From Cotality U.S. home equity dips further this fall

Cotality ... today released the Homeowner Equity Report (HER) for the third quarter of 2025. The report reveals a mixed picture of homeowner equity gains across the United States.

Borrower equity decreased year over year, declining by $373.8 billion or 2.1%. That decline translates to an overall net equity to $17.1 trillion for homes with a mortgage. Homeowner equity peaked at close to $17.7 trillion in the second quarter of 2024 and has since oscillated between $17 trillion and $17.6 trillion.

"As the pace of home price growth slows and markets recalibrate from pandemic peaks, we’re seeing a clear shift in equity trends,” said Cotality Chief Economist Dr. Selma Hepp. “Negative equity is on the rise, driven in part by affordability challenges that have led many first-time and lower-income buyers to over-leverage through piggyback loans or minimal down payments. While overall home equity remains elevated, recent purchasers with smaller down payments may now face negative equity.”
...
While the share of homeowners in negative equity reduced in the second quarter of this year, it ticked up again in the third quarter. In the current quarter, 2.2% of homeowners have negative equity or 1.2 million properties. Another way to think about it is that there’s been a 21% year-over-year rise in the number of homeowners in negative equity with 216,000 more homes falling into the category in the third quarter, a trend that has been gaining steam and signals possible market difficulties ahead.

Compared to the second quarter, there has been a 6.7% increase in the number of mortgaged residential properties sitting in negative equity. This slide in equity tracks with market cycles as the spring homebuying season faded into the slower fall market, during which period there’s a more consistent weakness in home price gains across markets.

This graph compares the distribution of equity (and negative equity) in Q3 vs. Q2. 
About 1.2 million properties are in negative equity (owe more than the property is worth), but this is a fairly small percentage historically.
Most homeowners have substantial equity in their homes.

Today, in the Calculated Risk Real Estate Newsletter: Mortgage Rates: The New Normal

A brief excerpt:

In June 2023, I wrote: Could 6% to 7% 30-Year Mortgage Rates be the "New Normal"?

At that time, the Fed Funds rate was set at 5 to 5-1/4 percent and the Ten Year Treasury was yielding 3-3/4%. I noted in 2023: “the 10-year yield would likely increase even as the Fed lowers the Fed Funds rate.”

And that is what happened. The 10-year is yielding 4-1/4% this morning. This is a key point. Just because the FOMC is cutting rates, doesn’t necessarily mean long rates will follow.

Note: For a discussion of the R* and the neutral rate, see housing economist Tom Lawler's post on Tuesday.

[I]f, as expected, the FOMC decides to cut its federal funds rate target by 25 bp tomorrow, then the resulting level of the federal funds rate will be very close to the neutral nominal policy rate.

The following graph is from Mortgage News Daily and shows the 30-year mortgage rate since 2000. Rates were in the 5.5% to 6.5% range prior to the housing bust and financial crisis. Then rates were in the 3.5% to 5% range for over a decade prior to the pandemic. Currently rates are at 6.30% for 30-year mortgage rates.

There is much more in the article.

Dems Are "Greatest Con Artists" When It Comes To Inflation Disaster

Authored by Steve Watson via Modernity.news,

In a fresh interview, White House Press Secretary Karoline Leavitt exposed the left’s blatant hypocrisy on economic issues that have hammered everyday Americans for years.

Leavitt hammered Democrats for posing as saviors on affordability while ignoring their own role in fueling runaway inflation during the Biden era.

Appearing on Fox News, Leavitt labeled Democrats “the greatest CON ARTISTS in American politics!” She zeroed in on their empty rhetoric, stating, “They are pretending to champion the issue of affordability when they themselves created the worst inflation crisis in a generation.”

? BREAKING: Karoline Leavitt NUKES Democrats as "the greatest CON ARTISTS in American politics!"

"They are pretending to champion the issue of affordability when they themselves created the worst inflation crisis in a generation."

"You can't create a problem and then turn… pic.twitter.com/qBjEr1jQoV

— Eric Daugherty (@EricLDaugh) December 9, 2025

She drove the point home, noting “You can’t create a problem and then turn around and say, I’m the best person to fix it!”

Leavitt emphasized that voters see through the charade, adding, “that’s why President Trump was reelected to fix it. And that’s exactly what he’s doing.”

The press secretary urged Republicans to step up their game, noting, “So as President Trump has been screaming from the rooftops, Republicans need to remain tough and smart, and they need to be more vocal about touting the accomplishments of this administration.”

She wrapped up by dismantling the Democrats’ claims to represent ordinary folks: “You can’t say you’re for the working man and woman when you vote to raise their taxes. Republicans and President Trump have a proven economic formula and agenda that’s working. It’s focused on bigger paychecks and lower prices, and that’s what President Trump will talk about tonight.”

Leavitt’s comments come against the backdrop of the Biden administration’s dismal economic track record, where inflation soared to levels not seen in decades. Under Biden, the average year-over-year inflation rate hit nearly 5%, with a peak of 9.1% in mid-2022 – a far cry from the stable, low-inflation environment of Trump’s first term. 

Cumulative price increases reached a staggering 21.5% over Biden’s four years, squeezing family budgets on everything from groceries to housing.

This wasn’t some unavoidable global hiccup; it stemmed from reckless spending sprees and anti-energy policies that crippled domestic production.

Democrats flooded the economy with trillions in unchecked stimulus, igniting price hikes that disproportionately burdened working-class Americans. Meanwhile, their war on fossil fuels drove up energy costs, amplifying the pain at every turn.

Contrast that with Trump’s approach, which prioritizes unleashing U.S. energy independence and cutting red tape to boost growth. The results are already showing, proving Leavitt’s point that Republicans hold the winning formula for prosperity.

Nowhere is the Trump turnaround more evident than at the gas pump, where prices have tumbled to levels unseen in decades. Americans are stunned by the rapid drop, crediting President Trump’s pro-drilling policies and focus on energy dominance.

In Colorado, one driver captured the widespread disbelief: “I ain’t seen the gas $1.83 since the F-ing early 2000s! What the F goin’ on? What the hell goin’ on?!”

? WOW! Americans can't BELIEVE how cheap President Trump got gas

Colorado: "I ain't seen the gas $1.83 since the F-ing early 2000s!"

"What the F goin' on? What the hell goin' on?!" ??pic.twitter.com/rZfhFt9HxX

— Eric Daugherty (@EricLDaugh) December 9, 2025

This sentiment echoes across the nation as Trump’s agenda slashes costs that skyrocketed under Biden. During Biden’s tenure, average gas prices hovered around $3.50 per gallon nationally, with spikes above $5 in some states – a direct hit from policies that hampered drilling and pipelines.

 Under Trump, Americans are seeing multi-year lows, with Colorado’s current averages dipping below $2.50 and trending even lower in spots.

These plummeting prices aren’t magic – they’re the fruit of Trump’s drill-baby-drill strategy, reopening federal lands for exploration and fast-tracking infrastructure projects. 

It’s a stark rebuke to the green zealots who prioritized climate virtue-signaling over affordable energy for families.

The facts are clear: When America produces its own energy, prices fall, and independence grows. Trump’s policies are restoring that edge, putting more money back in pockets and easing the affordability crunch Democrats exacerbated.

Leavitt’s call for Republicans to get louder about these successes couldn’t be timelier. With Democrats scrambling to rewrite history and claim credit for fixes they obstructed, the GOP needs to own the narrative. Trump’s playbook – tax cuts, deregulation, and energy freedom – is delivering bigger paychecks and lower costs, just as promised.

As inflation cools and gas flows cheaply, Americans are experiencing the tangible benefits of ditching globalist agendas for pro-worker priorities. The contrast exposes the left’s con game: They broke it, but Trump is fixing it.

Democrats’ affordability charade crumbles under scrutiny, while Trump’s results speak for themselves. 

Your support is crucial in helping us defeat mass censorship. Please consider donating via Locals or check out our unique merch. Follow us on X @ModernityNews.

Tyler Durden Thu, 12/11/2025 - 13:05

Left-Wing Judge Orders "Maryland Father" Migrant Released From ICE Custody

A left-wing federal judge in Maryland has ordered the immediate release of Kilmar Armando Abrego Garcia, a Salvadoran migrant, directing Immigration and Customs Enforcement to free him by 5 p.m. EST today.

U.S. District Judge Paula Xinis ruled that the federal government lacked lawful authority to continue detaining Garcia, accused of smuggling migrants within the U.S. 

He has also been accused of being a member of the foreign terrorist organization MS-13. 

Kilmar Abrego Garcia is not a “Maryland Man”—he is an MS-13 gang member involved in human trafficking who entered the United States illegally. His deportation to El Salvador was always going to be the end result.@TriciaOhio pic.twitter.com/bd3s8wHM2T

— Homeland Security (@DHSgov) April 15, 2025

Xinis noted that his confinement appeared "constitutionally infirm" because there was no final deportation order on record and officials had failed to take reasonable steps to secure a lawful destination for removal.

The Trump administration previously admitted it mistakenly deported Garcia to El Salvador earlier this year, where he was jailed in the CECOT maximum-security prison before being flown back to the U.S. to face human smuggling charges in Tennessee.

Left-wing corporate media and Democrats routinely identified the accused migrant smuggler as a "Maryland Father" ...

Notice how the "Maryland Father" corporate media stories suddenly erupted earlier this year - there is an information war underway by the Democratic Party and their MSM cheerleaders. Time for this term to surge once again... 

The Justice Department could still appeal the ruling, and Trump officials may attempt to initiate new immigration proceedings against the migrant. Separately, Garcia still faces federal smuggling charges in Nashville.

Tyler Durden Thu, 12/11/2025 - 12:10

US 'Answers' China By Sending Pair Of Nuclear-Capable Bombers Over Sea Of Japan

On Wednesday we detailed that Japanese and South Korean fighter jets quickly answered a joint Russian-Chinese long-range bomber flight over the Western Pacific. Chinese J-16 fighter jets, two Russian Su-30 fighters and an A-50 early-warning aircraft were part of the provocative flight, which also passed close to South Korea. Russia's Defense Ministry (MoD) had confirmed its Tu-95MS strategic bombers and China’s H-9 strategic bombers conducted the eight hour flight over the Sea of Japan, the East China Sea and the Western Pacific - but that at no time was any country's airspace violated.

Washington has quickly injected itself into the ratcheting situation, coming amid a diplomatic and economic standoff between Japan and China, by sending US nuclear capable bombers on patrol over the Sea of Japan.

Handout photo from Japan's Ministry of Defense 

Japan's government confirmed its fighter planes joined the US bomber patrol, which was clearly a show of force signaling China and Russia.

"We confirmed the strong resolve of Japan and the United States not to allow any unilateral change of the status quo by force, as well as the readiness of the Self-Defense Forces and the US military," Japan's Defense Ministry said in a statement.

The fresh exercise with the US Air Force was conducted in "an increasingly severe security environment surrounding our country" - it said.

The flight included a pair of US B-52 bombers, escorted by Japanese F-35 stealth fighters and three F-15 jets. Beijing had presented the prior, longer flight as routine and in accord with international law.

"We consider it a grave concern from the standpoint of Japan's security," Japan's Chief of Staff, Joint Staff General Hiroaki Uchikura, commented of the prior Chinese-Russian aerial patrol.

Chinese Foreign Ministry spokesperson Guo Jiakun responded dismissively, saying "The Japanese side has no need to make a fuss about nothing or to take this personally."

All of this is taking place as a carrier strike group is sailing close to Japan, and after weekend PLA drills saw monitoring Japanese planes come under radar lock. The US State Department has condemned this, saying "China's actions are not conducive to regional peace and stability."

Much of these tensions hearken back to Prime Minister Sanae Takaichi's words to parliament last month wherein she left open the possibility of Japan sending its military to defend Taiwan in the event of a Chinese invasion.

