed.”
November 2 – Reuters (Lim Hui Jie): “Spain’s Santander said… the world faces a financing gap of around €30 trillion ($33.6 trillion) over the next five years, mainly in investment needs linked to the energy transition but also to AI and defence. It said… preliminary estimates for the period between 2026 and 2030 suggested the world needed to invest around €50 trillion in total and, given the financing sources and expected growth rate, the resulting financing gap would reach around €30 trillion.”
AI Bubble/Arms Race Watch:
November 5 – Bloomberg (Maggie Eastland and Shirin Ghaffary): “Top AI companies that had cozied up to President Donald Trump over the past two years are now bracing for the fallout from Democrats’ resounding victories in the US midterm elections. The Democratic sweep in the House, Senate and a number of key governors’ races is poised to ratchet up Congressional scrutiny on tech firms, bolster momentum for meaningful AI safety regulation and, perhaps most imminently, lead to tighter state-level restrictions on data center construction. ‘Every hyperscaler is now thinking about ‘Do we need to build outside the United States?’ Meta Platforms Inc. President Dina Powell McCormick said… Elon Musk… went even further in a post on X: ‘Data centers in space looking pretty appealing right now.’”
November 5 – Bloomberg: “The post-election rout for US stocks has revealed a sobering truth: The AI industry is now driving the fate of the markets and the economy as a whole. The possibility that newly elected Democrats will slow data center development was enough to send stocks reeling this week. It’s easy to see why. As of Nov. 3, nearly $32 trillion in market value had been added to the S&P 500 Index since OpenAI released ChatGPT, and more than half of that gain came from just 10 companies — all linked to artificial intelligence. About 44% of US pension fund holdings — $610 billion — are now tied up in tech… Almost all the growth in US business spending last year came from spending on technology. The US corporate bond market is on track for its busiest year ever — thanks to companies building out AI infrastructure.”
November 4 – Axios (Maria Curi): “Voters showed deep distrust of the AI race Tuesday, approving dozens of data center moratoriums and electing a raft of candidates who favor slowing a $10 trillion buildout, including in Texas — the epicenter of the boom. In an election that hinged on an affordability crisis for many Americans, voters made it clear they view Silicon Valley’s AI ambitions not as a technological miracle, but as a resource-draining threat to their wallets and communities. The results were a warning shot to some of the nation’s wealthiest and most powerful executives, many of whom are already working on ways to build a more palatable version of the revolution they are dead set on winning. ‘What we just witnessed was an AI earthquake,’ Brad Carson, co-founder of Americans for Responsible Innovation, told Axios.”
November 4 – Reuters (Laila Kearney and Nathan Crooks): “Texas governor-elect Gina Hinojosa has rattled the state’s data center industry with a campaign pledge to halt new projects, injecting new uncertainty into one of the country’s fastest-growing markets for server warehouses worth billions of dollars. With plentiful energy supplies, relatively cheap land and a pro-business policy, Texas has become one of the leading regions in the world for data center developments. Big Tech companies including Meta, Google and Microsoft have announced major data center projects in the state over the past two years.”
November 3 – Financial Times (Michael Acton and Martha Muir): “Democratic gubernatorial candidates who pledged to halt data centre development swept to victory…, threatening to derail billions of dollars of planned investments for the AI boom over the coming years. Three states at the centre of the AI build-out — Texas, Georgia and Ohio — elected Democratic candidates who have pledged to crack down on building data centres. The ‘blue wave’ of results on Tuesday, which also included a number of local ballot measures blocking the data centre construction, marked a sharp rebuke to President Donald Trump’s endorsement of the AI infrastructure building spree.”
November 2 – Reuters (Akash Sriram, Shashwat Chauhan, Devika Nair, and Sumedha Mukherjee): “Oracle… said it will raise $20 billion through bond and share sales, as the software giant taps investors to fund its costly AI and cloud infrastructure build-out. Oracle priced the offering of 86.2 million shares at $116 each later in the day, an 11.2% discount to Friday's closing price. The company will raise about $10 billion from the stock sale and another $10 billion through debt offerings maturing between 2029 and 2046.”
November 2 – Axios (Michael Acton): “Anthropic’s third-quarter revenue surged to nearly $17 billion, while its contractual spending agreements on AI infrastructure ballooned to $900 billion, per its amended pre-IPO paperwork. It’s taking a lot of cash to generate those returns. Anthropic disclosed approximately $895.4 billion in aggregate spending commitments under purchase agreements and leases, all substantially tied to compute and infrastructure. Approximately $447.5 billion is expected to be incurred by the end of 2030, with substantially all of the remaining $447.9 billion expected between 2031 and 2045. Nearly $70 billion is due within the 12 months following September 30, 2026.”
October 30 – Wall Street Journal (Berber Jin): “OpenAI has raised less than half of the $30 billion it had initially targeted for its latest funding round, with market jitters over the AI trade dampening investor appetite for one of the industry’s biggest names. After receiving tepid interest from some large investors, OpenAI has so far secured roughly $11 billion in commitments for the new financing… The deal values the company at $1.25 trillion—less than the $1.4 trillion valuation that it had earlier hoped to achieve. The fundraising hiccups come as OpenAI prepares to go public as soon as early next year…”
November 2 – Bloomberg (Cathy Chan, Denise Wee, and Kiuyan Wong): “Wall Street’s top chiefs said that capital markets will continue to underwrite the global artificial intelligence infrastructure buildout, with Morgan Stanley projecting cumulative spending could reach $15 trillion over the next decade… Morgan Stanley Chief Executive Officer Ted Pick estimated that the largest technology hyperscalers could deploy between $800 billion and $1 trillion annually over a seven- to 12-year horizon.”
November 2 – Bloomberg (Echo Wong and Kari Soo Lindberg): “Artificial intelligence-related financing could grow to about $10 trillion over the next five years, eventually reaching excessive levels, said Emmanuel Roman, chief executive officer of Pacific Investment Management Co. Roman estimated that about $2 trillion of financing needs could be created annually over the next five years to fund capital spending by the AI industry, compared with a US bond market of about $12 trillion. The amount is eventually ‘going to be too much,’ Roman said…”
November 4 – Bloomberg (Mark Gurman): “Apple Inc. is reducing employee budgets for artificial intelligence usage as part of a cost-cutting effort, even as the company seeks to put AI at the center of its operations. Last month, Apple quietly lowered the daily spending cap for some engineers using AI models to $200 from $300… The company is now planning further cuts for some engineering teams…”
November 2 – Bloomberg (Todd Gillespie): “Goldman Sachs… has irked some of its staff after it banned most of them from using advanced artificial intelligence tools designed for coding after reviewing productivity and risk concerns. For months, Goldman allowed bankers to use Anthropic PBC’s Claude Code and Microsoft Corp.’s GitHub for work. Now, the bank is limiting the use of those tools to engineers only, according to internal guidance updated in October... The ban has frustrated some traders…”
Global Bubble Watch:
November 5 – New York Times (Eli Tan, Theodore Schleifer and Erin Griffith): “In September, President Trump hosted a White House luncheon to discuss artificial intelligence, flanked by some of the world’s wealthiest tech executives: Jensen Huang of Nvidia, Elon Musk of Tesla and SpaceX, Mark Zuckerberg of Meta and others. They had the president’s ear to pitch an A.I. future uninhibited by regulation or guardrails. For two years, it had been that easy to get what they wanted. Tech billionaires and their companies donated money to Mr. Trump’s favored causes, including the White House ballroom. The moguls posed for photos and lavished him with praise and gifts… Then on Tuesday, the American public delivered a rebuke of the tech industry’s agenda. Overnight, the billionaires’ political alignment with the president may have become a liability.”
November 5 – Financial Times (Amelia Pollard, Michael Taffe and Alex Rogers): “Wall Street billionaires who threw their fortunes behind Republicans suffered a crushing defeat, raising questions about the ultra-wealthy’s ability to sway elections. Hedge fund managers and other major investors — including longtime Republican donors Paul Singer and Ken Griffin — collectively spent more than $330mn on the US midterm elections, according to an FT analysis, as they pushed for Republicans to hold control of Congress. Many of the candidates they backed were in favour of low taxes, scant regulation and supporting Israel.”
November 3 – Bloomberg (Suvashree Ghosh and Scott Patterson): “The theft of at least $6.3 billion in cryptocurrency from the world’s marquee digital-asset exchange shows that however sophisticated the fortifications, high-tech criminals are still finding a way in. Hackers absconded with the biggest single haul in the history of cyber attacks, forcing the exchange, Binance, and its partners to freeze billions of dollars of assets, and shaking confidence in crypto-market infrastructure. While Binance promised to reimburse lost funds from customers, the heist was another blow to the security framework of an industry trying desperately to win the trust of institutional Wall Street. ‘This is the largest cyber theft on record, not just the largest in crypto,’ said Aneirin Flynn, chief executive officer of cybersecurity technology firm FailSafe. ‘This will damage confidence in crypto. The industry is courting institutional capital, but institutions will not overlook repeated failures in custody and security.’”
November 2 – Reuters (Ankur Banerjee and Rae Wee): “Binance’s customers have withdrawn a net $4.72 billion from the world’s biggest cryptocurrency exchange since it reopened, after hackers stole around $6.3 billion of crypto from the platform in what could be the largest-ever financial heist. The exchange froze withdrawals for more than two days after the hack…, then started allowing customers to withdraw again on Sunday morning. The theft has underlined the vulnerability of digital assets to attacks and raised questions about the impact of the hack on Binance, which has vowed to repay customers in full.”
November 1 – Bloomberg (Soobin Kim): “The North Korean group accused of the world’s largest-ever crypto heist is a state-sponsored collective of elite hackers, groomed from an early age to hunt for ‘big game.’ Artificial intelligence has now provided them with a powerful new tool to swell Kim Jong Un’s coffers and fund his military expansion. Nuclear-armed North Korea maintains a thousands-strong hacker army, but the top unit known as ‘TraderTraitor’, which the FBI blames for the recent $6.3 billion Binance hack, may only have a dozen or so members, experts say.”
November 3 – Bloomberg (Sidhartha Shukla): “Investors pulled over $1 billion from US-listed Bitcoin funds over two trading sessions, as the record Binance hack and uncertainty around the US midterm elections remain an overhang on sentiment. The funds posted $1.04 billion in net outflows over Friday and Monday…”
November 5 – Bloomberg (Muyao Shen): “For years, the digital-asset industry has sought to shake up finance by stripping away the intermediaries, delays and controls that govern the movement of money on Wall Street. The pitch: faster transactions, final settlement and fewer middlemen with the power to intervene. But the largest crypto heist on record has exposed the dangers — and limits — of that pitch. A system built to move money without restraint offers few ways to stop it when it is stolen, threatening to cement the Wild West reputation the industry has spent years trying to escape.”
November 2 – Wall Street Journal (Rebecca Picciotto and Paul Kiernan): “The Beaudry apartment tower is a visible showpiece for downtown L.A. At 695 feet, it is among the tallest residential buildings in California. The dark glass tower offers sweeping views of the city, and the list of rich amenities includes a full-swing golf simulator, saltwater swimming pool and pet spa. Yet the developer, real-estate giant Brookfield, this summer said it is walking away from the $600 million project less than four years after it opened. Brookfield’s decision to let go of the Beaudry ‘reflects entrenched market challenges facing downtown Los Angeles,’ a spokeswoman said.”
