Swetha Gopinath of Bloomberg reports Canada pension giant balks at paying fees to co-invest with private equity:

Institutional investors will not allow alternative asset managers to start charging them for large deals despite the emerging competition from retail money, according to Canada Pension Plan Investment Board, one of the world’s largest retirement funds.

Large pensions and sophisticated investors like CPPIB have for decades jointly invested with buyout firms in marquee transactions on a no-fee, no-carry basis. An influx of capital from wealth channels now threatens to change that dynamic.

Any moves by alternative asset managers to levy co-investment fees “will undoubtedly have an impact on our appetite for the asset class, because that’s the model we run,” CPPIB chief executive John Graham said in an interview on Wednesday. If the firm can’t keep the traditional structure “we actually will tend not to partner with them,” he said.

Private equity firm EQT, for one, has been working to quell concerns that it might start charging investors to do those transactions after its chief executive officer described it as a potential new source of revenue. Institutions are “economic animals” and if the fee model changes they will reevaluate their allocations to the sector, Graham said.

The shift in the investor base in private equity is playing out even as institutions get more selective about where they park their money after waning performance from the asset class in recent years. Larger investors are also worried they’ll get smaller allocations for deals amid the competition from wealthy individuals.

CPPIB had net assets of $777.5 billion at the end of September. About 29 per cent of the portfolio is made up of private equities, it reported earlier this year. It’s also a big investor in real estate, infrastructure and credit.

It’s still too early to tell how the influx of retail money will impact the industry and co-investments like those favoured by CPPIB, Graham said.

“Institutional investors are still the bedrock investors,” he added. “Retail might be the shiny new thing, but for 20-plus years, institutional investors have helped build these franchises.”

Still, he said, the influx of retail brings in other considerations, like regulatory scrutiny. Investments like junk leveraged credit “are buyer beware markets,” he said. “These are not public equity markets, which is a gentleman’s game.”

CPPIB is also taking a differentiated approach to public markets, deliberately choosing to be underweight the Magnificent Seven megacap technology stocks, which means the manager currently underperforms the S&P 500.

“Diversification is an act of humility,” he said. “The concentration level in the United States equity markets is not a risk we want to take.”

I'll get back to the Mag-7 below, first on the subject of potentially levying fees on co-investments.

Put simply, CPP Investments' active management strategy which was introduced back in 2006 relies heavily on the partnership model, meaning, they invest in private equity funds but they expect big co-investment opportunities in return where they pay no fees to reduce fee drag.

Co-investments serve two purposes: to reduce fee drag and to allow them to maintain a heavy allocation to the asset class.

If they are forced to pay fees on co-investments because of intense competition from wealth management and other retail outfits, then they will be forced to rethink their hefty allocation to this asset class. 

It's that simple, I personally don't see this happening, big institutional pension funds, sovereign wealth funds and insurance funds make up the bulk of the assets private equity manages so they'd be shooting themselves in the foot imposing fees on co-investments for this group.

But this example and John Graham's comments show us that the landscape in private markets is changing, there is intense competition in private equity, infrastructure, real estate, private credit and structural changes there are forcing big pension funds to rethink their strategy.

Below, recent market volatility and geopolitical uncertainty have raised questions about the US' status as a safe haven. But there are still no strong alternative 'safe harbours', says John Graham, President and CEO of CPP Investments, Canada's largest pension fund. Graham says the fund is underweight AI in the US, but seeking more opportunities in large-scale infrastructure. It also remains committed to private equity. He spoke with Francine Lacqua on 'Bloomberg: The Pulse'.

John raises excellent points on the symbiotic relationship between them and private equity and how that model has been a win-win over the past 25 years.

He also mentions they're underweight Mag-7 stocks and here a couple of points. First, there seems to be a bifurcation going on in the Mag-7 where Google and Nvidia are leading the rest (same with Broadcom if you expand to Mag-10). Second, no doubt about it, cyclical stocks like financials and industrials and defensive pharmaceuticals have outperformed technology shares in the last quarter. Whether this continues in 2026 remains to be seen.

On that topic, Ed Yardeni, Yardeni Research president, joins 'Squawk Box' to discuss the latest market trends, why he's moving away from being overweight on Magnificent 7 stocks, sectors he's in favor of, the Fed's interest rate outlook, and more.

Third, in a wide-ranging interview with Yahoo Finance Executive Editor Brian Sozzi, Apollo Global Management CEO Marc Rowan discusses the Federal Reserve's rate cut decision, the rise of private credit markets, and data centers (Note: Apollo Global Management is the parent company of Yahoo Finance).

Lastly, earlier today, Bloc MP Christine Normandin expressed disapproval for Prime Minister Mark Carney's rumoured pick for Canada's ambassador in the U.S., Mark Wiseman, during question period. 

Mark Wiseman was the former CEO of CPP Investments and it's clear his rumoured appointment is making opposition parties howl. 

Poor Mark, he's getting no respect but he's a born politician and very smart guy so let's give him a shot (and for the record, I don't agree with the Century Initiative, if we increase immigration at the expense of housing, education and health care, we are doomed. We need better coordination).

Note: Mortgage rates are from MortgageNewsDaily.com and are for top tier scenarios.

Thursday:
• At 8:30 AM ET, The initial weekly unemployment claims report will be released.  There were 191,000 initial claims last week.

• Also at 8:30 AM, Trade Balance report for September from the Census Bureau. The consensus is the trade deficit to be $65.5 billion.  The U.S. trade deficit was at $59.6 billion in August.

• At 10:00 AM, the Q3 2025 Housing Vacancies and Homeownership from the Census Bureau.

• Also at 10:00 AM, State Employment and Unemployment (Monthly) for September 2025