This refers to this NYT story (https://t.co/rdFRYttqF9) in which they reveal there now exists an "overmatch brief" at the Pentagon that details China vs US military power. The name says it all...

Apparently when a senior US official read the brief he “turned pale” as he realized… https://t.co/fJBKMKzR08

— Arnaud Bertrand (@RnaudBertrand) December 11, 2025

Amid economic and diplomatic retaliation, including on the tourism sector, Japan was hoping for more vocal help from the Trump administration while feeling Beijing's wrath, but alas it hasn't come in a political form. However, the US sending bombers for an 'exercise' does seem fairly muscular.

Tyler Durden Thu, 12/11/2025 - 12:00

Over 30 Kamikaze Drones Sent On Moscow Overnight, Shutting Down Airports

An overnight drone assault on Russia by Ukraine was particularly large, including dozens of drones sent on Moscow. The Russian defense ministry said it down 287 drones across the country, one of the highest single-night totals ever recorded in the war.

Among these were 32 Ukrainian long-range kamikaze drone inbound on Moscow, reportedly intercepted. The disruption of airspace around Moscow was enough to briefly shut down area hubs and cause the delay of some 200 flights, impacting at least four airports.

Prior drone attacks have hit buildings in the heart of Moscow, via AFP

In addition to the 32 drones "intercepted and shot down" which were directly targeting the capital city, at least 40 more were headed toward the broader Moscow region, the defense ministry noted.

Two fertilizer plants were also targeted in the western Novgorod and Smolensk regions. Fire resulted at one of these, the Acron mineral fertilizer plant, among Russia's largest chemical producers.

The drone assault was quite extended in time too, with authorities saying it lasted over a period of some eight hours. Large drone waves were reported in other regions as well:

• Bryansk region: 118 drones
• Moscow region: 40
• Kaluga region: 40

Russian media has presented the overnight operation as an act of desperation at a moment Zelensky is feeling the pressure from Washington, and as Ukraine forces are in retreat on the battlefield:

A senior Russian diplomat linked the surge in Ukrainian attacks to growing US pressure on Vladimir Zelensky to accept a peace deal with Russia that would require concessions that Kiev has so far refused to make. Several European NATO states, meanwhile, back Zelensky’s uncompromising stance. US President Donald Trump said this week that the Ukrainian leader “has to be realistic” about the situation and “start accepting things” his administration is offering.

Indeed Trump as a of a late Wednesday presser has not backed off his calls for Zelensky to quickly accept reality and sign a peace deal and prepare for elections.

Trump:

Zelensky has to be realistic.

I do wonder about how long is it gonna be until they have an election?

82% of the Ukrainian people demand a settlement be made. pic.twitter.com/spV5k2JZJY

— Clash Report (@clashreport) December 10, 2025

Zelensky has said that while he's "ready" to organize and hold elections, it has to be done under safety, and that the international community must step up and help ensure this happens. He said he's ready to within 60 days if his government and external backers can offer a viable plan. But is he just buying time and pacifying Trump?

There's a possibility his own parliament could, under pressure, come back and say that elections are not a practical reality at this point. Likely Kiev will demand that Russia observe a ceasefire in order for the elections to take place.

Tyler Durden Thu, 12/11/2025 - 11:25

Affordability Crisis: Challenging The Poverty Line

Authored by Michael Lebowtiz via RealInvestmentAdvice.com,

Michael Green, Chief Strategist and Portfolio Manager at Simplify Asset Management, wrote a provocative Substack essay, Part 1: My Life Is A Lie, that is sparking a debate among economists and raising awareness of the affordability crisis. It’s not just the wonky economists debating the merits of his article; The Washington Post, CNN (News Central), FOX Business (Charles Payne), and social media are also critiquing it.

Michael uses the official poverty line calculation and what he deems the “Mathematical Valley” to help his readers better appreciate why affordability is becoming a hot topic. 

The Poverty Line

Per Michael Green:

But there was one number I had somehow never interrogated. One number that I simply accepted, the way a child accepts gravity.

The poverty line.

I don’t know why. It seemed apolitical, an actuarial fact calculated by serious people in government offices. A line someone else drew decades ago that we use to define who is “poor,” who is “middle class,” and who deserves help. It was infrastructure—invisible, unquestioned, foundational.

This week, while trying to understand why the American middle class feels poorer each year despite healthy GDP growth and low unemployment, I came across a sentence buried in a research paper:

“The U.S. poverty line is calculated as three times the cost of a minimum food diet in 1963, adjusted for inflation.”

I read it again. Three times the minimum food budget.

I felt sick.

This article summarizes Michael Green’s perspective and opposing arguments regarding the poverty line. Bear in mind, as you read on, that there is no “right” poverty line. However, what Michael Green has successfully done is ignite a conversation about the large number of Americans who feel left behind economically and repeatedly raise affordability as a key political issue.

The 1963 Poverty Line Benchmark

Green’s analysis centers on the poverty line, which was established in the early 1960s by Mollie Orshansky. The original formula she developed was simple: take the cost of a basic basket of food for a family, multiply it by three (on the assumption that food accounted for about one-third of a household’s budget), and use that as the poverty threshold.

Her benchmark was then adjusted for inflation each year, but the underlying assumptions about household spending and needs haven’t been updated since. Per Green:

Orshansky’s food-times-three formula was crude, but as a crisis threshold—a measure of “too little”—it roughly corresponded to reality. A family spending one-third of its income on food would spend the other two-thirds on everything else, and those proportions more or less worked. Below that line, you were in genuine crisis. Above it, you had a fighting chance.

Notably, Green emphasizes that Orshansky’s poverty line served as a threshold. Those with incomes beneath this threshold were in crisis.

Orshanky’s Poverty Line Is Outdated

Green emphasizes the items we spend money on, and their costs compared to food prices have changed significantly since then. For example, he points out:

• Housing costs as a percentage of income rose significantly.

• Cell phones didn’t exist.

• Healthcare costs have become the most significant expense for most families.

• A second income became a necessity for many families after the formula was devised, leading to increased childcare expenses.

• He also notes rising college and transportation costs.

Simply, feeding a family no longer constitutes a third of total family budgets.  To wit, he states:

Housing now consumes 35 to 45 percent. Healthcare takes 15 to 25 percent. Childcare, for families with young children, can eat 20 to 40 percent.

Michael Green’s punchline:

Which means if you measured income inadequacy today the way Orshansky measured it in 1963, the threshold for a family of four wouldn’t be $31,200.

It would be somewhere between $130,000 and $150,000.

What does that tell you about the $31,200 line we still use?

It tells you we are measuring starvation.

Green’s Data Analysis

Green supports his theory with a basic family budget based on national averages. He applies it to a family earning the median household income of $80,000. The results, as we share below, cast significant doubt on the value of the current $31,200 poverty line. Furthermore, they argue that at least half of the nation is “living in deep poverty.” Per Green:

I wanted to see what would happen if I ignored the official stats and simply calculated the cost of existing. I built a Basic Needs budget for a family of four (two earners, two kids). No vacations, no Netflix, no luxury. Just the “Participation Tickets” required to hold a job and raise kids in 2024.

Using conservative, national-average data:

Childcare: $32,773

Housing: $23,267

Food: $14,717

Transportation: $14,828

Healthcare: $10,567

Other essentials: $21,857

Required net income: $118,009

Add federal, state, and FICA taxes of roughly $18,500, and you arrive at a required gross income of $136,500.

The graph below shows the cumulative price growth for $1,000 across many of the spending items Michael Green identifies above. As shown, except for transportation prices, all the others have significantly outpaced food prices. Thus, to Green’s point, a poverty line based on a steady price-consumption relationship for these goods and others in relation to food prices has become grossly ineffective.

Hedonics

Hedonics is a statistical method used by the BLS in the CPI report to distinguish pure price changes from changes in product quality and how those changes impact value.

For example, if a new laptop offers twice the performance at the same sticker price as an old one, hedonics treats that as a quality improvement and will record an effective price decline. Supporters say it prevents overstating inflation as products improve. In contrast, critics argue that it can understate inflation and relies on modeling choices that are impossible to validate.

Green is a critic. As we share below, he uses landline telephones and smartphones to make his point:

To function in 1955 society—to have a job, call a doctor, and be a citizen—you needed a telephone line. That “Participation Ticket” cost $5 a month.

Adjusted for standard inflation, that $5 should be $58 today.

But you cannot run a household in 2024 on a $58 landline. To function today—to factor authenticate your bank account, to answer work emails, to check your child’s school portal (which is now digital-only)—you need a smartphone plan and home broadband.

The cost of that “Participation Ticket” for a family of four is not $58. It’s $200 a month.

Green states that food prices, not hedonics, are the only primary factors used to compute the CPI for food. In his calculations, the rate of inflation across many other CPI items greatly exceeded the CPI’s reported rate, in part due to faulty hedonics.

Mathematical Valley

Michael Green introduces what he calls a “mathematical valley.” This idea illustrates a trap within the American economic system. The valley symbolizes the area where working families earn enough to lose government benefits but not enough to cover the actual cost of middle-class economic stability.

As families move from poverty into the lower middle class—usually earning between about $40,000 and $100,000—they lose access to safety net programs like food stamps, housing subsidies, or Medicaid. Still, their wages don’t keep up with the rising costs of housing, healthcare, childcare, and transportation. As a result, climbing the economic ladder can actually make families worse off financially because the loss of benefits outweighs the income gains.

This Valley creates a perverse incentive to stay poor or near-poor, traps millions in financial insecurity, and fuels widespread cynicism among the working poor who feel punished for trying to get ahead.

Green’s Summary

The Orshansky poverty line is based on the amount required to cover a minimum food budget times three. Since she developed her formula in 1963, the price of food has tracked below the broad CPI inflation rate. At the same time, many essential items have grown faster than food prices. To wit, food-at-home expenditures currently account for only 5 to 7 percent of spending, not the 33% assumed by Orshansky.

Therefore, because food prices are used as the basis for calculating the poverty line instead of a broader range of essential expenses, which have increased much more than food prices, the $31,200 poverty line is significantly understated. Additionally, the Mathematical Valley diminishes some incentives to earn more, thus resulting in affordability issues.

Arguing Against Green

While Michael Green makes a strong case that the poverty rate in this country is much higher than we think, and that affordability is becoming a hot topic, other opinions on Green’s article are worth considering. We summarize a few of them below.

• Child Care Costs Exaggerated: While childcare is costly, it isn’t part of most budgets once their children are past the age of four or five.

• Stuff is also cheaper: Green harps on things we buy that are more expensive, but some necessities, like clothing and electronics, are more affordable.

• Real incomes are rising. While a good argument, it raises questions about whether CPI is a good indicator of actual costs.

• What is the poverty line? To quote Alex Tabarrok of George Mason via the Washington Post: “He takes the poverty measure — and then turns it around and turns it into a middle-class measure,” Tabarrok said. “What do you need to be comfortable or thriving or middle class? Then, of course, you get a much bigger number. But to think that we today are living in some hellish landscape compared to our parents and even our grandparents is just a complete distortion of reality.”

Our Take- Summary

There isn’t a single inflation rate or poverty line. We live in a diverse country with many different regional economies. Also, families have unique needs and desires that can’t be summarized in one number. That said, no matter the poverty line, many American households are struggling.

Remember when Obama ran on “Change”? He was followed by Trump, who ran twice on a similar message. The economic system remains broken for many Americans, and they are voicing concerns about affordability in election polls and sentiment surveys. Look at the graph below. According to the University of Michigan, consumer sentiment is at its lowest point since at least 1960!

Of course, diagnosing the affordability problem and fixing it are two different things. But it’s hard to fix the problem without being aware of it. Hopefully, Michael Green’s article is raising enough debate and awareness on affordability to inspire action.

Tyler Durden Thu, 12/11/2025 - 11:05

 

 

Perhaps the most overlooked element in the “affordability hoax” is the president’s own role in it.