Inflation Watch:
November 3 – New York Times (Kurtis Lee): “Almost all industries have faced downstream impacts from the war, but the high price of diesel has been particularly hard for farmers, who use it to power machinery, and truckers, who are paying around 70% more per gallon than they were a year ago. In September, at least 40 trucking companies nationwide… filed for bankruptcy, according to BKwire… It was a 38% increase from a year earlier. While every failing business has its own story, logistics experts and bankruptcy lawyers say record-breaking diesel prices have been a contributing factor, especially for small operators.”
November 2 – Financial Times (Michael Acton): “Apple on Monday said the ‘unprecedented’ rise in memory chip prices and the cost of serving its AI tools would squeeze its margins even as it forecast better than expected sales for the crucial Christmas season.”
Federal Reserve Watch:
November 4 – Bloomberg (Andrew Ackerman): “President Donald Trump’s campaign to reshape the Federal Reserve and bend interest-rate policy to his will has hit a formidable firewall after Democrats won control of the Senate… The flip in the Senate… effectively blocks the White House from confirming loyalist nominees to the Fed’s seven-member Board of Governors, stripping the administration of its most direct lever to exert greater control of the US central bank. Under a Democratic majority, Massachusetts Senator Elizabeth Warren is likely to assume the chairmanship of the Senate Banking Committee, handing the panel that oversees the Fed to a lawmaker expected to bottle up any nominees perceived as unduly pliable to executive pressure.”
November 4 – Axios (Neil Irwin): “A recurring subplot of President Trump’s term has been a desire to replace Biden appointees to the powerful Federal Reserve Board of Governors — even ahead of their terms ending — with allies. That effort now looks dead in the water. Even if Trump succeeds in his efforts to fire governor Lisa Cook, or to oust any of the other three Biden-era holdovers on the seven-member board, a Democratic Senate will likely block any replacements it views as insufficiently independent from the administration.”
November 5 – Reuters (John Revill and Michael S. Derby): “Two Federal Reserve officials on Thursday made a case for modest and steady interest rate increases to tackle above-target inflation, in the first round of comments from central bankers after Democrats won control of Congress and made gains at the state level in elections that could change the path of price pressures in the economy… ‘I expect that monetary policy will need to move to a restrictive stance to bring inflation back to 2% in a timely manner,’ Federal Reserve Bank of Cleveland President Beth Hammack said…”
November 6 – Reuters (Francesco Canepa): “US economic growth has remained resilient and the labour market is remarkably stable despite successive shocks, but inflation is too high and must be brought back to 2%, New York Federal Reserve President John Williams said… ‘Inflation is absolutely too high. It's been too high for too long,’ Williams told a ECB conference... ‘It’s absolutely essential that we bring inflation back to our 2% target in a timely manner and a sustained basis.’ But Williams also argued that the Fed’s key focus should be on where inflation is heading and making sure that current shocks do not translate into broader or more persistent inflation.”
U.S. Economic Bubble Watch:
November 6 – CNBC (Jeff Cox): “The U.S. economy added jobs at a much stronger-than-expected pace in October, while the unemployment rate moved lower as the labor market showed surprising strength. Nonfarm payrolls increased by a seasonally adjusted 165,000 for the month, compared with the… estimate for 59,000… The unemployment rate nudged down to 4.1%... A more encompassing measure that includes discouraged workers and those holding part-time jobs for economic reasons rose to 7.9%, up 0.3 percentage point, amid an increase of 421,000 in the civilian labor force… Prior months were revised up substantially: The August figure moved to 186,000, an upward revision of 53,000, while the September count shifted to 60,000 following an upward revision of 31,000… Average hourly earnings increased 0.4% on the month and 3.1% annually… The average workweek was unchanged at 34.4 hours.”
November 3 – Reuters (Lucia Mutikani): “US job openings surged in September while layoffs fell to the lowest level in 1-1/2 years… The Labor Department’s Job Openings and Labor Turnover Survey, or JOLTS report, … also showed the largest number of resignations in nearly 3-1/2 years. There were 1.06 job openings for every unemployed person in September. This ratio was up from 1.02 in August… ‘For now, all signs point to a solid labor market, even if it is difficult for pockets of workers, namely those who are unemployed,’ said Matthew Martin, senior US economist at Oxford Economics.”
November 4 – CNBC (Jeff Cox): “Private sector job growth held steady in October, with gains spread across sectors, as the labor market showed fresh signs of stabilization, ADP reported… The payrolls processing firm said companies added 86,000 jobs during the month… Employment gains came mainly in the service sector. Trade, transportation and utilities led with 39,000 new jobs, while education and health services added 28,000, and leisure and hospitality contributed 19,000. Other sectors showing gains included financial activities (15,000), construction (13,000) and other services (10,000).”
November 5 – Associated Press (Paul Wiseman): “Fewer Americans applied for unemployment benefits last week as layoffs remain scarce and most workers enjoy job security. The Labor Department reported…189,000 people sought jobless aid last week, the fewest since mid-July and down from 195,000 the week before. The four-week average of claims, which smooths out week-to-week ups and downs, dipped to 194,750.”
November 4 – Reuters (Lucia Mutikani): “The US trade deficit narrowed slightly in September, though imports increased to a record high amid an artificial intelligence spending spree by businesses. The report from the Commerce Department… also showed the US logged record goods trade deficits with several countries, including Mexico, Vietnam, Taiwan and South Korea, despite President Donald Trump's aggressive tariffs… The trade shortfall contracted 0.7% to $105.0 billion…”
November 4 – Reuters (Lucia Mutikani): “US services sector growth slowed marginally in October amid a moderation in new orders, but supply chains remained strained, keeping prices for inputs elevated. The Institute for Supply Management said… its nonmanufacturing Purchasing Managers’ Index dipped to 54.5 last month from 54.9 in September… New orders received by services businesses decreased to 55.9 last month from 59.8 in September… The survey’s measure of prices paid by businesses for inputs eased to a still-high 73.0 last month from 74.0 in September… Services employment rose to 51.4 from 50.1 in September.”
November 2 – Bloomberg (Jeffrey Sparshott): “US manufacturing activity picked up in October, supported by the strongest production growth in nearly five years. The Institute for Supply Management’s manufacturing index rose one point to 55.5 in October, the second-highest reading in more than four years… ISM’s report showed that factories in October once again faced elevated prices for raw materials and longer lead times on supplier deliveries. ISM’s prices gauge fell to 75.2, down from the prior month but still higher than before the Middle East conflict began.”
November 3 – Reuters (Lucia Mutikani): “New orders for US factory goods increased more than expected in September, boosted by bookings for aircraft and a range of other goods… Factory orders rose 1.8% after an upwardly revised 0.3% gain in August… Economists… had forecast orders surging 1.2% after a previously reported 0.1% gain in August. Orders advanced 7.2% on a year-over-year basis in September. An artificial intelligence infrastructure buildout and strong consumer spending are anchoring manufacturing, which accounts for about 9.4% of the economy.”
November 4 – CNBC (Diana Olick): “After a brief bounce the week before, mortgage demand continued its slide last week… Refinance demand was essentially flat for the week, rising just 0.1%. It was, however, 60% lower than the same week one year ago… Applications for a mortgage to purchase a home fell 2% from the previous week and were 19% lower year over year.”
China Watch:
November 4 – Reuters (Greg Torode and Clare Jim): “Activist Joshua Wong, who became the global face of Hong Kong's pro-democracy movement, was sentenced on Thursday to 10 years in jail on a charge of collusion with foreign entities under the city’s national security law. Wong was among a group of young people whose protest efforts have effectively been outlawed by a sweeping national security law Beijing imposed on the Asian financial hub in 2020…”
November 2 – Bloomberg: “China’s credit market just suffered its worst selloff in two years as a major conglomerate’s plunge into distress tests the assumption that government ties can protect state-owned firms from financial peril. In just a few days, Zhuhai Huafa Group Co. called that view into question. The conglomerate, wholly owned by local governments in the southern province of Guangdong, missed payments on two trust products and asked to extend some bank loans… By Friday, unease was mounting as investors came to terms with the implications in a country where missed debt payments by state-owned firms had become rare.”
November 3 – Wall Street Journal (Peter Landers): “China has told the country’s biggest securities firms and banks to throttle back their work on initial public offerings and focus on boosting the struggling stock market… China Securities Regulatory Commission said Monday at a closed-door meeting that it would process IPO applications already in the pipeline but wouldn’t take up new submissions for now, the people said. Officials also asked shareholders of listed companies to hold off from large-scale share sales until market conditions improve…”
November 1 – Bloomberg: “Chinese stocks advanced on expectations of renewed liquidity support as the nation’s central bank huddled with financial firms and introduced measures to stabilize the capital market. Reports started to trickle in from the weekend that financial regulators will likely use key liquidity-injection tools from a 2024 rescue plan to put a floor under the market…”
November 4 – Reuters (Ellen Zhang and Ryan Woo): “China’s services activity in October expanded at its slowest pace since July, with business confidence easing as firms grappled with fierce competition and rising costs, a private-sector survey showed… The RatingDog China General Services PMI fell to 50.8 in October from 51.6 in September…”
October 31 – Reuters (Liangping Gao, Yukun Zhang and Ryan Woo): “China’s factory activity dropped in October, its third contraction in four months…, hurt by soft demand for goods at home as well as signs of weakness in exports… ‘Insufficient demand is increasing downward pressure on the economy,’ said Zhang Liqun, an analyst with the China Federation of Logistics & Purchasing. The official manufacturing purchasing managers’ index (PMI) fell to 49.3 from 50.1 in September…”
Central Bank Watch:
November 5 – Financial Times (Sam Fleming, Delphine Strauss and Ian Smith): “The Bank of England has raised rates by a quarter point to 4% and signalled it is planning at least one further increase as soon as next month, as it warned inflation will hit 5% next year. Thursday’s rate increase… was its first since 2023 and comes as the energy shock unleashed by the Iran war has prompted a string of central banks to lift borrowing costs. In a sign of the MPC’s concern over inflation, eight members backed the quarter-point rise, with Catherine Mann breaking ranks to vote for a half-point increase.”
November 5 – Bloomberg (Jack Sidders and Laura Noonan): “The Bank of England has queried market participants about data center projects that are being financed without a tenant in place to pay rent. The questioning is part of wider efforts to understand lending to the industry… Loans to projects that start construction before an occupier agrees to lease the completed project are known as speculative financing in the real estate industry.”
November 2 – CNBC (Lim Hui Jie): “Australia’s central bank raised its benchmark cash rate by 25 bps to 4.85% on Tuesday, the highest level since November 2008. The Reserve Bank of Australia’s move was in line with expectations…, and marked its fifth rate increase this year… This also comes as the country continues to grapple with high inflation, with the consumer price index rising 4.3% in September, up from 4% in August and marking its highest level since March.”
November 3 – Reuters (Balazs Koranyi): “Another European Central Bank rate hike in December seems almost inevitable, Bundesbank President Joachim Nagel said…, joining an already long list of policymakers backing the move… ‘From today’s perspective, an interest rate hike in December is very likely necessary,’ Nagel, a crucial voice on the ECB’s Governing Council, said… ‘There seems to be little alternative to an interest rate hike unless the inflation outlook improves significantly.’”