What GAO Found Preliminary results from GAO’s ongoing covert testing suggest fraud risks in the advance premium tax credit (APTC) persist. The federal Marketplace approved coverage for nearly all of GAO’s fictitious applicants in plan years 2024 and 2025, generally consistent with similar GAO testing in 2014 through 2016. GAO’s covert testing is illustrative and cannot be generalized to the enrollee population. Plan year 2024. The federal Marketplace approved subsidized coverage for all four of GAO’s fictitious applicants submitted in October 2024. In total, the Centers for Medicare & Medicaid Services (CMS) paid about $2,350 per month in APTC in November and December for these fictitious enrollees. For some, the federal Marketplace requested documentation to support Social Security numbers (SSN), citizenship, and reported income. GAO did not provide documentation yet received coverage. Plan year 2025. Of 20 fictitious applicants, 18 remain actively covered as of September 2025. APTC for these 18 enrollees totals over $10,000 per month. GAO continues to monitor the enrollments as part of its ongoing work. More broadly, GAO’s preliminary analyses identified vulnerabilities related to potential SSN misuse and likely unauthorized enrollment changes in federal Marketplace data for plan years 2023 and 2024. Such issues can contribute to APTC that is not reconciled through enrollees’ tax filings to determine the amount of premium tax credit for which enrollees were ultimately eligible. GAO’s preliminary analysis of data from tax year 2023 could not identify evidence of reconciliation for over $21 billion in APTC for enrollees who provided SSNs to the federal Marketplace for plan year 2023. Unreconciled APTC may not necessarily represent overpayments, as enrollees who did not reconcile may have been eligible for the subsidy. However, it may include overpayments for enrollees who were not eligible for APTC. GAO’s preliminary analyses identified over 29,000 SSNs in plan year 2023 and nearly 68,000 SSNs in plan year 2024 used to receive more than one year’s worth of insurance coverage with APTC in a single plan year. CMS officials explained that the federal Marketplace does not prohibit multiple enrollments per SSN to help ensure that the actual SSN-holder can enroll in insurance coverage in cases of identity theft or data entry errors. GAO’s preliminary analyses also identified at least 30,000 applications in plan year 2023 and at least 160,000 applications in plan year 2024 that had likely unauthorized changes by agents or brokers. This can result in consumer harm, including loss of access to medications. In July 2024, CMS implemented a new control to prevent such changes, which GAO is reviewing in its ongoing work. GAO preliminarily identified weaknesses in CMS’s APTC fraud risk management as compared to leading practices. Specifically, CMS has not updated its fraud risk assessment since 2018 despite changes in the program and its controls. Further, CMS’s 2018 assessment may not fully align with leading practices, like identifying inherent fraud risks. Finally, CMS did not use its 2018 assessment to develop an antifraud strategy. Together, these weaknesses appear to hinder CMS’s ability to effectively and proactively manage fraud risks in APTC. Why GAO Did This Study The Patient Protection and Affordable Care Act provides premium tax credits to help eligible individuals pay for health insurance. The federal government can pay this credit directly to health insurance issuers as APTC. CMS estimated that it paid nearly $124 billion in APTC for about 19.5 million enrollees in plan year 2024. Consumers can enroll in insurance through the federal Marketplace independently or with assistance from an agent or broker. Recent indictments highlight concerns about agent and broker practices in the federal Marketplace. Further, CMS reported that it received roughly 275,000 complaints in 2024 that consumers were enrolled or had insurance plans changed in the federal Marketplace without their consent. This testimony discusses preliminary results of ongoing GAO work related to (1) covert testing and (2) data analyses of enrollment controls in the federal Marketplace, as well as (3) CMS’s APTC fraud risk assessment and antifraud strategy. To perform this work, GAO created 20 fictitious identities and submitted applications for health care coverage in the federal Marketplace for plan years 2024 and 2025. The results, while illustrative, cannot be generalized to the full enrollment population. Additionally, GAO analyzed federal Marketplace enrollment data for plan years 2023 and 2024 and compared these data to federal death data and tax data. Finally, GAO assessed documentation related to CMS’s fraud risk management activities against relevant leading practices.

Statement here.

Fed Chair Powell press conference video here or on YouTube here, starting at 2:30 PM ET.

Here are the projections.  
The BEA's estimate for first half 2025 GDP showed real growth at 1.6% annualized. Most estimates for Q3 GDP are around 3.5%. That would put the real growth for the first three quarters at 2.2% annualized - well above the top end of the September projections. The FOMC revised up Q4 2025 and Q4 2026 GDP growth.
GDP projections of Federal Reserve Governors and Reserve Bank presidents, Change in Real GDP1 Projection Date2025202620272028 Dec 20251.6 to 1.82.1 to 2.51.9 to 2.31.8 to 2.1 Sept 20251.4 to 1.71.7 to 2.11.8 to 2.01.7 to 2.0 1 Projections of change in real GDP and inflation are from the fourth quarter of the previous year to the fourth quarter of the year indicated.

The unemployment rate was at 4.4% in September. There was no data for October due to the government shutdown, and the November report will be released on December 16th - so the FOMC was flying blind today on the unemployment rate. However, they increased the 2026 projection into the employment recession range. Note: An unemployment rate of 4.6% over the next few months might be recessionary.
Unemployment projections of Federal Reserve Governors and Reserve Bank presidents, Unemployment Rate2 Projection Date2025202620272028 Dec 20254.5 to 4.64.3 to 4.44.2 to 4.34.0 to 4.3 Sept 20254.4 to 4.54.4 to 4.54.2 to 4.44.0 to 4.3 2 Projections for the unemployment rate are for the average civilian unemployment rate in the fourth quarter of the year indicated.

As of September 2025, PCE inflation increased 2.8 percent year-over-year (YoY), up from 2.7 percent YoY in August.  Projections for PCE inflation were lowered slightly.
Inflation projections of Federal Reserve Governors and Reserve Bank presidents, PCE Inflation1 Projection Date2025202620272028Dec 20252.8 to 2.92.3-2.52.0 to 2.22.0 Sept 20252.9 to 3.02.4-2.72.0 to 2.22.0
PCE core inflation increased 2.8 percent YoY in September, down from 2.9 percent in August.   Projections for 2025 core PCE inflation were decreased.
Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents, Core Inflation1 Projection Date2025202620272028Dec 20252.9 to 3.02.4-2.62.0 to 2.22.0 Sept 20253.0 to 3.22.5-2.72.0 to 2.22.0

Ohio Governor Mike DeWine has vetoed a bill that would have extended the number of hours that employers can schedule 14–15-year-olds to work on school nights, in violation of federal law. DeWine vetoed the bill last week after advocates from a long list of child health and welfare, education , organized labor, and economic justice organizations publicly urged him to oppose the bill.

DeWine’s decision reflects conclusions backed up by decades of research and public policy experience. As his veto message emphasizes, existing work hour guidelines—providing young teens (under 16) opportunities to gain work experience “after school up to 7 p.m.”—have been “in place, across this country, for many years” and have “served us well” and “effectively balanced the importance of 14- and 15-year-old children learning to work, with the importance of them having time to study.”

If enacted, the Ohio bill in question (SB 50) would have allowed longer, later work hours—up to 9 p.m. on school nights for children as young as 14—that can interfere with young teens’ education, sleep, health, and development. Studies have consistently shown that intensive work at a young age is associated with poor academic outcomes; longer hours raise the risk of work-related illness and injury; and work later into the night exacerbates sleep deprivation that in turn can interfere with teens’ education and well-being. Allowing employers to schedule young teens to work until 9 p.m. also increases the likelihood of nighttime driving for new drivers (minors can be permitted to drive at age 15.5 in Ohio), an additional risk factor for accidents. Motor vehicle crashes are already the leading cause of death for teens and young adults, who are three times more likely to die in a car accident than adults over 20. For all these reasons, federal law limits the maximum number of working hours for young teens to three hours per night or 18 hours a week and prohibits work past 7 p.m. on school days.

At a moment when the U.S. faces a reemerging crisis of rising child labor violations and when Ohio is taking steps to decrease teen driving fatalities, DeWine’s veto is a sensible, informed response to harmful legislation. It also marks a hopeful next stage in ongoing state-level struggles to maintain and strengthen essential child labor protections in the face of a coordinated, industry-backed campaign to weaken child labor standards—first at the state level, and eventually nationwide.

Veto spares Ohio employers from confusing conflict between state and federal law, while threats to erode federal child labor standards still loom

Governor DeWine also appears to have taken to heart and, wisely, acted on lessons his fellow policymakers learned the hard way in other states where similar legislation has been proposed or enacted in recent years.

Ohio’s SB 50 would have allowed employers to schedule 14–15-year-olds to work until 9 p.m. on school days, two hours later than allowed under the federal Fair Labor Standards Act (FLSA). Because states can legislate above FLSA standards but not below, the proposed new state standards would have conflicted directly with federal law, sowing confusion for parents, teens, and employers, and putting employers at risk of being charged with federal child labor violations if they chose to follow weaker state guidelines.

This exact scenario played out recently in Iowa when, despite strong warnings from labor advocates and U.S. Department of Labor (DOL) officials, Governor Kim Reynolds signed a 2023 bill that included multiple provisions conflicting with federal child labor law. Once the Iowa bill went into effect, information from state agencies and employer groups (including the Iowa Restaurant Association) sowed confusion by suggesting that employers could now abide by weaker new state standards. Then, after a number of restaurants faced federal child labor investigations and fines for violating the FLSA in 2024, Governor Reynolds publicly defended the illegal employer practices—in part with (unsubstantiated) claims that the businesses were being unfairly targeted by the DOL, and by calling on the federal government to stop enforcing existing child labor laws and instead “look to Iowa as an example” of how to handle child labor.

