This week, I speak with Henry Ward, Chief Executive Officer at Carta, a technology company that provides capitalization table management and valuation software for startups. They discuss founding a business, the growth of private markets, and his lobby efforts for retail investors to access private markets.

The firm manages cap tables, compensation, valuations, liquidity, amidst an assortment of other data for more than 50,000 companies, 8,500 investment funds, and over 2.5 million equity holders’ $2.5 trillion in company equity; they help facilitate $13 billion in secondary sales.

His current reading is here; A transcript of our conversation is available here Tuesday.

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.

Be sure to check out our Masters in Business interview this weekend with Liz Ann Sonders, Chief Investment Strategist, Charles Schwab & Co. Named “Best Market Strategist” by Kiplinger’s Personal Finance, she is also on Barron’s “100 Most Influential Women in Finance” every year since the list’s inception.

 

 

Favorite Books

 

 

The post MiB: Henry Ward, Carta Chief Executive Officer appeared first on The Big Picture.

Visualizing The Compute, Cash, & Contracts That Power OpenAI

In order to train and deploy cutting-edge AI models like ChatGPT, OpenAI relies on a sprawling infrastructure network involving multiple billion-dollar entities, intricate contracts, and vast capital commitments. A new visualization from Made Visual Daily maps this infrastructure pipeline using three flows—compute, cash, and contracts—highlighting the increasingly circular nature of AI development funding.

The map, via VisualCapitalist.com, synthesizes data from public financial reports, media disclosures, and filings in an attempt to show who builds what, who pays whom, and where potential risk may be accumulating in the system.

The biggest nodes in the diagram are familiar names: Nvidia ($4.6 trillion), Microsoft ($3.8 trillion), TSMC ($1.5 trillion), and Oracle ($0.8 trillion).

OpenAI itself, valued at around $500B in its most recent secondary sale, anchors the middle of the chart. Microsoft, in particular, plays a dual role—both providing compute (via Azure) and injecting capital and GPU credits back into OpenAI.

The GPU Supply Chain: Scarcity, Dominance, and Dependency

The engine behind OpenAI—and much of today’s generative AI—is the Nvidia GPU.

But these chips don’t come out of thin air. The GPU supply chain is global and fragile:

• Design: Nvidia designs the chips in-house.

• Fabrication: TSMC (Taiwan Semiconductor Manufacturing Company) fabricates the chips at its advanced 5nm and 4nm nodes.

• Assembly: The chips are then packaged and tested by firms like Quanta and Foxconn.

• Deployment: Server makers such as Supermicro integrate them into AI-optimized racks and clusters.

• Delivery: These clusters are shipped to cloud providers like Microsoft Azure and CoreWeave.

Any disruption along this chain—whether geopolitical, economic, or logistical—can send shockwaves through the entire AI sector. That’s why the U.S. has placed tight export controls on AI chips, and why countries like China are scrambling to develop domestic alternatives.

Demand for H100s has grown so intense that cloud firms and startups alike are reserving capacity months or even years in advance. In rare cases, some even use GPUs as collateral to secure financing, reinforcing their role as a new strategic commodity.

Closed-Loop Capital and the AI Bubble Risk

What makes the modern AI ecosystem remarkable isn’t just the number of players involved—it’s how deeply interwoven their financial and operational relationships have become.

Microsoft, for instance, has invested over $13 billion in OpenAI, while also serving as its primary cloud and compute partner through Azure. Much of OpenAI’s model training runs on clusters powered by Nvidia GPUs, procured via Microsoft’s cloud infrastructure.

At the same time, Microsoft is the primary customer of CoreWeave, a rapidly growing cloud provider that also buys large volumes of Nvidia hardware—often financed through credit arrangements with private investors and funds.

This creates an interdependent web of capital, compute, and contracts, where the same dollars and chips circulate between a handful of firms dominating AI’s supply chain. Analysts have noted that such tight coupling could magnify shocks if demand or funding conditions change abruptly.

To dig deeper into the relationship between OpenAI and its backers, explore our related post: OpenAI vs Big Tech.

Tyler Durden Fri, 10/17/2025 - 15:00

Zelensky Desperately Pitches Drones For Tomahawks At White House

Update(1542ET): In a somewhat lengthy Q&A with the press, Presidents Trump and Zelensky fielded a variety of questions before starting a closed-door meeting at the White House, with each leader's full delegations present.

All eyes have been on the potential decision to transfer Tomahawks to Ukraine, but President Trump at every turn dodged the question, and did not offer anything clear on Tomahawks one way or the other. But he did say at one point when asked about concerns over the Pentagon's own dwindling missile stockpiles that "I have to make sure we're stocked up as a country."

That opened up an interesting moment where Zelensky offered "thousands" of Ukrainian drones in exchange for receiving Tomahawks, though Trump appeared cool toward the idea, and noted that the United States already possesses excellent and cutting-edge drone production. The moment unfolded below:

BREAKING: Just as Trump says "hopefully they won't need Tomahawks," Zelenskyy chimes in and begs for them and wants to trade for Ukrainian drones.

Zelenskyy isn't so focused on peace today.

President Trump is LASER FOCUSED: "We would much rather have the war be over." pic.twitter.com/U4h2pWwvYw

— Gunther Eagleman™ (@GuntherEagleman) October 17, 2025

*  *  *

Astaxanthin // Peak Focus // Mushroom 10x

Just ahead of Ukraine's Zelensky arriving at the White House to meet with President Trump, Russia announced Friday morning that its forces had seized three more villages in Ukraine’s Dnipropetrovsk and Kharkiv regions.

Russian troops captured Pishchane and Tykhe in Kharkiv and Pryvillia in Dnipropetrovsk, the Kremlin said. The development in the Kharkiv region is going be met with particular alarm among Kiev's backers in the West, given that the Ukrainian's military's 2022 counteroffensive had actually retaken much of Kharkiv.

Anadolu Agency via Getty Images

But the Russian military is clearly pushing forward again, and is eyeing the capture of Kupiansk next, which is a crucial logistics hub in the region.

Russia's military command has at the same time tallied its forces have captured eight Ukrainian settlements in total over the course of the past week.

A statement in TASS says "In the Kharkov direction, Battlegroup North units liberated the settlement of Tikhoye in the Kharkov Region through decisive operations... Battlegroup West units liberated the settlements of Borovskaya Andreyevka and Peschanoye in the Kharkov Region in decisive operations...battlegroup Center units liberated the settlements of Moskovskoye, Balagan and Novopavlovka in the Donetsk People’s Republic through active and decisive operations."

The Defense Ministry continued listing out: "Over the past week, Battlegroup East units liberated the settlements of Alekseyevka and Privolye in the Dnepropetrovsk Region," it said.

Without doubt, Moscow has timed its "announcement" touting the capture of all these locations to correspond with Zelensky's visit to Washington, also coming after Thursday's Trump-Putin phone call.

The only 'leverage' that Ukraine might have is related to its stepped-up long-range drone offensive which has wreaked havoc on Russian oil.

Nobody waited for Zelensky in Washington. So, his PR crew organised a stunt.

They lined up Jermak, the head of Zelensky’s Presidential Office and the pilots of the plane.

The PR female introduces Jermak as if Zelensky did not know his comedy ex-manager.pic.twitter.com/NYFqTz95Q4

— Alternative News (@AlternatNews) October 17, 2025

Depot after depot has been hit over the past weeks and months, including also vital oil shipping terminals on the Crimean coast. If Ukraine received long-range missiles from the West and the United States, it will certainly train them on such vital targets.

Tyler Durden Fri, 10/17/2025 - 14:42

Bubble Trouble: The Contrarian's Curse...And Opportunity

Authored by Riccardo Cumerlato via BondVigilantes.com,

"Once upon a time, a learned man watched his friends grow rich by investing in a company that promised to revolutionise trade. Attracted by the prospect of easy riches, he joined the party, but was cautious at first, investing only small amounts. He even sold his shares for a tidy profit when he felt their price could no longer be rationally justified.

But, as the mania grew and the share prices kept increasing, he couldn’t resist… he bought back in, this time with more money, more conviction, and more confidence.

The bubble popped. He lost a fortune. The man was so shaken that he declared he could ‘calculate the motions of the heavenly bodies, but not the madness of people."

This story of Sir Isaac Newton and the South Sea Bubble of 1720 offers a cautionary tale about speculative excess, even among the most brilliant minds.

But why is it so difficult, even for one of the smartest people ever to have lived, to resist the lure of financial bubbles?

Human nature fuels the hype

During periods market exuberance, it’s not just valuations that defy gravity, so does reason. As Keynes famously put it, ‘It is better for reputation to fail conventionally than to succeed unconventionally’. In other words, it’s easier to join the crowd and be wrong together than to stand alone and be right too early.

For example, during the dot-com boom, financial news channels gave extensive coverage to IPOs, reflecting the excitement of the time.. Analysts who dared to question valuations were labelled ‘out of touch’.

Fund managers and analysts are human too –  reading the same headlines, hearing the same chatter, and many will feel the same level of Fear Of Missing Out (FOMO). When everyone else is riding the rocket ship, sitting on the launchpad with a sceptical look and a clipboard isn’t just lonely, it can be career-threatening.

The bubble becomes a social phenomenon, not just a financial one.

Betting against a bubble is structurally hard

Even if a fund manager has the courage to go against the grain, the tools to do so are hardly user-friendly. Going long is simple: buy, hold, and enjoy the ride. Going short? That’s a different beast.

Shorting equities means borrowing stock, posting margin, and paying dividends to the lender. If the stock keeps rising, margin calls pile up. In fixed income, shorting often involves paying the bond’s coupon out of pocket; negative carry at its finest. All the while, the bubble may continue expanding while others enjoy a windfall .

As Keynes (again) warned, ‘markets can remain irrational longer than you can remain solvent’. And irrational markets tend to be very, very solvent.