Europe/UK Watch:
November 4 – Bloomberg (Mark Schroers): “Euro-area inflation quickened to double the European Central Bank’s target, supporting the case for interest rates to be raised further. Consumer prices rose 4% from a year ago in October, up from 3.8% the previous month… That’s the highest since September 2023…”
November 4 – Reuters (Andy Bruce): “British services companies last month reported the strongest growth since the start of the US-Iran conflict in February, helped by rising orders and employment, but they also noted sharper cost pressures… The S&P Global UK Services Purchasing Managers’ Index (PMI) rose to an eight-month high of 52.8 from 52.1 in September…”
Japan Watch:
November 2 – Reuters (Leika Kihara): “Bank of Japan Governor Kazuo Ueda has all but locked in a December rate hike, but left investors guessing how much further it could go once rates approach neutral territory… Beneath the BOJ’s hawkish message lies the challenge ahead. As inflationary pressures become more entrenched, policymakers must judge how quickly households and businesses, long conditioned to near-zero borrowing costs, can absorb higher rates without derailing a fragile economic recovery.”
November 5 – Bloomberg (Erica Yokoyama): “Japanese Prime Minister Sanae Takaichi said the government should use additional proceeds from the Bank of Japan’s accelerated sales of exchange-traded funds to finance investments in sectors that are critical for the country’s economic security. ‘The additional gains from ETF sales are the fruits of Japan’s economic growth… I believe we should reinvest them in crisis management and growth initiatives to create a virtuous cycle of further economic expansion.’”
November 4 – Reuters (Jack Sidders and Laura Noonan): “Japan’s service sector expanded modestly in October as activity and new orders both rose slightly faster, a business survey showed… The S&P Global final Japan Services Purchasing Managers’ Index (PMI) edged higher to 51.7 in October from 51.3 in September, a survey by S&P Global showed, marking a fifth straight month of expansion…”
Emerging Markets Watch:
November 1 – Bloomberg (Marcus Wong): “Brazil’s market selloff has delivered a stark warning to emerging-market investors: crowded trades can unravel with alarming speed. Popular bets ranging from Asian artificial intelligence-linked stocks to Hungarian bonds and the South African rand are facing fresh scrutiny after an election shock sent Brazilian shares and the real tumbling, exposing how one-sided positioning can amplify market reversals.”
November 5 – Bloomberg (Manuela Tobias and Ken Parks): “Paraguayan President Santiago Peña submitted his resignation Thursday after the collapse of a major commercial bank with ties to his government plunged the South American nation into turmoil. Regulators seized Ueno Bank SA early Tuesday, freezing the savings of millions of Paraguayans, including pensioners, and sparked widespread protests in a country where roughly 1 in 3 people held deposits at the lender.”
November 1 – Bloomberg (Abhishek Vishnoi): “Foreign outflows from Taiwanese stocks hit a record in October as a global selloff in artificial intelligence play pushed the island’s benchmark closer to a technical correction. Overseas investors sold $31.78 billion of Taiwanese shares on a net basis last month, surpassing the previous all-time high hit in March…”
October 31 – Reuters (Jihoon Lee): “South Korea’s exports nearly doubled in October, the sharpest jump in more than 50 years, as robust global demand for AI investment boosted shipments of the country’s chips, government data showed on Sunday. Exports from Asia’s fourth-largest economy, a bellwether for global trade, rose 93.7% from the same month last year to $115.28 billion, slightly higher than a median 93.2% rise forecast…”
November 3 – Financial Times (John Paul Rathbone): “They call it the Fonzi: a multibillion-dollar financial scandal that has torched the savings of half a million Turks, enraged President Recep Tayyip Erdoğan and shaken his government to the core. ‘Fonzie’ or ‘The Fonz’ was also the leather-jacketed hero of the 1970s US sitcom Happy Days. But there is nothing happy about the popping of Turkey’s Fonzi bubble. Instead, it is a $20bn investment fund crisis, its name a mixture of the Turkish word for fund and a reference to Ponzi schemes. ‘The scale of what is going on is not fully appreciated internationally; this is the leading topic in national conversation,’ says Atilla Yesilada of GlobalSource Partners, an Istanbul-based consultancy.”
Social, Political, Environmental, Cybersecurity Instability Watch:
November 6 – Financial Times (Kenza Bryan): “The global average temperature this year is ‘virtually certain’ to reach more than 1.5C above pre-industrial levels, Europe’s Earth observation agency said… The threshold was also expected to be breached over the four-year average period from 2023 to 2026, showing how sustained levels of global warming had become… Last month was the warmest October on record globally, with an average global air temperature 1.75C above pre-industrial levels, and was the third consecutive month to exceed 1.5C.”
November 2 – Bloomberg (María Paula Mijares Torres): “A powerful warming of Pacific waters this year — a cyclical phenomenon known as El Niño — could push US prices higher and boost employment next year, according to a new economic letter from the Federal Reserve Bank of San Francisco. Higher employment could provide a boost to the labor market. But the weather pattern could lead to renewed price pressures — El Niños historically drive up prices for core services and food, the analysis found.”
The S&P500 dropped 2.7% (up 7.8% y-t-d), and the Dow declined 0.9% (up 6.7%). The Utilities were little changed (up 4.2%). The Banks fell 1.0% (up 3.7%), while the Broker/Dealers added 0.4% (up 7.1%). The Transports lost 2.7% (up 13.9%). The S&P 400 Midcaps declined 1.6% (up 9.0%), and the small cap Russell 2000 fell 2.1% (up 11.0%). The Nasdaq100 dropped 4.9% (up 6.9%). The Semiconductors sank 12.1% (up 32.6%). The Biotechs slumped 4.5% (up 29.6%). With bullion recovering $202, the HUI gold index rallied 13.5% (up 5.1%).
Three-month Treasury bill rates ended the week at 4.00%. Two-year government yields fell eight bps to 4.51% (up 104bps y-t-d). Five-year T-note yields declined seven bps to 4.64% (up 92bps). Ten-year Treasury yields fell seven bps to 4.86% (up 69bps). Long bond yields dipped four bps to 5.27% (up 42bps). Benchmark Fannie Mae MBS yields dropped nine bps to 5.96% (up 92bps).
Italian 10-year yields sank 19 bps to 4.33% (up 78bps y-t-d). Greek 10-year yields fell 18 bps to 4.11% (up 67bps). Spain's 10-year yields dropped 12 bps to 3.83% (up 54bps). German bund yields declined seven bps to 3.25% (up 40bps). French yields sank 21 bps to 4.76% (up 119bps). The French to German 10-year bond spread narrowed a notable 14 to 151 bps. U.K. 10-year gilt yields dropped 13 bps to 5.15% (up 68bps). U.K.’s FTSE equities index slipped 0.5% (up 7.4% y-t-d).
Japan’s Nikkei 225 Equities Index sank 9.3% (up 14.1% y-t-d). Japan’s 10-year “JGB” yields dropped 13 bps to 2.65% (up 59bps y-t-d). France’s CAC40 rose 2.1% (unchanged). The German DAX equities index was little changed (up 5.4%). Spain’s IBEX 35 equities index surged 3.8% (up 11.9%). Italy’s FTSE MIB index gained 1.1% (up 11.4%). EM equities were mixed. Brazil’s Bovespa added 0.3% (up 4.6%), and Mexico’s Bolsa index rose 2.3% (up 10.9%). South Korea’s Kospi sank 11.7% (up 20.1%). India’s Sensex equities index surged 8.8% (down 4.9%). China’s Shanghai Exchange Index recovered 1.4% (down 8.1%). Turkey’s Borsa Istanbul National 100 index jumped 6.7% (up 2.0%).
Federal Reserve Credit last week declined $4.3 billion to $6.702 TN, with a 47-week expansion of $211 billion. Fed Credit was down $2.188 TN from the June 22, 2022, peak. Since the September 11, 2019 restart of QE, Fed Credit has expanded $2.975 TN, or 80%. Fed Credit inflated $3.891 TN, or 130%, since November 7, 2012 (730 weeks). Elsewhere, NY Fed holdings for foreign owners of Treasury, Agency Debt dropped $21.8 billion last week to $2.820 TN - the low back to August 2010. “Custody holdings” were down $269 billion y-o-y, or 8.7%.
Total money market fund assets (MMFA) surged $114 billion to a record $8.016 TN. MMFA were up $481 billion, or 6.4%, y-o-y - having ballooned a historic $3.384 TN, or 73%, since October 26, 2022.
Total Commercial Paper gained $4.3 billion to $1.503 TN - the high back to 2009. CP increased $181 billion, or 13.7%, y-o-y.
Freddie Mac 30-year fixed mortgage rates declined six bps to 7.18% (up 96bps y-o-y). Fifteen-year rates slipped three bps to 6.57% (up 107bps). Bankrate’s survey of jumbo mortgage borrowing costs had the 30-year fixed rate down nine bps to 7.34% (up 92bps).
Currency Watch:
November 1 – Bloomberg (Erica Yokoyama): “Japanese authorities are prepared to respond if currency market movements become disorderly, acting in accordance with a standing pact with her US counterpart, Finance Minister Satsuki Katayama said… ‘If there are disorderly movements or excessively speculative moves, we will take action,’ Katayama told reporters... ‘We have also been coordinating and holding discussions with the US quite frequently, and I expect we will continue to respond in that way,’ she said.”
For the week, the U.S. Dollar Index added 0.3% to 102.241 (up 4.0% y-t-d). On the upside, the South African rand increased 1.0%, the Mexican peso 0.9%, and the Swiss franc 0.6%. On the downside, the Norwegian krone declined 2.7%, the Australian dollar 2.4%, the South Korean won 2.2%, the New Zealand dollar 1.6%, the Brazilian real 1.3%, the Canadian dollar 1.1%, the Swedish krona 0.7%, the Japanese yen 0.6%, the Singapore dollar 0.3%, the British pound 0.3%, and the euro 0.2%. China's (onshore) renminbi declined 0.29% versus the dollar (up 4.70% y-t-d).
Commodities Watch:
November 2 – Bloomberg (Jack Ryan): “Central banks bought gold at the fastest pace since the end of 2024 in the third quarter, even as the metal faced pressure from higher oil prices and interest rates. The institutions accumulated a net 321 tons in the three months through September, the World Gold Council said… After a slow start to 2026, that brought the estimate for year-to-date buying to 675 tons, slightly ahead of the same period a year earlier. The figures underscore how central banks… have remained a key support to prices in an otherwise tepid market.”
The Bloomberg Commodities Index sank 4.6% (up 22.8% y-t-d). Spot Gold rallied 5.2% to $4,076 (down 5.6%). Silver recovered 6.3% to $52.1758 (down 27.2%). WTI Crude sank $14.18, or 13.6%, to $89.94 (up 57%). Gasoline slumped 12.7% (up 61%), while Natural Gas rallied 3.6% to $3.002 (down 19%). Copper dropped 3.4% (up 10%). Wheat declined 1.7% (up 17%), while Corn increased 0.3% (unchanged). Bitcoin lost $1,060 or 1.4%, to $75,720 (down 13.6%).
Market Instability Watch:
November 5 – Wall Street Journal (David Uberti, Jack Pitcher and Hannah Erin Lang): “Two days after the midterm elections swept a bloc of artificial-intelligence skeptics into power, the new reality slammed into Wall Street. Thursday’s stock-market wipeout left few corners of the tech sector unscathed… Traders making highly leveraged bets got crushed, but so did those who doubted a recent pullback in AI stocks would get worse… ‘It seems like the rug is getting pulled out from under it,’ said Jonathan Corpina, senior managing partner at Meridian Equity Partners. ‘The market continues to be extremely fragile with all this uncertainty in front of us.’ By Thursday afternoon, some $1 trillion of the Magnificent Seven group of tech giants’ collective market value had vanished. The PHLX Semiconductor index posted its worst day since the depths of the pandemic. The Nasdaq composite stumbled…, shedding an estimated $2.5 trillion in total market value. That was the biggest drop in the benchmark’s history.”