A concurrent resolution accompanying the Ohio bill, which was adopted by both chambers, similarly called on Congress to weaken the FLSA by adopting Ohio’s proposal for longer school-night hours for young teens as the new federal standard. By repeatedly proposing—and in some cases implementing—standards that conflict with federal law, legislators in states like Iowa and Ohio have attempted to chip away at the already fragile federal floor for workplace protections. Federal child labor standards are also under direct threat. The Project 2025 policy agenda closely followed by the Trump administration recommends lifting prohibitions on hazardous child labor and allowing states to opt out of the FLSA entirely.

In light of continuing threats, states have a critical role to play in defending and strengthening child labor standards

Ohio’s SB 50 and its 2023 predecessor were both sponsored by the same state senator with the support of industry groups whose members would benefit from weaker child labor laws—the Ohio Restaurant and Hospitality Alliance, National Federation of Independent Business in Ohio, and the Pickerington Chamber of Commerce—as well as Americans for Prosperity, a right-wing, billionaire-backed dark money group that has coordinated state-by-state legislative campaigns to weaken child labor laws across the country, often alongside the right-wing think tank Foundation for Government Accountability (FGA).

Governor DeWine now joins a growing number of governors and state legislators who have stood up in opposition to these attacks. For example, Wisconsin Governor Tony Evers vetoed an FGA-sponsored bill last year that would have eliminated the state’s effective, commonsense youth work permit system. Some have even gone further to propose or support legislation that strengthens state child labor standards, with lawmakers in more than a dozen states proposing legislation or administrative rules to protect minors from hazardous or exploitative work, deter child labor violations, and increase accountability for law-breaking employers.

Governor DeWine, after hearing the voices of numerous parents, educators, health care, and driving safety experts, concluded that a veto of SB 50 was “in the public interest.” Given evidence that industry campaigns to weaken child labor laws are continuing (and the very real risk that aspects of federal child labor protections could face similar threats from the same forces), more states should pursue critical opportunities and responsibilities in 2026 to—at the very least—defend the long-standing, minimal floor set by the FLSA and, wherever possible, to strengthen state standards that ensure young teens who work can do so without damaging their health or education.

CBO finds that maintenance for Navy destroyers and amphibious warfare ships has often taken longer and required more labor than planned. Those delays affect the fleet's readiness and reflect aging ships, late inspections, and other factors.

Fed Chair Powell press conference video here or on YouTube here, starting at 2:30 PM ET.

FOMC Statement:

Available indicators suggest that economic activity has been expanding at a moderate pace. Job gains have slowed this year, and the unemployment rate has edged up through September. More recent indicators are consistent with these developments. Inflation has moved up since earlier in the year and remains somewhat elevated.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment rose in recent months.

In support of its goals and in light of the shift in the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 3-1/2 to 3‑3/4 percent. In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.

In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.

The Committee judges that reserve balances have declined to ample levels and will initiate purchases of shorter-term Treasury securities as needed to maintain an ample supply of reserves on an ongoing basis.

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Susan M. Collins; Lisa D. Cook; Philip N. Jefferson; Alberto G. Musalem; and Christopher J. Waller. Voting against this action were Stephen I. Miran, who preferred to lower the target range for the federal funds rate by 1/2 percentage point at this meeting; and Austan D. Goolsbee and Jeffrey R. Schmid, who preferred no change to the target range for the federal funds rate at this meeting.
emphasis added

FTA Threatens To Cut Funds To Chicago Transit Authority After Woman Set On Fire

Authored by Melanie Sun via The Epoch Times,

The Federal Transit Authority has threatened to withdraw funding for Chicago’s public transport network if the city doesn’t “measurably reduce assaults on transit workers and passengers” and address “unsafe conditions that have contributed to increased crime.”

FTA Administrator Marc Molinaro on Dec. 8 sent letters to Chicago Mayor Brandon Johnson and Illinois Gov. JB Pritzker, outlining a Dec. 15 deadline for the Chicago Transit Authority (CTA) to develop a “verifiable security enhancement plan” to be implemented in full across the CTA’s bus and rail system by Dec. 19 or risk cuts to federal funding.

The special directive also ordered the CTA to update its public transportation agency safety plan by the end of December and share that plan with the FTA within seven days of approval by the CTA’s Transit Board Committee.

The CTA is an FTA-regulated transit agency and must comply with the FTA’s safety oversight through special directives by the specified deadlines. Otherwise, it could face up to 25 percent cuts in federal funding under the Urbanized Area Formula Grants program authorized by statute 49 U.S.C. § 5307.

In the letters, Molinaro cited an attack last month in which 26-year-old female commuter Bethany MaGee was set on fire while traveling on a Chicago train, leaving her with life-threatening burns. She survived but remains hospitalized, with years of surgeries ahead of her.

Police arrested 50-year-old Lawrence Reed of Chicago the next morning. He was charged with committing a terrorist attack. Molinaro said in the letter that Reed was previously arrested 72 times.

He was on pretrial release at the time of the attack. Molinaro said in the letter that Reed was released after being charged with assaulting a social worker in August. Online court records did not list an attorney for Reed.

“Illinois is notorious for being the first state in the U.S. to impose a deadly cashless bail policy that allows alleged criminals to be released from jail without paying any money while they await trial,” the FTA said in a statement.

The Cook County chief judge’s office, when asked to comment on the case, pointed to a state law that limits judges’ ability to deny the release of defendants ahead of their trials.

Molinaro said the “preventable” attack on MaGee was not an isolated incident, pointing to “high crime rates on CTA property.”

A Chicago Transit Authority train pulls into the new Damen Ave. station just two blocks from the United Center on Aug. 12, 2024. Charles Rex Arbogast/AP Photo

This included reports to the FTA of a violent crime rate four times higher than the national average, marked by four homicides in the past 18 months and a more than doubling of assaults against workers and riders in the last five years.

The attack “reflects systemic failures in both leadership and accountability on all levels that cannot be tolerated,” Molinaro wrote. “I will not accept the brutal assault of an innocent 26-year-old woman as an inevitable cost of providing public transportation.”

The FTA administrator said if the CTA does not quickly increase its law enforcement presence, the FTA will act, “including by withholding federal funds.”

“Transit leaders and elected officials who fail to enforce basic laws and permit disorder to erode the integrity of their systems are making deliberate choices that endanger riders,” he said.

Johnson told reporters Dec. 9 that his office will respond to the Federal Transit Administration letter.

“We do have to look at what the security apparatus looks like for public transportation,” the mayor said. “I don’t need a letter from the Trump administration to tell me what my priorities are.”

Pritzker also responded to the FTA letter at a press conference.

“This is the federal government threatening state and local government with taking away federal funds for a purpose that they’re not allowed to,” he ‌said. “We want the safest possible and most modern transit system in the entire country, and that’s what we’re prepared to implement.”

Illinois passed public transit reform that includes increased funding for public safety programs, including combating violent crime on public transit, his office said.

A CTA spokesperson said in a statement that the agency is reviewing the FTA request and will “respond within the requested timeline.” Its operations rely heavily on federal funding, particularly for capital improvement projects.