Short sellers during the meme stock episode faced significant challenges, highlighting the risks of contrarian positioning in volatile markets. Hedge funds betting against GameStop found themselves squeezed by retail traders armed with Reddit threads and stimulus cheques. The stock soared, losses mounted, and some funds were forced to close positions at eye-watering losses. It was a masterclass in how expensive it can be to be right too early, and a reminder that the market doesn’t always reward rationality.

Contrarians need saintly patience (and patient saints)

To survive a bubble, a contrarian needs not just conviction, but also investors who are aligned with a long-term philosophy and understand the nature of contrarian strategies. Take Warren Buffett in the late 1990s. While dot-com darlings soared, Buffett stuck to his guns; no tech, no hype, just fundamentals. Critics said he didn’t ‘get it’. His returns lagged, but his investors stayed loyal.

When the bubble burst in 2000, Buffett emerged unscathed, vindicated, and wealthier. His story is a reminder that sometimes the tortoise really does beat the hare, if the tortoise has patient shareholders.

Buffett’s success wasn’t just about his investment philosophy, it was about the trust he had built with his investors over decades. They understood that his approach was long-term, even if the market wasn’t. Compared to investor that are more reactive to short-term performance , Buffett’s investor base acted more like partners than clients. That kind of long-term perspective is invaluable when swimming against the tide.

Source: Bloomberg

All told, the contrarian’s road can be lonely and often met with scepticism. You not only have to be right about the endgame, but also have to stay invested long enough to enjoy it. As one market wit quipped, contrarian investing can feel like ‘standing in front of an oncoming train and mumbling, ‘it will stop…’

History shows us that overheated markets cool down – bubbles tend to burst – but often not before testing the resolve of those who challenge prevailing market sentiment. Yet for the fund managers who can resist the rally, deploy the right tools, and manage patient capital, the rewards of contrarian courage can be substantial.

Going  against the crowd in a bubble isn’t just a test of conviction, it’s an opportunity to shine when the dust finally settles.

Tyler Durden Fri, 10/17/2025 - 14:40

Auto Loan Delinquencies Surge 50% As Cracks Deepen Across U.S. Credit Markets

A month after bankruptcies of subprime auto lender Tricolor and auto-parts supplier First Brands, new cracks emerged in U.S. credit markets. This week, Zions and Western Alliance disclosed they were victims of loan fraud tied to funds investing in distressed commercial real estate. The revelations come amid broader credit trouble, and shifting our focus back to autos, there's new data this morning about credit products tied to the riskiest consumers that have seen a 50% surge in delinquencies. 

Bloomberg cites data from the credit-scoring company, VantageScore, which reveals that delinquencies among the low-tier consumers have surged 50% since 2010. Fueling the delinquencies is a perfect storm of record-high car prices, elevated interest rates, longer loan terms, and monthly payments that average nearly as much as rent for some folks. 

Since 2019, new vehicle prices have jumped over 25% to $50,000, while average monthly payments reached $767, with 20% of borrowers paying over $1,000 per month. Loan rates now exceed 9%, worsening the affordability crisis.

Notably, prime and near-prime borrowers are now defaulting faster than subprime consumers, as lenders tightened standards for the lowest-credit segment, according to the report. The average auto loan balance has risen 57% since 2010, and many borrowers are "upside-down", owing more than their cars are worth.

"We're seeing the cost of cars and the cost related to car ownership increase enormously," VantageScore chief economist Rikard Bandebo said in an interview. "In the past five years, it has increased even faster."

Bandebo continued, "That's a double... You've been hit by the increased cost of the car and then the financing cost of the car."

"Consumers now are in a more precarious position than they've been since the last recession," Bandebo said. "We've seen this growing trend over the last several years of more and more consumers struggling to make ends meet, and it's looking like that trend is going to continue into next year."

Here's the sequence of alarming events unfolding in the credit markets in recent weeks:

• Subprime Crisis 2.0? Red Flags Fly As Alleged Fraud Triggers Billion-Dollar Auto-Lender Bankruptcy

• "Worst Thing I've Ever Seen"; Trickle-Down Terror Of Tricolor Trouble Hits Alts

• Creditors Of Bankrupt First Brands Say Billions "Simply Vanished" Amid Debt Rehypothecation Nightmare

• Probably More 'Cockroaches': Finger-Pointing Begins In Private Credit As Managers Fear More 'Late-Cycle Accidents'

• First Tricolor Subprime Meltdown, Now UBS Warns: Consumer Weakness Spreading From Low-Income To Middle-Class

• Morgan Stanley's 3 Lessons From The Shocking Collapse Of First Brands

• DOJ Opens Probe Into First Brands' Shocking Bankruptcy

And by late this week:

• Regional Banks Crash As More Credit "Cockroaches" Emerge

• "This Is Crazy": Goldman Stunned By Regional Bank Meltdown; Its Clients Demand Answers To These 3 Questions

UBS analyst Jolie Ho commented on the credit market cracks:

Two U.S. regional banks, Zions and Western Alliance, said they were the victims of fraud on loans to funds that invest in distressed commercial mortgages, fueling concern that more cracks are emerging in the credit markets. Zions sank 13% on Thursday after it disclosed a $50 mn charge-off for a loan underwritten by its wholly-owned subsidiary. Western Alliance shed almost 11% after it said it made loans to the same borrowers. Bloomberg reported that the disclosures add to recent loan blowups, including bankruptcies at subprime auto lender Tricolor and auto-parts supplier First Brands. JPMorgan and Fifth Third reported hundreds of millions in combined losses tied to Tricolor, while Jefferies revealed exposure to First Brands. While these hits can be easily absorbed by the biggest U.S. banks, the totals are worrisome for regional lenders. U.S. credit-risk gauges worsened on Thursday, with the spread on the Markit CDX North American Investment Grade Index widened as much as 1.69bp to 54.47, as reported. A similar gauge for junk bonds, which falls as credit risk climbs, dropped as much as 0.49 point to 106.87.

Meanwhile, rate traders have priced in two 25 bps cuts by year's end. 

Let's not forget about the government shutdown... All is troubling.

Tyler Durden Fri, 10/17/2025 - 14:20

US Regulators End Climate Oversight Framework For Big Banks

Authored by Tom Ozimek via The Epoch Times (emphasis ours),

Federal regulators will no longer require banks to spell out how they manage climate-related financial risk, following objections from officials in the Trump administration and Republican lawmakers, who said that climate policy was distorting financial regulation.

A woman walks in the rain in New York City, on Oct. 13, 2025. Spencer Platt/Getty Images

In a joint move announced on Oct. 16, the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency rescinded a set of rules called the Principles for Climate-Related Financial Risk Management for Large Financial Institutions.

Introduced in 2023, the rules applied to banks with more than $100 billion in assets and were intended to incentivize institutions to integrate climate considerations into governance, scenario analysis, and risk oversight.

Regulators said the withdrawal reflects a return to long-standing safety and soundness standards that already require banks to manage all material risks—without singling out climate.

“The agencies do not believe principles for managing climate-related financial risk are necessary,” the notice stated, while a Federal Reserve memo further clarified that such guidance risked distracting banks from focusing on core vulnerabilities such as credit, liquidity, and operational risk.

“Existing safety and soundness standards require large financial institutions to have effective risk management processes commensurate with the size, complexity and risk of their activities,” the memo stated, adding that existing rules and guidelines “are sufficient to help ensure financial institutions are managing all material risks.”

Fed Governor Christopher Waller welcomed the move with a two-word statement: “Good riddance.”

Michelle Bowman, the Federal Reserve’s vice chair for supervision, also backed the rollback, saying in a statement that the climate framework had created “confusion about supervisory expectations” and imposed compliance costs and burdens without improving financial stability. She said banks should focus on “core risks” such as credit and liquidity rather than speculative long-term climate scenarios, and that the rules could reduce credit supply and raise borrowing costs for American households.

“One likely potential consequence could be to discourage banks from lending and providing financial services to certain industries, forcing them to seek credit outside of the banking system from non-bank lenders,” Bowman said. “This could result in decreasing or eliminating access to financial services and increasing the cost of credit to these industries. These costs will ultimately be borne by consumers.”

But the decision drew dissent from several other Fed officials. Federal Reserve Governor Michael Barr called the rescission “short-sighted” and said it would “make the financial system riskier even as climate-related financial risks grow.” He pointed to recent disasters such as Hurricane Helene and the California wildfires as evidence of mounting financial exposure.

“The rescission contains literally no evidence to support taking this step only two years after putting the principles into effect,” Barr said. “We owe the public a rational, evidence-based explanation for our actions, and this rescission fails that test.”

Federal Reserve Governor Lisa Cook, while accepting the board’s decision and noting the benefit of regulations that are clear and predictable, said that she expects banks to remain vigilant in assessing severe weather risks.

“My view has not changed since 2023: to the extent severe weather events could cause disruptions to specific firms or to the financial system, I would expect that large banks would seek to be proactive in monitoring, assessing, and appropriately addressing such risks,” Cook said. “I also believe it is advantageous for the banking industry to have stable, well-understood supervisory expectations.”

The rollback marks a broader effort by the Trump administration to unwind climate-related directives across financial agencies and limit the role of environmental, social, and governance factors in regulatory supervision.

That shift has extended beyond the banking regulators. In September, the U.S. Financial Stability Oversight Council, chaired by Treasury Secretary Scott Bessent, voted to disband two panels dedicated to analyzing climate-related systemic risks. Bessent said the decision was a necessary refocus on “core financial stability issues,” including bank safety, liquidity risks, and oversight of nonbank financial firms.

Climate advocates called the move a setback for efforts to prepare the financial system for extreme weather disruptions.