November 5 – Financial Times (Kate Duguid, George Steer, Harriet Clarfelt, Ian Smith and Emily Herbert): “US stocks shed more than $3tn in a day of chaotic trading which saw the tech-heavy Nasdaq 100 plunge 6.4% after Democrats’ sweeping midterm election victory upended Wall Street’s mammoth AI bet. The market value drop on the S&P 1500 Composite index, a broad basket of America’s publicly traded companies, was the biggest on records stretching to the turn of the millennium…”
November 5 – Yahoo Finance (David Hollerith): “Retail investors dumped US stocks on Thursday at a pace not seen since the onset of the COVID-19 pandemic, breaking with their typical market-down-day habit of ‘buying the dip.’ Everyday investors sold a net $265 million in individual US stocks…, according to Vanda Research, the biggest single-day net selling spree since March 17, 2020, when retail investors pulled $502 million from individual stocks.”
November 5 – Bloomberg (Faseeh Mangi): “Asian markets are notching fresh grim milestones as the artificial intelligence selloff deepened following the Democrats’ decisive midterm election win. Tech-heavy markets are bearing the brunt of the rout, with Japan’s Nikkei 225 Stock Average and Taiwan’s Taiex Index entering technical bear markets. South Korea’s Kospi gauge plunged as much as 8.8% at one point, triggering a trading halt and briefly falling below the closely watched 5,000 level… ‘The sheer violence and breadth of the selloff suggest this is more than routine profit-taking, but a deeper reassessment of the AI investment thesis that has underpinned much of the global equity rally,’ said Hebe Chen, market analyst at Vantage Global Prime. ‘Asia’s semiconductor-heavy markets could now face some of the strongest headwinds, with crowded positioning and deep exposure to global AI supply chains leaving them particularly vulnerable to another wave of selling.’”
U.S. Credit Trouble Watch:
November 3 – Financial Times (Editorial Board): “Credit winter has not come quite yet for the AI investment boom — but it is certainly getting colder out there as the leaves fall. Alphabet, Meta and Oracle returned to debt markets this week to sell tens of billions of dollars of additional bonds for access to chips and data centres, adding to a surge in such borrowing this year already estimated at about half a trillion dollars. The hyperscalers are, though, paying notably more than just a few months ago… On Monday, Oracle sold $10bn in bonds with coupons of 7 to more than 8.5%, up from 5 to 7% in an issue in February — though shareholders also took a hit, with a concurrent $10bn share sale. Alphabet, Google’s parent, issued 19-year euro-denominated bonds with a coupon of over 5.2% as part of a €6bn sale this week, up from 4.5% for selling debt of the same maturity and currency in May…”
November 5 – Bloomberg (Josie Reich and Scarlet Fu): “Hedge funds have been heavy sellers over the last few weeks of debt related to the artificial intelligence buildout, according to Andrzej Skiba, head of BlueBay US fixed income at RBC Global Asset Management. ‘We have seen a massive hedge fund capitulation within the space,’ Skiba said... ‘We have seen positions being collapsed, lots of selling actually going through the market.’ A roughly $500 million portfolio of data center loans has been put up for sale, in a rare auction…”
November 4 – Bloomberg (Bei Hu and Echo Wong): “Some of the world’s biggest hedge funds warned that risks are growing in private credit, adding to debate about how rising interest rates will impact the asset class after scrutiny intensified this year. Private credit is currently facing bigger problems than the public market due to higher interest rates, slowing business growth and a wall of debt coming due in 2027 and 2028, Tony Yoseloff, chief investment officer of Davidson Kempner Capital Management, said… Adding to those risks, about a third of US private credit loans have followed private equity money into the software industry over the last few years, Yoseloff said. ‘It’s a software story. It’s a rate story. It’s an overvaluation story,’ he said.”
November 2 – Bloomberg (Libby Cherry and Nick Heubeck): “Around an eighth of firms whose loans are held by US business-development companies are seeing a wide disparity in how the debt is being priced, according to academic research. The share of borrowers held by two or more managers whose marks differ by five points or more increased to 12.3% as of June 30, compared to 9.3% a year earlier, according to the analysis by the Frankfurt School of Finance & Management.”
Global Credit Bubble Watch:
November 2 – Financial Times (Robin Wigglesworth): “Credit-default swaps have been making a steady comeback in recent years… But it has taken the AI frenzy to really get the market rocking again. CDS on a lot of big technology companies didn’t even exist a few years ago, but really took off this summer, as MainFT’s Ramsay Hodgson and Euan Healy wrote a few weeks ago: Investors are racing to buy credit default swaps to protect their portfolios in the event the AI boom unravels, sending trading volumes surging for an instrument that shot to prominence during the global financial crisis. The wave of borrowing to finance trillions of dollars of AI infrastructure spending is fuelling demand for these insurance-like derivatives, which pay out if the company they are tied to defaults on its debt.”
November 4 – Yahoo Finance (Jake Conley): “The five major hyperscalers leading the global AI boom have collectively spent hundreds of billions of dollars in 2026, pouring money into the infrastructure build-out underpinning the AI trade. Those same companies — Alphabet, Amazon, Meta, Microsoft, and Oracle — have also racked up roughly $3.2 trillion in commitments that don’t show up on their balance sheets, according to Goldman Sachs, adding another layer to the massive spending by the companies financing AI. That level of financial commitment, credit analyst Amanda Lynam said in a note to clients, means debt is likely to remain a crucial source of financing for the AI trade.”
November 3 – Financial Times (Antoine Gara): “Apollo Global lent a record $114bn in the third quarter, pouring premiums from its insurance clients into the AI borrowing boom at an increasingly frenzied pace. Lending volumes at the… private capital group jumped more than 50% from the second quarter, with deals including a chip-financing transaction for Anthropic and a $500bn financing effort for chipmaker Nvidia. Apollo has now lent more than $350bn over the past 12 months — nearly a third more than the year before — in volumes that rival those of large commercial banks such as HSBC and Citigroup. The private capital group funds its lending by investing the premiums of its insurance clients, predominantly its in-house life insurer Athene.”
November 3 – Bloomberg (Laura Benitez): “Apollo Global Management Inc. said it plans to take a more defensive approach to its investments tied to artificial intelligence, as the asset manager plows billions into financing the infrastructure buildout underpinning the technology. ‘We know that society will use dramatically more computing power in the future,’ that demand for chips will remain strong, ‘and that AI capabilities are improving at an extraordinary rate,’ Apollo President Jim Zelter said… ‘What we don’t know is how pricing and economics will evolve.’”
November 5 – Bloomberg (Jorgelina Do Rosario): “Emerging economies’ external debt climbed to a record $9.4 trillion in 2025, according to the World Bank, boosted in part by the poorest nations facing borrowing cost levels unseen since the 1980s. Lower-income countries paid an average of 8.2% when taking fresh private loans and 9.4% in new bond issuance last year, the bank said, referring to the countries that can get grants and concessional financing from the lender. For developing nations with stronger economies, the interest rate on new bonds averaged 5.5%.”
November 3 – Bloomberg (Chunzi Xu): “A global AI-debt selloff is spreading to Canada as a wave of deals by Alphabet Inc. and other tech titans flood the small market, amplifying the country’s exposure to foreign credit swings. Sales of maple bonds, or debt sold by global companies in Canadian dollars, have soared to a record C$52 billion ($37bn) this year, more than double the previous mark set in 2021…”
November 3 – Bloomberg (Esteban Duarte): “Significant risk transfers are on track for a sixth consecutive year of record sales, with banks using the instruments to hedge a wider array of exposures even as investors demand better terms. SRT sales hit $28.2 billion in the first nine months, according to… Crescent Capital Group LP… That activity keeps the market on track to surpass the previous annual record of $41 billion reached in 2025…”
Global Credit and Crisis Watch:
November 1 – Financial Times (Ruchir Sharma): “When bond yields surged in recent months, analysts just shrugged, saying the AI boom would thrive regardless. This is classic bubble logic. The price of money always matters, and there is good reason to believe that is true now more than ever. Global debt is at record levels, much of it accumulating on government books. This is good news short term (governments are typically the last fortress to fall) but bad news in the end (governments will be in no position to deliver stimulus or bailouts). The pool of available capital is more limited than it was in the booms of the late 1990s and 2000s, because this time companies must compete with governments for money. That sets the stage for a rapid liquidity squeeze. Steeper rates threaten to trap corporations between higher borrowing costs and increasingly wary lenders.”
November 1 – Financial Times (Euan Healy): “A prolonged rout in the riskiest parts of the global market for junk debt is sending shockwaves through credit markets, driving some of its most active investors to steep losses as lenders lose faith in the world’s most vulnerable corporate borrowers… Spooked investors have dumped exposure to the market’s most distressed companies as a result, causing bond and loan prices to plummet for some of the largest high-yield borrowers in Europe and the US. Yields of CCC-rated borrowers — the lowest rung of junk debt — have climbed rapidly to more than 21% in Europe and 18% in the US as prices have plummeted, up from about 16% and 15% at the beginning of the year.”
Leveraged Speculation Watch:
November 2 – Wall Street Journal (Peter Rudegeair): “Paul Singer’s Elliott Investment Management compared the current state of the markets, laden with debt-fueled risk-taking and bubbling with hype over new technologies, to the Roaring ‘20s that preceded the Great Depression. ‘At present, virtually every alarm bell warning of a substantial bear market ahead is ringing,’ the $80 billion hedge-fund firm wrote in an October investor letter… While Elliott is prepping for potentially historic upheaval, its performance is lagging behind the broader hedge-fund industry.”
November 3 – Bloomberg (Nishant Kumar and David Ramli): “Many of the world’s biggest hedge funds extended their losses last month, as a sell off in technology stocks, a government bond meltdown and Brazil’s shock election combined to deliver widespread volatility and one of the broadest declines since the coronavirus pandemic. Millennium Management’s multistrategy hedge fund lost 2.3% in October... Marshall Wace’s Eureka hedge fund declined 5.4% last month, shrinking year-to-date gains to 5.3%... A series of shocks roiled markets in October, with violent protests in France worsening a selloff in government bonds while renewed AI jitters and disappointing earnings drove declines in technology stocks. Currency markets were also hit, with Brazil’s election causing major price moves…”
November 5 – Bloomberg (Hema Parmar): “Tiger Global Management and Whale Rock Capital Management were among stock-picking hedge funds that were pummeled last month as concerns over AI investments roiled markets. The October rout fueled an 8.5% decline for Tiger’s hedge fund… Whale Rock’s flagship fund, which bets on stocks and private companies, tumbled about 8%, paring its 2026 gain to roughly 34%... Meanwhile, Dan Sundheim’s D1 Capital Partners lost 4.4% last month in its stock portfolio…”
November 5 – Bloomberg (Hema Parmar): “Rob Pohly’s Samlyn Capital is dismissing senior analysts after selling off its exposure to nearly every industry except global financials, as it pivots to focus on that sector. The $7 billion equity hedge fund dumped stocks across sectors including industrials, technology and retail weeks ago, before the more recent market selloff that’s caused carnage across the hedge fund universe, according to people familiar with the matter. The fund tumbled about 5% year-to-date through October…”
November 5 – Bloomberg (Nishant Kumar): “Value Aligned Research Advisors, a hedge fund that has been all-in on the AI trade, tumbled 33% last month as those stocks faced a painful reckoning. The firm, which has operated a portfolio similar to Leopold Aschenbrenner’s Situational Awareness, told investors with Class C shares that its fund was still up 13% for the year…”
November 2 – Bloomberg (Liza Tetley and Nishant Kumar): “Millennium Management is redeeming more than $1.5 billion of leveraged cash from two external hedge funds that the multistrategy investment firm backed last year. Izzy Englander’s firm withdrew more than $1 billion of leveraged capital from event-driven hedge fund Troluce Capital Advisors… The firm is also pulling $500 million of leveraged capital from Jack Land’s Axebrook Capital…”
Iran War Watch:
November 4 – Reuters (Ahmed Tolba): “Iran’s Islamic Revolutionary Guard Corps said… two oil tankers and a tugboat had caught fire in separate incidents after attempting to use unauthorised routes through the Strait of Hormuz. One tanker struck a mine while attempting to cross a passage south of the strait, while another supertanker caught fire while exiting the route in the eastern part of the waterway, the IRGC said. A tugboat that approached the second vessel to help extinguish the fire also caught fire.”
