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Trump’s One Percent Interest Rate: Fun with Money

Beat The Press - 3 hours 9 min ago

The post Trump’s One Percent Interest Rate: Fun with Money appeared first on CEPR.

Is the Future still Bright?

It was almost thirteen years ago when I wrote "The Future's so Bright …" I noted that I was the most optimistic since the '90s, and that things would only get better.

I pointed out that housing starts would increase significantly over the next several years, that state and local governments would start hiring again, that the budget deficit would decline sharply, and that household deleveraging was nearing and an end.

As I noted in January 2013: "There are several tailwinds for the economy, and the headwinds (like household deleveraging) are mostly subsiding."

Now these tailwinds have subsided. The significant growth for housing starts, new home sales and vehicle sales, is behind us.

With the exception of data centers, commercial real estate is struggling, and some sectors - like hotels - are in recession. The Architecture Billings Index (ABI) has been in contraction for 35 of the last 37 months, suggesting a slowdown in CRE investment well into 2026.
And the Federal budget deficit is increasing sharply.

Fortunately the unemployment rate is still historically fairly low (but increasing), and household debt service and financial obligation ratios are low.

I was also positive on demographics too, but unfortunately with less immigration and more prime age deaths, the demographic outlook isn't as favorable as a several years ago.

And we haven't addressed some of the longer term challenges I mentioned thirteen years ago:

There are a number of longer term challenges from rising health care expenditures, climate change, income and wealth inequality and more, but I remain very optimistic about the longer term too. There is a constant focus on the aging population, but by 2020, eight of the top ten largest cohorts (five year age groups) will be under 40, and by 2030 the top 11 cohorts are the youngest 11 cohorts. The renewing of America! And these young people are smart (less exposure to lead is a significant story), and well educated too.

Note: Here is an update on demographics through 2024.
Unfortunately recent policy choices have made the long term challenges more difficult. But I'm still optimistic that those issues will be addressed.

I'm not currently predicting a recession (although I'm watching), and I expect further growth in 2026, but the near term future isn't as bright now.

Transcript: Wilhelm Schmid, A. Lange & Söhne CEO

The Big Picture - 9 hours 42 min ago

The transcript from this week’s MiB: A. Lange & Söhne CEO Wilhelm Schmid, is below.