The Trump administration in October announced it was withholding $2.1 billion for Chicago infrastructure projects, including expansion plans for the Red Line L commuter train. The project would have established stops in some of the city’s poorest neighborhoods. White House budget officials said at the time that they wanted to ensure funding wasn’t moving through race-based contracting.

Tyler Durden Wed, 12/10/2025 - 13:45

"Bud Light" Moment Hits Cracker Barrel: Stock Crushed, Traffic Slides, Guidance Slashed

Cracker Barrel shares are lower in premarket trading after posting softer-than-expected quarterly sales and cutting full-year revenue and profit guidance. Customer traffic dropped more than anticipated, driven in part by backlash after the casual dining chain effectively "Bud Lighted" itself with a disastrous woke rebranding.

The rebranding ... 

... which was eventually reversed and the marketing 'expert' resigned, appears to have a lasting impact on sales. 

First-quarter results swung to an adjusted loss of 74 cents per share versus a profit a year ago, slightly better than the Bloomberg Consensus estimate. Revenue dipped 6% and missed forecasts, with comparable sales for both restaurants and retail declining more than expected.

Wall Street analysts were spooked by the 7.3% decline in customer traffic for the quarter. 

Snapshot: First quarter results (courtsey of Bloomberg): 

• Adjusted loss per share 74c vs. EPS 45c y/y, estimate loss/shr 79c

• Revenue $797.2 million, -5.7% y/y, estimate $801.1 million

• Restaurant comp sales -4.7% vs. +2.9% y/y, estimate -4.02%

• Retail comparable sales -8.5% vs. -1.6% y/y, estimate -6.5%

Ongoing traffic deterioration sharply reduced annual sales and profit guidance (courtsey of Bloomberg):

• Sees revenue $3.2 billion to $3.3 billion, saw $3.35 billion to $3.45 billion, estimate $3.38 billion (Bloomberg Consensus)

• Sees capital expenditure $110 million to $125 million, saw $135 million to $150 million

• Sees adjusted Ebitda $70 million to $110 million, saw $150 million to $190 million

In premarket trading, Cracker Barrel shares are down about 5.5%. As of Tuesday's close, the stock has been cut in half since the August rebranding debut. 

Here's what Wall Street analysts are saying (courtsey of Bloomberg);

Piper Sandler (neutral, PT to $27 from $49), Brian Mullan

• "Unfortunately, the struggles that kicked off in August have continued at CBRL, with traffic in the quarter down 7.3% (better in the beginning of August, and then worse after that)," Mullan writes

• Traffic for the fiscal 2Q-to-date period is running down 11%, and management "materially" reduced its annual guidance

• Cracker Barrel is sticking with many of the turn-around efforts designed to help over the long-term, but the main takeaway from the 3Q report/conference is that "things remain pretty tough at the business in the here and now"

Citi (sell PT to $20 vs. $24), Jon Tower

• "The traffic slump spurred by the ill-fated logo change resonated through F1Q results, and, along with a softer restaurant backdrop, prompted a weaker start to F2Q and a FY26 guidance cut," Tower writes

• In the near-term, the company is "mixing in tactical sales drivers," like buy-one-get-one and holiday promos, that may "prove costly" to the P&L, and weaving in longer-term initiatives to "sustainably drive the top line and preserve profits."

• Believes the stock will remain under pressure until traffic/sales show "sustained improvement, as out-year numbers remain a question mark"

Truist (buy, PT to $45 from $50), Jake Bartlett

• "Sales trends have not begun to recover from the 8/19 re- branding fiasco, or any recovery has been offset by macro pressures," Bartlett writes 

• Says Cracker Barrel is "taking the right steps" to boost traffic, with its focus on improved service and food quality

• This has been reflected in improving guest satisfaction scores and will eventually, he believes, be reflected in a traffic recovery

• Business investments, including adding value to the menu and retaining labor hours, are headwinds to FY26 margins, but should drive operating leverage in FY27

Cracker Barrel is a case study for every other casual dining chain: go woke, get crushed.

Tyler Durden Wed, 12/10/2025 - 13:25

Obamacare Was Not A Failure

Authored by Connor O'Keefe via The Mises Institute,

“You have turned, Mr. President, the right of every American to have access to decent healthcare into reality for the first time in American history.”

Those are the words then-Vice President Joe Biden said to President Obama in the East Room of the White House on March 23, 2010, as he prepared to sign the Patient Protection and Affordable Care Act—or Obamacare—into law.

The signing ceremony was jubilant as party leaders celebrated their legislative victory. And across the country, their joy was shared by millions of Obama’s supporters who were convinced that the man they voted for had actually delivered the kind of meaningful reform every politician promises, but few make good on.

Americans listened to Joe Biden proclaim that every American would now have access to decent healthcare. And they listened to Obama recount stories of people he had brought to the ceremony who had gone untreated for various serious medical conditions because they could not afford it, and then suggest that, because of the bill he was about to sign, those stories would be a thing of the past.

I think it’s safe to assume that the Obama supporters who were watching that day would never have imagined that, fifteen years later, Congress would be battling over the extension of several temporary “emergency” subsidies that had had to be put in place to keep Obamacare afloat as healthcare and health insurance costs soared to heights that would have been considered unimaginable to anyone living in 2010.

But here we are.

As Congress fights over not whether but how to extend these covid-era ACA subsidies, it can be tempting to call Obamacare a failure. I mean, how else would you describe an “affordable care” act that made healthcare and health insurance less affordable while requiring a constant influx of new tax dollars to keep it from falling apart?

That’s a reasonable conclusion.

But the problem with it is that it takes the political class at its word and accepts that Obamacare was genuinely meant to make healthcare more affordable and accessible to the American people. It wasn’t.

To understand the true purpose that Obamacare served, you have to first go back and understand why government first intervened in the healthcare market a little over a century ago.

It was not, as the progressive creation myths many of us are taught in school suggest, to protect Americans from maniacal doctors or food and drug companies that were trying to kill them. Nor was it to help Americans afford healthcare—prices back then weren’t anywhere near the absurd levels we see today.

The reason government began intervening in healthcare was because some industry insiders and interest groups recognized that they could achieve and protect a level of market dominance practically unseen up to that point if they stopped merely trying to offer customers more value than their competitors and instead used government power to warp the healthcare industry to their benefit.

That began when a physicians’ interest group maneuvered its way into setting the accreditation standards for American medical schools. That position of influence allowed the group to ban programs that didn’t align with its specific medical philosophy, leading to the forced closure of nearly half the country’s medical schools.

This created an artificial shortage of doctors, which kicked off the affordability crisis that has defined American healthcare ever since.

Of course, the problem was still quite limited in the early days. But as other related industries—especially pharmaceuticals—began falling prey to the same crony dynamic at the heart of the Progressive Era, healthcare quickly began to grow more expensive.

Then, in the middle of the twentieth century, the health insurance industry followed the lead of healthcare providers and pharmaceutical companies and lobbied government officials for rules and regulations that benefited insurance companies’ bottom lines.

That effort culminated in a reworking of the tax code under President Truman. The government made employer-provided health insurance tax-deductible while it continued to tax other forms of employee compensation and other means of paying for care. In other words, the government used the tax code to change how Americans paid for healthcare. It didn’t take long for employer-provided insurance plans to become the dominant arrangement and for health insurance to morph away from actual insurance.

Shortly after that happened, the government significantly ramped up demand for the artificially-constrained supply of medical care with the passage of Medicare and Medicaid, leading to an easily-predictable explosion in the price of healthcare.

And, as fewer and fewer people could afford healthcare at these higher prices, more government assistance was required, which meant more demand, higher prices, more need for government support, and so on.