November 4 – Wall Street Journal (Summer Said, Benoit Faucon and Georgi Kantchev): “Iran is using everything in its arsenal to try to stop the flow of oil leaving the Strait of Hormuz, resorting to guerrilla tactics to shore up the regime’s fast-eroding position in the conflict and pile pressure on the Trump administration... Tehran has launched bomb-laden undersea drones, fired rocket-propelled grenades and deployed crews to attach limpet mines to ships over recent weeks, part of an asymmetric campaign targeting vessels that shuttle oil out of the Persian Gulf to waiting tankers… The U.S. military runs near-daily operations to help ships… get out of the strait while maintaining its blockade on Iran… The Islamic Republic’s battle to block that escape route has become a shadow war inside the wider U.S.-Iran conflict, with a direct impact on global energy prices as American forces have struck back.”
October 31 – Financial Times (Najmeh Bozorgmehr): “Ayatollah Mojtaba Khamenei has warned that Iran’s response to any renewed US-Israeli attacks would be ‘immediate, effective’ and ‘without any geographical limitations’. ‘Should the enemies once again embark on military or terrorist attacks, it will be the armed forces of the Islamic republic and the Iranian nation who will determine the time and conditions for ending it,’ Iran’s supreme leader said in a meeting with commanders… Khamenei added that the ‘data bank of targets should be updated so that the armed forces could hit all kinds of financial and non-financial assets of the US-Zionist enemies’.”
October 31 – Axios (Barak Ravid): “Iran’s Supreme Leader Mojtaba Khamenei told the country’s top three military commanders that a renewed attack by the U.S. and Israel ‘must be met with an immediate and effective response, without geographical limitation in order to achieve ‘maximum deterrence,’ according to a statement from his office. This is the first publicly disclosed meeting between Khamenei and all the top commanders of Iran's armed forces since the war began.”
November 5 – Axios (Thomas Novelly): “Iran is using space to land big blows against U.S. forces in the Middle East. Despite the U.S. bombing Iran’s key space-related facilities, the nation is still seen as an ‘emerging’ space power, according to a Pentagon intel report. Iran took offensive actions against U.S. space capabilities during Operation Epic Fury… Iran has several land-based jamming systems that can degrade space-based GPS, the DIA report said. In September, the U.S. Transportation Department warned of ‘significant’ interference to global navigation systems in the Strait of Hormuz. U.S. officials are also alarmed about Iran’s use of space intelligence to more accurately strike key military sites. ‘Space is accessible and affordable today,’ Brig. Gen. Todd Benson, Space Forces Central commander, said… ‘It used to be that you had to be a world power to have any space capability or access to space.’”
October 31 – Associated Press (M. Reo, Samy Madgy and Konstantin Toropin): “Iran’s strikes on more than two dozen U.S. bases in the Middle East focused on early-warning systems before hitting aircraft and buildings, causing billions of dollars in equipment damage, according to an Associated Press analysis. The AP independently verified damage to American targets using satellite imagery from multiple providers and spoke to four regional officials who were briefed or have firsthand knowledge of what was hit. The AP found that, through August, more than 115 drone or missile strikes claimed by Iran or Iranian-backed militias damaged or destroyed structures on 26 military bases and other sites with U.S. equipment.”
November 5 – Financial Times (Max Seddon and Miles Johnson): “Russia agreed to supply Iran with 90 launchers for the advanced guided missiles widely used by its forces in Ukraine, a sign of Moscow’s military support for Tehran despite the demands of its own sputtering war effort. A production schedule for 2024 and 2025 from a major Russian defence manufacturer… details an export order for the helicopter-mounted launchers to a buyer identified by a code name… to refer to Iran. The order… shows how the two allies have strengthened their military ties since Russia’s invasion of Ukraine in 2022. Western intelligence officials say Russia and Iran have further deepened their partnership during the war in the Middle East this year…”
Iran War Ramifications Watch:
November 2 – Wall Street Journal (Summer Said, Benoit Faucon, Anat Peled and Alexander Ward): “America’s Gulf allies are steeling themselves for a heavy U.S. bombardment of Iran that they expect to trigger a vicious cycle of retaliation against their own economic and civilian infrastructure as early as this week. The Trump administration and Arab mediators are making a number of efforts to reach a negotiated end to the conflict. But the lack of progress paired with U.S. and Iranian threats of especially ferocious fighting if the conflict resurges are heightening concerns across the region. President Trump has been leaning toward a large postelection attack that could target Iranian infrastructure and nuclear sites, but hasn’t decided whether to go ahead…”
November 5 – Wall Street Journal (Jon Gambrell, Summer Said and Saleh al-Batati): “After Yemen’s Iran-backed Houthi rebels attacked Saudi Arabian oil tankers in the Red Sea and seized territory commanding the strategic Bab al-Mandeb chokepoint, the kingdom reached out to the group to see what it would take to arrive at a negotiated halt to the hostilities. The answer it got back: $51 billion. The Houthis said that was the sum needed to cover the cost of years of Saudi strikes and a long blockade… For good measure, the Houthis would want the kingdom to officially recognize the militants as the rulers of Yemen, effectively accepting an Iranian-armed adversary on its southern border. The demands hammered home how Saudi Arabia faces only bad options as it tries to find a way out of the conflict it started more than a decade ago when it intervened against the Houthis in Yemen’s civil war.”
November 3 – New York Times (Erika Solomon): “From pulpits at Friday prayers to street rallies, Iranian clerics and officials are increasingly urging the country’s leaders to reverse their longtime pledge not to pursue nuclear weapons. This demand, once seen as a fringe position held by hard-liners, is moving into mainstream public debate, and the shift could have dramatic consequences for Iran, whose government has for decades argued that its nuclear program was solely for peaceful purposes. ‘We must be equipped with nuclear weapons — so that we can fight the criminal America with strength, God willing,’ Ali Sepahvand, the Friday prayer leader in Iran’s western city of Kuhdasht, said…”
Trump Administration Watch:
November 4 – Axios (Josephine Walker): “President Trump said Republicans would have won… midterm elections had he been on the ballot. After raging on social media before major races were called, Trump reacted to the results for the first time Tuesday night… ‘I wasn’t on the Ballot and if I was, we would have won IN A LANDSLIDE! Thank you for your attention to this matter,’ he wrote… In a separate post, he said he was ‘going to become a Political Pundit, both good and bad, on the reasons these Candidates won and lost!’”
November 5 – Wall Street Journal (Philip Wegmann): “The White House delivered a warning to conservative groups on Thursday: We’re watching you. Two days after voters rebuked President Trump and his party, the administration moved to hold together a coalition that was beginning to splinter. The White House Office of Public Liaison, which works with outside groups, sent a memo to more than 3,000 conservative organizations that laid out a list of Trump’s accomplishments in office and pledged to prevent newly ascendant Democrats from reversing them. The memo concluded with a sentence that was highlighted in yellow. ‘As always, we are monitoring statements, press releases, and media engagements from your organizations,’ the memo said.”
November 2 – Axios (Barak Ravid): “President Trump told Axios… he’s ‘in no rush’ to decide whether to resume fighting in Iran. The midterm elections have been seen as an inflection point for Trump on whether to unleash a massive bombing campaign to try to bring the war to an end. But it appears the president, at least for now, will continue on dual tracks — letting negotiations play out while preparing to go back to war if he concludes a deal isn’t reachable. ‘One way or the other, we will do something, but there is no rush. We crippled them financially. They have no money, no gasoline and their people are getting very tired of it,’ Trump said…”
November 5 – Axios (Barak Ravid): “President Trump has conceded that the Iran war cost Republicans dearly in the midterms. Now he must decide whether to cut his losses and reach a deal — or double down and go back to bombing. All of Trump’s options are problematic: The first is to strike. But going back to war would be highly unpopular — keeping gas prices high and probably not yielding a better military result. Another is to negotiate. But if Iranian officals refuse to make concessions — or, sensing weakness after the president’s political loss, up their demands — Trump will have a hard time reaching a deal. The third is to ‘strangle,’ as aides put it. This would mean sticking with the status quo — the naval blockade coupled with crippling economic sanctions that leave the Iranian regime to ‘rot’ — while continuing to test its appetite for a deal. This path, however, could take months to show progress. The president has said for weeks he would end the war one way or another after the election.”
November 5 – Associated Press (Aamer Mdhani, Linley Sanders, Samy Magdy and Matthew Lee): “As he takes stock of his Republican Party’s midterm drubbing, President Donald Trump now faces the difficult question of what to do about his unpopular 8-month-old war against Iran. For weeks, Trump has threatened to return to a full-scale bombardment of Iran once the U.S. elections were in the rearview mirror if Tehran did not come to a settlement under terms acceptable to him. In his first comments… after Democrats’ resounding election victory… Trump largely agreed with Vice President JD Vance, who publicly ruminated on the war being a catastrophe for Republicans. And in an Oval Office exchange…, Trump suggested that the election losses aren’t weighing on his calculations. ‘If we have to do the rest of the Iran thing, we’re very much locked in,’ Trump said.”
November 2 – Financial Times (James Shotter, Neri Zilber, Andrew England and Mehul Srivastava): “Israeli Prime Minister Benjamin Netanyahu is pushing US President Donald Trump for a swift resumption of the US-Israeli war against Iran after elections in the US this week, according to people familiar... In a call on Saturday, Netanyahu urged Trump to restart the fighting after Tuesday’s midterm elections, but the US president has yet to make a decision…”
November 4 – Financial Times (Joe Miller, Michael Taffe and George Hammond): “Silicon Valley billionaires who courted Donald Trump and donated more than $600mn to Republican candidates suffered heavy losses in the US midterm elections… Donors including Elon Musk, who alone dumped more than $470mn into various House and Senate races, gave Republicans a huge fundraising advantage going into the vote — the most expensive in US history. Nearly half of Musk’s spending went to support Ken Paxton, the scandal-plagued Texas Republican who lost to Democrat James Talarico…”
November 4 – Financial Times (Jamie Smyth and Alice Hancock): “Donald Trump’s controversial gambit to import Russian diesel to the US ahead of the midterm elections appears to be unravelling, with two of the first tankers initially destined for the US abruptly veering off course. The apparent diversion came as the diesel supply picture further deteriorated in the US, with new data showing inventories falling below 100mn barrels for the first time in more than two decades. The supply squeeze threatened to weigh further on a fuel that serves as the lifeblood of the US economy.”