You can stream and download our full conversation, including any podcast extras, on Apple Podcasts, Spotify, YouTube, and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here.

~~~

Barry Ritholtz: This week on an extra special live edition of Masters in Business, I’m at the Audra Newport Concourse de Elegance, and my conversation is with Wilhelm Schmidt. He is the CEO of Ang Zona, one of the finest watch companies in the world. They’re located in Glashutte, Germany.

Our conversation talked about everything from collectible timepieces to collectible cars. I found it fascinating, and I think you will also, with no further ado, my discussion with Alan’s owners, Wilhelm Schmidt. Wilhelm Schmidt, welcome to Bloomberg

Wilhelm Schmid: Thank you so much, Barry. Thank you.

Barry Ritholtz: Thank you so much for this, for hosting this event and, and participating in our conversation. I have, I have so many things to talk to you about, but I have to start with this prestigious concourse in this spectacular setting on what could be the nicest day of the year. What is the connection between classic cars and fine mechanical time pieces?

Wilhelm Schmid: Some mean people say me because I like cars and watches and watches and cars, but I think it’s of course more than that. You know, watchmaking is, that’s what we emphasize on and 90% of our energy will go into watchmaking. That, that’s, that’s, that’s our home turf. But I believe as a global brand, you also need to find a world that is focused on something else, but where you have sort of a common ground that you can walk on.

And about 14 years ago, we were looking for a platform where we can show the brand and where we can bring customers to entertain. And if you look at these cars, let’s start with the cars and, and look at the word concourse of elegance. So we are not in vintage cars or racing, it’s about concourse of elegance. You know, it’s about beauty, it’s about heritage, it’s about craftsmanship, it’s about design. And if you look onto the pillars on which our brand rests, it is exactly, it’s it’s history, heritage, it’s design, and it’s of course the craftsmanship. And trust me, these cars that you see here, as they were built, they were built by proper craftsmen. And even today, without proper craftsman, you will not keep them on the road.

Barry Ritholtz: I know that you studied as an engineer and mechanic before eventually moving over to, to watches, obviously the design ethos of some of these cars. Yeah. They’re just so phenomenal and spectacular. What sort of inspiration do you running a, a fine watchmaker take from the designs of these cars?

Wilhelm Schmid: I don’t think you can immediately take something from that world into our world, but if you look at these cars, well, the first thing that comes to mind is some of them are 50, 60, 80, a hundred years old. And we look at them today and they still fascinate us. So obviously that design survived all the different fashion change of taste, odds of time. They’re here today and they’re as attracted as they were probably back then when they were brand new.

If you look at specifically the purpose-built car, you know, the race cars, they were built for only one purpose and that’s what they were perfect in. And I think in watches you also have to identify what is it that you emphasize on, and then don’t compromise too much on it because if you start making big compromises, you end up with something which is, you know, a little bit of everything, but nothing particularly really good. So I think that’s what you can take from cars into watches, identify the purpose, and then everything should direct to achieve that. If I call it the North Star, you know that purpose and for watches, it’s exactly the same. So

Barry Ritholtz: There’s a lovely white Mercedes going out there. (Yes. With the red interior.) And I once heard someone ask you to compare A Lange to a car, and you thought about it and said the gull wing, because the design was purposeful from start to finish. Tell us what you mean by purposeful in either watch or car design.

Wilhelm Schmid: You know, if you, if you go back and think about the mid fifties in Germany, I mean, I wasn’t born there. I’m not that old, but you know, I can, I see, I saw pictures, I saw pictures of the Autobar and I saw the cars on the road back then. And then think about very suddenly something like the gold wing appears. I mean, an alien could have landed and caused the same result.

Barry Ritholtz: Tubular frame up racing an,

Wilhelm Schmid: d 210 horsepower you know, the 235 kilometers an hour high speed. You know what it did, the doors.

Barry Ritholtz: ’cause you couldn’t have a door over that frame exactly for the body, they were too wide.

Wilhelm Schmid: Right. So they just came up with the doors and you know what they did at limit? They wanted to permit that because in the book it, it didn’t say explicitly, it’s not allowed, but, you know, no got much Negotiated.

Barry Ritholtz: And they did very well,

Wilhelm Schmid: Absolutely they did. Absolutely did it. No, but I think the car was made for one purpose and it was winning races in the first place and, and, and paving the way for Mercedes internationally to be back where they wanted to be. And that is very high up. Don’t forget the price of these cars. I mean, you could probably bought streets for the same price, not houses or streets in, in, in the mid fifties ar

Barry Ritholtz: Arguably the first supercar ever made. So you’re a connoisseur of vintage cars. I know you have a couple of Porsches. Tell us what else you like in, in classic automobiles?

Wilhelm Schmid: I do like the, what I call the odd balls. The Porsche that I have are actually the exceptions because everybody knows what a nine 11 is. And probably many people know what a 356 is. So that’s, I don’t say utility, but these cars are, you know, the, the, the 356 is my Swiss pocket knife. Because you know, you can go on a tour with it, which I take that car a lot and if the weather is nice, you just open the roof and it takes you 30 seconds and if the rain comes, it takes you 30 seconds to bring the roof back on. It is not as watertight as you think it is. I have to say. There’s still a lot of water coming through, but at least you’re roughly protected against the environment.

And the 911 is the car that I never wanted and I will never sell. It’s just a fantastic driving car. But you know, the other cars that I have are more for people that really know about cars. You know, if I share somebody, I have a Fraser Nash, most people right. Wouldn’t even know what that is. And that’s not a surprise because I think they build about 600 cars pre-war and then about 83 post-war. So the likelihood that you know it, if you’re not into the hobby is very high.

Barry Ritholtz: So I keep me meeting people here, chatting about cars, chatting about watches. When I was doing a little research on you, it turns out that you really know the firm’s clients, both customers and collectors. What do you do in an event like this? How much time do you spend with some of the longer collectors and people who are so enthusiastic about the brand?

Wilhelm Schmid: I would say 90%. You know, really, if I’m not in interviews with you, then I’m out there and, and, and talking to our customers, you know, that’s the most important for us because at the end we mustn’t forget all that is not paid by Lang and Zuna. This is paid by our customers.

Barry Ritholtz: there’s a quote of yours I really enjoyed. We wanna surprise, inspire and enchant our clients with an unprecedented imagination and ingenuity. How do you go from those lofty goals to turning it into a mechanical time piece?

Wilhelm Schmid: Yeah, well first of all, it takes strict discipline. The moment you do things that are not in line with who you are, you may surprise people, but probably not positively. And, and for sure eventually will dilute your, your your brand equity. So the third thing is you have to apply this simply. That’s why we have six different watch families and we have sort of a horizon of seven years and we wanna apply each watch family at least once, let’s say within 24 months rolling. So that’s, you know, sort of the, the engineering structure all attempts. That doesn’t answer your question. I know staying traditional, but thinking out of the box because our value set is very traditional, but our thinking is often very much out of the box.

I give you a good example. The torubillion has been invented by Breguet, I think about 280 years back or so, something like this. It was there to enhance the accuracy of a watch by, you know, eliminating the mistake that happened through gravity, basically

Barry Ritholtz: Mostly pocket watches, which we’re always facing downwards,

Wilhelm Schmid: and of course it’s a very delicate mechanism. It it does do the job because think about you put your watch on desk next to your bed, so at least for 10 hours it is exposed to gravity without moving. Anyhow, I wanna argue the necessity of a ion. What we found very interesting is that it was there to enhance the accuracy, but it was impossible to set time correctly. Because if you do that with a running second, it is pure luck that you hit exactly the point. So we were the first in 2009 to come up with a mechanism that makes the toon stop. So the second hand comes to a stop and you can adjust the time properly. We then went one step further with the 1815 tobe beyond where you’re not only stopped the moment you pull the crown, that second then goes to zero, which is the best way to adjust your watch properly.

Now that sounds easy, but if you take into consideration that that tour beyond has about 85 little parts, the total weight is about oh 0.75 gram wow. You, you know, any impact and the mechanism will be destroyed. So you have to be very careful in what you do. That is just one example where we think out of the box, a chronograph with sort of a, a running minute, which most of them do, you know, the second hand goes and it’s catching the, the minute counter. And then as, as the second hand goes on, the minute counter slowly moves, which makes it quite difficult. Is it now two minutes or three minutes or four minutes. So hours in most cases have the jumping. So it’s the second hand crosses the 12th, it jumps by one minute. So you absolutely clear it’s one minute, two minute, three minute or four minute, not is it two and a half or is it three? Just little things that don’t mean a lot for people that are not into fine watches, but they mean the world for our customers.

Barry Ritholtz: I want to talk about the Odysseus in a little bit. Yes. And that particular chronograph, which is fairly unique, but we’re, we’re not quite there yet. I wanna stay with the fact that Longa is famously a German watchmaker. What advantages are there or disadvantages Yeah. For being a German maker in an industry dominated by giant Swiss brands?

Wilhelm Schmid: I think it’s more an advantage than a disadvantage. First of all, I always say there is no Swiss watchmaking and there’s no German watchmaking. Because think about it. I mean, you can find Swiss made watches for a hundred euro and then you find, find the same for a few million. How, how, how can, how can be there any common denominator that covers the Swiss mate from there to there. So same for Germany. You know, we have watches that are very inexpensive and then you have us with sometimes watches up to 2 million obviously at the, at the top end. It’s like a package, it’s like a box of chocolate, you know. And our chocolate is craftsmanship, history and design. And we stay very strict to it.

00:13:00 [Speaker Changed] So some of the bigger brands put out watches in the millions of units. Rolex famously two to 3 million. Patek is known to do about 75,000 watches. Longa does a small fraction. Every piece is made by hand assembled twice.

Barry Ritholtz: And not because we can’t get it right first time — its assembled first and then the pieces are taken apart and hand engraved and decorated.

Wilhelm Schmid: It’s you know, because we use the original sources, we believe that anything that nothing is much better than, than German silver. You know, that’s the perfect material. It’s been, it’s been good for the last 150 years. So we believe in this and we don’t want to coat it. Which means over time it will develop a very nice patina, you know, the silver will get that little golden glow, which is beautiful.

Problem is you breathe on it or you touch it, it will look very ugly very soon. And you cannot even clean it. You have to machine it. So that means to, to, to to, to maintain a statical and technical perfection, you first have to make sure your movement is absolutely up to scratch. All tolerances are there, everything is adjusted, everything works.

You go through the test and if you have assurance, you know, that movement is like, it has to be, it goes back to the watchmaker. He or she will disassemble it, clean it, put in the final decoration because now you know you don’t have to adjust anymore because that’s done. You clean it, you oil it, you put the final decoration in case it goes again through the test, and only then it ends up in a, on a, on a happy wrist.

Barry Ritholtz: So inherently the way you build watches, you’re gonna be somewhat limited in production. How, how does that affect the decision making process of what sort of watches you make? And I know there are a number of Longo watches that are limited editions of a hundred or 50 or even 25. Yes. What’s the thinking behind that?

Wilhelm Schmid: Very easy. You know, sometimes let’s take the minute repeater perpetual calendar that we launched this year in April. We know it’s gonna take us three to four years to build to 50 watches.

Barry Ritholtz: Meaning from start to finish you’ll do a couple of watches every year wow

Wilhelm Schmid: You know, so, and we know that. So in today’s world to come up now with this sort of capacity and say we produce a hundred means the last one will get to watch in eight years.

Barry Ritholtz: That’s a long time

Wilhelm Schmid: Right. So what that’s, you know, capacity balanced by what we think we can expect from a customer to wait, that usually gives an idea about the limitation.