Before we get into the details, a few preliminary caveats. First, as COVID-19 ran wild, lockdowns were beginning, and a vaccine was still off in the future, there was genuine panic spreading through the government. A Hobson’s choice was presented: do nothing and watch the unemployment rate jump to 10-15%. Or, get cash into people’s hands, keep them at home, and watch an inflation spike the same amount.

It was a choice of the lesser of two evils, and I believe the president made the right choice in March of 2020. At least, as far as the first CARES Act was concerned. This was a nearly $2 trillion stimulus, the largest fiscal stimulus as a percentage of GDP since World War II.

Before you accuse me of hindsight bias, this was the conversation I had with Wharton Professor Jeremy Siegel in May 16, 2020 (transcript). Siegel was the first person to raise the inflation issue in real time, prior to the surges occurring.

“I think we’re going to have a huge spending boom next year and I think for the first time, and I know this is a sharp minority view here, for the first time in over two decades, we’re going to see inflation.”

-Prof Jeremy Siegel, May 16, 2020

At the time, no one was extrapolating the inflationary impact of the Covid fiscal stimulus – except Siegel. Note that May 2020 was three months into the pandemic, and still a full six months before the 2020 Presidential elections.

Like all complex issues, the inflationary surge was caused by numerous factors, starting with Covid-19 itself. Add Congress to both Presidents Trump (CARES Acts 1+2) and Biden (CARES Act 3) as key factors; Consumers who overspent without regard to cost and Corporate Greedflation; Some elements had been in place for decades: Just in Time Delivery (supply chains) and the shortage of new homes are good examples. The Russian Invasion of Ukraine didn’t help, nor did the wanton spending of Crypto wealth. But I stopped listing factors at 15, and I am sure there are more.

Why bring all of this up now?

Because “affordability” today is not a hoax; and to hear POTUS say such things while nobody mentions his responsibility in creating the worst inflationary surge in modern history is disingenuous.

And I will repeat my caveats here again (but I expect the worst kinds of partisan analysts to  ignore them):

There were no good choices, only less bad ones 10+% Unemployment versus 10+% Inflation were our options Most of us would prefer Inflation over Unemployment.

I asked people during the surge which they would have preferred, and it was no contest.

Note this academic paper (“Economic Discomfort and Consumer Sentiment“) found people disliked unemployment twice as much as they disliked inflation; this paper (“The Happiness Trade-Off between Unemployment and Inflation“) found unemployment was disliked five times as much as inflation in Europe.

Which brings us back to Siegel, who saw all of this coming in real time:

“But with this liquidity in the economy, I expect moderate inflation, not — I’m not talking about hyperinflation. And so, I’m nowhere near that. I expect inflation to move up next year to two, three, four percent, five percent and maybe run again in 2022 the same way.

So, cumulatively, I expect inflation may be to go up — the price level, consumer price level go up 10, 12 percent over the next few years, maybe 15.”

-Prof Jeremy Siegel, May 16, 2020

The Inflation surge was visible to anyone looking at the impact of the single largest fiscal stimulus since World War 2. The point of all this is simply that we should be honest about what happened then, and transparent about the impact of the pandemic on higher prices today.

Higher prices are not a hoax; there is lots of blame to go around — including President Trump during his first term. He made the right choice of the lesser of two evils.

 

 

Previously:
MiB: Jeremy Siegel on the Covid Stock Market (June 20, 2020)

Who Is to Blame for Inflation, 1-15 (June 28, 2022)

Which is Worse: Inflation or Unemployment? (November 21, 2022)

A Dozen Contrarian Thoughts About Inflation (July 13, 2023)

The Least Bad Choice (September 28, 2023)

Revisiting Greedflation (November 16, 2023)

Inflation is Obvious But Wage Gains Seem Invisible (June 27, 2024)

 

The post Whose Inflation Is This? appeared first on The Big Picture.

A new measure of poverty that accounts for health care needs and resources being developed by the U.S. Census Bureau—the Health Inclusive Poverty Measure (HIPM)—shows that poverty affects even more people in the U.S. than the typical statistics estimate. This is particularly true for people of color. This is primarily a function of the limited access to health insurance that Black and Hispanic communities endure. Black and Hispanic individuals, for example, are more likely than peers to be uninsured and to rely on Medicaid for coverage. This is why we warned about the uneven impact of cuts to the program early this year.

Policymakers are currently debating the merits surrounding the Affordable Care Act (ACA) marketplace subsidies that help more than 20 million people afford health insurance and kept nearly 2 million people out of poverty in 2024. These subsidies were introduced through the American Rescue Plan and extended through the Inflation Reduction Act; they increase the accessibility of health insurance by subsidizing the amount eligible individuals pay for the “benchmark”—i.e., the second-lowest tier plan on a sliding scale with income—such that most individuals making near-poverty wages can access these plans for free.

Allowing the ACA premium enhanced tax subsidies to expire will increase health inclusive poverty across groups, but the impact will be felt most heavily by those for whom accessing health insurance was already precarious. These households are disproportionately Black, brown, and working class because those households sit at the margin of health insurance affordability under normal circumstances and have seen the largest increases in insurance rates during the period when the enhanced tax credits have been available.

Communities of color trying to obtain health coverage now face attacks on two fronts. The more economically vulnerable among them face a more financially constrained Medicaid program with more stringent work requirements, purposefully meant to reduce access to health care. And those fortunate enough to afford care via the ACA marketplace now face the rising prospect of being priced out of coverage if the credits are allowed to expire this month. If the subsidies are allowed to expire, those who previously had free access to the benchmark ACA plans would lose it. The poorest eligible families would see the largest percentage increase in their annual health insurance premiums, while families with higher incomes would experience a higher dollar amount increase.

The end result of this two-pronged attack on public health, not to mention the dismantling of the country’s public health infrastructure that the Trump-Vance administration has carefully orchestrated since coming into office, will be an increase in the number of uninsured individuals, higher economic insecurity for families who need health care but can’t afford coverage, and increased poverty. These forces, as we illustrate below, will affect people of color unevenly.

Health inclusive poverty reveals deeper economic pain than monetary poverty—the attack on Medicaid and health subsidies will make things worse

More than 50 million people struggled with health inclusive poverty last year. This means more than one in seven (14.8%) individuals grappled with economic insecurity because they lack the resources to meet their health and broader needs (see Figure A). 

Figure A

The HIPM produced by the U.S. Census Bureau researchers broadens the basket of goods and services that families need to maintain an adequate standard of living beyond the two measures of poverty that the Bureau publishes annually. These two measures include the Official Poverty Measure (OPM) and the Supplemental Poverty Measure (SPM). While the SPM goes further than the OPM to account for geographic differences in housing costs, tax credits, and government benefits (like SNAP), it doesn’t incorporate health care benefits, subsidies, and expenses like the HIPM. The HIPM therefore enables us to examine the extent to which access to health insurance and key health care subsidies impact the standard of living of individuals and families.

As observed in Figure A, health inclusive poverty has exceeded monetary poverty in the U.S. for the greater part of the last decade. Last year, for example, the prevalence of health inclusive poverty was more than 4 percentage points higher than the incidence of poverty measured by the OPM, and about 2 percentage points higher than the SPM. Access to health insurance serves as a key driver of the differences we observe between estimates of monetary and health inclusive poverty. This is because uninsured individuals have zero health insurance resources to offset the health care needs that the health inclusive measure of poverty introduces to the original poverty thresholds under the SPM.

Recent policy choices under the Turmp-Vance administration are likely to further widen the gap between these measures. The Republican Budget Reconciliation bill is projected to increase the number of uninsured individuals by more than 10 million in the years ahead, and the expiration of health care subsidies under the Affordable Care Act marketplace will quadruple the average net premiums for the more economically vulnerable and increase the number of uninsured individuals by nearly 5 million in 2026.

In 2024 alone, Medicaid kept about 15 million people out of poverty and health care subsidies that made health insurance more affordable for people in the ACA marketplace kept nearly 2 million people out of poverty. Without these support systems, about 17 more million people would have fallen below the poverty line in 2024, pushing the poverty rate from 14.8% to around 19.8%.

Health inclusive poverty affects people of color disproportionately

Black, Hispanic, and American Indian and Alaska Native (AIAN) individuals are more than twice as likely as their white peers to face economic hardship due to insufficient resources to meet their health and material needs. Last year, more than one in five Black, Hispanic, and AIAN people fell below the health inclusive poverty line (see Figure B).

Figure B

While the prevalence of health inclusive poverty exceeds that of monetary poverty for all racial and ethnic groups, the divide is starkest for Black, Hispanic, and AIAN individuals (as shown in Figure B). Compared with their non-Hispanic white peers, the percentage point difference between health and monetary poverty is more than twice as large for Black individuals and more than five times as large for Hispanic and AIAN individuals. These disparities are driven by unequal access to health insurance, as the uninsured rate is highest for Hispanic, AIAN, and Black individuals. More than one in six Hispanic and AIAN people, for example, lack access to health insurance. These groups are more than three times as likely as their white peers to lack access to health insurance. Slightly narrower, but just as harmful, disparities affect Black individuals. In 2024, more than 3.5 million Black people struggled without access to health insurance.

Statistically meaningful differences between both poverty measures are largest in Southern states, where communities of color make up a relatively larger share of the population. States where social and economic policy have historically been rooted in racism are also less likely to have expanded access to Medicaid. Census researchers find that states with expanded access to Medicaid coverage have health inclusive poverty estimates that are more than 2 percentage points lower than states without expanded access.

Black and brown people, as well as the working class and uninsured, skip or postpone needed health care due to cost

The U.S. health care system is designed such that access to adequate and timely care is based on a person’s ability to pay and often based on whether they are employed. Access to health insurance mediates access to health care, and employment is a major mediating factor for access to both health insurance and the income necessary to pay any out-of-pocket costs associated with care. In greed-driven health care systems like ours, poorer workers and their families often forgo or delay treatment that could improve or extend their lives because they can’t afford it.

Black and brown households are more likely to be uninsured, to report difficulties with reporting health care costs, and to report skipping or postponing needed health care within the past year than their white and Asian counterparts. Lack of access to adequate and timely care has long-term economic and health implications for Black and brown families and communities. Policies that threaten the already tenuous connection that marginalized groups have to the health care system, e.g., allowing the ACA premium tax credits to expire and restricting access to Medicaid, will contribute to the persistence of economic and health inequities across race and class.

HIPM underscores the economic and public policy imperative of expanding health care access to prevent poverty

The HIPM captures the impact of overlapping economic and public health policies—or lack of effective policies—on households’ exposure to poverty. It shows how policies like Medicare, Medicaid, and expansions to the Affordable Care Act protect families from financial distress and uncertainty. Racial and geographic differences in the HIPM highlight the variation in adequacy different groups experience across our patchwork health care system. It also helps us identify the impact that recent and ongoing policy choices will have on public health and equity.

The federal cuts to Medicaid that President Trump signed into law this summer, as well as the potential expiration of ACA health insurance subsidies, will disproportionately impact communities of color. Cuts to Medicaid will hurt Black and Hispanic adults and children most, as they are more likely than their peers to rely on Medicaid and CHIP for health insurance. The potential expiration of ACA subsidies will undoubtedly compound health inequities, pushing more than 2 million people of color into ranks of the uninsured. With both private and public options for health insurance falling further out of reach for the most disadvantaged, the administration’s attack on the country’s public health infrastructure will worsen health outcomes, widen disparities, and deepen the growing economic vulnerability of families struggling under Trump’s affordability crisis.

An "Existential Crisis" To Close 2025

By Michael Every of Rabobank

The Fed delivered what was expected – a 25bps rate cut to 3.75% and a deep public split over whether it should cut further because the labor market is weakening or keep policy tight because inflation is too high. The Fed will also buy $40bn of T-Bills just after stopping QT, but this is not to be seen as QE, nor as having any impact on monetary policy - and QE was a neutral “asset swap”, not a balance sheet expansion that juiced asset prices. See here for the take of our US Strategist Philip Marey, who concludes that as Trump takes a firmer grip of the Fed ahead, rates are likely to fall more than some expect.