Tyler Durden Fri, 10/17/2025 - 14:00

If We Measured The Economy By Quality-Of-Life Instead Of GDP, We'd Be In A Depression

Authored by Charles Hugh Smith via OfTwoMinds blog,

GDP is like collecting data on passenger satisfaction with the dessert cart on the Titanic and declaring everyone is delighted as the great "unsinkable" ship settles into the icy waters of the Atlantic.

That Gross Domestic Product (GDP) is an outdated and misleading metric of the economy is widely accepted. The problem isn't an abstraction, as we manage what we measure and so policymakers and citizens alike make decisions on what's being measured. If what's being measured is misleading, then we're flying blind.

Economist Joseph Stiglitz has long advocated for an overhaul for what we measure economically, focusing on well-being rather than adding up transactions. A new book The Measure of Progress: Counting What Really Matters, explains the difficulty of the overhaul. A recent article on the topic addressed the urgency of the task (Foreign Affairs, May/June 2025, paywalled):

"For Americans, these are tumultuous times. Inequality in income and wealth is at historically high levels. Artificial intelligence is reshaping society at an unprecedented pace, prompting layoffs and putting entire professions at risk. According to an estimate by the Brookings Institution, up to 85 percent of current workers in the U.S. labor force could see their jobs affected by today's generative AI technology. In the future, that percentage could climb even higher.

At moments of danger and uncertainty, it is usually the task of governments to protect people and help them navigate change--to step in when markets cannot. Yet Americans seem to have little belief in Washington's capabilities. Over the past two decades, public trust in the U.S. government has plummeted by 40 percent. Some Americans believe the federal government has been absent. Others believe it has failed to meet pressing challenges, including the rising cost of living, and the potential disruptions of AI. Either way, Washington has its work cut out for it as the government tries to regain Americans' trust.

So where can it start? The Measure of Progress, meanwhile, takes aim at the economic data that states use. According to Coyle, analysts evaluate the economy using outdated, limited metrics, causing policymakers to misunderstand the challenges citizens face.

Coyle's book is focused on understanding the economy as it exists today. But her argument--that analysts and governments have failed to properly measure peoples' well-being--is equally essential. The metrics that economists use, Coyle insists, are inherently flawed and do not sufficiently represent the reality of economic activity and value. That poses an immense problem for policymakers and analysts, distorting their view of the world and potentially leading them to faulty conclusions and ineffective policies."

The problem is multi-faceted. GDP and other metrics were institutionalized in the industrial age, where agriculture and factory production were easy to measure. As these sectors' share of the economy has slipped, the "hard-to-measure" parts of the economy are now dominant--81.5% by one estimate.

There are many other critical wrinkles in measuring the economy as it is. The book raises the issue of unpaid work, such as families caring for elderly parents and the unpaid "shadow work" that we're required to do now to keep all of our technology functioning. All this activity occurs outside the traditional market.

Since our metrics don't put a price tag on clean air and functional ecosystems, these are left out of the calculations, as if they don't exist. Not only do they exist, they're critical to our well-being. The book discusses natural capital accounting as an alternative, but alternative measures like this are inherently more challenging than toting up transactions.

What if we decided to measure the economy by the quality of life of the citizenry? While there are endless possibilities of what goes into quality of life, we can start with these basics:

1. Our physical and mental health.

2. The health of our social order--our social contract, social trust, communities and trust in our key institutions

3. The security and stability of our livelihoods and financial future.

Defining health isn't that difficult. A healthy person doesn't need any medications because, well, they're healthy, so there's no need for any interventions. A healthy person has an HDL / triglyceride ratio (calculated by dividing your triglyceride level by your HDL cholesterol level) well under 2, can walk a mile without even noticing, can stand on each foot for an extended time, and so on.

As for mental health, numerous studies have found that social connections are critical to our overall health, along with what we might call sufficiency--enough financial resources to secure the basics of life, and enough opportunities to fulfill one's potential.

Let's go through some charts of what we already measure. Here is a chart of our metabolic health. Over 50% of adult Americans are diabetic or prediabetic. This is a serious disease that shortens our lives.

Only a quarter of the adult population is normal (i.e. healthy) weight, reflecting an unhealthy lifestyle of processed foods and inactivity.

As for mental health, consider teen depression rates. Teen suicide rates have also risen. There is no way to interpret this as healthy.

Loneliness--a measure of declining social connections--is also rising sharply.

I prepared this chart of our unhealthy lifestyle and built environment in 2008. Nothing has changed. We can try to sugarcoat all these, but sugarcoating doesn't change reality.

Turning to the social and economic sources of stability, security and opportunity, consider the astounding rise of student loan debt, as attending college / university went from being affordable to requiring lifetime debt serfdom.

Student loan delinquencies reflect precarity and insecurity, not prosperity and security.

As for opportunity in an economy and society that claims to be a "level playing field," the benchmarks of middle-class security are no longer within reach. The number of 30-year olds who are both married and homeowners has plummeted. Yes, we can quibble about statistics like this, but quibbles are apologists' favorite tools: it's not so bad. But this is just more sugarcoating.

This chart of spending by income group reveals an enormous wealth-income divide. The top 10% collect virtually all the unearned income (from investments), collect over 40% of all the earned income and account for half of consumer spending. The bottom 60%--200 million Americans--account for one-quarter of total spending--half of what the top 10% (34 million Americans) spend.

The chart of generational wealth indicates opportunities to build wealth were more accessible pre-2000. Those graduating from high school or university in 2008 or later experienced a much different economy than their parents.

The health of the society is a key element in stability, security and opportunity. Social trust is eroding.

Trust in elites and institutions reflects the wealth-income divide. The top 10% reckon everything's going great because they're doing great. Meanwhile, the bottom 90% live in a completely different world.

Being born into a wealthy household offers numerous advantages that are difficult for those without these advantages to match. Admissions to elite university reflect this divide. This reflects a neofeudal economy and social order.

The wealthy own the vast majority of income-generating assets. The majority depend on wages for their living. The decline of wages' share of the economy over the past 50 years is consequential, reflecting the cumulative transfer of $150 trillion from wage earners to capital over the past five decades.

Wealth and income inequality has reached levels that do not reflect a healthy economy or social order.

The share of income going to the bottom 90% has declined.

The bottom 50% of American households own a tiny slice of the nation's financial wealth. The vast expansion of central bank stimulus and the resulting asset bubbles haven't increased the wealth of the bottom 170 million Americans, which hovers at 2.6%--signal noise compared to the 31% owned by the top 1% and the 68% owned by the top 10%.

How would we rate the US economy in terms of quality of life? It's clear that we'd have to conclude it's in a deep Depression. Can we really sugarcoat all this with claims everything's going great because GDP is rising and AI is making some of us rich?

As for all the cheerleading about how great the economy is doing--GDP is like collecting data on passenger satisfaction with the dessert cart on the Titanic and declaring everyone is delighted as the great "unsinkable" ship settles into the icy waters of the Atlantic.

*  *  *

Check out my updated Books and Films. Become a $3/month patron of my work via patreon.com Subscribe to my Substack for free

Tyler Durden Fri, 10/17/2025 - 13:25

"Outraged" Trump Refuses To Adhere To Global Carbon Tax On Shipping

The United States will vote “no” to a global carbon tax proposed by the International Maritime Organization (IMO) on Oct. 17, President Donald Trump said on Truth Social.

“I am outraged that the International Maritime Organization is voting in London this week to pass a global Carbon Tax,” he said in the post on Oct. 16, urging others to reject the proposal.

“The United States will NOT stand for this Global Green New Scam Tax on Shipping, and will not adhere to it in any way, shape, or form.

“We will not tolerate increased prices on American Consumers OR the creation of a Green New Scam Bureaucracy to spend YOUR money on their Green dreams.”

The net-zero framework proposal that was put before the U.N. agency specializing in regulating marine transport would require ships to comply with a global fuel standard for large oceangoing vessels, 5,000 tons or larger, to force the shipping industry’s greenhouse gas emissions down to net zero by 2050.

As T.J.Muscaro reports via The Epoch Times, the president’s opposition to the tax proposal follows a statement his administration made on Aug. 12.

Signed by Secretary of State Marco Rubio, Secretary of Commerce Howard Lutnick, Secretary of Energy Chris Wright, and Secretary of Transportation Sean Duffy, the statement declared that the United States would retaliate against any of the member states of the IMO that backed it, stating it would be a global carbon tax that “harms the interests of the American people.”

“Under this framework, ships would have to pay fees for failing to meet unattainable fuel standards and emissions targets. These fees will drive up energy and transportation, and leisure cruise costs,” the statement read.

“Our fellow IMO members should be on notice that we will look for their support against this action and not hesitate to retaliate or explore remedies for our citizens should this endeavor fail,” it stated.

“We will fight hard to protect the American people and their economic interests.”

A vote would only occur at the IMO if member states do not agree upon a proposed regulation.

There are 176 member states of the IMO, but a passing vote would require a two-thirds majority of only the 108 member states that ratified previous legislation aiming to reduce shipping pollution.

If passed, the global emissions tax would take effect in 2027 and become “the first in the world” to impose greenhouse gas pricing and mandatory emission limits across an entire industry sector.

The Epoch Times has reached out to the IMO for a response to the U.S. president’s statement.

*  *  *

Astaxanthin // Peak Focus // Mushroom 10x

Tyler Durden Fri, 10/17/2025 - 12:25

"The World Is Changing More Rapidly Than Anyone Could Have Imagined A Few Months Ago"

By Elwin de Groot, head of macro strategy at Rabobank

Whatever...

US equity markets extended their losses yesterday as bond yields fell on the back of a decline in US regional bank shares. The S&P index lost 0.6%, the yield on 10y UST’s dropped more than 5 basis points. The market had the finger pointed at the collapse of the subprime auto lender Tricolor Holdings, underscoring the increased sensitivity of the equity market at these elevated levels. Meanwhile, the IMF said it sees “significant downside risks” to global growth following the renewed tensions between the US and China.