This was not good for everyday Americans, but it was excellent for healthcare providers and drug companies whose revenues were ballooning as more and more cash poured into the healthcare system.

And it was great for the health “insurance” companies. All the taxes on competing means of payment effectively acted as a subsidy, putting the industry in a strong position to benefit from the mounting crisis because, in addition to facilitating most of the country’s healthcare spending, they helped these providers grow far beyond the typical bounds of insurance.

In a free market, insurance serves as a means to trade risk. It works well for accidents and calamities that are hard to predict individually but relatively easy to predict in bulk, like car accidents, house fires, and unexpected family deaths. But with the government incentivizing people to buy healthcare through insurance plans, those plans began to grow to cover easily-predictable occurrences like annual physicals.

So, zooming out, industry leaders and interest groups joined forces with government officials to use government interventions to create a healthcare system designed to move as much money as possible to healthcare providers, pharmaceutical companies, and the insurance industry. That is, and has always been, the main motivation behind the federal government’s healthcare policy.

But, as with any scheme like this, the party cannot last forever. It only works as long as money keeps coming in. For an important service like healthcare, which most people don’t consider optional, the threshold is pretty high. But there is still a point where premiums grow too high, fewer employers or individual buyers are willing to buy insurance, and the flow of money into the healthcare system starts to falter.

According to the government’s own census data, that tipping point was reached in the early 2000s. For the first time since the scam had really kicked off, the number of people with health insurance began to fall each year. The industry—which had apparently assumed the flow of money would never stop increasing—began to panic.

Something had to be done.

And that something was Obamacare.

Despite all the talk of affordability and access used to sell the bill to the public, the Affordable Care Act is best understood as a ploy by the healthcare industry and the government to keep the party going.

Obamacare required all 50 million uninsured Americans to obtain insurance and greatly expanded what these “insurance” companies covered. Demand for healthcare shot back up, and the vicious cycle started back up again.

As any competent economist was saying before the bill was even passed, ramping demand back up would not make healthcare more “affordable,” it would only raise prices. And that’s exactly what happened.

Of course, as prices rose higher and health “insurance” moved further and further away from actual insurance, it’s made the American people even more dependent on the government for healthcare, which is how we’ve arrived at our current situation where extra, “temporary” subsidies rolled out during an official national emergency need to be made permanent to keep everything going.

So, if you want to take the political establishment at their word, the best you can say is that Obamacare kicked the can down the road and made the healthcare affordability crisis worse in exchange for a bit of temporary relief for some uninsured Americans.

But if you view the ACA within the context of the last century of American healthcare policy, it reversed the faltering demand for healthcare and health insurance, accelerated the racket moving as much money as possible into the industry, and quickly became a new political third rail that the “opposition” party refuses to even consider rolling back.

It’s hard to view that as anything other than a meaningful success.

Tyler Durden Wed, 12/10/2025 - 13:05

Trump Says National Guard Member Who Survived DC Shooting 'Stood Up Today'

Authored by Aldgra Fredly via The Epoch Times,

President Donald Trump said on Dec. 9 that West Virginia National Guard member Staff Sgt. Andrew Wolfe, who was critically injured after being shot in Washington last month, has stood up from his bed and is showing signs of recovery.

Wolfe and fellow National Guard member Army Spc. Sarah Beckstrom were shot on Nov. 26 in what U.S. authorities say was an ambush near the White House. Beckstrom died of her injuries the following day, while Wolfe was left in critical condition.

Trump gave an update on Wolfe’s condition during a speech at an event in Pennsylvania.

“Today I got a call that he got up from bed. Do you believe that? He got up, he got up,” he said.

The president added that Wolfe has not spoken yet, noting that the National Guard member had been hit in the head during the attack.

“He didn’t speak, he’s not ready for that yet. I mean, he got hit in the head, but he got up and, boy, they’re so happy. It’s amazing,” he said, while commending the hospital staff and the military for their care.

“The love and the affection and the care that they’re given, they can’t even believe what’s happened. But Andrew stood up today, and people can’t believe it.”

West Virginia Gov. Patrick Morrisey said on Dec. 5 that Wolfe’s head wound is slowly improving, and he is beginning to “look more like himself,” quoting Wolfe’s parents.

Wolfe’s family said they expect him to remain in acute care for another two to three weeks as he continues recovering, according to the governor, adding that they have been “optimistic about his progress.”

“We continue to ask all West Virginians and Americans for their prayers! They are making a difference,” Morrisey said.

The suspect, Rahmanullah Lakanwal, 29, was shot during the confrontation.

Trump said in his speech that the U.S. government will seek the death penalty for Lakanwal, calling the attack an “act of terrorism.”

A makeshift memorial for U.S. Army Spc. Sarah Beckstrom and U.S. Air Force Staff Sgt. Andrew Wolfe outside of Farragut West Station, near the site where the two National Guard members were shot, in Washington on Dec. 1, 2025. Julia Demaree Nikhinson/AP Photo

Lakanwal, an Afghan national who once worked with the CIA and entered the United States in September 2021 through a Biden-era resettlement program, has been charged with first-degree murder, two counts of assault with intent to kill while armed, and three counts of possession of a firearm during a crime of violence.

Last week, he pleaded not guilty to murder and assault charges during his first hearing before a judge, appearing remotely by video from a hospital bed.

A court-appointed defense attorney for Lakanwal entered the plea during the virtual court appearance. The attorney pushed for his release, citing his lack of criminal history.

D.C. Superior Court Judge Renee Raymond ordered Lakanwal held without bond. His case is due back in court on Jan. 14.

A picture of Rahmanullah Lakanwal, an Afghan national who is the suspect in the shooting of two National Guard members, is displayed at a press conference in Washington on Nov. 27, 2025. Nathan Howard/Reuters

Wolfe and Beckstrom were among the National Guard members assigned to Joint Task Force-D.C., activated in August to support local and federal law enforcement efforts in restoring order in the nation’s capital.

Two lawmakers, Reps. Carol Miller (R-W.Va.) and Riley Moore (R-W.Va.), introduced a resolution to honor the two National Guard members. A similar measure was also introduced in the Senate.

“This resolution sends a clear message that the American people stand with the Beckstrom family, Andrew Wolfe, and the whole West Virginia National Guard community,” Moore said in a Dec. 3 statement. “We grieve this horrific and senseless attack, and continue to pray for these Guardsmen and their families.”

Tyler Durden Wed, 12/10/2025 - 12:25

As reported by the House Committee on Energy and Commerce on October 3, 2025

Intel Shares Fall After Lawsuits Claim US Chipmakers Aided Russian Weapons

Intel shares slipped in early trading Wednesday after the company was named in a series of lawsuits accusing major U.S. chipmakers of failing to stop their technology from ending up in Russian weapons used against civilians in Ukraine.

Intel, Advanced Micro Devices and Texas Instruments — along with Mouser Electronics, a Berkshire Hathaway–owned distributor — are alleged to have shown “willful ignorance” as restricted semiconductors were resold through third parties to Russia and Iran, according to five suits filed Wednesday in Texas state court.

The cases, brought on behalf of dozens of Ukrainian civilians, cite five attacks from 2023 to 2025 that killed and injured civilians. The filings claim the companies’ components were found in Iranian-made drones tied to Intel and AMD, as well as Russian Iskander and KH-101 missiles.

The defendants allegedly failed to prevent illegal diversions despite U.S. sanctions, amounting to “domestic corporate negligence.” Mass-tort lawyer Mikal Watts filed the suits in Dallas, arguing Texas jurisdiction because the companies operate in the state.