The ECB’s Lagarde spoke of “Europe's existential crisis” and didn’t think the level of ECB rates could do anything about it. She underlined estimates that internal trade barriers due to national regulations on top of the EU’s own amount to an effective tariff of 110% on services and 60% on goods traded between member states. “Everybody wants to sugarcoat, gold-plate and do just a bit more,” yet on reforms, “There will be pushback from multiple corners… from people who say: ‘We’re very happy in our corner of Europe, leave us alone.’” (As ‘Teresa Ribera is ‘not interested in competition,’ complains jilted Brussels bubble’ – but that didn’t stop the EU from just raiding China’s Temu over a foreign subsidy allegation.) Lagarde underlined the need for a transformative capital markets union and joint Eurobonds for defence funding, seeing this as opportunity.

The BoC left rates on hold at 2.25% and seems to think it’s done, yet admitted it‘s difficult to “assess the underlying momentum of the economy,” given US tariffs’ impact over time. See here for more from Molly Schwartz.

The RBA, hawkish on Tuesday, prompting market chatter of rate hikes in 2026, will look at the jobs numbers today (-21.3K vs +20K expected) and perhaps rethink. But what of asset prices as the AFR notes, ‘Why this mum bought her 11-year-old son a townhouse.’ Only one? Tsk!

Today, BoE Governor Bailey will testify to Parliament’s Covid Inquiry. Will we see questions about the Bank’s response, e.g., why didn’t it use macroprudential measures on mortgage lending at the same time as deep rate cuts and massive QE? There are key lessons to be learned for when the next, inevitable ‘nobody saw it coming’ crisis hits - will central banks have a clearer idea of what they are *for* by then?

Meanwhile, as so often reiterated here, the backdrop against which all central banks pretend to know what they’re doing is getting increasingly unpredictable.

In geoeconomics, Mexico imposed 50% tariffs on China and other Asian economies –exactly the Trump Plan we predicted: next, Canada(?) Against that backdrop, the USTR said he seeks a “constructive” reset on trade with China, which launched a satellite super factory to rival Starlink and added domestic AI chips to its official procurement list for the first time. However, Ford suppliers received China's new streamlined rare-earth licenses - but German automakers were notably excluded so far. Indonesia is resisting US trade demands on critical minerals and energy it sees risking its relations with China and Russia. On the other hand, India reportedly offered the US its ‘best-ever’ deal, as D.C. pushes farm access in trade negotiations, as the US Soybean association president meanwhile stated that Trump’s farm aid plan for them is “A band-aid on an open wound.” The UK’s PM also told Parliament that a return to the EU customs union would “unravel” new UK trade deals: yes, some things are zero sum. Trade can be one of them.

In geopolitics, US Representative Massie has introduced a bill to pull America out of NATO, which speaks to the times if not its likelihood of passage. It’s nonetheless noted that Trump’s recent verbal attacks on Europe will force it to speed up post-America defence plans, with belated recognition that the era of America’s “security guarantee” for Europe is over. It seems Europe will have to pay much more than it has budgeted for the military by 2035, and a lot sooner. That’s as a report suggested a parallel US National Security Strategy to split up the EU and establish a new global “C5” of the US, China, Russia, India, and Japan, leaving Europe out of the power loop.

Germany’s Chancellor Merz nonetheless underlined he still wants the US as partner, and if Trump "can't make sense of this institution or the structure of the EU," the US can still cooperate with member states, and “Germany is, of course, first and foremost one of them.” Divide et impera.

Regardless, the EU is pressing harder for the passage of its €210bn Ukraine loan scheme, which Lagarde says is now the “closest” to being legal so far - is that something compliance officers like hearing? She added the new version should reassure investors it “does not amount to confiscation” - but as this money is clearly not going to be given back to Russia, it’s unclear how. Indeed, Belgium is demanding an extra cash buffer as wergild against expected Russian retaliation against it and Euroclear. And that’s presuming retaliation stays in that dimension – the FT reports on fears of a wider Russian campaign of sabotage to infrastructure and businesses ahead, which potentially comes with its own cost in terms of lower growth and higher inflation.

Muddying the waters for the EU in terms of its desire to adhere to global institutions, the International Court of Justice granted Russia’s counterclaim in a genocide case vs Kyiv. The potential implication, according to some, is that any warfare can be genocide if civilians are involved. Elsewhere, the US threatened to sanction the International Criminal Court unless it promises not to prosecute President Trump.

In Latin America, the US seized an Iranian oil tanker off the coast of Venezuela after smuggling Nobel peace prize laureate Machado out of the country: she called for democracies to “fight for freedom,” which may not be metaphorical. In Brazil, a bill that could reduce ex-President Bolsonaro’s prison time has advanced in Congress. In Bolivia, leftist ex-president Arce was just arrested for corruption a month after leaving office. And China pledged foreign aid to the region with no “political conditions” – it seems the Western Hemisphere may be ideologically, if not physically, contested.

In the Indo-Pacific, China says it seeks a “fair and just maritime order” in the South China Sea, which it claims; the ongoing Japan-China spat is seen as having no off-ramp; a Telegraph report claims China’s hypersonic missiles would destroy the US Navy in a fight over Taiwan - as the US Navy Secretary called for a “wartime footing” in US weapons production; and Thailand-Cambodia border fighting rages on as Trump signals he might try to intervene.

In the Middle East, there are reports of a build-up of US military jets heading towards the Middle East, as others say Iran has started mass production of ballistic missiles again. Trump will also delay unveiling his Gaza Board of Peace members until 2026, and it’s reported that the US is weighing hitting the UN Palestinian refugee agency UNWRA with terrorism-related sanctions.

If you think that’s too much information to fit into a Global Daily, try writing it(!) Moreover, consider this is just one day, in one week, in one month, in what has been a non-stop year for wild news headlines. 2026 doesn’t look like it’s going to get any easier. Quite the opposite, in fact.

You might not see it all as an existential crisis, just a ‘volatile trading backdrop’, but trying to keep up with just that part for readers can certainly prompt one for those who try!

Tyler Durden Thu, 12/11/2025 - 10:25

TIME Person Of The Year Are The Architects Of AI

TIME magazine has picked the 'Architects of AI' as their person of the year for 2025, when the potential for AI "roared into view" with no turning back.

"For delivering the age of thinking machines, for wowing and worrying humanity, for transforming the present and transcending the possible, the Architects of AI are TIME’s 2025 Person of the Year," the magazine announced. 

2025 was the year when artificial intelligence’s full potential roared into view, and when it became clear that there will be no turning back.

For delivering the age of thinking machines, for wowing and worrying humanity, for transforming the present and transcending the… pic.twitter.com/mEIKRiZfLo

— TIME (@TIME) December 11, 2025

Whether you use it or not, AI has dominated headlines all year. On one hand, AI has proven useful in an increasing number of applications. On the other, it's potentially rotting our brains. What's hilarious is that less than 6 months ago, TIME published a piece titled "ChatGPT May Be Eroding Critical Thinking Skills, According to a New MIT Study." 

In it, MIT researchers found that "the usage of LLMs could actually harm learning, especially for younger users."

"What really motivated me to put it out now before waiting for a full peer review is that I am afraid in 6-8 months, there will be some policymaker who decides, ‘let’s do GPT kindergarten.’ I think that would be absolutely bad and detrimental," said the paper’s main author Nataliya Kosmyna. 

Then there's 'vibe coding' - where 'programmers' simply ask an AI to write code for them instead of programming it manually, and of course, you can't scroll Facebook now (why would you?) without running into mountains of 'AI slop' - which spans everything from fake scientific journals to brain-rotting videos seemingly designed to pull western society's average IQ into double-digits. 

McDonald's has unveiled its own AI-generated Christmas ad that somehow looks even worse than Coca-Cola's.

Terrible AI visuals? Check. Horrible messaging? Check. A like-to-dislike ratio that says it all? Oh, you better believe that's a check:https://t.co/XQHnVLoG5T pic.twitter.com/Vestu3uNJS

— 80 LEVEL (@80Level) December 8, 2025

In 2023, Elon Musk called AI one of humanity's "biggest threats," which is why he says he set off to create a "politically neutral" and "maximally truth-seeking" chatbot (Grok) with the aim of minimal bias. 

Maximally truth-seeking is absolutely essential to ensuring a good AI future for humanity https://t.co/6QnWy3v1AB

— Elon Musk (@elonmusk) July 25, 2025

"AI is more dangerous than, say, mismanaged aircraft design or production maintenance or bad car production, in the sense that it is, it has the potential — however small one may regard that probability, but it is non-trivial - it has the potential of civilization destruction," Musk told Tucker Carlson. "A regulatory agency needs to start with a group that initially seeks insight into AI, then solicits opinion from industry, and then has proposed rule-making." 

According to TIME, "It was hard to read or watch anything without being confronted with news about the rapid advancement of a technology and the people driving it. Those stories unleashed a million debates about how disruptive AI would be for our lives. No business leader could talk about the future without invoking the impact of this technological revolution. No parent or teacher could ignore how their teenager or student was using it." 

"Every industry needs it, every company uses it, and every nation needs to build it," Nvidia CEO Jensen Huang told the outlet. "This is the single most impactful technology of our time."

Indeed.

Tyler Durden Thu, 12/11/2025 - 10:05

The Census Bureau released the Residential Vacancies and Homeownership report for Q3 2025 today.

The results of this survey were significantly distorted by the pandemic in 2020.
This report is frequently mentioned by analysts and the media to track household formation, the homeownership rate, and the homeowner and rental vacancy rates.  However, there are serious questions about the accuracy of this survey.

This survey might show the trend, but I wouldn't rely on the absolute numbers. Analysts probably shouldn't use the HVS to estimate the excess vacant supply or household formation, or rely on the homeownership rate, except as a guide to the trend.

National vacancy rates in the third quarter 2025 were 7.1 percent for rental housing and 1.2 percent for homeowner housing. The rental vacancy rate was not statistically different from the rate in the third quarter 2024 (6.9 percent) and not statistically different from the rate in the second quarter 2025 (7.0 percent).

The homeowner vacancy rate of 1.2 percent was higher than the rate in the third quarter 2024 (1.0 percent) and higher than the rate in the second quarter 2025 (1.1 percent).

The homeownership rate of 65.3 percent was not statistically different from the rate in the third quarter 2024 (65.6 percent) and not statistically different than the rate in the second quarter 2025 (65.0 percent).
emphasis added

Click on graph for larger image.

The Red dots are the decennial Census homeownership rates for April 1st, 1990, 2000, 2010, and 2020. 

The HVS homeownership rate was increased to 65.3% in Q3, from 65.0% in Q2.  
The results in Q2 and Q3 2020 were distorted by the pandemic and should be ignored.

The HVS homeowner vacancy increased to 1.2% in Q3 from 1.1% in Q2.

The homeowner vacancy rate declined sharply during the pandemic and includes homes that are vacant and for sale (so this mirrors the increasing levels of existing home inventory).
Once again - this probably shows the general trend, but I wouldn't rely on the absolute numbers.


The rental vacancy rate increased to 7.1% in Q3 from 7.0% in Q2.  This is up from the low of 5.6% in 2021 and 2022.

The quarterly HVS is the timeliest survey on households, but there are many questions about the accuracy of this survey.

Disney Invests $1 Billion In OpenAI, Strikes Landmark Deal To Bring Beloved Characters To Sora

Disney and OpenAI have resolved their prior video-generation rights dispute by entering into a three-year licensing and technology partnership that makes Disney the first major content partner for Sora, OpenAI's generative video platform.