Bloomberg writes that Argentinians are dumping the peso, as they believe a devaluation is unavoidable. This potentially undermines the rescue package, including a $20bn swap line, put up by US Treasury Secretary Scott Bessent. Things likely got worse when, earlier this week, President Trump linked Argentinian leader Javier Milei’s success in the upcoming midterm elections to US support: “If he wins we’re staying with him, and if he doesn’t win we’re gone”, Trump said. That sounds more like a ‘whatever’ than a ‘whatever it takes’ US strategy …

French PM Lecornu can already buy himself an “I’m a survivor” t-shirt after surviving two confidence votes yesterday. Whether he survives the looming budget debate is another matter, as his fate now rests with MPs willing to back the budget. If the government sticks to its pledge not to invoke Article 49.3, a majority must actually vote for it.

Socialists leader Olivier Faure warned: “If parliament is not respected and the pension reform isn’t suspended, we would censure immediately.” Markets, meanwhile, are back at square one: the 10-year yield spread narrowed to 76bp from 86bp last week, and the CAC-40 erased October losses—though spreads remain wider than before Bayrou’s confidence vote announcement in August. MNI quoted EU officials saying the “New Fiscal Rules give Lecornu Budget leeway.” Where have we heard that before?

Macron and Lecornu have bought time, but France’s fiscal—and economic—challenges remain.

Beyond Paris, the global stage looks increasingly like an “eat or be eaten” arena where statecraft tools dominate. Wielding such tools successfully, however, is reserved for the ‘happy few,’ requiring economic heft, financial reach, strategic commodities, a strong bureaucracy, political agility, and military muscle.

That explains why small but wealthy economies like Switzerland drew the short straw: since August 7, Swiss goods face a 39% tariff—except generic drugs and Ticino-refined gold. It explains why weaker economies, especially in Africa, struggle against dumping practices due to weak frameworks and enforcement. It explains why several Asian nations agreed to lower tariffs on U.S. goods in exchange for still-high U.S. tariffs. And even the economically large but politically and militarily weaker EU faces limits. Meanwhile, if you have the commodities, you call the shots: Qatar warned yesterday it may halt business with the EU—including LNG supplies—unless Brussels revises its corporate sustainability rules, Reuters reported.

The US has demonstrated the clearest examples of applying such statecraft, as highlighted by our global strategist Michael Every. Presumably, also, because the US does hold the strongest cards (or at least thinks it holds them). This week and last, it was China’s turn to show it has such statecraft cards up its sleeve. It has introduced port fees for US ships (in response to the US port fees on Chinese built/operated ships coming into effect on 14 October) and underscored its dominance in critical raw materials, particularly rare earths, with a further tightening of its export controls regime.

Whether both players have a full grasp of their own and their opponent’s tools and power(s) remains an open question; uncertainty over that may actually be the strongest guardrail to prevent this power struggle from running completely out of control. That said, it’s even harder to see the spirit going back into the bottle. In other words, the world is changing more rapidly and profoundly than many would have imagined only a few months ago.

And the US keeps trying to drag its allies into its statecraft framework - “President Trump has instructed the ambassador and myself to tell our European allies that we would be in favour of whether you would call it a ‘Russian oil tariff’ on China or a ‘Ukrainian victory tariff’ on China,” Mr Bessent told reporters in Washington on Wednesday. “But our Ukrainian or European allies have to be willing to follow. We will respond if our European partners will join us.”

The strategy would introduce a 500 per cent levy on imports from China, with the money generated being used on weapons for Ukraine’s military. 500 is obviously Trump-style language, -and would effectively be counterproductive as it would halt most trade with tariff revenue close to nothing- but it does carry a serious undertone and the line of reasoning more fits ‘decoupling’ than ‘de-risking’.

For Europe de-coupling seems like no entry territory (unless China would truly block critical raw materials to European markets ?). It explains why Europe is often portrayed as the one being ‘squeezed’ in the middle. Whilst that remains a useful framing of the overall global picture, Europe is not standing still completely. The lack of key enabling factors such as military strength and political agility (read: unity) are visibly slowing things down, however.

For example, the EU has been slow with the implementation of its Competitiveness Compass agenda (a descendant from the 20204 Draghi and Letta reports); The ‘Draghi Observatory’ concluded in September that out of 383 recommendations, only 11.2% have been fully delivered.

That said, the European Commission (EC) is intensifying trade defense measures, making 2025 a record year for anti-dumping tariffs and protectionist actions. On 7 October, it proposed a new steel safeguard regime to replace the current system in July 2026, cutting tariff-free import volumes by 47% and doubling out-of-quota tariffs to 50%, a move partly influenced by the recent US-EU framework agreement. The EC is also considering pre-conditions for Chinese investments in Europe, such as mandatory technology transfers, signaling a strategic shift toward statecraft. Meanwhile, the EU announced it has achieved its €300 billion Global Gateway investment target two years early, focusing on sustainable infrastructure and strategic corridors, particularly in Africa, to rival China’s Belt and Road.

Energy independence remains a priority, with plans to ban Russian oil imports by early 2026 and gas by 2027, pending (final) parliamentary approval. At the Copenhagen summit (1–2 October), leaders debated strengthening EU defense capabilities, including a proposed “European Drone Wall,” though feasibility concerns persist. Discussions also revealed divisions over a €140 billion interest-free loan for Ukraine funded by frozen Russian assets, despite Germany softening its stance. A plan to “buy European” in public procurement - to boost domestic firms and counterbalance protectionist US trade policies as well as China’s weaponization of critical dependencies - is also in the works. But countries haggle about the definition of ‘European’. Overall, the EC’s actions underscore a more assertive and strategic EU posture globally, but it obviously cannot match the depth and speed of the US.

The EU yesterday unveiled a five-year defense roadmap aimed at closing critical capability gaps and modernizing its security architecture.

The plan introduces four flagship initiatives:

1. the European Drone Defence Initiative (operational by end-2027),
2. Eastern Flank Watch,
3. European Air Shield, and
4. European Space Shield.

It calls for coordinated defense spending, joint coalitions, and a target of 40% joint procurement by 2027. Member States are urged to collectively address shortfalls by 2030, accelerating production and strengthening defense industries while maintaining support for Ukraine.

The roadmap signals concrete ambition beyond bureaucracy and is expected to feature prominently at next week’s Brussels summit. This looks set to be the key event to watch next week.

Tyler Durden Fri, 10/17/2025 - 12:05

The post Still No Jobs Report, but Labor Market Is Not Looking Good appeared first on CEPR.

Average New Car Price In U.S. Tops $50,000 For First Time Ever

With U.S. car prices continuing to climb, the average cost of a new vehicle has officially crossed the $50,000 mark - a milestone analysts say was inevitable, according to Yahoo Finance.

According to Kelley Blue Book (KBB), the average transaction price reached a record $50,080 in September, up 2.1% from August and 3.6% year over year—the largest annual increase in more than two years.

“We’ve been expecting to break through the $50,000 barrier. It was only a matter of time, especially when you consider the best-selling vehicle in America is a pickup truck from Ford that routinely costs north of $65,000,” said Erin Keating, executive analyst at Cox Automotive, which owns KBB.

Keating noted that wealthier households are driving demand for new cars, supported by access to capital and better loan terms. Meanwhile, lower-income buyers have shifted to the used market as cheaper new models disappear. The $20,000 market for cars is “extinct,” she said.

Yahoo writes that recent CPI data backs this up: new vehicle prices rose 0.3% in August and 0.7% year over year, while used vehicles climbed 1% and 6%, respectively. The September CPI report has been delayed by the government shutdown.

KBB said tariffs have created “new cost pressure” across the industry, with many trade deals unfinished and a 25% rate still applied to vehicles imported from Mexico and Canada.

A surge in electric vehicle sales also pushed prices higher. The expiration of the federal EV tax credit on Sept. 30 prompted a wave of last-minute purchases, lifting September’s numbers. KBB estimated EVs made up 11.6% of sales, with an average transaction price topping $58,000.

Incentives also played a growing role in September’s record prices, Zero Hedge noticed while digging deeper into the KBB report, with average discounts rising to 7.4% of the average transaction price, or about $3,700 — the highest level so far in 2025. A wave of new 2026 model-year vehicles and a richer mix of luxury and EV models helped push transaction prices higher, with more than 60 models now averaging above $75,000.

Electric vehicle sales surged nearly 30% year over year in the third quarter, reaching a record 437,000 units, as buyers rushed to lock in incentives before they expired. KBB estimated the average EV price at $58,124 in September, up 3.5% from August, while Tesla’s average slipped to $54,138, down 6.8% year over year amid lower-priced Model 3 and Model Y trims.

Looking ahead, KBB doesn’t expect relief. The average new MSRP hit $52,183 in September, up 4.2% year over year. “It is important to remember that the new-vehicle market is inflationary. Prices go up over time, and today’s market is certainly reminding us of that,” Keating said.

Tyler Durden Fri, 10/17/2025 - 09:40

Outrage As Israeli Fans Banned From Attending Football Match In The UK

Authored by Thomas Brooke via Remix News,

The decision to bar Israeli fans from attending Maccabi Tel Aviv’s Europa League match against Aston Villa on Nov. 6 has sparked a political firestorm in Britain, with critics warning it sends a “shameful message” about antisemitism and public order in the country.

Aston Villa confirmed on Thursday that no away fans will be allowed into Villa Park, Birmingham, for the fixture following an instruction from the Safety Advisory Group (SAG), which issues safety certificates for all matches at the stadium. The club said the decision followed concerns from West Midlands Police about “public safety outside the stadium bowl and the ability to deal with any potential protests on the night.”