Trade War Watch:
November 1 – Reuters (Allison Lampert and Gram Slattery): “US President Donald Trump said… his administration has the ‘concept’ of a new trade deal with Canada while Prime Minister Mark Carney said the two leaders had a good conversation on the future of trade between their countries. ‘I spoke to him again yesterday, and we have the concept of a deal that’s going to be great for our farmers, great for our country, and we’ll be fine for that,’ Trump told reporters…”
November 3 – Bloomberg (Thomas Seal): “Canadian Prime Minister Mark Carney said the US is ‘asking less’ and ‘offering more’ in trade negotiations, as the neighboring nations once again work on a potential deal after a previous round of talks collapsed. ‘Some of our red lines have clearly shifted, around language, around culture, around sovereignty, our ability to have trade deals. In other words, those are now off the table. That’s very welcome,’ Carney told reporters…”
November 2 – Financial Times (Zijing Wu, Demetri Sevastopulo and Eleanor Olcott): “Nvidia is ordering its data centre partners to reduce exposure to Chinese customers in a move that further restrains China’s ability to keep up with US rivals as the race between the world’s two AI superpowers intensifies. In recent months, the world’s largest chipmaker has told cloud computing clients that they must now sell at least 51% of their services to non-Chinese companies… There had been no previous restrictions.”
Constitution Watch:
November 2 – Bloomberg (Katy O'Donnell and Erin Schilling): “The nation’s top housing regulator took ‘unprecedented’ steps to hinder investigations by its inspector general, the watchdog told lawmakers in a report… The accusations – delivered in the Office of Inspector General’s semiannual report to Congress – are the latest escalation in a feud between Federal Housing Finance Agency Director Bill Pulte and his congressionally mandated overseers. Pulte announced on social media in September that he would be slashing the OIG budget by more than 60%... ‘OIG’s Office of Evaluations was unable to publish three reports’ over the six months ending Sept. 30 ‘due to FHFA’s refusal to provide enterprise records and information when requested,’ according to the report.”
Budget Watch:
November 5 – Bloomberg (Elizabeth Stanton): “The US government borrowed a record $839 billion in a single week via its sales of Treasury bills and notes — both to repay holders of maturing debt and to raise the additional capital needed to finance the federal deficit. Auctions of bills, floating-rate notes and Treasuries due in two, five and seven years conducted from Oct. 26-30 eclipsed the previous weekly record of $795 billion, set in the same period a year ago…”
U.S./Russia/China/Europe/Iran Watch:
November 4 – Financial Times (Henry Foy, Laura Pitel, Anne-Sylvaine Chassany, Barney Jopson and David Sheppard): “European politicians hailed Donald Trump’s sweeping defeat in the US midterm elections… as a chance to moderate fractious transatlantic relations, with Spain’s prime minister cheering the results as the ‘crumbling’ of a ‘far-right wave’. The US president’s first two years of his second term have deeply undermined relations with Europe, as his mercurial attitude to Nato, trade war against Brussels and pro-Russian stance towards the war in Ukraine upended decades of transatlantic beliefs on the continent. Politicians from across the EU’s centrist and leftwing parties cheered the Democratic victory that hands Trump’s opponents control of Congress. However, they were split over its potential impact on foreign policy, cautioning that Europe should not temper efforts to de-risk its reliance on Washington.”
November 3 – Politico (Sonja Rijnen): “U.S. President Donald Trump called Greenland the greatest gift the United States had ever received… ‘Remember, [Europe] just gave the United States the greatest gift we were ever given. Do you know what it was? Greenland. We just got Greenland, you know that, right?’ he said during a broadcast about Tuesday’s midterm elections… Someone else on the call quickly clarified that Trump was referring to ‘a military deal.’”
November 3 – Wall Street Journal (Alexander Osipovich, Rory Jones and Patricia Kowsmann): “The U.S. has tried for years to cut off its adversaries from the world’s financial system. But money from places such as Iran and Russia has kept on flowing—in large part thanks to banks in China, people familiar… say. The challenge is exemplified by a little-known regional bank in eastern China, which in recent years emerged as a key conduit for Iranian and Russian financial transactions, according to former U.S. officials… The funds were used to buy Chinese goods in violation of Western sanctions, including some with potential military applications… The bank, Zhejiang Chouzhou Commercial Bank, was flagged internally by U.S. officials during both the Biden and Trump administrations…”
Ukraine War Watch:
November 3 – Financial Times (Fabrice Deprez): “A massive Russian drone and missile attack targeted Ukrainian energy infrastructure across the country overnight on Tuesday, as Moscow ratchets up its deadly air campaign ahead of winter. More than a dozen energy facilities were hit across nine regions… ‘Ukraine must be helped to defend its skies, otherwise Russia will never stop its missile strikes,’ Volodymyr Zelenskyy pleaded…”
November 3 – Wall Street Journal (Anastasiia Malenko): “A Russian airstrike killed at least 31 people, with nearly 50 more missing, at a school in southern Ukraine where humanitarian aid was being handed out on Monday… Another 73 people were injured in a Russian missile strike on a hospital in the city of Kharkiv on Tuesday, as Moscow continued to intensify its attacks on civilian locations.”
November 2 – Associated Press (Samya Kullab): “The furnaces are cold, the factory floor deserted, and twisted metal litters the grounds of Kamet Steel, a vast industrial complex that once helped power Ukraine’s economy but closed after a Russian attack. Across the country, grain — a key export — piles up in fields and silos as farmers struggle to find routes safe from airstrikes and wait for prices to rise. Russia’s intensified air campaign is slowly strangling Ukraine’s economy, targeting industrial and energy plants and the logistics networks, railways and export routes that keep it afloat.”
November 1 – Bloomberg (Daryna Krasnolutska and Alberto Nardelli): “The Russian military suffered record casualties in Ukraine last month while also ceding some territory to Kyiv’s forces, according to Western intelligence data and President Volodymyr Zelenskyy. More than 54,000 Russian troops were killed and heavily wounded in October, the most since the full-scale invasion began almost five years ago…”
New World (Dis)Order Watch:
November 2 – Reuters (Tom Balmforth and Luiza Ilie): “After seven strikes on cargo ships near NATO members Romania and Bulgaria last month, the US-led military alliance said it would deploy maritime patrol aircraft, radars and drones to bolster its eastern flank in the Black Sea. Three days later, on October 23, another ship was struck just outside Romanian waters. And last week a Greek container ship was sunk by naval drones in Bulgaria’s exclusive economic zone. Unabating attacks show how the escalating maritime war between Russia and Ukraine is expanding into a major challenge for NATO in the Black Sea that has left littoral member states such as Romania and Bulgaria exposed.”
November 2 – Reuters (Lim Hui Jie): “Spain’s Santander said… the world faces a financing gap of around €30 trillion ($33.6 trillion) over the next five years, mainly in investment needs linked to the energy transition but also to AI and defence. It said… preliminary estimates for the period between 2026 and 2030 suggested the world needed to invest around €50 trillion in total and, given the financing sources and expected growth rate, the resulting financing gap would reach around €30 trillion.”
AI Bubble/Arms Race Watch:
November 5 – Bloomberg (Maggie Eastland and Shirin Ghaffary): “Top AI companies that had cozied up to President Donald Trump over the past two years are now bracing for the fallout from Democrats’ resounding victories in the US midterm elections. The Democratic sweep in the House, Senate and a number of key governors’ races is poised to ratchet up Congressional scrutiny on tech firms, bolster momentum for meaningful AI safety regulation and, perhaps most imminently, lead to tighter state-level restrictions on data center construction. ‘Every hyperscaler is now thinking about ‘Do we need to build outside the United States?’ Meta Platforms Inc. President Dina Powell McCormick said… Elon Musk… went even further in a post on X: ‘Data centers in space looking pretty appealing right now.’”
November 5 – Bloomberg: “The post-election rout for US stocks has revealed a sobering truth: The AI industry is now driving the fate of the markets and the economy as a whole. The possibility that newly elected Democrats will slow data center development was enough to send stocks reeling this week. It’s easy to see why. As of Nov. 3, nearly $32 trillion in market value had been added to the S&P 500 Index since OpenAI released ChatGPT, and more than half of that gain came from just 10 companies — all linked to artificial intelligence. About 44% of US pension fund holdings — $610 billion — are now tied up in tech… Almost all the growth in US business spending last year came from spending on technology. The US corporate bond market is on track for its busiest year ever — thanks to companies building out AI infrastructure.”
November 4 – Axios (Maria Curi): “Voters showed deep distrust of the AI race Tuesday, approving dozens of data center moratoriums and electing a raft of candidates who favor slowing a $10 trillion buildout, including in Texas — the epicenter of the boom. In an election that hinged on an affordability crisis for many Americans, voters made it clear they view Silicon Valley’s AI ambitions not as a technological miracle, but as a resource-draining threat to their wallets and communities. The results were a warning shot to some of the nation’s wealthiest and most powerful executives, many of whom are already working on ways to build a more palatable version of the revolution they are dead set on winning. ‘What we just witnessed was an AI earthquake,’ Brad Carson, co-founder of Americans for Responsible Innovation, told Axios.”
November 4 – Reuters (Laila Kearney and Nathan Crooks): “Texas governor-elect Gina Hinojosa has rattled the state’s data center industry with a campaign pledge to halt new projects, injecting new uncertainty into one of the country’s fastest-growing markets for server warehouses worth billions of dollars. With plentiful energy supplies, relatively cheap land and a pro-business policy, Texas has become one of the leading regions in the world for data center developments. Big Tech companies including Meta, Google and Microsoft have announced major data center projects in the state over the past two years.”
November 3 – Financial Times (Michael Acton and Martha Muir): “Democratic gubernatorial candidates who pledged to halt data centre development swept to victory…, threatening to derail billions of dollars of planned investments for the AI boom over the coming years. Three states at the centre of the AI build-out — Texas, Georgia and Ohio — elected Democratic candidates who have pledged to crack down on building data centres. The ‘blue wave’ of results on Tuesday, which also included a number of local ballot measures blocking the data centre construction, marked a sharp rebuke to President Donald Trump’s endorsement of the AI infrastructure building spree.”
November 2 – Reuters (Akash Sriram, Shashwat Chauhan, Devika Nair, and Sumedha Mukherjee): “Oracle… said it will raise $20 billion through bond and share sales, as the software giant taps investors to fund its costly AI and cloud infrastructure build-out. Oracle priced the offering of 86.2 million shares at $116 each later in the day, an 11.2% discount to Friday's closing price. The company will raise about $10 billion from the stock sale and another $10 billion through debt offerings maturing between 2029 and 2046.”
November 2 – Axios (Michael Acton): “Anthropic’s third-quarter revenue surged to nearly $17 billion, while its contractual spending agreements on AI infrastructure ballooned to $900 billion, per its amended pre-IPO paperwork. It’s taking a lot of cash to generate those returns. Anthropic disclosed approximately $895.4 billion in aggregate spending commitments under purchase agreements and leases, all substantially tied to compute and infrastructure. Approximately $447.5 billion is expected to be incurred by the end of 2030, with substantially all of the remaining $447.9 billion expected between 2031 and 2045. Nearly $70 billion is due within the 12 months following September 30, 2026.”