"As part of this new, three-year licensing agreement, Sora will be able to generate short, user-prompted social videos that can be viewed and shared by fans, drawing from a set of more than 200 animated, masked and creature characters from Disney, Marvel, Pixar and Star Wars, including costumes, props, vehicles, and iconic environments," Disney wrote in a press release.

As part of the agreement, Disney will invest $1 billion in OpenAI and receive warrants for additional equity.

Disney will feature a curated selection of fan-generated Sora videos on Disney+, and both companies will collaborate to develop innovative AI products and enhance experiences across Disney's platforms.

In addition to enhancing the user experience with AI, Disney will adopt OpenAI tools for employees and use OpenAI APIs to build new internal and consumer-facing applications. So does that mean a restructuring of coders at the studio is just ahead?

"Technological innovation has continually shaped the evolution of entertainment, bringing with it new ways to create and share great stories with the world," Disney CEO Robert Iger wrote in a press release.

Iger continued, "The rapid advancement of artificial intelligence marks an important moment for our industry, and through this collaboration with OpenAI we will thoughtfully and responsibly extend the reach of our storytelling through generative AI, while respecting and protecting creators and their works."

He noted, "Bringing together Disney's iconic stories and characters with OpenAI's groundbreaking technology puts imagination and creativity directly into the hands of Disney fans in ways we've never seen before, giving them richer and more personal ways to connect with the Disney characters and stories they love."

So the OpenAI / $dis deal is a licensing deal where $dis invests $1bn?

I imagine they are going to collect more than $1bn in licensing fees

The game continues pic.twitter.com/a2zbKX6pu4

— Sterling Capital (@jay_21_) December 11, 2025

Disney shares are up 2% in early trading. Year-to-date, the stock is down 2% and has been trading sideways since its peak in early 2021.

The resolution follows Disney and other major studios raising serious concerns about the unlicensed use of their characters in early Sora-generated videos. Disney has found a solution. Will other studios follow?

Tyler Durden Thu, 12/11/2025 - 09:50

This is part 2 of a two-part series analyzing the impact of an amendment to the House Homeland appropriations bill on the H-2A and H-2B visa programs. Read part 1 here.

Key takeaways:

• The government funding bill for the Department of Homeland Security (DHS) may include a rider amendment that would establish a new methodology for setting the H-2B visa program’s annual numerical limit. This amendment (originally known as Amendment #1 but later dubbed the Bipartisan Visa En Bloc amendment) would result in a cap of at least 252,000 visas in fiscal year (FY) 2026.
• H-2B visa extensions and job changes are not counted against the annual cap, but after adding them to the updated cap of 252,000, the total number of H-2B workers employed in FY 2026 would be 282,000, which is almost 113,000 greater than the total number of workers in 2024 and 2025.
• The rider would move 12,000 H-2B workers employed at carnivals, traveling fairs, and circuses to the P visa, which lacks any numerical limit on the number of visas, further expanding the number of exploitable workers in H-2B industries.
• The rider would restrict the already limited ability of H-2A and H-2B workers to change employers, leaving them more exploitable and vulnerable to workplace violations.
• This amendment in Congress would mainly benefit employers by allowing them to gradually hire an exponentially higher number of workers they can control, while undercutting labor standards for all workers.

In part 1 of this two-part blog post series, I provided background and discussion on a rider amendment that the Homeland Security subcommittee of the House Appropriations Committee proposed and passed over the summer. Originally known as Amendment #1 but later dubbed the Bipartisan Visa En Bloc amendment, it would make major changes to the H-2A and H-2B visa programs through the appropriations process, while completely circumventing the committees that should have subject matter jurisdiction in the House and Senate. Part 1 focuses on the changes and impacts in the H-2A program; this post will briefly explain the components of the rider that would make changes to the H-2B visa program and the impact of those changes, as well as one change that would affect both programs.

The H-2B program has been expanded through appropriations riders every year since fiscal year 2016

Two of my previous reports provide a fuller explanation of the background on the size of the H-2B program and a history of the legislative riders in appropriations bills that have been used to expand the size of the H-2B program. A quick recap here is warranted. In fiscal year 2016, Congress authorized a “returning worker” exemption through appropriations legislation to fund the operation of the U.S. government. The legislation exempted H-2B workers from the annual H-2B cap of 66,000 that is set in law, for fiscal year 2016, if the workers hired were previously in H-2B status in any of the preceding three fiscal years. There was no cap on the number of returning H-2B workers under the exemption.

In each year since FY 2017, Congress has, through appropriations riders, given the executive branch the discretionary legal authority to roughly double the number of H-2B visas available. Rather than specify the level of increase for the H-2B program, appropriators have passed the buck instead to the executive branch—perhaps because they didn’t want the responsibility or criticism that may come from setting a specific number—by directing the U.S. Department of Homeland Security, in consultation with the U.S. Department of Labor (DOL), to determine how many additional H-2B visas are appropriate, if any. DHS has interpreted the rider language as allowing them to issue up to 64,716 “supplemental” visas in the corresponding fiscal year. In total, it has been 10 years (FY 2016–2025) since Congress first permitted increases to the size of the H-2B program through an appropriations rider. The Biden administration in 2023, 2024, and 2025 used the full authority granted to the executive branch in the legislative riders, raising the total H-2B annual limit to 130,716.

The appropriations rider would create a new methodology to expand the H-2B cap by at least 100,000

The rider takes a different approach to allowing a higher number of H-2B visas to be issued in FY 2026. The language of the amendment states that for every employer who has had any H-2B positions certified in the past five fiscal years (2021–2025), the highest number that they had certified in those years will be the number of H-2B workers they may hire who will not count against the annual cap of 66,000. In other words, if an employer had 10 jobs certified in 2021, 15 in 2022, 20 in 2023, 100 in 2024, and 50 in 2025, they would be allowed to hire 100 H-2B workers in 2026 without them counting against the 66,000 cap.

To calculate how many workers could be hired in 2026 under this formula, a colleague and I matched employer records from DOL and identified the employers who had at least one approved H-2B job in each of the years between 2020 to 2024. (Full year data for 2025 were not available at the time of writing, so 2020–2024 are used as a proxy.) Altogether, 186,342 H-2B workers would have been exempted from the annual cap under this formula. This is almost certainly a low-end estimate because the number of H-2B jobs certified in 2020 was lower than normal because of the bureaucratic shutdowns and slowdowns caused by the start of the COVID-19 pandemic.

Table 1 shows an estimate for 2020–2024 that serves as a proxy for our estimate on the number of new H-2B workers who will be exempted from the cap in 2026 and also lists the number of new H-2B workers who will be permitted under the regular annual cap of 66,000. Altogether, the regular cap plus the supplemental cap for H-2B in 2026 would permit at least 252,342 new workers if the language in the rider becomes law. That’s an increase of almost 100%, relative to the total cap in 2023–2025, and a 282% increase, relative to the original H-2B cap of 66,000.

It’s also important to note that the annual caps and total number of workers will grow exponentially in the following years after 2026 if Congress reauthorizes the same language in the rider year after year, as they’ve done with past H-2B riders. This will occur because employers will have an incentive to apply to DOL for labor certification for as many H-2B jobs as possible because that will increase the size of their exemption from the cap for the following year.

Table 1 Total number of H-2B workers would reach 282,000 in 2026 if the rider becomes law

In a recent report, I showed that in 2024, when 64,716 supplemental H-2B visas were added to the statutory cap of 66,000, for a total cap of 130,716, there were a total of 169,177 H-2B workers. This was up from 75,122 total H-2B workers just a decade earlier. The nearly 170,000 total in 2024 included 139,541 H-2B workers with newly issued visas from the State Department, and 4,580 H-2B workers who had their employment extended with the same employer. An additional 25,056 were H-2B workers who changed employers. Workers who extend their H-2B status or change jobs are not counted against the annual cap. (In 2025 the cap was identical to the previous year; thus, final numbers for 2025 are likely to be very similar to 2024.)

To get a better sense of the total number of H-2B workers who would be employed in 2026 if the rider became law, I estimated that the same number of workers who extended their status or changed jobs in 2024 would also do so in 2026, and added that total to the 2026 total cap that would result from the rider. This is illustrated in Figure A, which shows the total number of H-2B workers from 2017 to 2024, and projections for 2025 and 2026. The annual cap plus the supplemental cap, together with H-2B extensions and job changes, will result in nearly 282,000 H-2B workers being employed in 2026—almost 113,000 more workers than were employed in 2024 and 2025.

Figure A The rider would move 12,000 H-2B jobs to the P visa, which is not administered by the Department of Labor

The other notable change in the rider when it comes to the H-2B program is that H-2B workers employed at carnivals, traveling fairs, and circuses would be moved to the P visa program. According to DOL, in FY 2024 there were 12,398 H-2B jobs certified in the “Amusement and Recreation Attendants” occupation, which is the relevant occupation that would be moved to the P visa. There would be no annual cap on the number of amusement and carnival workers who could be employed in the P visa program.

At present, the P visa is a little-known program intended for use by professional athletes and coaches, members of an internationally recognized entertainment group, or persons performing under a reciprocal exchange program or as part of a culturally unique program. At present, the P visa program has no wage rules or worker protections and is administered exclusively by DHS, which has no staff or expertise on worker rights. This is extremely troubling, given that H-2B workers employed at carnivals and traveling fairs work grueling hours and in terrible conditions, making them some of the most exploited H-2B workers—as advocacy groups have pointed out. These workers are often paid below the minimum wage and are not paid for overtime hours. Yet DOL would no longer have any formal oversight role to ensure they are protected.

The rider language says that employers hiring H-2B carnival workers through the P visa “shall be subject to the same program requirements” of the H-2B program, which are administered by DOL. It also directs DHS and DOL to each separately publish regulations to implement H-2B carnival workers being moved to the P visa program within 180 days and finalize them within one year.

The legislators who support this amendment have provided no explanation or rationale for why it makes sense to create an entirely new process and set of regulations to move one of the biggest H-2B occupations from DOL into DHS—an agency that will be given primary responsibility over the P visa and protecting carnival workers, but which has no mandate or expertise on labor standards and employment laws. The most obvious explanation is that this legislative maneuver is simply a new way to expand the H-2B cap even beyond 252,000, in a way that gives carnival employers an unlimited supply of workers who can be exploited and underpaid. It also seems absurd to put a low-paid traveling carnival worker into the same visa category—where there’s no labor oversight—as a professional baseball player coming from abroad to sign a multimillion-dollar contract with a major league team, or a world-famous singer, dancer, or painter.

House Homeland Security appropriations rider would defund the H-2 modernization rule, restricting the ability of H-2 workers to change jobs and leave abusive employment situations

One other notable section in the rider that impacts both the H-2A and H-2B programs would prohibit DHS from spending funds to implement a regulation that took effect in January 2024—often referred to as the H-2 modernization rule. The rule, among other things, requires additional scrutiny of applications from employers that have violated the law, makes it easier for H-2 workers to be eligible for green cards through existing pathways, and expands the ability of H-2A and H-2B workers to change employers (this is referred to as visa “portability”), making it easier to leave an abusive employment situation. The regulation is far from perfect. As EPI and other advocates have pointed out, the portability provisions require additional measures to make visa portability a more practical reality, rather than just a right that exists on paper and one that can be hijacked by employers seeking to circumvent the annual cap.

Nevertheless, these three provisions in the H-2 modernization rule can undoubtedly help some workers, reducing the indentured nature of the visa programs by tilting the balance of power ever so slightly in the direction of workers. And that’s likely the exact reason that the employers and legislators pushing for the rider included this provision to defund the rule.