“The club is in continuous dialogue with Maccabi Tel Aviv and the local authorities throughout this ongoing process, with the safety of supporters attending the match and the safety of local residents at the forefront of any decision,” Aston Villa said.

The ruling follows weeks of campaigning by local Independent MP Ayoub Khan, who represents Birmingham Perry Barr. Khan, who had called Maccabi fans “violent” and argued the club should “not even be participating in European competition,” welcomed the SAG decision.

“From the moment the match was announced, it was clear that there were latent safety risks that even our capable security and police authorities would not be able to fully manage,” he said. “With so much hostility and uncertainty around the match, it was only right to take drastic measures.”

I will do everything in my power to guarantee Jewish communities the security they deserve. pic.twitter.com/IceYvBXOvu

— Keir Starmer (@Keir_Starmer) October 16, 2025

The decision has been widely condemned by political leaders. Prime Minister Keir Starmer, who only hours earlier had pledged to Jewish communities that he would “do everything in my power to guarantee Jewish communities the security they deserve,” wrote on X that the decision was “wrong.”

“We will not tolerate antisemitism on our streets,” he said. “The role of the police is to ensure all football fans can enjoy the game, without fear of violence or intimidation.” However, Starmer offered no indication that the government would intervene to overturn the ban.

Former immigration minister and current Shadow Justice Minister Robert Jenrick was among the first to demand that West Midlands Police reverse the decision. “Use Public Order units. Use mutual aid,” he said. “We can’t be a country where the safety of Jews cannot be guaranteed in some areas. The Home Secretary must be clear that if this isn’t reversed, she’ll intervene and heads will roll.”

Last week I was attacked for pointing out that parts of Birmingham were a failure of integration.

But now Israeli football fans are banned from watching their team play at Villa Park as the police can’t guarantee their safety.

Maybe I wasn’t wrong after all. https://t.co/iRW8SRdDQ5

— Robert Jenrick (@RobertJenrick) October 16, 2025

Jenrick linked the decision to his earlier comments about Birmingham’s integration challenges, remarks that were widely criticized last week. “Last week, I was attacked for pointing out that parts of Birmingham were a failure of integration. But now Israeli football fans are banned from watching their team play at Villa Park, as the police can’t guarantee their safety. Maybe I wasn’t wrong after all,” he said.

Opposition leader Kemi Badenoch called the development a “national disgrace.” “How have things come to this?” she asked. “Starmer pledged that Jews are welcome and safe in Britain, that he stands shoulder to shoulder with the Jewish community, and will use the full force of his government to prove it. Will he back those words with action and guarantee that Jewish fans can walk into any football stadium in this country? If not, it sends a horrendous and shameful message: there are parts of Britain where Jews simply cannot go.”

Aston Villa's have barred Israel's Maccabi Tel Aviv FC fans due to Muslim intimidation.

Astar Rashid, an Islamic preacher says when the Jewish team & fans arrive they will shown no "rahma" or mercy. pic.twitter.com/qzN1neyX6K

— David Atherton (@DaveAtherton20) October 17, 2025

The controversy was further inflamed by a widely shared video of Birmingham Imam Asrar Rashid calling for attacks on visiting Maccabi fans. “We will show no mercy toward Maccabi Tel Aviv fans who will arrive in several weeks for the match against Aston Villa,” he said in a recent address to Muslims.

Reform UK leader Nigel Farage said the decision “takes racial discrimination to a whole new level.”

The issue also comes less than a year after violent attacks targeted Maccabi Tel Aviv supporters in Amsterdam during a Europa League match against Ajax, which Dutch opposition leader Geert Wilders described as a “pogrom.”

Videos from the incident showed Jewish fans being beaten, thrown into canals, and even run over by vehicles, with one assailant shouting, “That’s for Palestine, motherfucker,” as he repeatedly kicked a victim lying motionless on the ground.

The Jerusalem Post reported that mobs attempted to storm buildings where Jewish supporters had barricaded themselves, and former Israeli Prime Minister Naftali Bennett urged people to “act by any means” to save their lives.

Read more here...

Tyler Durden Fri, 10/17/2025 - 09:20

Futures Rebound From Overnight Plunge After Trump Eases Trade Fears

US equity futures initially tumbled for much of the overnight session on mounting market liquidity and regional bank concerns, but erased almost all losses just after 7am ET when US President Trump spoke to Fox and calmed fears of a trade war with China, lifting sentiment following yesterday's steep declines in banking stocks.S&P 500 futures fell as much as 1.5% before paring the loss to 0.2% as of 8:00am ET. Here is a snapshot of Trump's comments on Fox News this morning which helped reverse the selloff:

• TRUMP SAYS HE'S MEETING WITH CHINA'S XI IN TWO WEEKS

• TRUMP, ASKED IF HIGH CHINA TARIFFS WILL STAND: NO

• TRUMP ON CHINA TRADE: WE'LL SEE WHAT HAPPENS

• TRUMP: CHINA IS ALWAYS LOOKING FOR AN EDGE

• TRUMP ON CHINA TRADE: I DON'T KNOW WHAT'S GOING TO HAPPEN

• TRUMP ON CHINA TARIFFS: IT'S NOT SUSTAINABLE

• TRUMP: 100 PERCENT TARIFF IS NOT SUSTAINABLE

• TRUMP ON CHINA TARIFFS: WE'RE GOING TO DO FINE WITH CHINA

• TRUMP ON CHINA TARIFFS: WE HAVE TO HAVE A FAIR DEAL -FBN

Friday’s crop of earnings helped bolster regional banks, with Truist Financial Corp., Regions Financial Corp. and Fifth Third Bancorp all rising in early trading after they reported lower provisions for credit losses than expected. Overnight, there were not much incremental positive headlines. ORCL updated its revenue and EPS guidance and beat expectations; however, this positive update has been widely expected with a high bar entering this earnings season. Bond yields are 1-4bp lower; USD is lower. Commodities are mixed: oil lower; base metals mostly higher. The US economic calendar includes August TIC flows at 4pm. Housing starts and import/export price indexes will be delayed due to government shutdown. Fed speaker slate includes Musalem at 12:15pm, and Fed’s external communications blackout ahead of the Oct. 29 Fed policy decision begins Saturday

All the majors still remain down from Trump's initial tweet last Friday

In premarket trading, Magnificent Seven stocks are lower (Microsoft -0.4%, Alphabet -0.4%, Apple -0.1%, Amazon -.1%, Meta -0.6%, Nvidia -1.2%, Tesla -0.8%).

• Cryptocurrency-linked stocks fall as Bitcoin liquidations continue and broader global equities markets selloff amid trade tensions between the US and China and worries over US regional banks.
• AST SpaceMobile (ASTS) falls 4% after Barclays downgrades the wireless telecommunications stock to underweight from overweight, citing expensive valuations.
• CSX (CSX) rises 2.8% after the freight transportation company reported third-quarter revenue above analysts’ estimates.
• Eli Lilly & Co. (LLY) declines 3% after President Donald Trump said the price of the blockbuster diabetes drug Ozempic could come down to just $150 a month.
• Fifth Third (FITB) rises 2.6% after the company reported earnings per share for the third quarter that beat the average analyst estimate. Net interest income FTE also also came in just above expectations.
• Huntington Bancshares (HBAN) rises 1.6% after posting third-quarter results.
• Micron (MU) falls 1.3% as Reuters reports that the chipmaker plans to stop supplying server chips to data centers in China after the business failed to recover from a 2023 government ban on its products in critical Chinese infrastructure.
• Truist Financial (TFC) rises 1.1% after the financial services company reported adjusted earnings per share and non-interest income that came in above the average analyst estimates

After a week when fears about escalating trade tensions between Washington and Beijing fueled sharp swings in stocks, Trump told reporters that current tariffs on China were “not sustainable” and confirmed he would meet with Xi Jinping in South Korea in the coming weeks, helping ease nerves.

The volatility has seen the VIX rise to its highest level since April. Meanwhile, havens such as Treasuries and gold erased gains following Trump’s remark and lender results.

“This very much looks like end-of-cycle symptoms, where we can see hints of complacency in lending standards,” said Raphael Thuin, head of capital markets strategies at Tikehau Capital. “With this year’s rally and costly valuations, the temptation to take profits and secure year-to-date gains is high.”

Still, while some analysts said the situation resembled the 2023 US regional banking crisis that led to the collapse of Silicon Valley Bank and UBS Group AG’s takeover of Credit Suisse, they expect the market reaction to be short-lived. Indeed, a rout in regional banks, sparked Thursday by news that Zions Bancorp and Western Alliance Bancorp were victims of fraud on loans to funds that invest in distressed commercial mortgages, appeared primed to reverse. 

“In the end, the crisis was contained, but that was not immediately clear,” said Leonard Cohen, chief executive officer of Ginjer Asset Management in Paris. “The third quarter results of US banks were good so investors are taken by surprise and wondering if they didn’t miss the forest for the trees.”

Concern about credit quality in the US economy is adding to disquiet among investors already uneasy about renewed trade tension between the US and China, the US government shutdown and a potential AI bubble. From the return of headline risk to jitters around a regional banking crisis, the market is getting the reaction in volatility that was broadly expected by derivatives strategists — albeit about a month later than the seasonal window suggested historically. Confidence that stocks can quickly reclaim record highs has been shaken.

Meanwhile, BofA said that stocks saw a fifth week of inflows, at $12.4 billion for the week ended Oct. 15. S&P 500 capital expenditures will likely grow 17% in 2025, boosted by AI hyperscalers’ investments, spending that’s constraining outlays on buybacks, according to Goldman Sachs strategists. Strategist Ryan Hammond cut his 2026 buyback growth forecast to 9% from 12% to “reflect the continued rotation from buybacks to capex among AI-exposed stocks”.

As for earnings season, with the occasional exception, it remains very strong: of the 51 S&P 500 companies that have reported so far this earnings season, more than 82% have beaten analysts’ forecasts, nearly 16% have missed, and 2% were as expected. 