Barry Ritholtz: I was looking at the Lange Perpetual In black. Yes. And I stopped by the boutique and they said figure somewhere between 12 and 15 months. Before yours is ready. So when someone orders a watch. That goes into the system and my watch is moving. Yeah. it’s literally that specific

The Odysseus came out very unique looking sports watch then a lightweight titanium version.

Wilhelm Schmid: No, first the white gold. White gold. So it was 24th of October 19 stainless steel in April, 2020. White gold, then titanium,

Barry Ritholtz: Then the honey gold,

Wilhelm Schmid: Then the honey gold. No then the odys chronograph.

Barry Ritholtz: Ah The chronograph

Wilhelm Schmid: And then the honey gold.

Barry Ritholtz: So I, let’s talk about the chronograph. Most people are familiar with Chronos ’cause they typically have two or three sub dials. YesNot with the Odysseus

Wilhelm Schmid: Now it wouldn’t work because of the design of the dial. You know, if you look at

Barry Ritholtz: ’cause of the big day and date?

Wilhelm Schmid: If you take the dial off and you look at the movement, the upside of the movement, you will see it’s almost all blocked. So there is no way that you come through. And of course we also didn’t want to increase the size by much, you know, we wanna have a wearable watch. So the only way was to utilize the center even more than we usually do. And that’s why the chronograph, the second and the minute hand comes out of the center.

Barry Ritholtz: And when you reset the chronograph, it does a little bit of a dance. Yeah. That’s kind of unusual. I’ve spoken to a lot of people about this. Nobody has been able to explain that to me. You are my last hope. Tell us about that.

Wilhelm Schmid: It’s very easy because they are yet together. So if you reset it, the, the minute hand will do as many turns as the second because it’s linked. Right. And it’s so quick that you can’t see. It probably would take a good camera and then you slow it down to see it. But basically, if you have stopped 17 minutes and let’s say 30 seconds, what works? Like this is factually seven times going around to come to zero.

Barry Ritholtz: Why does it, why does it do that?

Wilhelm Schmid: Because it’s geared together. It’s, there’s, you know, because it comes out of the,

00:19:05 [Speaker Changed] It’s strictly because of it’s a centen center hands. I think that’s

00:19:07 [Speaker Changed] Exactly the point.

00:19:08 [Speaker Changed] Huh. That, that’s really, that’s really fascinating. So a watch like the Zet work or the Odysseus, how long is that process when someone first conceives of this, take us through how long it is from idea till the finished product in the boutique.

00:19:24 [Speaker Changed] Very different. You know, Odysseus, as I said, took us 25 years. Basically. I think that the real process where we identify, that’s the phase, you know, that looks different to anything else in the market that will not cannibalize anything within our own range. To to to, to launch, to watch it. The 24th of October, in, in, in, in 2019. I was good. Seven years,

00:19:53 [Speaker Changed] Seven years from start to finish. That’s, that’s amazing. Yeah. So, so yesterday at the event two new longest dropped the Axia thin. Yes. In black Onyx and platinum. Is that

00:20:05 [Speaker Changed] Right? Yes. True. Onyx honey, gold and platinum. Yeah.

00:20:08 [Speaker Changed] Really striking dress watches. The Saxon are sort of, I don’t wanna call it entry level, but they’re less pricey than some of the other watches.

00:20:19 [Speaker Changed] They are more simple, simple. That’s how I show it, you know, it’s, for us, it’s all about the amount of parts the years it take to develop the, the hours it takes to assemble that at the end will define whether it’s a complicated watch or I would say more simple watch and two hands. I think we don’t go more simple than two hands.

00:20:40 [Speaker Changed] And my first nice dress watch was a rose gold Saxon mood phase, you see over black. Yes. And one of the things that people are genuinely surprised is the same level of detail and finishing what, what you describe as simple a lot of people think of in terms of price point. There seems to be no difference. No, no, no. It’s,

00:21:03 [Speaker Changed] You know, if you look at our, our process in the manufacturing, we can, you know, the people that work on finish, they sometimes have no idea where that part will end up. So they will not say, oh, that goes into grand complication. We do it a little better. Or that goes into thin. How we do it a little, that’s

00:21:22 [Speaker Changed] The same thing regardless. Million dollars or entry level.

00:21:25 [Speaker Changed] It, we do not distinguish in quality at all. It’s all the same emphasized on lofty detail, craftsmanship, hand polishing, decoration, hand engraving. There is no difference. Double assembly, it’s one process. It doesn’t matter whether the watch would cost 25,000 euro or 2 million.

00:21:47 [Speaker Changed] And when people say to me, I’m looking for an elegant dress watch, but something that’s not too pricey. My answer is always the Saxon, it’s just timeless, so elegant and continues to just, yes, the design gets better over time.

00:22:03 [Speaker Changed] And, and it’s, it’s, it’s ama you know, people, you look at it and you see it’s an Alan on Zuna watch. If you have something complicated like this, you have a lot of hands to work with. You have the sub dials, you know, you have to push back. You can do a lot. But I think one of the biggest challenge for designers is you have two hands to work with and not a lot on the on the dial. Make it an Alan Zuna.

00:22:28 [Speaker Changed] So the data graph has been called one of the best chronographs ever designed. What’s the core of that Watches appeal? What makes that so special?

00:22:39 [Speaker Changed] I think it’s, it’s, it’s, it’s more than just a watch. You know, I, I’m a watch collector for a long, long time. I can remember when I opened a newspaper in, in, in, in, in 20, in, in 94. And I saw the at with the four lunga watches. 99 were, most companies around the world were still using somebody else movement and often the same supplier. Here comes a chronograph, which is one of the crown things in watchmaking from Germany in a very unique design with an outsized date. I think it was a wake up call. And, and, and we must not estimate what that watch started in the watch industry because before that chronograph didn’t play a role. There were two supplier and that was it basically after that. And if you then go and, and, and, and analyze what happened from then to the following 5, 6, 7 years, a lot of chronograph movements came out. So that’s why this watch is so important for us because that was the first real complication other than the tobe beyond polymer that we worked on. And I think that was a wake up call and it, it, it just gave us a reputation as a solid watchmaker that it’s the next level up

00:24:20 [Speaker Changed] For sure. Absolutely. The next level up. So you get to spend a lot of time with, with clients, with customers. Absolutely. With collectors. How are you seeing the, their expectations and desires changing? What does the client base look for from Longo over the next decade? I think it

00:24:38 [Speaker Changed] Does. It never changed.

00:24:40 [Speaker Changed] Never

00:24:41 [Speaker Changed] Changes. No, you know, first of all, do you have any idea what you will like in three years from now, one

00:24:50 [Speaker Changed] Who does?

00:24:50 [Speaker Changed] Exactly. So when people say, oh, you come with a small watch because you follow trend, I say, look, I mean, I wish we had known seven years ago and we started developing the movement. We are not in the fashion industry. Business, you know, our processes and the time it takes to come to market is so long that you maybe can anticipate, but maybe you have to stay true to yourself. And I think the one thing which our customers expect from us is authenticity. It has to be in Lan Zuna. And if you had followed the discussion after we launched the Odysseus, because you know, we always said, we only precious metal in here, can we steal? And later on with titanium, say, of course there was a heated debate. Of course there was. And we were aware of it because that is a tension that on purpose we wanted, there were a lot of people that said, ah, it’s not for me. I see Langa as dress watch only there were luckily a lot more people that say, I want that watch desperately where we can produce fine. However, it just opened up a new chapter in our design language because now we have a playground to try out things that we would never do with our classical watch families.

00:26:19 [Speaker Changed] And every car enthusiast knows when the Porsche nine 11 came out, the 3 56 purists were upset. What, what are you giving us such a big car who needs six cylinders?

00:26:32 [Speaker Changed] Absolutely. That’s why they built a nine 12. Right. Put the four cylinder in. You know, that’s, that’s exactly what they did. So yeah. That’s funny. Sometimes I

00:26:41 [Speaker Changed] I I love this quote of yours and I’m wondering if it still applies. You said part of longer’s success is that we’re a secret. Yeah. So question number one is what makes that an asset? And question number two is look at this event. How much longer is this a secret? Oh,

00:26:58 [Speaker Changed] It is, it is, it is in the white world. We are still absolutely unknown and I think that’s a good place to be. There are, there are three reasons to it. The one is, what we do is very difficult to understand specifically at the price point that we request for people that are not into fine watchmaking. Why would you spend so much money on a watch when your iPhone gives you the time? More precisely. You know, that the general thinking for sure. The second is, in today’s world, you don’t want to show off too much. At

00:27:40 [Speaker Changed] Least these are very much under the radar. And I am always shocked at people who haven’t the slightest idea when I’m wearing this, as opposed to the better known

00:27:49 [Speaker Changed] Brands. Why isn’t that nice? I mean, that gives you a certain confidence and a certain, it’s, it’s, you know, you don’t need to shout. And on the other hand, and I’m sure you can agree on it, if you see somebody that is also having a una it’s not difficult to, to get the communication started. Isn’t it

00:28:08 [Speaker Changed] Immediate, immediately have something to shout about if you know, you know,

00:28:12 [Speaker Changed] You know for sure. And, and that’s why I believe it is so important to remain a secret. I also admit the real challenges to secret, to share the secret with, you know, the right crowd of people. Because at the end, you know, I mean I’m fine, but whenever we take the new apprenticeship trainees in in August, I feel the duty on my shoulders because now they start a career as watchmaker and they’re in for the next 40 years. So we need to make sure that the next generation knows what we do and we stay relevant for this.

00:28:46 [Speaker Changed] So I only have you for a few more minutes. I want to get to my last couple of questions. Speaking of the next generation. Yeah. How do you appeal to younger buyers and and what sort of approach do you have as all these tastes seem to shift amongst the 20 and 30 something crowd?

00:29:07 [Speaker Changed] Yeah, I gladly we don’t have a real issue here. We have a surprisingly young customer base. I always say that and I never understood it. I mean, if you are young and you’re interested, what speaks against quality, longevity, classless and timeless design. Robustness, value creation. Yeah. I mean, it doesn’t matter whether you are a hundred years old or 10. If you are into that, you’re gonna like it. The way we connect with these people is different to the way, let’s say I was connected to the watch industry because, and as, as I grew up, it was very difficult to find even specialized magazines for, for watches. Today you have everything you can think of. I believe we live in absolute paradise times for for watch enthusiast because never ever in history have there been more watch brands, higher quality, more information, right. More information and easy accessible information. You know, you can do your research without leaving your room. That was impossible in times, you know, where I started to get into the hobby,

00:30:21 [Speaker Changed] Although I, I would tell people go see the watch. Go try it on, make sure that’s

00:30:26 [Speaker Changed] The only thing that matters. That’s right. It’s the only, I would just say the natural habitat of a wrist watch is, is the wrist a wrist? So forget about looking at thumbing and ah, I like it. That’s a good start. But the moment of truth is you grab that watch, you put it around your wrist, you look at yourself and see is it me or is it not?

00:30:46 [Speaker Changed] So how do you have access to every longer watch? Yeah, there is. How do you decide what you’re gonna grab that day to wear? I,

00:30:54 [Speaker Changed] You know, this one because of, you know, chronograph, we’re in a car world. It’s the 1815, so that’s the more classical line. I’m a huge fan of chronographs and it doesn’t get any better than a Chronograph Raton. So you know that. And I, it’s admit, I think it works very nice with my tan color right now.

00:31:17 [Speaker Changed] So our last question. Tell us what’s next for Longa and Sona? What surprises are coming up down the road? What should we be looking for?

00:31:27 [Speaker Changed] I think it’s always good to look for, but if I now share secrets, there’s no surprise. And that’s the one thing people love surprises. But I can share with you as much as is, this is not the last surprise for this year.

00:31:44 [Speaker Changed] Oh, really? So the, the Saxon Finns not the last surprise of 2025. That’s

00:31:50 [Speaker Changed] What I should

00:31:50 [Speaker Changed] Fantastic. That was my conversation with Wilhelm Schmidt, CEO of Langan Zona at the Newport Oring concourse to Elegance. Extra special thanks to the team that came up to Newport to help film this. Alexis Noriega is my video producer. Sebastian Escobar is my videographer. Anna Luke is my producer. Sage Bauman is the head of podcast at Bloomberg. I’m Barry ols. You’ve been listening to Masters in Business on Bloomberg Radio.