The H-2B program needs reforms to improve labor protections and provide H-2B workers with a pathway to citizenship

The appropriations committees in the House and Senate should not continue using parliamentary tactics to make changes to the H-2B program that would likely not pass in Congress through regular order. Instead, Congress should work with the executive branch to reform the H-2B program in the following ways: 

• ensure U.S. workers are considered for open temporary and seasonal jobs 
• craft updated wage rules that protect U.S. wage standards for all workers in H-2B industries
• provide migrant workers with new protections and allow them to more easily change jobs
• provide migrant workers with a quick path to a green card and citizenship
• prohibit lawbreaking employers from hiring through the H-2B program

As EPI and other advocates have long said, these genuine reforms are the only way to ensure that the workers playing vital roles in the U.S. economy are not being exploited and underpaid and that their employers are not able to use visa programs as an employment law loophole that ultimately erodes job quality for all.

 

Australia's Social Media Ban For Under-16s Comes Into Effect

Authored by Victoria Friedman via The Epoch Times (emphasis ours),

A social media ban for those younger than 16 in Australia came into effect on Dec. 10, with Australian Prime Minister Anthony Albanese hailing the world’s first restriction of its kind as giving children back their childhoods.

Three 11-year-old boys use their phones while sitting outside a school in Sydney on Dec. 8, 2025. Rick RycroftAP Photo

As of Dec. 10, according to the Online Safety Amendment (Social Media Minimum Age) Act, social media platforms must stop under-16s in Australia from signing up for accounts and must begin phasing out existing accounts for underage children.

Facebook, Instagram, Kick, Reddit, Snapchat, Threads, TikTok, Twitch, X, and YouTube are now age-restricted platforms in Australia. These platforms are expected to take “reasonable steps” to prevent those younger than age 16 in the country from having or signing up for accounts, according to the Australian eSafety Commissioner website.

Companies failing in this regard face fines of up to AU$49.5 million (US$32.9 million).

The restrictions were brought in amid concerns over mental health, online harms, and screen addiction affecting Australian children.

“Enforcing a minimum account age of 16 will create normative change and give young people a reprieve from powerful and persuasive design features built to keep them hooked, often enabling harmful content and conduct online,” Australian eSafety Commissioner Julie Inman Grant said in a statement on Dec. 10.

She said that although no single measure is a “silver bullet,” the restrictions are part of a holistic approach that includes education and outreach.

The eSafety Commissioner website states that platforms must use measures for age verification that respect privacy laws and digital rights, suggesting that platforms use “age-related signals” to work out whether someone is underage, such as how long an account has been active, analysis of the user’s language level, and behavioral and interaction signals.

The website states that people who do have to prove their identity will not be forced to use a government ID, saying that the Social Media Minimum Age legislation “specifically prohibits platforms from compelling Australians to provide a government-issued ID or use an Australian Government accredited digital ID service to prove their age.” Platforms may offer it as an option but must also offer a reasonable alternative.

Global Issue

“This is the day when Australian families are taking back power from these big tech companies, and they’re asserting the right of kids to be kids and for parents to have greater peace of mind,” Albanese told ABC News Australia on Dec. 10.

When asked what advice he can give to parents and children concerned about the impact of the loss of social media profiles, the prime minister said families need to have that discussion and talk these issues through.

“We understand that this is going to be difficult,” Albanese said. “But it is so important that young people are given the opportunity to actually grow as young humans and to differentiate, as well, between what is real in human interactions and what they can often be exposed to online.”

Australian Prime Minister Anthony Albanese speaks to reporters during a news conference at Parliament House in Canberra, Australia, on Aug. 26, 2025. Lukas Coch/AAP Image via AP

The prime minister said that although his country is the first to have enacted such legislation, the impact of social media on children is a global problem. Other countries, including Malaysia and Denmark, as well as various states across the United States, are either bringing in similar controls or attempting to.

“New technology can do wonderful things, but we need to make sure that humans are in control of our own destiny, and that is what this is about, particularly focused on our youngest Australians,” Albanese said.

US, Australian Parents Back Bans

A recent survey found that most parents in Australia and the United States are in favor of social media bans for those younger than 16.

The Family Online Safety Institute found that 65 percent of Australian parents and 58 percent of U.S. parents supported such measures. Support among children aged 10 to 17 was much lower; 38 percent of young Australians and 36 percent of young Americans were in favor.

In its report, published on Dec. 9, the institute found that 52 percent of U.S. parents and 42 percent of Australian parents are confident that social media bans will protect children’s mental health. Lower percentages of American (43 percent) and Australian (33 percent) youth hold the same view.

However, both age groups shared the same beliefs about whether such bans would reduce young people’s overall screen use.

“Many children, 64 percent in the U.S. and 59 percent in Australia, say that with a social media ban in place, they would spend more time on other digital platforms, including video games or text messaging,” the report states.

“This could indicate that total screen time could remain the same, just with a shift to different digital platforms.”

Tyler Durden Thu, 12/11/2025 - 09:35

The Census Bureau and the Bureau of Economic Analysis reported:

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced today that the goods and services deficit was $52.8 billion in September, down $6.4 billion from $59.3 billion in August, revised.

September exports were $289.3 billion, $8.4 billion more than August exports. September imports were $342.1 billion, $1.9 billion more than August imports.
emphasis added

Click on graph for larger image.

Exports and imports increased in September. 

Exports were up 6% year-over-year; imports were down 4% year-over-year.
Imports increased sharply earlier this year as importers rushed to beat tariffs.  

The second graph shows the U.S. trade deficit, with and without petroleum.

The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

Note that net, exports of petroleum products are positive and have been increasing.

The trade deficit with China decreased to $15.0 billion from $31.8 billion a year ago.

Futures Rebound From Worst Levels As Oracle Plunges 11% On Cash Burn Fears

US equity futures are lower, as lousy earnings and an ugly capex forecast by Oracle reversed the market euphoria following the "more dovish than expected" Fed rate cut. As of 8:00am ET, S&P futures are down 0.2% but well off session lows, having tumbled as much as 1% earlier; Nasdaq 100 is down 0.4%, reversing earlier losses of 1.5%. In premarket trading, Mag 7 stocks underperform: NVDA -1.7%, META -1.0%, TSLA -1.0%. ORCL plunged 11.2% in premarket trading after cloud sales missed estimates with free cash flow concerns rising again amid a surge in capex at the worst possible time. Bond yields are mostly unchanged; the USD is lower. Commodities are mixed: oil is down -1.4%; base metals and Ags are lower. Bitcoin slipped nearly 2% as it approached $90,000. Today's US economic calendar includes weekly jobless claims, September trade balance (8:30am) and September final wholesale inventories (10am)

In premarket trading, Nvidia leads Mag 7 names lower after Oracle’s report dampened risk appetite in the AI sector (Apple +0.4%, Alphabet -0.2%, Amazon -0.6%, Microsoft -0.5%, Tesla -0.6%, Meta -0.6%, Nvidia -1.4%)

• Ciena (CIEN) soars 11% after the maker of equipment used by telecom companies posted reported adjusted earnings per share for the fourth quarter that beat the average analyst estimate.
• Diamond Hill Investment Group Inc. (DHIL) shares are halted after Genstar Capital-backed First Eagle Investments agreed to buy the boutique asset-management firm for $473 million in cash.
• Eli Lilly & Co. (LLY) gains 2% after a next-generation obesity shot helped patients lose almost a quarter of their body weight in 68 weeks.
• Gemini Space Station Inc. (GEMI) rises 15% after its application for a derivatives exchange was approved by the Commodity Futures Trading Commission, in a move that will allow the company to join the fast-growing field of prediction markets.
• Oracle (ORCL) falls 11% after the company forecast 3Q cloud sales growth below analyst estimates, raising concerns that supply constraints are preventing the cloud-infrastructure provider from converting its large backlog to actual revenues.
• Oxford Industries (OXM) sinks 21% after the owner of the Tommy Bahama apparel brand cut its adjusted earnings per share forecast for the full year, missing the average analyst estimate. The fourth-quarter net sales outlook also missed consensus.
• Planet Labs (PL) gains 17% after the satellite-imaging firm raised its sales and margin outlook, boosted by new and expanded contracts. Recent wins included an expansion to a contract with NATO and a deal with National Geospatial-Intelligence Agency.

Caution toward the AI space returned with a vengeance, with Nvidia Corp. down 1.4% to lead Magnificent Seven losses as Oracle, once viewed as a bellwether of the AI investment boom, sank more than 12% in premarket trading after cloud sales missed estimates and the company lifted its 2026 capital spending outlook by $15 billion to $50 billion.

Oracle’s results pushed worries about tech valuations and whether heavy spending on AI infrastructure will pay off back into focus, reviving concerns that fueled weeks of volatility in November. While the sector has powered the S&P 500’s stunning rally this year, spending fears have prompted some investors to rotate into other areas as the US economic outlook remains robust.

"Markets have grown far more wary of AI-related spending, which is a sharp contrast with mid-2025 when anything hinting at higher capex sparked excitement,” said Susana Cruz, a strategist at Panmure Liberum. “Oracle has been the weakest link in all this, largely because it’s funding a big chunk of its investment with debt.” 

In an attempt to reboot excitement in the sector, Microsoft’s CEO said the company will unveil a new model on Friday that is “going to take agents to the next level.” 

Oracle’s earnings landed after the S&P 500 closed just shy of a record on Wednesday, lifted by a Federal Reserve interest-rate cut and Chair Jerome Powell’s sanguine economic outlook. Investors had taken comfort in Fed policymakers leaving the door open to more easing next year, even though the quarter-point cut drew three dissents. Traders stuck to bets on two cuts in 2026, even as the Fed’s new projections signaled only one such move.

“The Fed’s ‘hawkish-but-bullish’ cut last night reinforces this: stronger 2026 growth, faster disinflation,” said Florian Ielpo, head of macro at Lombard Odier Investment Managers. “Cuts are continuing, but they’re no longer automatic — and that’s usually a constructive backdrop for equities.”

“The effect of Oracle has been greater than the Fed. This already tells us everything as we’ve been witnessing a strong concentration and one theme — AI — leading the market,” said Alberto Tocchio, a portfolio manager at Kairos Partners. “This doesn’t mean that AI is gone or it’s a bubble, but we need to focus on a wider scale.”

In other assets, the IEA trimmed estimates for a global oil supply surplus this year and next for the first time in several months as demand strengthens and output growth slows. And tariffs are back in focus, with Mexican lawmakers giving final approval for new duties on Asian imports.

Technology stocks dragged Asian bourses lower overnight and looked set to do the same in Europe but the Stoxx 600 is now green. Construction, retail and industrial shares are leading gains. The construction and materials sector outperforms, while utilities lag. Software stocks including SAP SE and Sage Group Plc drop after US tech giant Oracle Corp. reported disappointing cloud sales and a jump in AI-related spending. Here are some of the biggest European movers on Thursday:

• Schneider Electric shares climb as much as 4.4%, the most since July, after the electrical power products manufacturer announced a share buyback program as it targets growing profitability over the next five years.
• Nilfisk shares surge as much as 35%, the most on record, after the cleaning products manufacturer received a takeover offer from Freudenberg Group.
• BNP Paribas Bank Polska shares rise as much as 3.5% to a record high, after the Polish unit of BNP targeted acceleration of loan growth and net income in its 2026-2030 strategy.
• Carl Zeiss Meditec shares gain as much as 8.6%, the most since April, after the German medical technology firm reported earnings which included a beat on quarterly revenues.
• Nordex  shares rise as much as 3.9%, on course to close at their highest level since 2007, after Kepler Cheuvreux upgraded its recommendation on the wind-turbine maker to buy from hold.
• RS Group shares rise as much as much as 5.5%, touching their highest levels since February, after JPMorgan upgraded the stock to overweight from neutral, as it sees a better year for European business services in 2026.
• Entain shares slip as much as 4.1% after the gambling firm announced that Chief Financial Officer Rob Wood will step down after 13 years.
• Naturgy shares drop as much as 6.9%, to the lowest level since April, after BlackRock’s infrastructure arm sold a stake in the Spanish company at a 5.4% discount to Wednesday’s closing price.
• SAP shares drop as much as 4.3% to their lowest level since October 2024, after US peer Oracle reported disappointing cloud sales.
• Ceres Power shares sink as much as 15% after Grizzly Research discloses that it’s short the clean-energy technology stock.
• Delivery Hero shares falls as much as 6.6%, putting the firm among Thursday’s worst performers in the Stoxx 600 index, after Citi downgraded it to sell amid increasing competition in the Middle East and North Africa region.