Mouser, acquired by Berkshire in 2007, is accused of helping route chips from Intel, TI and others to shell companies controlled by Russian proxies. The distributor’s U.S.-based logistics were a “substantial domestic component” of the harm, one suit claims.

Intel, AMD, TI, Mouser and Berkshire Hathaway didn’t immediately comment. All three chipmakers have previously said they fully comply with export rules, oppose any use of their technology in Russian weapons and ended business in Russia after the invasion.

Bloomberg reporting last year found U.S. chips continue to power Russian drones, missiles and communications systems despite sanctions, prompting repeated warnings from U.S. lawmakers that manufacturers must do more to stop the flow.

Tyler Durden Wed, 12/10/2025 - 12:05

Deep Discounts Tempt Indian Refiners To Seek Non-Sanctioned Russian Oil

Authored by Tsvetana Paraskova via OilPrice.com,

The majority of India’s biggest refiners are buying Russian oil from non-sanctioned sellers and traders as widening discounts of Russia’s crudes to benchmarks are tempting the price-sensitive Indian importers, sources involved in the purchases told Bloomberg on Wednesday. 

Before the latest sanctions on Russian oil producers Rosneft and Lukoil, India bought from Russia around one-third of all the crude it imported, as it sought cheaper oil.

Amid tense trade negotiations with the United States, India earlier this year was singled out by U.S. President Donald Trump as the main financier of the Kremlin’s oil revenues.

At the time, India remained adamant that it would buy the cheapest oil available, regardless of whether it came from Russia or elsewhere.    

However, the U.S. sanctions on Rosneft and Lukoil upended all previous plans by Indian refiners, who hastened to withdraw from the spot market for Russian crude in December.

But Bharat Petroleum Corporation Limited (BPCL) and Indian Oil Corporation (IndianOil) have bought Russian crude from non-sanctioned companies for January delivery, at a discount of $6-$7 to Brent crude, reports emerged last week.

Combined, IndianOil and Bharat Petroleum have purchased in recent days 10 cargoes of non-sanctioned Russian crude, including Urals, according to Bloomberg’s sources.

Another state-owned Indian refiner, Hindustan Petroleum Corporation Limited (HPCL), is seeking non-sanctioned Russian oil for January delivery, the sources said. 

Private refiner Reliance Industries, the owner of the world’s biggest integrated refining complex at Jamnagar, is a notable absence among Indian refiners in the market for non-sanctioned Russian crude, according to Bloomberg. 

Reliance, which operates the 1.4 million barrels per day (bpd) Jamnagar complex, has a long-term deal with Rosneft to buy almost 500,000 bpd.

Reliance was India’s single biggest buyer of Russian crude, until now, but it halted all purchases of oil from Russia last month, after the sanctions on Rosneft and Lukoil. 

Tyler Durden Wed, 12/10/2025 - 11:40

Russia Rejects New Zelensky Offer Of 'Energy Ceasefire' As Grid Repair Woes Worsen

Russia has rejected a new Zelensky proposal for an "energy ceasefire." Kremlin spokesman Dmitry Peskov has explained that Russia wants a "long-term peace" and not a just a temporary ceasefire. Zelensky has offered a mutual halt to strikes on energy infrastructure if Russia agreed, mirroring something which had only briefly been in effect at the start of this year.

This 'offer' comes at a moment that Ukraine is suffering perhaps its worst energy crisis of the war, with lengthy blackouts not just being experienced in the country's east and south - but long outages in and around the capital as well.

Kyiv without power. File image via Suspilne News 

Oleksandr Kharchenko, director of the Ukrainian Energy Research Center, has in recent comments confirmed that resources for repairing damaged energy facilities have almost run out. 

"Now I don't see the resources from either Ukrenergo, the generating or distribution companies to purchase the equipment they already need and will need in two or three months," he said in televised remarks.

"Ukraine may run out of equipment to restore its energy system if Russia continues to launch attacks," he has explained.

The new proposal for a fresh energy ceasefire comes as Moscow is still livid at recent attacks on tankers transporting Russian oil. And now a cargo vessel carrying grain from Crimea has been detained at Odessa port:

Ukrainian security officials have detained a cargo vessel in the port of Odesa that authorities say is part of Russia’s so-called “shadow fleet,” the Security Service of Ukraine (SBU) said Wednesday.

The ship, whose name was not disclosed, arrived under the flag of an African country to load a shipment of steel pipes. The captain and 16 crew members holding passports from unspecified Middle Eastern countries were on board at the time of the seizure.

According to the SBU, the vessel illegally transported nearly 7,000 tons of Russian grain from annexed Crimea to North Africa in January 2021.

Via Telegram

The SBU claims it found evidence of "illegal operations in ports on temporarily occupied Ukrainian territory" after a search of the ship.

Apparently Ukrainian authorities intend to seize the ship's cargo altogether, and transfer them Ukraine’s Asset Recovery and Management Agency (ARMA), a government entity which deals with property linked to corruption or other crimes. So naturally, Moscow is not going to look kindly on fresh offers to mutually stop attacks on energy infrastructure.

Tyler Durden Wed, 12/10/2025 - 11:00

WTI Holds Losses After Big Product Inventory Builds, US Crude Production Nears Record Highs

Oil prices extended their recent decline this morning as concerns about global oversupply continued to weigh on sentiment.

Crude has been trapped in a tight $4-a-barrel range since the start of November, as oversupply concerns vie with geopolitical risks surrounding the flow of sanctioned Russian barrels into nations including India.

“I’m increasingly becoming a bit of a contrarian here, given the limited selling response to all the negative news," said Ole Hansen, head of commodities strategy at Saxo Bank AS.

"The biggest risk to prices could be to the upside if next year’s oversupply is already priced in," he added.

Overnight saw API report a large crude draw but sizable product builds...

API

• Crude -4.78mm (-1.7mm exp)

• Cushing

• Gasoline +3.14mm

• Distillates +2.88mm

DOE

• Crude -1.812mm

• Cushing +308k

• Gasoline +6.397mm - biggest build since Dec 2024

• Distillates +2.5mm

US crude stocks fell last week but products saw notable builds (4th straight week) as Cushing inventories hover near 'tank bottoms'...

Source: Bloomberg

US Crude production picked up again to a new record high as rig counts remain near cycle lows...

Source: Bloomberg

Oil prices have stuck within a tight range in recent weeks as rising geopolitical risks amid Ukrainian attacks on Russian oil infrastructure and shipping counter rising global inventories of the fuel.

In its monthly Short-Term Energy Outlook released Tuesday, the EIA warned rising global production has outpaced demand and it expects inventories to continue rising by two-million barrels per day in 2026, pressuring prices.

Tyler Durden Wed, 12/10/2025 - 10:49

The Fiddle-All Reserve

By Michael Every of Rabobank

The RBA rates hold decision generated two notable headlines from the Australian Financial Review: ‘RBA is worried it cut interest rates too far’; and ‘RBA is caught in Ray Dalio’s Doom Loop’.

The Bank of England says Chancellor Reeves’ budget will lower inflation by 50bps in 2026, backing the view that they will give the public an Xmas rate cut next week. Of course, note that the Australian government used similar state spending deliberately targeted at certain sections of the CPI index to help persuade the RBA to cut three times… only for it to then worry it went too far and get caught in a ‘doom loop’.

The RBNZ ‘s new Governor Brennan stated rates are not on a preset course, implying that they could go either up or down. Who knew? Not those who think they can’t go back up, for one.