~~~

The post Transcript: Wilhelm Schmid, A. Lange & Söhne CEO appeared first on The Big Picture.

Chinese, Japanese Boats In Tense Standoff Near Disputed Islands As Taiwan-Related Feud Escalates

Zero Hedge - 9 hours 42 min ago

Chinese, Japanese Boats In Tense Standoff Near Disputed Islands As Taiwan-Related Feud Escalates

The severe diplomatic standoff which was triggered by last month's words of Japanese Prime Minister Sanae Takaichi wherein she suggested Japan would militarily aid in Taiwan's defense in the event of a Chinese invasion is increasingly becoming a potential military standoff. We earlier detailed that Japan has even deployed medium-range missiles to a remote Japanese island not far from China.

Already there's been a confrontation involving China's coast guard boats, which attempted to run off a Japanese fishing vessel for allegedly being inside claimed Chinese waters. The fresh incident happened near a group of geopolitically sensitive islands in the East China Sea on Tuesday.

Japan and Chinese coast guard vessels have clashed somewhat frequently in the recent past. Illustrative: Kyodo News, via Associated Press

The Japanese boat is accused of entering the waters of the Diaoyu Islands - which Tokyo calls the Senkaku Islands and has long administered.

But a nearby Japanese Coast Guard ship which had been accompanying the fishing vessel then in turn expelled two Chinese Coast Guard ships as they approached and tried to enforce Beijing's expansive maritime claims over the territory.

The area is already a bit of a flashpoint between the two historic rivals, as Taiwan is located just less than 100 miles southwest of the Senkaku Islands. There are conflicting accounts of the incident, with the Chinese side relating as follows:

China Coast Guard (CCG) spokesperson Liu Dejun said that Chinese vessels on Tuesday approached and warned off a Japanese fishing boat that had "illegally entered the territorial waters of China's Diaoyu Dao", according to a state media report.

Liu added that the CCG took "necessary law enforcement measures", claiming that the islands were Chinese territory and urging Japan to "immediately stop all acts of infringement and provocation in these waters".

However, Japan has countered that its coast guard boats approached the Chinese vessels shortly after they were seen breaching Japanese waters and issued warnings and threats demanding they leave sovereign waters.

The current broader standoff over PM Takaichi's Taiwan comments is now trickling down to the common populations on either side, as events like concerts have been canceled:

The abrupt cancellations of several Japanese music events in Shanghai - one of them midway through a song - have sparked criticism among fans, with some calling the moves "rude" and "extreme".

Maki Otsuki was halfway through the theme of hit anime One Piece on Friday when the lights and music went off, after which she was rushed off stage by two crew members.

On Saturday, pop star Ayumi Hamasaki performed to an empty 14,000-seat stadium after organizers axed her concert in Shanghai, citing "force majeure".

This spate of cancellations come as diplomatic tensions between Beijing and Tokyo fester over Japanese Prime Minister Sanae Takaichi's remarks on Taiwan.

China earlier warned Japan will suffer a "crushing" defeat if it ever decided to directly intervene in the Taiwan dispute. Recent years have also seen Beijing's anger grow after NATO briefly talked about opening an official office in Tokyo, but these plans were soon abandoned for the time being.

Source: VOA

Last month China's foreign ministry warned that "Right-wing forces in Japan are ... leading Japan and the region toward disaster." Foreign ministry spokesperson Mao Ning further told a regular news briefing. Beijing "is determined and capable of safeguarding its national territorial sovereignty."

Tyler Durden Tue, 12/02/2025 - 09:00

Chinese, Japanese Boats In Tense Standoff Near Disputed Islands As Taiwan-Related Feud Escalates

Zero Hedge - 9 hours 42 min ago

Chinese, Japanese Boats In Tense Standoff Near Disputed Islands As Taiwan-Related Feud Escalates

The severe diplomatic standoff which was triggered by last month's words of Japanese Prime Minister Sanae Takaichi wherein she suggested Japan would militarily aid in Taiwan's defense in the event of a Chinese invasion is increasingly becoming a potential military standoff. We earlier detailed that Japan has even deployed medium-range missiles to a remote Japanese island not far from China.

Already there's been a confrontation involving China's coast guard boats, which attempted to run off a Japanese fishing vessel for allegedly being inside claimed Chinese waters. The fresh incident happened near a group of geopolitically sensitive islands in the East China Sea on Tuesday.

Japan and Chinese coast guard vessels have clashed somewhat frequently in the recent past. Illustrative: Kyodo News, via Associated Press

The Japanese boat is accused of entering the waters of the Diaoyu Islands - which Tokyo calls the Senkaku Islands and has long administered.