In Europe, Deutsche Bank AG and Barclays Plc stayed more than 5% lower, with a gauge of lenders leading regional declines. The Stoxx 600 was off by 1.5%, amid broad declines in banking stocks on both sides of the Atlantic, and for tech stocks in US premarket trading. Here are the biggest movers Friday:

• EssilorLuxottica jump as much as 12% and to a record high after the eyewear group reported third-quarter revenue that soared past estimates, lifted by a new batch of AI glasses with partner Meta Platforms
• Vitrolife rises as much as 8%, one of the few gainers in the European health-care sector after US President Donald Trump advanced his campaign promise of making IVF less expensive and more widely available in the U
• European defense stocks slump after President Donald Trump said he would meet Vladimir Putin for a second time “within two weeks or so” to discuss ending the war in Ukraine
• Novo Nordisk shares fall as much as 7%, the most since July 29, after US President Donald Trump said the White House will negotiate to lower prices for weight-loss drugs such as Novo Nordisk’s Ozempic
• Volvo shares fall as much as 8%, after the Swedish truckmaker said it expects a slowdown to extend into next year as uncertainties linked to President Donald Trump’s tariffs weigh on demand in North America
• Tomra falls as much as 15%, the most since June, after the Norwegian recycling equipment company reported earnings. DNB Carnegie says company is showing weakness in all regions
• Norion Bank falls as much as 12%, the most since March, after the Swedish niche lender reported earnings that fell short of estimates
• QT Group shares fall as much as 22%, the most in two monthst, after the Finnish technology group cut its operating margin forecast for the full year

Earlier in the session, Asian stocks slumped, hurt by lingering worry over US-China frictions and as loan problems at two American regional banks heightened concerns about the credit market. The MSCI Asia Pacific Index fell as much as 1.2%, snapping a two-day gain, with financials and tech hardware the biggest drags. TSMC dropped, with investors seen taking profits after the chipmaker raised its revenue outlook on strong AI demand. Hong Kong and mainland China benchmarks were among the worst performers amid the ongoing trade spat with the US. Investors also are positioning after the strong recent rally, with eyes on next week’s Fourth Plenum policy meetings. Japanese stocks fell as investors eye continued uncertainty over the local political situation. Key gauges also slid in Indonesia, Taiwan and Australia.

In Fx, the dollar reverses an earlier decline. The Bloomberg Dollar Spot Index is up to 1208; the Swiss franc and yen were the biggest gainers but have since reversed much of their gains.

In rates, Treasury yields reversed losses with outperformance at the short-end, and the 10Y rising 2bps to 4.00% after sliding as low as 3.93%.

In commodities, gold reversed its overnight surge, and after touching another record high of $4,380 it has since dropped below $4,300. Oil prices in the red, with WTI futures slipping below $57/barrel and Brent holding above $60/barrel. Crypto tumbling too, with Bitcoin touching the lowest since June.

Looking at the US economic calendar calendar includes August TIC flows at 4pm. Housing starts and import/export price indexes face delays due to government shutdown. Fed speaker slate includes Musalem at 12:15pm, and Fed’s external communications blackout ahead of the Oct. 29 Fed policy decision begins Saturday

Market Snapshot

• S&P 500 mini -0.1%,
• Nasdaq 100 mini -0.4%,
• Stoxx Europe 600 -1.0%,
• DAX -2%,
• CAC 40 -0.6%
• 10-year Treasury yield +2 basis point at 3.99%
• VIX -1.7 points at 24.5
• Bloomberg Dollar Index up to 1208.23
• euro +0.1% at $1.1702
• WTI crude -1% at $56.87/barrel

Top Overnight News

• The White House is poised to ease tariffs on the US auto industry, a move that would deliver a major win for carmakers that have aggressively lobbied to stem the fallout from record-level import duties. The Commerce Department is slated to announce a five-year extension for an arrangement that allows automakers to reduce what they pay in tariffs on imported car parts. BBG
• US Senator Majority Leader Thune said the Senate is expected to vote next week on a bill to pay federal workers who have been forced to work without pay which would include the military, according to Punchbowl.
• Donald Trump will host Volodymyr Zelenskiy at the White House today. The Ukrainian President will also meet representatives from defense companies including Raytheon during his US visit. BBG
• Shares in US regional banks fell on Thursday after two lenders disclosed that they were exposed to alleged fraud by borrowers, raising concerns about the health of bank loan portfolios. The disclosures by Western Alliance Bank and Zions Bank follow the recent failures by car parts maker First Brands and auto lender Tricolor, which have left credit investors nursing losses and are under scrutiny from the US DOJ.  FT
• The Trump administration's slashing of the federal workforce amid the government shutdown is threatening AI work at the Commerce Department: Axios
• Tech companies aggressively shift their supply chains out of China – Microsoft aims to produce the majority of its new products outside of China as early as next year, while AWS is expanding its supply chain shift down to the component level. Nikkei
• Micron plans to stop supplying server chips to data centers in China after the business failed to recover from a 2023 government ban on its products in critical Chinese infrastructure, two people briefed on the decision said. Micron was the first U.S. chipmaker to be targeted by Beijing - a move that was seen as retaliatory for a series of curbs by Washington aimed at impeding tech progress by China's semiconductor industry. RTRS
• The US asked South Korea to increase soybean imports during trade negotiations, DongA Ilbo reported. American supplies account for half of the country’s purchases. BBG
• ORCL AI World proving to be another sell-the-news event after yesterday's TSM print as it trades lower in the pre this morning. ORCL closed +3% yesterday after projecting better margins than expected at its Analyst Day, but moved lower after the company announced further long-term revenue and profit forecasts after the close (ORCL -3.6% premkt). H/T GS TMT Trading
• Novo Nordisk shares dropped (NVO -450bps premkt) and Eli Lilly fell premarket (LLY -420bps) after Trump said the price of Ozempic may come down to just $150 a month — compared to about $1,000 currently. BBG
• The Trump administration is sharply increasing U.S. military pressure on the government of Nicolás Maduro, Venezuela’s authoritarian president, with a dramatic show of aerial threats in recent days as the Pentagon mounts a major troop buildup in the region. NYT
• On US Obamacare credit extension, Punchbowl writes "it's true" that there are House Republicans who want to extend the credits; however, House Republican leadership does not want to, and their view is "hardening as the shutdown drags on"
• Fed Governor Miran said the downside of tariffs has been nowhere near what people predicted and that tariffs have had no material signs of growth drag or inflation spike, while he doesn't think the cost of tariffs will be passed onto consumers.
• Fed's Kashkari (2026 voter) said it is too soon to know the effect of tariffs on inflation and the impact of tariffs is taking longer to be felt than had guessed, while he expects services inflation to trend down and it is possible that goods inflation could spill over. Furthermore, he said the job market is slowing down and it is challenging to read signals without core government data because of the shutdown, as well as noted that most folks say they are still concerned about inflation.

Trade/Tariffs

• US State Department said Secretary of State Rubio and USTR Greer met with Brazil's Foreign Affairs Minister Vieira and had very positive talks regarding trade and ongoing bilateral issues, while they agreed to work together to schedule a meeting between President Trump and President Lula at the earliest possible occasion.
• US State Department said China's sanctions against Hanwha Ocean's (042660 KS) US-linked units are attempts to undermine US-South Korea cooperation and coerce South Korea.
• South Korean Finance Minister said it's 'uncertain' whether US President Trump will accept Korea's position against an 'upfront' USD 350bln payment related to their tariff/trade agreement, according to Yonhap.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were predominantly lower as the region followed suit to the losses on Wall Street, where risk sentiment took a hit as regional bank concerns were reignited following loan fraud disclosures by Western Alliance and Zions Bancorp. ASX 200 was led lower by underperformance in financials, energy and tech, while gold miners were boosted by the  record highs in the precious metal. Nikkei 225 retreated amid a firmer currency and as banking stocks suffered in sympathy with US counterparts, while uncertainty lingered ahead of next Tuesday's PM vote with the Japanese Innovation Party noting a 50-50 chance of a coalition with the LDP. Hang Seng and Shanghai Comp conformed to the downbeat mood amid US-China frictions, with both sides blaming each other for the tensions.

Top Asian News

• Japan's LDP and CDP agreed to hold a vote to decide Japan's next PM on October 21st, while it was also reported that Japan Innovation Party co-leader Yoshimura said the chance of a coalition with the LDP is 50-50.
• Japan's Ishin Party (Innovation Party) Co-head Fujita announces big progress with the LDP following talks; will enter the stage of finalising details, final discussions are very delicate.
• Japan's Komeito party is reportedly arranging not to vote for the opposition PM candidate, according to Kyodo.
• BoJ's Uchida says Japan's economy is recovering moderately, although there are some weak signs. The BoJ will continue to raise interest rate if prices move in line with our forecast.

European equities (STOXX 600 -1.8%) opened entirely in the red and dipped soon after the cash open, before finding a base where indices currently reside. The ongoing US regional banking fears remain at the forefront of traders' minds. European sectors are all negative. Banks/Financial Services unsurprisingly underperform, given the aforementioned banking fears. Elsewhere, Defence names across Europe have been pressured after the White House suggested that the latest Trump-Putin conversation was good and constructive. US equity futures (ES -1% NQ -1.2% RTY -1.6%) continue to extend the losses seen in the prior session, in-fitting with the risk tone. It is worth highlighting that the Regional Banking ETF (KRE) is lower by roughly 2% in the US pre-market.

Top European News

• BoE's Mann said the UK labour market is loosening but not falling off a cliff, while she added that the UK yield curve now provides a more appropriate financial condition for the UK economy.
• ECB's Scicluna said the ECB must not rush further interest rate action, because the effects of higher US tariffs on prices aren't yet clear, according to Bloomberg.