Earlier,  Asian equities erased early advances and fell, dragged by a slide in technology shares as disappointing earnings from Oracle Corp. offset optimism over the Federal Reserve’s rate cut. The MSCI Asia Pacific Index fell as much as 0.7%, after rising 0.6% in morning trading Thursday. A gauge of the region’s technology shares dropped 1.7%. SK Hynix declined after Korea Exchange issued an alert on the stock and prohibited margin trading after big gains. Equity benchmarks in Taiwan dropped more than 1%, while those in Japan and South Korea also retreated. 

In FX, the Bloomberg Dollar Spot Index is steady. The Aussie dollar is the weakest of the G-10 currencies, falling 0.3% against the greenback after soft jobs data. The Swiss franc is the best performer, rising 0.4% after the SNB left interest rates on hold.

In rates, treasuries are little changed, with US 10-year yields near flat at 4.14% broadly holding Wednesday’s curve-steepening rally that followed the FOMC rate decision. OIS contracts price in around 50% odds of another 25bp rate cut in March. Trading of short-term rate products remains in focus as the Fed’s plan, also announced Wednesday, to buy $40 billion of Treasury bills per month. Yields are 1bp-2bp richer on the day with belly outperforming, steepening 5s30s spread by around 1bp. 10-year yields is near 4.135% after peaking near 4.21% Wednesday, highest since Sept. 4. The week’s Treasury auction cycle concludes with $22 billion 30-year bond reopening at 1pm New York time, following good demand for 3- and 10-year note sales Monday and Tuesday. WI 30-year yield near 4.78% is ~9bp cheaper than last month’s auction, which tailed by 1bp.

In commodities, oil retreated toward the lowest since October, tracking wider losses in risk assets. WTI crude futures fall 1.3% to around $57.70 a barrel. Spot gold drops $15. Silver extended an all-time high past $62 an ounce. Bitcoin is down over 2% near $90,000.

Looking ahead, today's US economic calendar includes weekly jobless claims, September trade balance (8:30am) and September final wholesale inventories (10am)

Market Snapshot

• S&P 500 mini -0.5%
• Nasdaq 100 mini -0.7%
• Russell 2000 mini little changed
• Stoxx Europe 600 +0.1%
• DAX little changed
• CAC 40 +0.4%
• 10-year Treasury yield -1 basis point at 4.14%
• VIX +0.3 points at 16.1
• Bloomberg Dollar Index little changed at 1209.7
• euro little changed at $1.1704
• WTI crude -1.6% at $57.54/barrel

Top Overnight News

• Trump said any deal for Warner Bros. Discovery must include the sale of CNN, a potential wrinkle for Netflix’s bid. As the takeover fight plays out, the political divide grows. BBG
• NEC Director Hassett said the Fed has plenty of room to cut rates and probably will need to do some more, while he added that data could support a 50bps cut and they could definitely get to 50, or even more. Hassett also said a 25bps cut would be a small step in the right direction and that President Trump will make the Fed Chair choice in a week or two.
• US House of Representatives voted 312-112 to pass the USD 901bln defence spending bill
• China now has the biggest power grid the world has ever seen. Between 2010 and 2024, its power production increased by more than the rest of the world combined. Last year, China generated more than twice as much electricity as the U.S. Some Chinese data centers are now paying less than half what American ones pay for electricity. WSJ
• China put rate cuts in play after pledging to adopt supportive monetary and fiscal policy to bolster the economy. It will “flexibly” use interest rate and RRR cuts. Policymakers also plan to step up efforts to stabilize the housing market. BBG
• The BoJ sees limited need for emergency intervention to restrain rising bond yields, a move that runs counter to its effort to roll back stimulus. RTRS
• The SNB kept its interest rate at zero, in line with expectations, judging that a weakened inflation outlook doesn’t yet justify a return to negative borrowing costs. BBG
• Mexico approved tariffs of up to 50% on Chinese and other Asian imports, broadly aligning itself with US efforts targeting Beijing. China urged Mexico to “correct” its unilateral and protectionist practices. BBG
• Mexico’s tariff hike will affect $1 billion worth of shipments from major Indian car exporters, including Volkswagen and Hyundai. BBG
• Rents for Manhattan apartments surged to a record high in November. New leases were signed at a median of $4,750 in the month, up 13% from a year earlier and 3.3% from October. RTRS
• The United States can use other measures to recreate the roughly $200 billion in revenues it is collecting under tariffs based on a 1977 law if the Supreme Court strikes down use of that law, U.S. Trade Representative Jamieson Greer said on Wednesday. RTRS

Trade/Tariffs

• UK pledges an additional GBP 1.5bln for NHS medicines as part of Trump tariff deal, according to FT.
• Britain is to reform the system to speed up investigations into unfair trade practices and is to sharpen trade defences by giving the trade secretary power to direct investigations, according to draft government guidance.
• Mexico approves wide-ranging tariffs of up to 50% on China, according to Bloomberg. China's Commerce Ministry later commented regarding Mexico's tariffs that it will closely monitor the implementation and will further evaluate the impact, while it added that the measures harm the interests of relevant trade partners, including China.
• India's CEA chief economic advisor said most trade issues with the US have been sorted out and will be surprised if there is no deal with the US by March.
• Mexico's tariffs to hurt Indian-made car exports of Volkswagen (VOW3 GY), Hyundai (5380 KS), Nissan (7201 JT) and Maruti Suzuki (7269 JT), according to Reuters Sources. It was earlier reported by Bloomberg that Mexico approved wide-ranging tariffs of up to 50% on China.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were ultimately subdued after failing to sustain the early positive momentum from the dovishly perceived FOMC where the Fed lowered rates by 25bps to between 3.50-3.75%, as expected, but with a less hawkish tilt than what Wall Street had anticipated, although much of the gains were eventually wiped out as a slump in Oracle post-earnings stoked tech and AI-related concerns. ASX 200 eked mild gains but with upside limited by the latest jobs data, which showed a surprise contraction in jobs that was solely due to a drop in full-time work. Nikkei 225 reversed its opening gains and more amid pressure from a firmer currency and as AI-exposed stocks were hit, including SoftBank. Hang Seng and Shanghai Comp gradually retreated with the mainland not helped by another liquidity drain by the PBoC, while trade-related uncertainty lingered, with China said to have held urgent discussions with major domestic tech firms on Wednesday about whether to permit purchases of NVIDIA’s H200 processors.

Top Asian News

• HKMA cut its base rate by 25bps to 4.00%, as expected, and in lockstep with the Fed.
• China's Commerce Ministry said China has taken measures to grant exemptions on Nexperia chips for compliant exports intended for civilian use.
• China's Foreign Ministry on tensions with Japan said Japanese PM Takaichi's attitude makes it impossible to engage in dialogue.
• China's Commerce Ministry said non-state import quota for fuel oil in 2026 set at 20mln metric tons.
• China holds annual central economic work conference on Dec 10-11th, according to Xinhua; said China is to make use of RRR rate cut flexibly. Will continue to expand domestic demand. Will build strong domestic market. Will consolidate, stabilise economy. Will implement appropriately loose monetary policy. Will implement more proactive fiscal policy. Will maintain yuan exchange rate basically stable. Will step up counter-cyclical and cross-cyclical adjustment. Will optimise fiscal expenditure structure. Will emphasise resolving local fiscal difficulties. Will flexibly use policy tools including RRR, rate cuts. Will actively resolve local govt debt risks, prohibit new hidden debt. Will stabilise property market with city-specific measures. Encourages buying existing homes for social housing.
• Japan's Lower House passes supplementary budget bill for FY2025 to fund new economic policy package under PM Takaichi, according to Jiji.

European bourses (STOXX 600 +0.2%) opened broadly lower, but managed to clamber off worst levels as the morning progressed, albeit marginally so. European sectors also held a negative bias as the open, but now display a mixed picture. Construction leads followed by Autos whilst Tech is weighed down by pressure seen in Oracle (-11% pre-market) after its earnings.

Top European News

• ECB's Makhlouf said he is confident that medium-term inflation will be at 2%.
• SNB maintains its Policy Rate at 0.00% as expected; SNB reiterates it remains willing to be active in the foreign exchange market as necessary. Inflation in recent months has been slightly lower than expected. In the medium term, however, inflationary pressure is virtually unchanged compared to the last monetary policy assessment. Sight deposits held at the SNB will be remunerated at the SNB policy rate up to a certain threshold. Although US tariffs and trade policy uncertainty weighed on the global economy, economic developments in many countries had thus far remained more resilient than had been assumed.
• SNB Chairman Schlegel said the Bank will continue to observe the situation and adjust monetary policy where necessary to keep price stability Banks' sight deposits held at the SNB will be remunerated at the SNB policy rate up to a certain threshold. The low level of interest rates in Switzerland is having an effect via the exchange rate. Mid-term inflation pressure is practically unchanged since the previous quarter. Ready to intervene in the FX market if necessary. Policy continues to be expansionary, and supports inflation and the economy. Cannot say lower CPI outlook makes NIRP more likely.
• ECB proposes expanding the existing small banks regime to include more banks for supervision purposes. Recommends merging bank capital stack into 2 elements; a releasable and a non-releasable buffer. The non-binding pillar 2 guidance would be kept separate, on top of the releasable buffer. ECB design or role of additional tier 1 instruments could be adjusted to enhance loss absorption capacity.
• BoE's Bailey said BoE should not have interest rate risk on its balance sheet, the question is how fast to remove it.

FX

• DXY attempted a recovery from the post-FOMC slump, which saw the index fall to a 98.592 low yesterday before extending lower to 98.537; though the index is now flat. A floor was found during APAC trade as risk began to wane. To recap, the Fed cut rates by 25bps to 3.5-3.75%, as expected, but in a dovish 9-3 vote split - Goolsbee and Schmid voted to leave rates unchanged, while Miran wanted a larger 50bps reduction. In terms of the session ahead stateside, weekly initial jobless claims (for the week of 6th December) are seen rising to 220k from 191k (last week's low reading was largely due to seasonal adjustment factors); continuing claims (for the week of 29th November) are seen ticking up to 1.947mln from 1.939mln. Wholesale sales and inventory revisions are also due today.
• High beta FX (CAD, GBP, NZD, AUD) are all softer, with state-side sentiment also lower following the Fed and Oracle earnings. AUD is the laggard following the Aussie jobs report overnight, which showed a surprise contraction in jobs that was solely due to a drop in full-time work. Little move was seen on China's Economic Work conference readout, which noted that China is to make use of RRR rate cut flexibly. EUR/USD is uneventful around the 1.1700 mark in a narrow 1.1683-1.1707 parameter.
• CHF was unmoved by the SNB rate decision, which was overall as expected with no fireworks (some expected a return to NIRP). SNB kept rates at 0.00% and reiterated its language on FX, that it “remains willing to be active in the foreign exchange market as necessary”. In terms of inflation projections, 2025 was unchanged, whilst 2026 and 2027 were revised a touch lower. The CHF, however, saw mild strength during the press conference, in which he said he cannot say whether a lower CPI outlook makes NIRP more likely. USD/CHF dipped as low as 0.7979 (vs high 0.8001).
• RBI likely selling USD to help INR avert a sharp fall, according to traders cited by Reuters