But a nearby Japanese Coast Guard ship which had been accompanying the fishing vessel then in turn expelled two Chinese Coast Guard ships as they approached and tried to enforce Beijing's expansive maritime claims over the territory.

The area is already a bit of a flashpoint between the two historic rivals, as Taiwan is located just less than 100 miles southwest of the Senkaku Islands. There are conflicting accounts of the incident, with the Chinese side relating as follows:

China Coast Guard (CCG) spokesperson Liu Dejun said that Chinese vessels on Tuesday approached and warned off a Japanese fishing boat that had "illegally entered the territorial waters of China's Diaoyu Dao", according to a state media report.

Liu added that the CCG took "necessary law enforcement measures", claiming that the islands were Chinese territory and urging Japan to "immediately stop all acts of infringement and provocation in these waters".

However, Japan has countered that its coast guard boats approached the Chinese vessels shortly after they were seen breaching Japanese waters and issued warnings and threats demanding they leave sovereign waters.

The current broader standoff over PM Takaichi's Taiwan comments is now trickling down to the common populations on either side, as events like concerts have been canceled:

The abrupt cancellations of several Japanese music events in Shanghai - one of them midway through a song - have sparked criticism among fans, with some calling the moves "rude" and "extreme".

Maki Otsuki was halfway through the theme of hit anime One Piece on Friday when the lights and music went off, after which she was rushed off stage by two crew members.

On Saturday, pop star Ayumi Hamasaki performed to an empty 14,000-seat stadium after organizers axed her concert in Shanghai, citing "force majeure".

This spate of cancellations come as diplomatic tensions between Beijing and Tokyo fester over Japanese Prime Minister Sanae Takaichi's remarks on Taiwan.

China earlier warned Japan will suffer a "crushing" defeat if it ever decided to directly intervene in the Taiwan dispute. Recent years have also seen Beijing's anger grow after NATO briefly talked about opening an official office in Tokyo, but these plans were soon abandoned for the time being.

Source: VOA

Last month China's foreign ministry warned that "Right-wing forces in Japan are ... leading Japan and the region toward disaster." Foreign ministry spokesperson Mao Ning further told a regular news briefing. Beijing "is determined and capable of safeguarding its national territorial sovereignty."

Tyler Durden Tue, 12/02/2025 - 09:00

Futures Rebound As Bitcoin Halts Plunge

Zero Hedge - 9 hours 58 min ago

Futures Rebound As Bitcoin Halts Plunge

After Monday's dismal start to December, US equity futures are higher (if only for the time being), although lacking conviction with few major catalysts on deck today. As of 8:15am, S&P 500 futures are up 0.3% and Nasdaq 100 contracts add 0.4%. Pre-market, Mag 7 are mostly higher led by META (+0.6%) and AMZN (+0.4%). Bond yields are unchanged and the USD is flat. Commodities are mostly mixed: Oil is flat; base metals are all higher (aluminum +0.9%), while precious metals are lower. After the latest post-BOJ bloodbath, bitcoin has managed to hold a modest bid and was trading above $87,000. The US economic calendar is blank for scheduled data releases.

In premarket trading, Mag 7 stocks are mostly higher (Meta +0.6%, Alphabet +0.5%, Nvidia +0.8%, Amazon +0.7%, Tesla +0.3%, Microsoft +0.05%, Apple -0.1%).

Cloudflare Inc. (NET) gains 2% after Barclays launched coverage on the infrastructure software company with an overweight rating and a $235 price target.
Credo Technology (CRDO) rises 18% after the communications equipment company’s second-quarter results came in much stronger than expected. It also gave a strong forecast. Shares of competitor Astera Labs (ALAB) gain 5%.
MongoDB (MDB) rallies 23% after the database software company reported stronger-than-expected results. It also raised its full-year forecast.
Six Flags Entertainment (FUN) gains 3% after Truist Securities upgraded the theme park operator’s stock to buy from hold.
Solaris Energy Infrastructure Inc. (SEI) rises 4% after the data center power generator was initiated at Morgan Stanley with a recommendation of overweight on power supply demand.
Warner Bros. Discovery Inc. (WBD) inches 1.1% higher. The company was fielding a second round of bids on Monday, including a mostly cash offer from Netflix Inc., in an auction that could wrap up in the coming days or weeks, according to people familiar with the discussions.

In corporate news, The Information reported that Amazon is planning a new ultrafast grocery delivery offering in major US urban areas, sending shares of Instacart lower. Warner Bros. Discovery was said to be fielding a second round of bids on Monday, including a mostly cash offer from Netflix. The Commerce Department agreed to invest as much as $150 million in xLight, a chip technology startup tied to former Intel CEO Pat Gelsinger.

With the market stuck in a holding pattern until the next leg higher or lower, investors are awaiting eco data later this week, and the Fed is now in a blackout period. Black Friday and Cyber Monday offered some clues on the economy, with Bloomberg describing “anxious but still active” consumers, and Salesforce data showing Cyber Monday spending grew more slowly in the US than Europe for the first time as tariffs stung American shoppers.

“For long-only investors like we are, I’d say in the absence of any major catalyst, it’s very much wait-and-see until the Fed meeting, while keeping an eye on US jobs and inflation data,” said Karen Georges, a fund manager at Ecofi Investissements in Paris.

Much now depends on the Fed’s decision at next week’s meeting. Disappointment would pose a risk for equities, though confidence in a cut is virtually certain, with market odds of a cut at 100% following softer labor and inflation data and a run of dovish comments from officials.

“Dips continue to present attractive buying opportunities,” wrote Michael Brown, senior research strategist at Pepperstone. “The narrative behind that bull case remains an attractive one, with earnings growth solid, the underlying economy resilient, a calmer tone on trade continuing to prevail, and the monetary backdrop growing looser.”

Bitcoin is steady today after a more than 5% plunge on Monday which saw almost $1 billion of leveraged crypto positions liquidated. Crypto retail investors who piled into exchange-traded funds tracking Strategy’s volatile stock have paid a heavy price. Both MSTX and MSTU - which offer double the daily return - have dropped more than 80% this year, among the 10 worst-performing funds in the entire US ETF market.

While bitcoin longs were hammered again, so were stock short sellers: they were down $80 billion in mark-to-market losses in the final week of November, wiping out the bulk of what had been nearly $95 billion in month-to-date profits prior to last week, per data compiled by S3 Partners. “Being short here requires high confidence in a much weaker economic backdrop or a significant change in the outlook for AI capex,” said Dennis Debusschere, co-founder and chief market strategist at 22V Research.

Ahead of next week’s Fed decision, Barclays strategists noted that S&P 500 implied moves ahead of FOMC meetings have declined since early 2023, with realized moves hovering near zero recently. It’s a trend that underscores the fading influence of monetary policy, they wrote.

After hitting a record high just shy of $60, silver pulled back modestly with a technical gauge showing that a six-day rally had pushed the metal into overbought territory. Copper also retreated amid signs that softer Chinese demand heading into winter might help to ease a looming global supply crunch.

Elsewhere, Bloomberg found that among the 14 largest markets, the US currently ranks 5th from last in local-currency terms and 4th from last in dollar terms this year. That raises questions about whether the AI theme will lead it to victory or whether volatility tied to nascent tech exposure is doing more harm than good.