Today, sees the Bank of Canada, the Fed, and the BCB in Brazil - which in Asia means a day of fiddling. The BCB is seen on hold at 15%. So is the BoC at 2.25% (see here for more from our cross-asset strategists Molly Schwartz and Christian Lawrence). At the Fed, a 25bps cut to 3.75% is priced in (see here for the take from our US Strategist Philip Marey) - but so is disagreement on what next. As Reuters headlines it, ‘Investors warm up for long spell of discordant Fed’. That’s putting it mildly.

The Financial Times reports Trump and Treasury Secretary Bessent will start final interviews for the new Fed Chair this week, with a trio of names still in the ring alongside favorite Kevin Hassett. He just said he wouldn’t bow to pressure over cutting rates, but he agrees with Trump there’s “plenty of room” for cuts in the coming months. So, that’s one tricky interview question in his pocket. However, ‘Where do you see yourself in five years?’ might be harder given the FT claims Hassett could be appointed for a shorter than usual term, allowing “Bessent to move to the Fed later.” Moreover, at a campaign-style rally, Trump just stated “It could be” that all four Biden-era Fed appointments, including “too late” Powell, “may have been signed by the autopen”, so are “maybe” invalid, “but we’ll take two.”

The RBA fiddled. The BOE may fiddle. The RBNZ may fiddle. The BoC are taking a rest from fiddling. The Fed is still fiddling - and the Fed is being fiddled with. Yet Nero-liberal markets don’t fret about getting burned as the music deafens them to what’s going on.

Trump just gave Ukraine’s Zelenskyy “days” to respond to his peace proposal: he reportedly wants things wrapped up by Xmas having failed to do so for Thanksgiving. Ukraine is preparing to unveil its updated peace proposal to the US, and Zelenskyy also claims to be “ready for elections.”

Trump thrashed EU leaders, stating “I think they’re weak,” and their countries are “decaying” – the accompanying article states “The Most Influential Man in Europe Thinks Europe is Full of Losers.” Trump also denied pledging any Argentina-style bailout for Hungary’s embattled leader Orbán, even if he praised central and eastern Europe vs the west.

European leaders have, typically, responded weakly for fear of losing US support. Indeed, the US denied a German request to integrate American artillery rockets into its armed forces, which could make it more difficult for the German military to cooperate with the US and other NATO allies. For an overview of the geostrategic dilemma Europe is in, see ‘A Grand Strategy for Europe in the New Cold War’. For now, there is Romanesque rhetoric but Nero-style fiddling going on.

Against this backdrop, the FT also argues ‘Why the world should worry about stablecoins’, concluding that “Dollar-based digital currencies offer benefits for the US, but Britain and the EU are better off resisting them.” Really? How? Is that also fiddling as things get hotter?

The Politico interview also touched on the “Trump Corollary” to the US Monroe Doctrine, where he refused to rule out boots on the ground in Venezuela, or moves vs Colombia or Mexico. That’s as CNN reports the Trump admin is quietly building plans for what would happen if Maduro were ousted – as if this is in the passive rather than active sense.

In geoeconomics, Trump’s controversial decision to allow Nvidia to sell H200 AI chips to China is seen by Bloomberg as spurred by Huawei’s AI Gains; the Wall Street Journal states those chips will have to undergo an unusual US security review before being exported to China; and the FT claims China will (again) limit access to them anyway, as it aims for its domestic production. That’s what a push for strategic autonomy looks like – not lots of grand speeches about strategic autonomy.

The EU has announced stricter food import controls to reassure EU farmers and address French conditions for supporting the EU-Mercosur deal: will it therefore replace tariffs with non-tariff barriers? It’s also considering further tariffs on China. Meanwhile, EU Industry Commissioner Séjourné admitted: "Last month, I was supposed to go to Brazil to discuss a rare earth mine. Three days beforehand we were told that the Americans had come, put money on the table, and bought all production until 2030." By contrast, China claims to have pulled off a critical mineral production tech revolution in 10 months, leaving it further ahead. And in the UK, a token vote in favor of rejoining the customs union with the EU passed Parliament.

The FT also reports July’s US-Indonesia trade deal is at risk of collapse, with D.C. believing that Jakarta is reneging on terms of agreement. Watch this space to see how the US reacts when a country doesn’t stick to a deal.

In political economy, France's National Assembly narrowly approved a contentious 2026 social security budget. At the same time, the leading French (presumed) presidential candidate Bardella claims “Together, Nigel Farage and I will restore Europe’s borders” via a ‘patriotic alliance’ between the National Rally and Reform UK to reshape Europe. Not coincidentally, the UK’s PM Starmer, a former Human Rights lawyer, urged Europe’s leaders to curb (or can we say, ‘fiddle with’?) the European Court of Human Rights in order to halt the rise of the far right.

In key data, China’s CPI inflation was unchanged y-o-y at 0.7%, but PPI deflation deepened further to -2.2% from -2.1%. Of course, that shows some economic problems, even if the West would kill for 0.7% CPI. So do reports that major Chinese EV firms are losing money on every vehicle that they sell. But when the quid pro quo is global domination of supply chains now close the point of no return for other countries’ established industries such that no future recovery is then possible, it’s arguably still a tune worth squeezing out of all the instruments of economic statecraft… even if Neo-liberalism burns.

Against that kind of backdrop, the Fed meeting today is just one little note.

Tyler Durden Wed, 12/10/2025 - 10:20

As introduced in the Senate on December 8, 2025

China's DeepSeek Using Banned Nvidia Chips To Develop Next Major Model

Chinese AI startup DeepSeek has been using 'several thousand' banned Nvidia Blackwell chips to develop its next major model, The Information reports, citing six people with knowledge of the matter. 

The chips in question were smuggled into China through a complex scheme that involves sending them to data centers in countries that are allowed to purchase them - then dismantling the servers and importing the components to China. 

Doing so allowed DeepSeek to remain competitive in the AI race, as Chinese AI chips are still not sufficient to train AI models - a process in which the models 'learn' from mountains of data. While Beijing has pushed for domestic companies to use homegrown alternatives, the Nvidia chips are currently the only ones that can get the job done.

Nvidia's Blackwell, which shipped in the fourth quarter of 2024, have been used by companies including xAI, Google, Microsoft and OpenAI - which all use hundreds of thousands of B200 chips, along with the prior "hopper" generation H100 / H200 models - to train and operate. 

DeepSeek made headlines in January, when its R1 deep-reasoning model displayed high performance vs. what the company claimed was very minimal cost to train it. Since then, the startup has only made incremental upgrades to their model - which uses a method called 'sparse attention' in which only certain parts of the model are used to answer questions vs. the entire model, according to the report. This technique could significantly reduce the costs of 'inference' (when AI models send your power bills higher to create cat videos) - which lowers the overall cost to adopt AI. 

Blackwell chips are perfect for this approach, as they include specialized hardware designed to silo various processes and accelerate sparse computing, which can run such calculations nearly twice as fast as traditional methods. 

DeepSeek’s focus on the sparse attention technique has made its model development more challenging and time-consuming, according to the person. The company in September released the V3.2-Exp, which it described as an experimental model serving as “an intermediate step” toward its next-generation model. But applying sparse attention to bigger models is proving to be more complicated, the person said.

Some DeepSeek employees are hoping to roll out the next-generation model by the Lunar New Year holiday in mid-February, according to the person. However, DeepSeek founder Liang Wenfeng, who prioritizes performance over the timeline, hasn’t set a hard deadline for the new model, the person said. -The Information

DeepSeek originally trained its models with older Nvidia A100 chips which launched in 2020 - 10,000 of which were stockpiled by its hedge fund parent, High-Flyer Capital Management before US export restrictions kicked in in 2022. The A100 is two generations older than Blackwell. DeepSeek also used Hopper chips, the generation just before Blackwell, according to company research papers from 2024. 