October 30 – Wall Street Journal (Berber Jin): “OpenAI has raised less than half of the $30 billion it had initially targeted for its latest funding round, with market jitters over the AI trade dampening investor appetite for one of the industry’s biggest names. After receiving tepid interest from some large investors, OpenAI has so far secured roughly $11 billion in commitments for the new financing… The deal values the company at $1.25 trillion—less than the $1.4 trillion valuation that it had earlier hoped to achieve. The fundraising hiccups come as OpenAI prepares to go public as soon as early next year…”
November 2 – Bloomberg (Cathy Chan, Denise Wee, and Kiuyan Wong): “Wall Street’s top chiefs said that capital markets will continue to underwrite the global artificial intelligence infrastructure buildout, with Morgan Stanley projecting cumulative spending could reach $15 trillion over the next decade… Morgan Stanley Chief Executive Officer Ted Pick estimated that the largest technology hyperscalers could deploy between $800 billion and $1 trillion annually over a seven- to 12-year horizon.”
November 2 – Bloomberg (Echo Wong and Kari Soo Lindberg): “Artificial intelligence-related financing could grow to about $10 trillion over the next five years, eventually reaching excessive levels, said Emmanuel Roman, chief executive officer of Pacific Investment Management Co. Roman estimated that about $2 trillion of financing needs could be created annually over the next five years to fund capital spending by the AI industry, compared with a US bond market of about $12 trillion. The amount is eventually ‘going to be too much,’ Roman said…”
November 4 – Bloomberg (Mark Gurman): “Apple Inc. is reducing employee budgets for artificial intelligence usage as part of a cost-cutting effort, even as the company seeks to put AI at the center of its operations. Last month, Apple quietly lowered the daily spending cap for some engineers using AI models to $200 from $300… The company is now planning further cuts for some engineering teams…”
November 2 – Bloomberg (Todd Gillespie): “Goldman Sachs… has irked some of its staff after it banned most of them from using advanced artificial intelligence tools designed for coding after reviewing productivity and risk concerns. For months, Goldman allowed bankers to use Anthropic PBC’s Claude Code and Microsoft Corp.’s GitHub for work. Now, the bank is limiting the use of those tools to engineers only, according to internal guidance updated in October... The ban has frustrated some traders…”
Global Bubble Watch:
November 5 – New York Times (Eli Tan, Theodore Schleifer and Erin Griffith): “In September, President Trump hosted a White House luncheon to discuss artificial intelligence, flanked by some of the world’s wealthiest tech executives: Jensen Huang of Nvidia, Elon Musk of Tesla and SpaceX, Mark Zuckerberg of Meta and others. They had the president’s ear to pitch an A.I. future uninhibited by regulation or guardrails. For two years, it had been that easy to get what they wanted. Tech billionaires and their companies donated money to Mr. Trump’s favored causes, including the White House ballroom. The moguls posed for photos and lavished him with praise and gifts… Then on Tuesday, the American public delivered a rebuke of the tech industry’s agenda. Overnight, the billionaires’ political alignment with the president may have become a liability.”
November 5 – Financial Times (Amelia Pollard, Michael Taffe and Alex Rogers): “Wall Street billionaires who threw their fortunes behind Republicans suffered a crushing defeat, raising questions about the ultra-wealthy’s ability to sway elections. Hedge fund managers and other major investors — including longtime Republican donors Paul Singer and Ken Griffin — collectively spent more than $330mn on the US midterm elections, according to an FT analysis, as they pushed for Republicans to hold control of Congress. Many of the candidates they backed were in favour of low taxes, scant regulation and supporting Israel.”
November 3 – Bloomberg (Suvashree Ghosh and Scott Patterson): “The theft of at least $6.3 billion in cryptocurrency from the world’s marquee digital-asset exchange shows that however sophisticated the fortifications, high-tech criminals are still finding a way in. Hackers absconded with the biggest single haul in the history of cyber attacks, forcing the exchange, Binance, and its partners to freeze billions of dollars of assets, and shaking confidence in crypto-market infrastructure. While Binance promised to reimburse lost funds from customers, the heist was another blow to the security framework of an industry trying desperately to win the trust of institutional Wall Street. ‘This is the largest cyber theft on record, not just the largest in crypto,’ said Aneirin Flynn, chief executive officer of cybersecurity technology firm FailSafe. ‘This will damage confidence in crypto. The industry is courting institutional capital, but institutions will not overlook repeated failures in custody and security.’”
November 2 – Reuters (Ankur Banerjee and Rae Wee): “Binance’s customers have withdrawn a net $4.72 billion from the world’s biggest cryptocurrency exchange since it reopened, after hackers stole around $6.3 billion of crypto from the platform in what could be the largest-ever financial heist. The exchange froze withdrawals for more than two days after the hack…, then started allowing customers to withdraw again on Sunday morning. The theft has underlined the vulnerability of digital assets to attacks and raised questions about the impact of the hack on Binance, which has vowed to repay customers in full.”
November 1 – Bloomberg (Soobin Kim): “The North Korean group accused of the world’s largest-ever crypto heist is a state-sponsored collective of elite hackers, groomed from an early age to hunt for ‘big game.’ Artificial intelligence has now provided them with a powerful new tool to swell Kim Jong Un’s coffers and fund his military expansion. Nuclear-armed North Korea maintains a thousands-strong hacker army, but the top unit known as ‘TraderTraitor’, which the FBI blames for the recent $6.3 billion Binance hack, may only have a dozen or so members, experts say.”
November 3 – Bloomberg (Sidhartha Shukla): “Investors pulled over $1 billion from US-listed Bitcoin funds over two trading sessions, as the record Binance hack and uncertainty around the US midterm elections remain an overhang on sentiment. The funds posted $1.04 billion in net outflows over Friday and Monday…”
November 5 – Bloomberg (Muyao Shen): “For years, the digital-asset industry has sought to shake up finance by stripping away the intermediaries, delays and controls that govern the movement of money on Wall Street. The pitch: faster transactions, final settlement and fewer middlemen with the power to intervene. But the largest crypto heist on record has exposed the dangers — and limits — of that pitch. A system built to move money without restraint offers few ways to stop it when it is stolen, threatening to cement the Wild West reputation the industry has spent years trying to escape.”
November 2 – Wall Street Journal (Rebecca Picciotto and Paul Kiernan): “The Beaudry apartment tower is a visible showpiece for downtown L.A. At 695 feet, it is among the tallest residential buildings in California. The dark glass tower offers sweeping views of the city, and the list of rich amenities includes a full-swing golf simulator, saltwater swimming pool and pet spa. Yet the developer, real-estate giant Brookfield, this summer said it is walking away from the $600 million project less than four years after it opened. Brookfield’s decision to let go of the Beaudry ‘reflects entrenched market challenges facing downtown Los Angeles,’ a spokeswoman said.”
Inflation Watch:
November 3 – New York Times (Kurtis Lee): “Almost all industries have faced downstream impacts from the war, but the high price of diesel has been particularly hard for farmers, who use it to power machinery, and truckers, who are paying around 70% more per gallon than they were a year ago. In September, at least 40 trucking companies nationwide… filed for bankruptcy, according to BKwire… It was a 38% increase from a year earlier. While every failing business has its own story, logistics experts and bankruptcy lawyers say record-breaking diesel prices have been a contributing factor, especially for small operators.”
November 2 – Financial Times (Michael Acton): “Apple on Monday said the ‘unprecedented’ rise in memory chip prices and the cost of serving its AI tools would squeeze its margins even as it forecast better than expected sales for the crucial Christmas season.”
Federal Reserve Watch:
November 4 – Bloomberg (Andrew Ackerman): “President Donald Trump’s campaign to reshape the Federal Reserve and bend interest-rate policy to his will has hit a formidable firewall after Democrats won control of the Senate… The flip in the Senate… effectively blocks the White House from confirming loyalist nominees to the Fed’s seven-member Board of Governors, stripping the administration of its most direct lever to exert greater control of the US central bank. Under a Democratic majority, Massachusetts Senator Elizabeth Warren is likely to assume the chairmanship of the Senate Banking Committee, handing the panel that oversees the Fed to a lawmaker expected to bottle up any nominees perceived as unduly pliable to executive pressure.”
November 4 – Axios (Neil Irwin): “A recurring subplot of President Trump’s term has been a desire to replace Biden appointees to the powerful Federal Reserve Board of Governors — even ahead of their terms ending — with allies. That effort now looks dead in the water. Even if Trump succeeds in his efforts to fire governor Lisa Cook, or to oust any of the other three Biden-era holdovers on the seven-member board, a Democratic Senate will likely block any replacements it views as insufficiently independent from the administration.”
November 5 – Reuters (John Revill and Michael S. Derby): “Two Federal Reserve officials on Thursday made a case for modest and steady interest rate increases to tackle above-target inflation, in the first round of comments from central bankers after Democrats won control of Congress and made gains at the state level in elections that could change the path of price pressures in the economy… ‘I expect that monetary policy will need to move to a restrictive stance to bring inflation back to 2% in a timely manner,’ Federal Reserve Bank of Cleveland President Beth Hammack said…”
November 6 – Reuters (Francesco Canepa): “US economic growth has remained resilient and the labour market is remarkably stable despite successive shocks, but inflation is too high and must be brought back to 2%, New York Federal Reserve President John Williams said… ‘Inflation is absolutely too high. It's been too high for too long,’ Williams told a ECB conference... ‘It’s absolutely essential that we bring inflation back to our 2% target in a timely manner and a sustained basis.’ But Williams also argued that the Fed’s key focus should be on where inflation is heading and making sure that current shocks do not translate into broader or more persistent inflation.”
U.S. Economic Bubble Watch:
November 6 – CNBC (Jeff Cox): “The U.S. economy added jobs at a much stronger-than-expected pace in October, while the unemployment rate moved lower as the labor market showed surprising strength. Nonfarm payrolls increased by a seasonally adjusted 165,000 for the month, compared with the… estimate for 59,000… The unemployment rate nudged down to 4.1%... A more encompassing measure that includes discouraged workers and those holding part-time jobs for economic reasons rose to 7.9%, up 0.3 percentage point, amid an increase of 421,000 in the civilian labor force… Prior months were revised up substantially: The August figure moved to 186,000, an upward revision of 53,000, while the September count shifted to 60,000 following an upward revision of 31,000… Average hourly earnings increased 0.4% on the month and 3.1% annually… The average workweek was unchanged at 34.4 hours.”
November 3 – Reuters (Lucia Mutikani): “US job openings surged in September while layoffs fell to the lowest level in 1-1/2 years… The Labor Department’s Job Openings and Labor Turnover Survey, or JOLTS report, … also showed the largest number of resignations in nearly 3-1/2 years. There were 1.06 job openings for every unemployed person in September. This ratio was up from 1.02 in August… ‘For now, all signs point to a solid labor market, even if it is difficult for pockets of workers, namely those who are unemployed,’ said Matthew Martin, senior US economist at Oxford Economics.”
November 4 – CNBC (Jeff Cox): “Private sector job growth held steady in October, with gains spread across sectors, as the labor market showed fresh signs of stabilization, ADP reported… The payrolls processing firm said companies added 86,000 jobs during the month… Employment gains came mainly in the service sector. Trade, transportation and utilities led with 39,000 new jobs, while education and health services added 28,000, and leisure and hospitality contributed 19,000. Other sectors showing gains included financial activities (15,000), construction (13,000) and other services (10,000).”