European stocks and US equity futures hold modest gains; the Stoxx 600 rises 0.2%, led by gains in banks, utilities and construction. Bayer soars after the Trump administration urged the Supreme Court to take up the company’s appeal of the Roundup case. Here are some of the biggest movers on Tuesday:

Bayer shares surge as much as 15% after the US solicitor general urged the high court to consider the German company’s appeal targeting thousands of lawsuits blaming its Roundup weedkiller for causing cancer.
Bilfinger shares rise as much as 6% after the German company said it aims to achieve an advanced average revenue growth of 8% to 10% annually, elevate its Ebita margin to 8% to 9%, and ensure a cash conversion rate of at least 90% until 2030.
Victrex shares jump as much as 11% after JPMorgan said the thermoplastic maker cleared a low bar by beating expectations in the second half. Jefferies noted that a feared dividend cut hasn’t materialized.
Biotalys shares rise as much as 8.8% after the Belgian agricultural technology company received regulatory approval from the US Environmental Protection Agency for its first biofungicide, called Evoca.
Compagnie des Alpes rises as much as 6.9% following 2025 results from the French ski resort and theme park operator, which CIC Market Solutions describes as “excellent.”
Swissquote shares tumble as much as 8.6% after one of its investors offered shares at a discount to the last closing price. Shares fell below the offer price before paring losses.
Scandic Hotels drops as much as 8.8% as Morgan Stanley downgrades to underweight from equal-weight, saying the country’s acquisition of Dalata’s hotel operation may not be as profitable as previously expected.
Foresight Group shares decline as much as 8.2% after the UK infrastructure and private equity investment management services company’s interim results, with Peel Hunt noting impact from margin compression.
Pantheon Resources shares drop as much as 28% after the company’s update on work at the Dubhe-1 well. Canaccord Genuity said markets are still waiting for representative flow rates and that the cost of the work has come in higher than previously forecast.

Earlier in the session, Asian stocks gained, snapping a two-day decline, helped by a rally in tech-heavy markets of South Korea and Taiwan. The MSCI Asia Pacific Index rose as much as 0.5%, before paring gains. TSMC, Samsung Electronics and SK Hynix were among the biggest boosts to the gauge’s climb. Shares eked out small gains in Japan as banks extended advances on speculation of a Bank of Japan interest-rate hike this month. Growing expectations of an interest rate cut in the US is aiding risk-on in the region. A stabilization in bitcoin also helped sentiment after a selloff in cryptocurrencies led declines in global risk assets on Monday. Shares drop in India, as the rupee hit a record low. Concerns over the lack of a trade deal with the US is weighing on the currency. Benchmarks in China also traded lower.

In FX, the yen is the weakest of the G-10 currencies, falling 0.4% against the dollar and pushing USD/JPY above 156. The euro loses a few pips with little reaction to a surprise uptick in euro-area CPI. The pound is down 0.2%.

In rates, treasury yields are higher, within two basis points of Monday’s close with 10-year trading around 4.11%. Bund and gilts are little changed. In Asia, JGBs were supported after Tuesday’s 10-year auction drew solid demand. The corporate issuance slate is expected to grow following a heavy day on Monday. The IG dollar bond issuance slate is empty so far. Tuesday is expected to bring more US investment-grade bond issuance after around $16 billion of new deals on Monday, led by Merck’s acquisition-related $8 billion eight-part offering.

In commodities, spot gold falls $45 and back below $4,200/oz. US crude futures are treading water at $59.30 a abrrel.

The US economic calendar is blank for scheduled data releases. Fed members are in external communications blackout ahead of the Dec. 10 policy announcement

Market Snapshot

S&P 500 mini +0.2%
Nasdaq 100 mini +0.3%
Russell 2000 mini +0.5%
Stoxx Europe 600 +0.2%
DAX +0.5%
CAC 40 +0.2%
10-year Treasury yield unchanged at 4.09%
VIX -0.4 points at 16.85
Bloomberg Dollar Index little changed at 1219.09
euro little changed at $1.1604
WTI crude little changed at $59.34/barrel

Top Overnight News

Trump's schedule noted he will host a Cabinet meeting on Tuesday at 11:30am and will make an announcement at 2:00pm. Some expect he could announce Kevin Hassett as next Fed Chair (Hassett's odds are up to 79% on Polymarket).
Senators have about a week before they’re set to vote on soon-to-expire Affordable Care Act subsidies. Most of them already believe the chances for a bipartisan breakthrough by then are roughly zero. Politico
US envoy Steve Witkoff is set to meet Vladimir Putin to discuss a Ukraine peace plan as Russia claimed its forces seized Pokrovsk on the Donetsk frontline. A fourth Russia-connected tanker in less than a week was attacked today. BBG
Officially, the search for a new Federal Reserve chair is still under way. A handful of finalists are scheduled to sit down for interviews beginning this week with Vice President JD Vance and senior White House staff. Unofficially, the process seems to be all but over, with President Trump appearing to favor longtime adviser Kevin Hassett. If Hassett does end up the nominee, it will be because he met Trump’s two key criteria: loyalty, and credibility with the markets. WSJ
OpenAI Chief Executive Sam Altman told employees Monday that the company was declaring a “code red” effort to improve the quality of ChatGPT and delaying other products as a result. OpenAI plans to launch a new reasoning model next week that the company claims outperforms Gemini 3. WSJ
The world economy is weathering Trump’s trade tariffs better than expected, the OECD said. It raised its US and euro-area growth forecasts. Still, it continues to predict global growth will slow to 2.9% in 2026, from 3.2% in 2025. BBG
China is expected to ramp up US soybean purchases this month to meet a pledge to buy at least 12 million tons by year-end, led by state firms like Cofco, traders said. So far, only about 3 million have been booked. BBG
Strong demand for Japanese government bonds helped to steady Asian markets on Tuesday, a day after hawkish comments from the central bank governor sparked a global selloff. FT
Europe’s headline CPI for Nov ran a bit warmer than anticipated at +2.2% (vs. the Street +2.1% and up from +2.1% in Oct) while the core number was inline at +2.4% (and steady vs. Oct). BBG
Members of the House of Representatives are quitting Congress at a record rate, with Republican retirements and resignations outpacing Democrats by a nearly 2-to-1 ratio in the first 11 months of the year. In previous cycles, the party with more departures tends to lose seats — if not the majority. Axios
Apple plans not to follow the order by the Indian government to preload phones with a state-run cyber safety app, according to Reuters, citing sources; Co. to voice its concerns around privacy and security following new app order

Trade/Tariffs

Chinese rare-earth magnet companies are reportedly finding workarounds to their government’s export restrictions, as they seek to keep sales flowing to Western buyers, according to WSJ.
China reportedly issues first rare earth magnet general export licence after the Trump-Xi meeting, according to Reuters sources
Exxon (XOM) is reportedly in talks with Iraq over purchasing Lukoil's stake in the West Qurna 2 oilfield, via Reuters citing sources.
Russia's Kremlin Spokesperson Peskov says that Russia continues to be an important supplier of energy to India on a competitive basis. Looking at possibilities to increase imports from India. A decrease in oil trade volumes can be decreased for a brief period of time.

A more detailed look at global markets courtesy of Newsqsuawk

APAC stocks were predominantly in the green as the region shrugged off the weak lead from Wall Street, but with the upside capped amid quiet macro catalysts and in the absence of any tier-1 data. ASX 200 eked mild gains with the help of outperformance in energy, resources and mining, but with gains limited by underperformance in tech and utilities, while data was uninspiring with a larger-than-expected contraction in building approvals. Nikkei 225 nursed some of the prior day's losses but with the rebound contained amid risks of a BoJ December hike. Hang Seng and Shanghai Comp mostly traded mixed as participants reflected on a slew of monthly auto sales updates, while the mainland lagged after the PBoC's open market operations resulted in a net daily drain of CNY 146bln.

Top Asian News

RBNZ Governor Breman said she will discuss with the MPC the possibility of being more transparent with how members vote, while she added that the mandate is very clear that we should focus on keeping inflation low and stable. Breman said that they aim to support a healthy, strong and growing economy, but keep inflation low and stable. It was separately reported that the RBNZ is to begin weekly open-market operations from December 4th and will update changes to the format in Q1 2026.
Samsung Electronics (005930 KS) has completed development of its 6th-gen HBM4 and is entering full-scale mass production, via AJUNews.