FX

• DXY is net lower with the USD showing a divergent performance vs. peers on account of the risk-averse moves triggered by the recent selling in regional US banks. As such, the USD is weaker vs. havens (CHF, JPY) and bid vs. risk-sensitive currencies (AUD, NZD). The question for markets is whether the selling pressure in Zions and Western Alliance Bancorp (on account of exposure to fraudulent loans) is a deep systemic issue or something that will have limited contagion, as per the SVB debacle in 2023. DXY hit a new low for the week at 98.02 (coincides with the 50DMA), before bouncing off the lows.
• EUR is up against the USD for a fourth session in a row on account of an aversion by the market to bid up the USD amid regional banking concerns and markets continuing to find solace in the developments in French politics this week. On the latter, with Lecornu having survived two no-confidence motions and odds of legislative elections by year-end receding to just 27% (vs. 50%+ earlier in the week), attention now turns to the subsequent debate and potential passage of the budget, as well as Moody's rating on France next Friday. Elsewhere, headline EZ HICP Finals were unrevised, and had limited impact on the Single-Currency. EUR/USD has eclipsed its 50DMA at 1.1692.
• JPY outperforms major peers on account of a haven bid alongside the selling in global equity markets. Subsequently, USD/JPY has slipped below the 150 mark for the first time since October 6th. From a domestic viewpoint, focus remains on the political landscape with the JIP co-head announcing "big progress" in discussions with the LDP party and stating that they will be entering the stage of finalising details. On the BoJ, comments from Governor Ueda over the past 24 hours have reiterated the Bank's view of raising rates if its economic forecasts are realised, whilst Assistant Governor Shimzu has noted that the Bank must tread carefully. USD/JPY has delved as low as 149.39 with the next downside target ahead of the 149 mark coming via the 6th October low at 149.04.
• The recovery in the pound vs. the dollar has faltered today on account of the broader risk tone. From a macro perspective, this week in the UK has been characterised by soft labour market metrics and sluggish growth with the former increasingly acknowledged by several BoE speakers this week. Next week also sees flash PMI and retail sales metrics, which are likely to be hampered by ongoing budget-related angst. Today's speaker slate includes BoE’s Pill, Greene & Breeden.
• Antipodeans are both lower vs. the USD on account of the risk-averse tone in the market with AUD continuing to lag its antipodean peer following yesterday's soft jobs metrics from Australia.
• PBoC set USD/CNY mid-point at 7.0949 vs exp. 7.1154 (Prev. 7.0968)

Fixed Income

• USTs are firmer, as the US regional banking backdrop remains at the forefront of market focus for today. USTs peaked at 114-02 early doors, sending the US 10yr yield below the 4% mark for the first time since April; for reference, the April low was 3.86%. Since, the benchmark has pulled back to just below the 114-00 mark but holds onto gains of c. 5 ticks on the session and around 25 on the week, as things stand.
• Bunds are bid, given the general risk tone and FTQ seen after the US regional banking flareup on Thursday. Bunds peaked at 130.59 early doors before seeing a relatively sharp pullback as the European morning got underway, to a 130.22 low; but, still firmer on the session. European specific newsflow of note for fixed income a little light, aside from largely unrevised headline HICP metrics. The docket ahead features ECB’s Nagel and Rehn.
• Gilts gapped higher by 46 ticks, acknowledging the upside seen in peers on Thursday after the Gilt close as the US regional banking situation reverberated to the broader risk tone. Opened at 93.10 and extended to a 93.17 peak, notching a new high for the week and taking the benchmark to its highest since July when Gilts briefly traded above 93.50. Amidst this, the UK 10yr yield found itself under pressure and to a 4.45% low; the lowest since July when 4.41% printed. Ahead, we have a handful of BoE speakers due. On the hawkish side, Pill and Greene feature and are followed by the usually more neutral Breeden.

Commodities

• WTI and Brent are pressured today amidst the ongoing risk-off sentiment, and as traders digest the latest constructive commentary surrounding the latest Trump-Putin call. The White House described that call as "good and productive" and have agreed to convene a meeting of high-level staff next week. WTI and Brent are currently trading towards the lower end of their respective USD 56.73-57.56/bbl and USD 60.30-61.11/bbl range.
• Spot gold continues to advance and remains at top end of the day's range (USD 4,279.10-4,380.79/oz). Price action this morning fairly rangebound, but ultimately at elevated levels given the risk-off environment.
• Base metals are lower across the board, pressured by the risk tone; 3M LME Copper currently off by around 1.6% in a USD 10,461.6-10,637.5/t range.

Geopolitics

• Hamas said the return of Israeli hostages' bodies may take time as some were buried in tunnels destroyed by Israel and others remain under rubble, while the retrieval requires equipment to remove rubble, which is currently unavailable due to Israel's entry ban on such tools. Furthermore, it stated that it remains committed to the Gaza agreement and is keen to hand over all remaining hostages' bodies.
• "Israeli Foreign Minister: Israel is committed to Trump's plan, but Hamas is violating the agreement by holding the remains of 19 of our dead hostages", according to Sky News Arabia
• US President Trump said regarding Russian President Putin and Ukrainian President Zelensky, that they might do separate meetings, while he will probably meet Putin over the next two weeks. Trump commented that Tomahawks are also needed for the US, and he responded that he will speak to Senate Majority Leader Thune after House Speaker Johnson, about the Putin call and make the right determination, when asked about Russian sanctions.

US Event Calendar

• 8:30 am: Sep Housing Starts, est. 1320k, prior 1307k
• 8:30 am: Sep P Building Permits, est. 1343k, prior 1330k
• 8:30 am: Sep Housing Starts MoM, est. 0.99%, prior -8.5%
• 8:30 am: Sep Import Price Index MoM, est. 0.1%, prior 0.3%
• 8:30 am: Sep Import Price Index YoY, est. 0.35%, prior 0%
• 4:00 pm: Aug Net Long-term TIC Flows, prior 49.2b
• 4:00 pm: Aug Total Net TIC Flows, prior 2.1b

DB's Jim Reid concludes the overnight wrap

Market sentiment saw a sharp deterioration over the past 24 hours as news of bad loans at two US regional lenders triggered broader concerns about credit quality, leading US bank stocks to their worst day since early April while the S&P 500 sank -0.63%. Other risk assets also struggled, with US HY credit spreads +10bps wider. Treasuries rallied with the 2yr yield dropping -7.3bps to a 3-year low of 3.42%, also helped by oil prices falling to a new 5-month low. Earlier yesterday, French Prime Minister Lecornu survived his two no-confidence votes, which led to another sizable advance for the CAC 40 (+1.38%), with the STOXX 600 (+0.69%) outperforming its US counterparts. 

An initially positive risk mood turned during the US session yesterday after news that Zions Bancorp (-13.14%) made a $50m charge-off while Western Alliance (-10.81%) alleged it also suffered from fraud on loans to the same borrowers linked to distressed commercial mortgages. While this was an ostensibly isolated story at two banks each less than $10bn market cap, the event drew inevitable comparisons to the regional bank stress that followed the collapse of SVB in March 2023 and raised broader questions over potential credit quality issues after a lengthy period of elevated rates and expansion in private credit, following also the bankruptcy of subprime auto lender Tricolor last month.

US bank stocks struggled in response, as the KBW regional bank index plunged by -6.31% while the S&P 500 banks sector group fell -2.98%, with both posting their worst days since the post-Liberation Day turmoil in early April. The volatility weighed on the broader S&P 500 (-0.63%), with the small cap Russell 2000 (-2.09%) underperforming and the VIX index rising to its highest since April (+4.67pts to 25.31). A cautious mood has continued overnight, with futures on the S&P 500 (-0.44%) and NASDAQ (-0.29%) both lower.

Treasuries rallied amid the risk-off sentiment, with 2yr yields falling -7.3bps to their lowest since September 2022 when the Fed was still midway through its hiking cycle. That came as fed funds futures priced in 54bps of rate cuts by year-end (+5.7bps on the day), the first time that two more 25bps Fed cuts have been fully priced. Meanwhile, 10yr yields fell -5.4bps to a 12-month low of 3.97% and are another -3.0bps lower overnight. The dollar index (-0.46%) lost ground yesterday amid lower rates, while gold saw its biggest daily rise since May (+2.83%) to reach a new high of $4,326/oz and is another +0.79% higher this morning.

That rally in Treasuries came despite measured Fedspeak earlier in yesterday’s session. Notably, Fed Governor Waller reiterated his support for a 25bps cut in October, but said that beyond then, he would be “looking for how the solid GDP data reconcile with the softening labor market”. That suggested Waller may see a December rate cut as not quite a done deal, even as he has been one of the more dovish voices within the FOMC and is one of the five candidates reported to be in the short-list for Fed Chair. By contrast, Governor Miran repeated his call for a larger 50bps rate cut, while Richmond Fed President Barkin said he was still “sanguine” on the employment and inflation outlook. Waller also appeared to echo Powell’s signal earlier in the week that reserves may soon approach ample levels. With the recent shift in tone, our US rates strategists now expect the Fed to announce the end of QT at the December meeting (see here).

A notable exception from the sour risk mood yesterday was the Philadelphia Semiconductor Index (+0.49%), which held onto gains driven by positive results from TSMC and upbeat margin guidance from Oracle (+3.09%).

European markets had closed before most of the US sell-off, with the STOXX 600 up +0.69%. Indices were higher across the continent, led by a +1.38% gain for France’s CAC after French PM Lecornu survived his two votes for no confidence. The government’s chances of survival had improved as the Socialist Party declared they would not vote to topple the government after Lecornu announced that he would suspend the 2023 pension reform until after the 2027 presidential election. The first round vote came fairly close (271 deputies voted no confidence vs the 289 needed), although only 144 deputies voted for no confidence in the second round. The result helped the 10yr Franco-German spread inch -0.6bps lower to 76bps, its lowest since late August. Attention will now turn to passing the 2026 budget, with our economists expecting the government to limit amendments as it seeks to keep the deficit below 5% of GDP. See their note yesterday on the budget process here.