When Blackwell was unveiled, Nvidia released a design that combines 72 chips in connected server racks weighing 3,000 pounds (1.5 tons) each when fully assembled - taller than the average household refrigerator. While this has been the go-to option for US companies, it's impossible for smugglers to move it around in suitcases. Instead, they smuggle Blackwell hardware into China in eight-chip servers that are much lighter (about the size of a large suitcase), which are easier to install and repair. 

On Monday, President Trump announced that he would allow the sale of Hopper (H200) chips to China, while Beijing is still deliberating over whether to permit companies to use them. Doing so could reduce demand for smuggled Blackwell chips. 

As The Information notes, DeepSeek's models are custom-tailored to work with Nvidia hardware and software, making the use of Chinese chips less than ideal. After US export controls kicked in, DeepSeek followed Beijing's policy priorities and began using Huawei Technologies' chips instead to train smaller models - while continuing to rely on Nvidia processors for larger and more powerful models. 

In April, the House Select Committee on the Chinese Communist Party called DeepSeek a "profound threat" to US national security - and accused the company of circumventing export controls and potentially stealing intellectual property from US companies. In February, legislation was introduced to prohibit DeepSeek's chatbot app on federal devices. 

(Is the 'profound threat' that the US government can't control what DeepSeek tells people?)

How They're Smuggled

In this instance: 

First, chip dealers usually line up non-Chinese data center companies, typically in Southeast Asia, to procure Nvidia chips through authorized sellers. After the chips and accompanying servers are installed in those data centers outside China, Nvidia or its distributors, such as Dell Technologies and Super Micro Computer, dispatch personnel to inspect the equipment on location and make sure it complies with technical standards and export regulations, the people said.

Once the inspection is completed, dealers dismantle the servers and ship them into China. After passing Chinese customs, usually under a false declaration, the chips and servers are installed in data centers that already have leasing agreements with Chinese AI companies, the people added.

The elaborate scheme means the chips can only be ordered and delivered in batches, but it also ensures no paperwork can be traced to the end user.

Last month we noted a WSJ investigation which detailed a different method that keeps the chips physically out of China, but under Chinese control:  

1. Nvidia sells chips to a U.S. partner partly owned by a Chinese firm: Nvidia supplies advanced AI chips to Aivres, a Silicon Valley server builder whose parent company is one-third owned by Inspur—a Chinese tech firm placed on a U.S. national-security blacklist in 2023. While Nvidia is barred from dealing with Inspur or its blacklisted subsidiaries, the restrictions don’t extend to U.S.-based entities like Aivres, allowing the business relationship to continue.

2. Aivres finds an overseas buyer for high-end Nvidia servers: In mid-2024, Aivres negotiated a $100 million deal to sell 32 Nvidia GB200 server racks - containing roughly 2,300 Blackwell-generation chips - to Indosat Ooredoo Hutchison’s cloud-computing division in Indonesia. Indosat is jointly owned by Qatar’s Ooredoo and Hong Kong’s CK Hutchison.

3. The Indonesian buyer lines up a Chinese AI startup as the end user: Indosat agreed to purchase the servers only after securing a major client facilitated by Aivres: Shanghai-based AI startup INF Tech. Negotiations also included representatives from Fudan University, where INF’s founder, Qi Yuan, directs an AI institute.

4. The Chinese startup intends to use the chips for finance and medical AI: By October, the servers had arrived in Indonesia and were being set up. INF plans to use the computing power to train AI models for financial analytics and scientific research, including drug-discovery applications.

According to attorneys familiar with export-control rules, as long as the Chinese company isn't directly using the chips to help China with military intelligence or weapons of mass destruction, the arrangement doesn't violate any laws set by the Trump administration. 

Nvidia has responded to The Information, telling the outlet in a written statement: "We haven’t seen any substantiation or received tips of ‘phantom data centers’ constructed to deceive us and our [server manufacturing] partners, then deconstructed, smuggled and reconstructed somewhere else. While such smuggling seems farfetched, we pursue any tip we receive."

Meanwhile, the company has developed a software feature to track the location of its chips - which could help the company combat chip smuggling, Reuters reported Wednesday. If this feature becomes live, it could 'severely cripple' the use of smuggled chips in China. 

Tyler Durden Wed, 12/10/2025 - 10:00

What GAO Found Since June 2020, GAO has made dozens of recommendations to help the Small Business Administration (SBA) better manage fraud risks, improve its estimates of improper payments, and oversee its contracting programs. This testimony discusses SBA’s efforts to address 42 of these, of which SBA has implemented 17. Fraud risks. GAO has found that some SBA programs—particularly its COVID-19 pandemic relief programs—have been susceptible to fraud. SBA established these programs quickly to respond to the adverse economic conditions small businesses faced, but the speed of implementation came at the expense of appropriate safeguards. SBA has implemented most GAO recommendations in this area—for example, by implementing oversight plans, conducting fraud risk assessments, and developing a fraud strategy. GAO has estimated that the additional controls SBA put in place for its pandemic-relief programs collectively had saved the government more than $30 billion as of the end of fiscal year 2025. However, it is imperative for SBA to advance its fraud prevention and detection efforts, such as by expanding use of data analytics and improving its process for referring potential fraud to SBA’s Office of Inspector General. Furthermore, examining fraudsters and fraud schemes that emerged during the pandemic can help agencies identify fraud mitigation controls that can be implemented both in emergency environments and during normal operations. Improper payments. GAO has also previously identified problems related to SBA’s estimates of improper payments, particularly for its pandemic relief programs. An improper payment occurs when a payment should not have been made or was made in the incorrect amount. SBA has implemented one GAO recommendation in this area but has not implemented three others. These include expanding and documenting its overpayment review procedures and expanding its overpayment tracking process. Developing reliable improper payment estimates is essential for understanding and addressing financial vulnerabilities in SBA’s programs in a timely manner. Contracting assistance programs. SBA has addressed several GAO recommendations related to oversight of its contracting programs, including the 8(a) Business Development Program. For example, the agency has improved its documentation of compliance reviews of small business subcontracting plans. However, SBA has not addressed 14 recommendations intended to address critical risk management and cybersecurity issues associated with its small business certification platform. In addition, SBA’s independent financial statement auditor issued a disclaimer of opinion on SBA’s fiscal year 2024 financial statements. The auditor reported material weaknesses in SBA’s controls over pandemic relief programs for the fifth consecutive year. For example, the auditor found that SBA did not sufficiently design the review process for Paycheck Protection Program (PPP) loan forgiveness. GAO supports the auditor’s recommendations to address these weaknesses and urges SBA to work toward obtaining a clean financial statement audit opinion. Why GAO Did This Study Since spring 2020, SBA has made or guaranteed more than $1 trillion in loans and grants and assisted more than 10 million small businesses adversely affected by the COVID-19 pandemic, primarily through PPP and the COVID-19 Economic Injury Disaster Loan program. SBA also continued to support small businesses through its contracting assistance and small business research programs. This testimony discusses the status of selected GAO recommendations to SBA related to fraud risks, improper payments, and contracting assistance programs, as well as issues related to SBA’s financial statements. This testimony is based on prior GAO reports issued from June 2020 through March 2025 that assessed SBA’s implementation of four pandemic relief programs, SBA improper payments, financial statements, and contracting assistance programs. Details on GAO’s methodology can be found in the individual reports cited. For more information, contact Courtney LaFountain at lafountainc@gao.gov.