European bourses (STOXX 600 +0.2%) started the session flat/incrementally firmer before then catching a bid as the morning progressed; no clear driver for the upside, but a move which has sustained as indices reside near peaks. European sectors hold a slight positive bias. Banks take the top spot, with gains broad-based across the UK and Europe, but traders may also be digesting the latest update via the BoE, where it lowered capital requirements for UK banks as they pass stress tests. Media is found at the foot of the pile, joined closely by Travel & Leisure.

Top European News

Confederation of British Industry said Britain's private sector expects output to decline during the next three months in the gloomiest outlook since May as cautious consumer spending and cost pressures continue to weigh on businesses.
BoE Financial Policy Committee Record: System-wide level of Tier 1 capital requirements is now around 13% of risk-weighted assets, 1ppt lower than its previous benchmark of around 14%. CCyB maintained at 2%. "The Committee has also identified areas for further work, including on buffer usability, the implementation of the leverage ratio in the UK, and initiatives by the Bank to respond to feedback on interactions, proportionality, and complexity. Committee supports the Bank’s plans for a private markets system-wide exploratory scenario (SWES)".
OECD sees global growth of 3.2% in 2025 (maintained from prev. forecast), 2.9% in 2026 (maintained), 3.1% in 2027 (new forecast).
UK OBR's Miles says it was not misleading for Chancellor Reeves to have said that the situation with public finances was very challenging.
BoE Governor Bailey says he expects banks to support the economy through lending following recent capital changes.

FX

DXY and most G10 FX are uneventful in relatively quiet trade, with a similar lack of macro drivers seen during APAC hours. Specifically, DXY resides in a narrow 99.38-99.52 parameter, with ING calling for a lower dollar this week - "we expect that the remainder of the week will validate the market’s dovish pricing for next week’s Fed meeting". As it stands, the index trades at the upper end of the mentioned ranges, with recent strength thanks to some pressure seen in the GBP.
EUR traded flat ahead of the EZ HICP metrics, and then was little moved on the release itself. Headline printed a touch above expected at 2.20% (exp. 2.10%) whilst the Services figure also ticked higher from the prior month. Overall, given the figures were near enough in line with expectations, there was little follow-through into the single-currency and held within a 1.1604 to 1.1616 range, before then touching 1.1600 as the USD picked up a touch.
USD/JPY outperforms amid a pick-up in risk sentiment and after the pair's volatile Monday session, which saw a slump to 154.66 lows before bouncing back up and clear of 155.50 and then 156.00, with the pair eyeing yesterday's 156.15 peak as the near-term resistance level, and thereafter Black Friday's 156.58 high.
GBP traded flat against the USD, before then moving lower in recent trade. Nothing behind the latest bout of pressure, but it does come after Cable breached 1.3200 to the downside, and then continued to tumble to make a fresh trough at 1.3180 (though it is a moving target).
AUD outperforms after ANZ removed its call for an RBA cut in H1-2026, now sees the RBA on an "extended pause" through 2026. As a reminder, CBA and NAB also expect the RBA to be on hold for an extended period of time/foreseeable future. Westpac continues to expect two 2026 cuts, touting May and August for those. AUD/NZD marginally eclipsed 1.1450, from a 1.1418 trough.

Fixed Income

A lack of fresh drivers for USTs. The March contract is near-enough flat in a narrow 112-25 to 112-29 band. Overnight, WSJ's Timiraos wrote that, regarding the search for the next Fed Chair, "Unofficially, the process seems to be all but over, with President Trump appearing to favour longtime adviser Kevin Hassett.".
Bund Dec'25 is contained in a thin 128.18-35 band this morning. Specifics light. No move in Bunds on the EZ Flash HICP for November, the headline came in hotter-than-expected and ticked up from the prior, while Services lifted from the previous rate. Overall, the hotter-than-expected series chimes with the view that the ECB's easing cycle has likely concluded.
Gilts underperform. If the move continues, we look to support for the Gilt Mar'26 contract at 90.53, a double-bottom from the session of and before the Budget. Currently, the low is 90.98, taking out Monday's base by a tick. A move that lifted the UK 10yr yield back above the 4.5% mark. However, this pressure proved somewhat fleeting as the benchmark bounced and has made its way back to the unchanged mark. Nothing fresh, though the OBR briefing is underway and we note remarks from BoE officials on the morning's FSR/FPC briefings.
Saudi National Bank is seeking a USD 1bln syndicated loan, via Bloomberg. Loan is being syndicated to the broader market, incl. Asia, according to sources cited.
JGB's led overnight after a strong 10yr auction and in a bit of a breather from the largely Ueda-induced selling seen at the start of the week. To a 134.72 peak with gains of just over 20 ticks at best.
UK sells GBP 1bln 0.125% 2031 I/L Gilt: b/c 3.88x (prev. 3.49x), real yield 0.949% (prev. 0.889%)
Germany sells EUR 3.563bln vs exp. EUR 4.5bln 2.00% 2027 Schatz: b/c 1.7x (prev. 1.7x), average yield 2.05% (prev. 1.98%), retention 20.82% (prev. 24.68%)

Commodities

WTI and Brent continue to trade within Monday's post-OPEC range of USD 58.83-59.97/bbl and USD 62.69-63.82/bbl, respectively, as a pause in output hike and rising geopolitical concerns continue to support crude prices in the near term. WTI and Brent peaked at the start of the APAC session at USD 59.67/bbl and 63.36/bbl before falling to troughs of 59.09/bbl and 62.88/bbl.
XAU and XAG traded muted at the start of the European session. Oscillated in a tight USD 4201-4236/oz and USD 56.60-58/oz band, respectively. More recently, the yellow metal has fallen to make fresh session troughs of USD 4,181/oz - a move which lacked catalysts, but technicians highlight accelerating selling pressure after spot gold slipped below USD 4.2k/oz.
3M LME Copper gapped lower and fell to a trough of USD 11.12k/t before rebounding to a session high of USD 11.27k/t as global risk tone slightly turns around following Monday's selloff.

Geopolitics: Middle East

Arab media reported new Israeli attacks in Khan Yunis and Rafah, according to Iran International.

Geopolitics: Ukraine

European Commission proposals for the Ukraine reparation loan should be distributed to member states tomorrow, and likely first discussion by EU ambassadors on Friday, according to Radio Liberty journalist
Russian Foreign Minister Lavrov is to meet with Chinese Foreign Minister Wang Yi on Tuesday.
Russia's Kremlin Spokesperson Peskov says US Special Envoy Witkoff and President Putin will discuss the understanding reached between the US and Ukraine, in a meeting at 14:00GMT/09:00EST, via TASS. S-400 and SU-57 fighter jets will be on the agenda.

Geopolitics: Other

Venezuelan President Maduro reportedly asked for sanction removal for more than 100 officials during a previous call with US President Trump. Furthermore, Trump gave Maduro a Friday deadline to leave Venezuela with his family, while the failure to meet the Friday deadline prompted Trump's comments on Saturday about the closure of airspace, according to sources cited by Reuters.
US Treasury Secretary Bessent said the Treasury is investigating allegations that Minnesota tax dollars may have been diverted to Al-Shabaab.
China's Coast Guard said it expelled a Japanese vessel in the waters of the Senkaku Islands on Tuesday.
"Turkey says oil tanker attacked in Black Sea while sailing from Russia to Georgia", according to Sky News Arabia. However, Sky News Arabia later clarifies, "Turkey says cargo ship attacked in Black Sea while sailing from Russia to Georgia".
Japan's Defence Minister Koizumi is considering a visit to the US as early as mid-January to hold talks with War Secretary Hegseth, via Kyodo.