November 5 – Associated Press (Paul Wiseman): “Fewer Americans applied for unemployment benefits last week as layoffs remain scarce and most workers enjoy job security. The Labor Department reported…189,000 people sought jobless aid last week, the fewest since mid-July and down from 195,000 the week before. The four-week average of claims, which smooths out week-to-week ups and downs, dipped to 194,750.”
November 4 – Reuters (Lucia Mutikani): “The US trade deficit narrowed slightly in September, though imports increased to a record high amid an artificial intelligence spending spree by businesses. The report from the Commerce Department… also showed the US logged record goods trade deficits with several countries, including Mexico, Vietnam, Taiwan and South Korea, despite President Donald Trump's aggressive tariffs… The trade shortfall contracted 0.7% to $105.0 billion…”
November 4 – Reuters (Lucia Mutikani): “US services sector growth slowed marginally in October amid a moderation in new orders, but supply chains remained strained, keeping prices for inputs elevated. The Institute for Supply Management said… its nonmanufacturing Purchasing Managers’ Index dipped to 54.5 last month from 54.9 in September… New orders received by services businesses decreased to 55.9 last month from 59.8 in September… The survey’s measure of prices paid by businesses for inputs eased to a still-high 73.0 last month from 74.0 in September… Services employment rose to 51.4 from 50.1 in September.”
November 2 – Bloomberg (Jeffrey Sparshott): “US manufacturing activity picked up in October, supported by the strongest production growth in nearly five years. The Institute for Supply Management’s manufacturing index rose one point to 55.5 in October, the second-highest reading in more than four years… ISM’s report showed that factories in October once again faced elevated prices for raw materials and longer lead times on supplier deliveries. ISM’s prices gauge fell to 75.2, down from the prior month but still higher than before the Middle East conflict began.”
November 3 – Reuters (Lucia Mutikani): “New orders for US factory goods increased more than expected in September, boosted by bookings for aircraft and a range of other goods… Factory orders rose 1.8% after an upwardly revised 0.3% gain in August… Economists… had forecast orders surging 1.2% after a previously reported 0.1% gain in August. Orders advanced 7.2% on a year-over-year basis in September. An artificial intelligence infrastructure buildout and strong consumer spending are anchoring manufacturing, which accounts for about 9.4% of the economy.”
November 4 – CNBC (Diana Olick): “After a brief bounce the week before, mortgage demand continued its slide last week… Refinance demand was essentially flat for the week, rising just 0.1%. It was, however, 60% lower than the same week one year ago… Applications for a mortgage to purchase a home fell 2% from the previous week and were 19% lower year over year.”
China Watch:
November 4 – Reuters (Greg Torode and Clare Jim): “Activist Joshua Wong, who became the global face of Hong Kong's pro-democracy movement, was sentenced on Thursday to 10 years in jail on a charge of collusion with foreign entities under the city’s national security law. Wong was among a group of young people whose protest efforts have effectively been outlawed by a sweeping national security law Beijing imposed on the Asian financial hub in 2020…”
November 2 – Bloomberg: “China’s credit market just suffered its worst selloff in two years as a major conglomerate’s plunge into distress tests the assumption that government ties can protect state-owned firms from financial peril. In just a few days, Zhuhai Huafa Group Co. called that view into question. The conglomerate, wholly owned by local governments in the southern province of Guangdong, missed payments on two trust products and asked to extend some bank loans… By Friday, unease was mounting as investors came to terms with the implications in a country where missed debt payments by state-owned firms had become rare.”
November 3 – Wall Street Journal (Peter Landers): “China has told the country’s biggest securities firms and banks to throttle back their work on initial public offerings and focus on boosting the struggling stock market… China Securities Regulatory Commission said Monday at a closed-door meeting that it would process IPO applications already in the pipeline but wouldn’t take up new submissions for now, the people said. Officials also asked shareholders of listed companies to hold off from large-scale share sales until market conditions improve…”
November 1 – Bloomberg: “Chinese stocks advanced on expectations of renewed liquidity support as the nation’s central bank huddled with financial firms and introduced measures to stabilize the capital market. Reports started to trickle in from the weekend that financial regulators will likely use key liquidity-injection tools from a 2024 rescue plan to put a floor under the market…”
November 4 – Reuters (Ellen Zhang and Ryan Woo): “China’s services activity in October expanded at its slowest pace since July, with business confidence easing as firms grappled with fierce competition and rising costs, a private-sector survey showed… The RatingDog China General Services PMI fell to 50.8 in October from 51.6 in September…”
October 31 – Reuters (Liangping Gao, Yukun Zhang and Ryan Woo): “China’s factory activity dropped in October, its third contraction in four months…, hurt by soft demand for goods at home as well as signs of weakness in exports… ‘Insufficient demand is increasing downward pressure on the economy,’ said Zhang Liqun, an analyst with the China Federation of Logistics & Purchasing. The official manufacturing purchasing managers’ index (PMI) fell to 49.3 from 50.1 in September…”
Central Bank Watch:
November 5 – Financial Times (Sam Fleming, Delphine Strauss and Ian Smith): “The Bank of England has raised rates by a quarter point to 4% and signalled it is planning at least one further increase as soon as next month, as it warned inflation will hit 5% next year. Thursday’s rate increase… was its first since 2023 and comes as the energy shock unleashed by the Iran war has prompted a string of central banks to lift borrowing costs. In a sign of the MPC’s concern over inflation, eight members backed the quarter-point rise, with Catherine Mann breaking ranks to vote for a half-point increase.”
November 5 – Bloomberg (Jack Sidders and Laura Noonan): “The Bank of England has queried market participants about data center projects that are being financed without a tenant in place to pay rent. The questioning is part of wider efforts to understand lending to the industry… Loans to projects that start construction before an occupier agrees to lease the completed project are known as speculative financing in the real estate industry.”
November 2 – CNBC (Lim Hui Jie): “Australia’s central bank raised its benchmark cash rate by 25 bps to 4.85% on Tuesday, the highest level since November 2008. The Reserve Bank of Australia’s move was in line with expectations…, and marked its fifth rate increase this year… This also comes as the country continues to grapple with high inflation, with the consumer price index rising 4.3% in September, up from 4% in August and marking its highest level since March.”
November 3 – Reuters (Balazs Koranyi): “Another European Central Bank rate hike in December seems almost inevitable, Bundesbank President Joachim Nagel said…, joining an already long list of policymakers backing the move… ‘From today’s perspective, an interest rate hike in December is very likely necessary,’ Nagel, a crucial voice on the ECB’s Governing Council, said… ‘There seems to be little alternative to an interest rate hike unless the inflation outlook improves significantly.’”
Europe/UK Watch:
November 4 – Bloomberg (Mark Schroers): “Euro-area inflation quickened to double the European Central Bank’s target, supporting the case for interest rates to be raised further. Consumer prices rose 4% from a year ago in October, up from 3.8% the previous month… That’s the highest since September 2023…”
November 4 – Reuters (Andy Bruce): “British services companies last month reported the strongest growth since the start of the US-Iran conflict in February, helped by rising orders and employment, but they also noted sharper cost pressures… The S&P Global UK Services Purchasing Managers’ Index (PMI) rose to an eight-month high of 52.8 from 52.1 in September…”
Japan Watch:
November 2 – Reuters (Leika Kihara): “Bank of Japan Governor Kazuo Ueda has all but locked in a December rate hike, but left investors guessing how much further it could go once rates approach neutral territory… Beneath the BOJ’s hawkish message lies the challenge ahead. As inflationary pressures become more entrenched, policymakers must judge how quickly households and businesses, long conditioned to near-zero borrowing costs, can absorb higher rates without derailing a fragile economic recovery.”
November 5 – Bloomberg (Erica Yokoyama): “Japanese Prime Minister Sanae Takaichi said the government should use additional proceeds from the Bank of Japan’s accelerated sales of exchange-traded funds to finance investments in sectors that are critical for the country’s economic security. ‘The additional gains from ETF sales are the fruits of Japan’s economic growth… I believe we should reinvest them in crisis management and growth initiatives to create a virtuous cycle of further economic expansion.’”
November 4 – Reuters (Jack Sidders and Laura Noonan): “Japan’s service sector expanded modestly in October as activity and new orders both rose slightly faster, a business survey showed… The S&P Global final Japan Services Purchasing Managers’ Index (PMI) edged higher to 51.7 in October from 51.3 in September, a survey by S&P Global showed, marking a fifth straight month of expansion…”
Emerging Markets Watch:
November 1 – Bloomberg (Marcus Wong): “Brazil’s market selloff has delivered a stark warning to emerging-market investors: crowded trades can unravel with alarming speed. Popular bets ranging from Asian artificial intelligence-linked stocks to Hungarian bonds and the South African rand are facing fresh scrutiny after an election shock sent Brazilian shares and the real tumbling, exposing how one-sided positioning can amplify market reversals.”
November 5 – Bloomberg (Manuela Tobias and Ken Parks): “Paraguayan President Santiago Peña submitted his resignation Thursday after the collapse of a major commercial bank with ties to his government plunged the South American nation into turmoil. Regulators seized Ueno Bank SA early Tuesday, freezing the savings of millions of Paraguayans, including pensioners, and sparked widespread protests in a country where roughly 1 in 3 people held deposits at the lender.”
November 1 – Bloomberg (Abhishek Vishnoi): “Foreign outflows from Taiwanese stocks hit a record in October as a global selloff in artificial intelligence play pushed the island’s benchmark closer to a technical correction. Overseas investors sold $31.78 billion of Taiwanese shares on a net basis last month, surpassing the previous all-time high hit in March…”
October 31 – Reuters (Jihoon Lee): “South Korea’s exports nearly doubled in October, the sharpest jump in more than 50 years, as robust global demand for AI investment boosted shipments of the country’s chips, government data showed on Sunday. Exports from Asia’s fourth-largest economy, a bellwether for global trade, rose 93.7% from the same month last year to $115.28 billion, slightly higher than a median 93.2% rise forecast…”
November 3 – Financial Times (John Paul Rathbone): “They call it the Fonzi: a multibillion-dollar financial scandal that has torched the savings of half a million Turks, enraged President Recep Tayyip Erdoğan and shaken his government to the core. ‘Fonzie’ or ‘The Fonz’ was also the leather-jacketed hero of the 1970s US sitcom Happy Days. But there is nothing happy about the popping of Turkey’s Fonzi bubble. Instead, it is a $20bn investment fund crisis, its name a mixture of the Turkish word for fund and a reference to Ponzi schemes. ‘The scale of what is going on is not fully appreciated internationally; this is the leading topic in national conversation,’ says Atilla Yesilada of GlobalSource Partners, an Istanbul-based consultancy.”
Social, Political, Environmental, Cybersecurity Instability Watch:
November 6 – Financial Times (Kenza Bryan): “The global average temperature this year is ‘virtually certain’ to reach more than 1.5C above pre-industrial levels, Europe’s Earth observation agency said… The threshold was also expected to be breached over the four-year average period from 2023 to 2026, showing how sustained levels of global warming had become… Last month was the warmest October on record globally, with an average global air temperature 1.75C above pre-industrial levels, and was the third consecutive month to exceed 1.5C.”
November 2 – Bloomberg (María Paula Mijares Torres): “A powerful warming of Pacific waters this year — a cyclical phenomenon known as El Niño — could push US prices higher and boost employment next year, according to a new economic letter from the Federal Reserve Bank of San Francisco. Higher employment could provide a boost to the labor market. But the weather pattern could lead to renewed price pressures — El Niños historically drive up prices for core services and food, the analysis found.”