Fixed Income

• USTs continue to build on the post-FOMC upside; in brief, the FOMC cut rates by 25bps to 3.50-3.75%, as expected, while the vote split was a bit more dovish than expected. For US paper specifically, the Fed also said it will start technical buying of Treasury bills to manage market liquidity, in which the initial round will total around USD 40bln in Treasury bills per month to help manage market liquidity levels. Currently trading in a 112-11 to 112-18+ range, and another leg higher would see a retest of the high from 8th December at 112-19. From a yield perspective, the FOMC sparked a bull steepening, which has continued into today. Now attention turns to a number of US data points, incl. Jobless Claims, Wholesale Sales and then a 30-year auction, which follows on from a strong 3yr and mostly positive 10yr.
• Bunds follow USTs, and are now flat to trade in a current 127.36 to 127.77 range. Newsflow is incredibly light this morning, with price action essentially a paring of some of the upside seen following the FOMC. Elsewhere, UBS analysts recommend a long 10yr Bund trade, target 2.75% yield; said term premia priced by markets are too high – for reference, current 10yr yield is at 2.85%.
• Elsewhere, Gilts remain bid, as UK paper plays catch-up to peers – price action muted and within a narrow 91.22 to 91.38 range.
• Italy sells EUR 5bln vs exp. EUR 4.0-5.0bln 2.35% 2029, 3.00% 2029, 2.70% 2030 BTP

Commodities

• Crude benchmarks have sold off throughout the APAC session and into the European session as risk tone sours across equity markets despite an FOMC cut that was perceived dovish. After opening at USD 58.92/bbl and USD 62.43/bbl respectively, WTI and Brent trended c. USD 1.30/bbl lower to session lows of USD 57.57/bbl and USD 61.20/bbl as equities sold off. The selloff completely reversed Wednesday's gains following the seizure of an oil tanker off the coast of Venezuela.
• Spot XAU peaked to USD 4248/oz early in the APAC session as the metal continued its gains following the dovish FOMC announcement. As the APAC session continued, however, XAU reversed lower as the dollar began to strengthen and equities sold off. In past sessions, XAU has been moving in-tandem with equities despite its safe haven characteristics, perhaps explaining the selloff in the APAC session.
• 3M LME Copper gapped higher and drove higher to a peak of USD 11.72k/t, USD 30/t shy of ATHs, before falling back lower as global risk tone soured. The red metal stabilised at USD 11.58k/t and has since remained in a tight USD 60/t band.
• Russia's Energy Ministry expects oil refining and gas and coal production to remain at 2024 levels in 2025, via RIA.

Geopolitics: Middle East

• US officials discussed hitting the UN Palestinian refugee agency with terrorism-related sanctions, according to sources cited by Reuters.
• US State Department condemned the Houthis' ongoing unlawful detention of current and former local staff of US missions to Yemen.

Geopolitics: Ukraine

• Ukrainian navy drones in the Black Sea struck the "Dashan" vessel that is part of Russia's shadow fleet, while the attack led to the tanker being disabled.
• The EU is looking to reach an agreement by Friday to lengthen the freeze on Russian assets using emergency powers, according to Bloomberg citing people familiar.
• Russia's Lavrov said Russia wants a package of documents on a long term sustainable peace for Ukraine. Should be security guarantees for all sides.
• Ukrainian drones struck Lukoil's oil extraction platform in the Caspian sea, according to SBU source cited by Reuters; oil and gas production halted.
• Russia’s Lavrov said European peacekeepers in Ukraine "will Be A Target ", via Interfax.

Geopolitics: Other

• US seized an oil tanker off the coast of Venezuela, while President Trump said the vessel was seized for a very good reason, and Attorney General Bondi said the oil tanker was used to transport sanctioned oil from Venezuela and Iran. Furthermore, Guyana's government said the oil tanker seized by the US was falsely flying a Guyana flag and that it will take action against the unauthorised use of the Guyanese flag.
• Russia's Kremlin said President Putin plans to meet Turkey's President Erdogan during his visit to Turkmenistan.
• Russia's Kremlin said Russia remains open to investment. It was reported by the WSJ that US companies could invest in strategic sectors from rare-earth extraction to drilling for oil in the Arctic and help restore Russian energy flows to Western Europe and rest of the world.

US Event Calendar

• 8:30 am: Dec 6 Initial Jobless Claims, est. 220k, prior 191k
• 8:30 am: Nov 29 Continuing Claims, est. 1938k, prior 1939k
• 8:30 am: Sep Trade Balance, est. -63.1b, prior -59.6b
• 10:00 am: Sep F Wholesale Inventories MoM, est. 0.1%

DB's Jim Ried concludes the overnight wrap

Last night saw the market rally resume after the Fed cut rates by 25bps, which included enough dovish hints to pare back the hawkish repricing over recent days. So the S&P 500 (+0.67%) closed less than 0.1% beneath its record high, whilst 2yr Treasury yields (-7.7bps) saw their best day in two months. However, that momentum behind risk assets has been lost overnight, as disappointing results from Oracle after the US close pushed their shares down -11.52% in after-hours trading. And in turn, S&P 500 futures are down -0.90% this morning, with those on the NASDAQ 100 down -1.20%. So even as investors were reassured by the Fed’s latest rate cut, familiar concerns about AI are still very much top of mind right now. 

In terms of the Fed decision, the FOMC delivered a third consecutive cut that took the target range for the fed funds rate down to 3.50-3.75%. This was a 9-3 decision, with Governor Miran again advocating for a larger 50bp cut, whereas regional Fed presidents Goolsbee and Schmid favoured no change. The cut was accompanied by implicit signals that the Fed could remain on hold in early 2026. For instance, the dot plot showed the median participant only expecting one more rate cut in 2026, while new wording on “the extent and timing” of further rate adjustments signaled a possible pause ahead. Powell also emphasised that the FOMC was “well positioned to wait and see how the economy evolves” as recent easing had brought the policy stance “within a broad range of estimates of neutral”.

However, this cautious guidance was accompanied by several dovish-leaning elements. Notably, the updated economic projections struck a sanguine tone, with real GDP revised higher across the 2025-27 period, whilst 2026 headline and core PCE inflation were revised -0.1pp and -0.2pp lower to 2.4% and 2.5% respectively. The statement also dialed up the tone on the recent uptick in unemployment while Powell sounded a bit more sanguine on upside inflation risks, saying that “inflation has come in a touch lower” recently and that “most of the inflation overshoot is from tariffs”. Our US economists’ base case remains that Powell has now delivered the last rate cut of his tenure as chair, but continued labor market weakness could swing the FOMC to cut again in the next few months (see their full reaction note here).
Away from rates policy, the Fed also announced they’ll begin reserve-management purchases of Treasury bills. Those will start at $40bn a month from next week and are expected to “remain elevated for a few months” before slowing significantly after the April tax payment window. This will mark the first sustained increase in the size of the Fed balance sheet since the Fed ended QE in spring 2022. And it was a slight surprise this was announced at yesterday’s meeting, even if a shift towards more active liquidity management had been expected by early 2026.

After the decision, markets saw the FOMC’s signal as favourable to expectations of a 2026 rate cut. So even though a rate cut is only priced at 20% by the next meeting in late-January, futures currently signal a 52% chance of a cut by March as we go to press this morning. Moreover, there was a dovish shift in the futures curve, with the rate priced by the December meeting down -6.6bps on the day, meaning that 55bps of cuts were priced for next year by the close. In turn, that meant 2yr Treasury yields fell by 5 to 6bps intraday after the FOMC to register their biggest daily decline in two months (-7.7bps to 3.54%), and 10yr yields fell by -4.1bps on the day to 4.15%. That trend has continued overnight as well, with the 10yr yield down another -2.1bps to 4.13%. And this also weighed on the dollar index, which fell -0.44% yesterday to a six-week low.

Although the Fed’s decision helped to support equities, with the S&P 500 (+0.67%) closing just -0.06% below its all-time high, it’s been a very different story overnight following Oracle’s earnings. They reported after the US close, but their revenues fell short of analysts’ estimates, with their share price down -11.52% in after-hours trading. So that’s pushed US equity futures lower this morning, with those on the S&P 500 down -0.90%, whilst those on the NASDAQ 100 have fallen -1.20%.

That more negative trend has continued in Asia overnight, where there’ve been losses across the major indices. So the Nikkei (-0.97%), the Shanghai Comp (-0.75%), the CSI 300 (-0.52%), the Hang Seng (-0.22%) and the KOSPI (-0.20%) are all lower this morning. And those losses have been particularly sharp for tech stocks, with the Hang Seng Tech index down -1.12%. Bond yields have also moved lower, which partly reflects the Fed and the wider risk-off tone this morning, but we also saw Japan’s 20yr auction have its strongest demand since 2020. Moreover, the latest employment data from Australia showed an unexpected contraction of -21.3k in November (vs. +20.0k expected), which has raised doubts about the likelihood of a near-term rate hike by the RBA. Indeed, yields on 10yr Australian government bonds are down -8.9bps this morning, and the Australian dollar is the worst-performing G10 currency, down -0.59% against the US dollar.

Before the Fed and Oracle’s earnings, investors had priced in a growing chance of an ECB rate hike for 2026, which is now seen as a 40% chance. That gave the European bond selloff a fresh dose of momentum, which was particularly clear at the front end of the curve. For instance, the 2yr German yield (+2.2bps) rose to 2.17%, its highest level since the fiscal stimulus announcements were made in March. And that was echoed across the continent, with yields on 2yr French (+2.4bps) and Italian (+1.6bps) debt also at their highest in months. However, the long-end was more subdued, with yields on 10yr bunds (+0.1bps), OATs (+1.2bps) and BTPs (+0.3bps) seeing smaller increases that still left them beneath their closing level on Monday. In the meantime, equities saw a relatively stronger performance, with the STOXX 600 (+0.07%) inching up after three consecutive declines.

On the theme of central banks, yesterday also brought the Bank of Canada’s decision, who held their policy rate at 2.25% as expected. This followed rate cuts at the previous two meetings, but this time their statement said that if the economy and inflation evolved in line with their October projections, then they felt rates were “at about the right level”. In turn, Canadian government bond yields fell back, with the 2yr yield down -6.0bps on the day, whilst the 10yr fell -4.4bps.

Finally, there wasn’t too much data yesterday, although we did get the Employment Cost Index (ECI) from the US for Q3. That came in a bit softer than expected at +0.8% (vs. +0.9% expected), and it was also the slowest pace since Q3 last year. So that helped to ease fears about inflationary pressures, particularly with the year-on-year pace now down to +3.5%, the slowest since Q2 2021.

To the day ahead now, and data releases include the US weekly initial jobless claims, along with the trade balance for September. Otherwise from central banks, we’ll hear from BoE Governor Bailey.

Tyler Durden Thu, 12/11/2025 - 08:39

Continuing Jobless Claims Plummet To 8 Month Lows

After plunging near 60 year lows in the prior week (at 192k), initial jobless claims rebounded (as many expected) to 236k last week - back into the 'normal' range and nothing at all to worry about from a labor market perspective...

Source: Bloomberg

Sure enough it was California in large part that was responsible for the chaos...

Source: Bloomberg

But while initial claims rebounded back to 'normal', continuing jobless claims plummeted

Source: Bloomberg

We assume whatever screw-up that seasonal adjustments caused in initial claims the week before have rippled through to the continuing claims data this week, but still - taken at face value, it's great news!

However, there could be an even more silver lining as we noted last week, before Trump sent out his ICE troops, California's Continuing Claims were running ~400K per week. Beginning in the summer, however, these claims steadily dropped... and perhaps this week's crash in continuing claims is the chopping block coming down on illegals claiming benefits in California?

Tyler Durden Thu, 12/11/2025 - 08:38

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The U.S. goods and services trade deficit decreased in September 2025 according to the U.S. Bureau of Economic Analysis and the U.S. Census Bureau. The deficit decreased from $59.3 billion in August (revised) to $52.8 billion in September, as exports increased more than imports. The goods deficit decreased $7.1 billion in September to $79.0 billion. The services surplus decreased $0.6 billion in September to $26.2 billion. Full Text