US Event Calendar

Nov Wards Total Vehicle Sales, est. 15.4m, prior 15.32m
10:00 am: Fed’s Bowman Testifies Before House Committee

DB's Jim Reid concludes the overnight wrap

Markets got December off to a rocky start yesterday, with bonds and equities losing ground, alongside a sharp slump in Bitcoin (-5.19%). The moves gathered pace right from the open, as hawkish remarks from BoJ Governor Ueda had already pushed 10yr JGB yields up to a post-GFC high. But that then cascaded across global markets, with bond yields moving sharply higher in the US and Europe too. In the meantime, matters weren’t helped by the latest data, as the ISM manufacturing print leant in a stagflationary direction, whilst higher oil prices only exacerbated those fears. So with all said and done, the S&P 500 (-0.53%) slipped back, whilst 10yr Treasury yields (+7.2bps) saw their biggest daily jump in nearly four weeks.

Those developments in Japan were critical for yesterday’s moves, because Ueda’s comments had led investors to price in a December rate hike from the BoJ as a near-certainty. So that meant bond yields hit a whole bunch of new records, and by the close in Japan yesterday, the 10yr yield (+5.8bps) was at a post-2008 high of 1.86%, whilst the 30yr yield (+4.1bps) was at 3.37%, and the highest since that maturity was first issued in the late-1990s. Similarly at the front end, the 2yr yield closed above 1% for the first time since the GFC. This morning yields on 2yr and 10yr JGBs are both down a basis point after a decent 10yr auction has provided some respite to the bond sell-off. The bid-to-cover ratio was recorded at 3.59, compared to 2.97 at the previous sale in November, and a 12-month average of 3.20.

US futures are also fairly flat, indicating that the sell-off has paused for now. The KOSPI (+1.81%) is leading the way in Asia after rebounding from yesterday and after the US announced that the general tariff rate on imports from South Korea, including automobiles, will decrease to 15% retroactively effective from November 1. In other markets, the Nikkei (+0.24%) is recovering a little this morning after a near two percent decline yesterday, while the S&P/ASX 200 (+0.11%) is also experiencing modest gains. Meanwhile, the Hang Seng (+0.13%) is maintaining small gains, in contrast to the CSI (-0.61%) and the Shanghai Composite (-0.55%), which are lower after a stronger session on Monday.

The moves in Japan echoed around the world yesterday, with a sharp bond selloff on both sides of the Atlantic. For instance, Treasury yields rose across the curve, with the 2yr yield (+4.0bps) up to 3.53%, the 10yr yield (+7.2bps) rose to 4.09%, and 30yrs (+7.4bps) to 4.74%. Moreover, those moves got further support from several inflationary indicators, including the ISM manufacturing survey. Admittedly, the headline index unexpectedly fell back to 48.2 (vs. 49.0 expected), but the prices paid component ticked up to 58.5 (vs. 57.5 expected) after a run of 4 consecutive monthly declines. So that exacerbated concerns about tariff-driven inflation persisting. And with oil prices rising (+1.27% for Brent) after Ukraine’s weekend attack against an oil terminal in the Black Sea, the 1yr inflation swap (+1.7bps) also posted a 4th consecutive increase to 2.64%.

That downbeat tone was seen for equities too, where the S&P 500 (-0.53%) fell back after a run of 5 consecutive gains, and the small-cap Russell 2000 (-1.25%) saw an even bigger slump. Nearly three quarters of the S&P constituents were lower on the day, though the index did recover some ground after futures in Asia had suggested an even larger fall. The Mag-7 (-0.10%) outperformed as Nvidia (+1.65%) rebounded from Friday’s -1.81% decline. By contrast, crypto assets suffered, with Bitcoin (-5.19%) falling to $86,446 by the close, and trading below $84k intra-day. Unsurprisingly, that meant there were sizeable losses for crypto-related stocks like Coinbase (-4.76%). Overnight Bitcoin has bounced a little.

Earlier in Europe, markets had followed a very similar pattern, with bonds and equities selling off together. So the STOXX 600 (-0.20%) also fell back after 5 consecutive gains, and there was a particularly sharp decline for the German DAX (-1.04%). And there wasn’t much data capable of boosting the mood either, with the Euro Area manufacturing PMI revised down a tenth from the flash reading to 49.6, so still in contractionary territory. Meanwhile, yields on 10yr bunds (+6.1bps), OATs (+7.5bps) and BTPs (+6.9bps) all moved higher.

Here in the UK, we also heard yesterday that the head of the OBR budget watchdog had resigned, which comes after their analysis of the budget’s contents went live on its website ahead of the Chancellor’s announcement. However, that wasn’t a market moving story, and the rise in 10yr gilt yields (+4.1bps) was more muted than in other countries yesterday, whilst the FTSE 100 (-0.18%) largely matched the STOXX 600. We did get a bit of UK data too, with October mortgage approvals down to 65.0k (vs. 64.5k expected), but that very much kept them within their 60-70k range that they’ve been in for the last 18 months.

Looking forward to today, we’ll see some focus on geopolitics as Trump’s envoy Witkoff is due to meet Russia’s President Putin in Moscow to discuss US proposals to end the war in Ukraine. The visit comes as US-led peace talks intensified over the past couple of weeks with “productive” meetings between US and Ukrainian officials but Kyiv staying resistant to territorial demands that have been made by Moscow.

In terms of the rest of the day ahead, data releases include the Euro Area flash CPI print for November, with Friday’s country-level releases suggesting that headline and core inflation should be unchanged at 2.1% and 2.4% respectively. We'll also see the Euro area unemployment rate for October. Otherwise, central bank speakers include the Fed’s Bowman but with the blackout on it won't be about monetary policy.

Tyler Durden Tue, 12/02/2025 - 08:43

Futures Rebound As Bitcoin Halts Plunge

Zero Hedge - 9 hours 58 min ago

Futures Rebound As Bitcoin Halts Plunge

After Monday's dismal start to December, US equity futures are higher (if only for the time being), although lacking conviction with few major catalysts on deck today. As of 8:15am, S&P 500 futures are up 0.3% and Nasdaq 100 contracts add 0.4%. Pre-market, Mag 7 are mostly higher led by META (+0.6%) and AMZN (+0.4%). Bond yields are unchanged and the USD is flat. Commodities are mostly mixed: Oil is flat; base metals are all higher (aluminum +0.9%), while precious metals are lower. After the latest post-BOJ bloodbath, bitcoin has managed to hold a modest bid and was trading above $87,000. The US economic calendar is blank for scheduled data releases.

In premarket trading, Mag 7 stocks are mostly higher (Meta +0.6%, Alphabet +0.5%, Nvidia +0.8%, Amazon +0.7%, Tesla +0.3%, Microsoft +0.05%, Apple -0.1%).

Cloudflare Inc. (NET) gains 2% after Barclays launched coverage on the infrastructure software company with an overweight rating and a $235 price target.
Credo Technology (CRDO) rises 18% after the communications equipment company’s second-quarter results came in much stronger than expected. It also gave a strong forecast. Shares of competitor Astera Labs (ALAB) gain 5%.
MongoDB (MDB) rallies 23% after the database software company reported stronger-than-expected results. It also raised its full-year forecast.
Six Flags Entertainment (FUN) gains 3% after Truist Securities upgraded the theme park operator’s stock to buy from hold.
Solaris Energy Infrastructure Inc. (SEI) rises 4% after the data center power generator was initiated at Morgan Stanley with a recommendation of overweight on power supply demand.
Warner Bros. Discovery Inc. (WBD) inches 1.1% higher. The company was fielding a second round of bids on Monday, including a mostly cash offer from Netflix Inc., in an auction that could wrap up in the coming days or weeks, according to people familiar with the discussions.