European bond moves were muted overall, with the 2yr bund yield down -1.3bps while the 10yr was unchanged. The front-end rally came as the amount of ECB rate cuts priced by next June rose +3.4bps to 19bps, its highest since August, with investors focusing on the potential for lower oil prices to increase the size of the inflation undershoot expected over the next year. These moves came despite comments by Governing General Council members Nagel, Wunsch and Dolenc playing down the inflation undershoot, while Rehn noted “two sided” risks to the inflation outlook. Meanwhile in the UK, gilts outperformed, with the 10yr yield down -4.2bps after underwhelming August GDP data. While the UK economy grew +0.1% m/m as expected, July was revised down from 0.0% to -0.1% m/m and services activity was flat for a second month running in August (vs +0.1% expected).

Turning to the limited US data amid the shutdown, investors got a surprise when the Philadelphia Fed factory index for October came in much weaker (-12.8 vs +10.0 expected). However, the details of the survey were not quite as weak as the headline and the move ought to be judged together with Wednesday’s Fed Empire reading, which saw a near mirror opposite upside surprise.

Finally on geopolitics, Trump and Russia’s President Putin held a two-hour phone call yesterday. The main outcome was an agreement for the two to meet in Budapest, which Trump suggested could take place “within two weeks or so”, after US and Russia first hold high-level staff talks next week. The US President expressed optimism that the meeting could lead to a breakthrough towards peace in Ukraine, progress on which has stalled since the last Trump-Putin summit in Alaska in August. The Trump-Putin call came just ahead of Ukraine President Zelenskiy visiting Trump in Washington today. Prospects of a new Trump-Putin summit helped ease market fears of new restrictions against Russian oil, with Brent crude falling -1.37% to $61.06/bbl, its lowest since May.

Asian equity markets this morning are mostly following the losses on Wall Street. Across the region, Chinese equities are leading the decline, most of all the Hang Seng (-1.57%), followed by the CSI (-1.27%) and the Shanghai Composite (-1.00%). US-China trade tensions are negatively impacting sentiment with China’s Ministry of Commerce yesterday accusing the US of inciting “panic” over its rare earth controls, saying “the US interpretation seriously distorts and exaggerates China’s measures”. Elsewhere, the Nikkei (-0.98%) is also lower, with financial stocks underperforming after the sharp declines in US regional banks, after having seen substantial gains in the previous two sessions.

Conversely, the KOSPI (+0.23%) is defying the region's negative trend, though it’s given up most of its initial gains of up to +1.23% driven by battery and chemicals shares amid optimism for a potential trade agreement with the US.

In central bank news, BoJ Governor Ueda has indicated that the central bank will persist with tightening measures if confidence in achieving its economic outlook improves, thereby leaving the possibility open for a near-term interest rate hike. Ueda's remarks were the first since Sanae Takaichi's election as the leader of the ruling Liberal Democratic Party (LDP) earlier this month. Still, 10yr JGB yields are -4.5bps lower this morning, following the move in US Treasuries.

To the day ahead now, and we’ll get central bank speakers including Fed’s Musalem speaks, ECB’s Nagel and Rehn speak, BoE’s Pill, Greene and Breeden speak. Notable earnings include American Express and Volvo. 

Tyler Durden Fri, 10/17/2025 - 09:15

U.S. Defense Stocks Hit Resistance As Goldman Reveals Key Takeaways From America's Top Weapons Conference

The S&P 500 Aerospace & Defense Index (SPSIAD Index) has surged as much as 72% since late March, fueled by rising defense spending and the U.S. military's strategic reposturing under what we've dubbed the "Western Hemispheric Defense" theme. But after weeks of hitting technical resistance, and with growing risks of a near-term pullback, attention now turns to insights from Goldman analysts, who met this week with 15 defense firms at the AUSA conference to gauge what 2026 might bring for the sector.

Two weekly bearish shooting star candles have printed, signaling exhaustion - or at least near-term resistance - and suggesting rising odds of a retracement.

To capture executive sentiment across the defense sector, Goldman analysts led by Noah Poponak met with 15 companies, including large-, mid-, and small-cap defense firms, defense-tech players, startups, and government IT contractors.

Macro Outlook:

Poponak sees the U.S. defense budget rising in FY27 versus the FY26 base, though not when adjusted for reconciliation. International demand for weaponry remains solid but races production capacity constraints. Margin outlooks are mixed. 

Defense Tech Momentum:

New entrants are rapidly gaining traction with scalable, advanced technologies, signaling a potential shift in the defense market. Booth traffic at the AUSA conference for these companies was notably high. Legacy defense firms in the drone and space segments are also showing strong growth tailwinds. 

AUSA Conference Trend:

A major theme of the conference was counter-drone technology, with many companies unveiling new systems. 

Government IT:

Government IT contractors continue to face headwinds from federal personnel turnover and constrained agency budgets, compounded by potential government shutdown risk.

Out of the 15 meetings the analysts held with defense firms, we're focusing on just two: L3Harris Technologies Inc. and Palmer Luckey's Anduril Industries Inc.

L3Harris Technologies Inc. (LHX; Buy)

We hosted a group meeting with Bob Daminski (Director, DoD tactical communications). The discussion focused on LHX's expansion into unmanned systems with differentiated radio technology, robust international radio growth, and new program wins via strategic partnerships.

• Expansion in unmanned systems and drones: LHX highlighted a push into the unmanned systems market, developing both kinetic and electronic warfare (EW) capabilities, exemplified by their "Red Wolf" and "Green Wolf" initiatives. These are reportedly targeting multiple Army programs, including the "Army Launch Effects" program, with management noting strong customer reception. The company noted its differentiated radio technology for command and control links in these systems, enabling both remote and autonomous operations. LHX also stated it is actively working with partners like AeroVironment (AVAV) to integrate its radios into unmanned platforms.

• International growth and resilient communication solutions: LHX highlighted strong international growth, particularly in its radio segment, with large orders from countries such as the Netherlands, Poland, and the Czech Republic. This growth is driven by customer demand for security and resiliency in communication, with LHX's software-defined radios allowing for substantial upgrade work beyond new unit sales. The Company's TACCOM (Tactical Communications) offerings, including anti-jamming capabilities and the NGC2 cloud network, are key differentiators.

• Strategic partnerships driving new program wins and market expansion: The Company noted its collaboration with Anduril on projects like Eagle Eye, leveraging Anduril's expertise in night vision, and the SMBC program of record for next-gen IBAS (Integrated Battle Command System), which Anduril acquired from Microsoft. Domestically, LHX is collaborating with GM Defense on the Infantry Squad Vehicle. These partnerships demonstrate LHX's ability to integrate its advanced technologies into major defense initiatives and expand its reach into new platforms and capabilities.

Anduril Industries Inc. (private)

We hosted a group meeting with Christian Brose (Chief Strategy Officer) and Allison Lazarus (Head of Investor Relations). The company discussed the state of the defense supply chain, government procurement process, and Anduril's longer term product and market vision.

• Supply chain. Anduril noted that progress in the defense space has largely been limited by the supply chain and production capacity rather than funding. The company is building its own supply chain to solve for this issue, with a focus on commercial materials that simplify the supply chain and make it easier to find employees. Anduril has started onboarding employees at the company's new facility in Ohio that will be 4-5mn sq ft and has access to two twelve-thousand foot runways, and the facility will start opening in 1Q26. Anduril aims to differentiate its production with more automation and larger production batches, along with bringing components causing bottlenecks in-house to enable faster production. Motors are a key area that it has brought in-house and the company noted it can produce 6-8 thousand GMLRS sized motors a year.

• Shifting government procurement. Anduril emphasized that it does not see expensive exquisite systems going away, but rather being augmented with higher volumes of cheaper, effective systems. The company highlighted that government procurement is moving in this direction as the customer becomes more open to different business models like Anduril's that are more commercial and rely on IRAD. Additionally, Anduril plans to continue to push for novel approaches such weapons or compute/encryption as a service.

• Long term vision. The company is being built on a foundational vision of a data fabric and network layer to move information to people and machines efficiently without additional manpower or higher costs. This enables a modular approach that should simplify production and operation of its products. Anduril emphasized that there is not a lack of capable technology to achieve this, rather it is a matter of utilizing up to date systems rather than outdated tech. The company also noted that it embraces partnerships when other companies do things it cannot do internally, and that the team approach with partners like Microsoft and Palantir are novel and more efficient than bringing everything in-house.

Related: 

• Anduril Founder Urges Rapid Reindustrialization As U.S. Defense Supply Chain Remains Alarmingly Reliant On China

A reversal in stocks only takes a trade headline or two... 

Tyler Durden Fri, 10/17/2025 - 09:05

From March 2013: Business Cycles and Markets

I've been asked several times about the recent ECRI recession call (obviously I disagreed with their incorrect recession call in 2011 - I wasn't even on recession watch then and I'm not on recession watch now - and I also think ECRI is wrong about a recession starting in mid-2012). ...

It seems to me ECRI is trying to make this an academic exercise and hoping for some significant downward revisions. Right now the data doesn't indicate a recession in 2012, but, as Menzie Chinn notes, "all of these series will be revised, so one wouldn’t want to state definitively we are not in a recession – therein lies the path to embarrassment. But the case still has to be made for recession."

But why do we care? ...

Why is there so much focus on the business cycle? For companies, especially cyclical companies, the reason is obvious – it helps with planning, staffing and investment.

But why are investors so focused on the business cycle? Obviously earnings decline in a recession, and stock prices fall too. The following graph shows the year-over-year (YoY) change in the S&P 500 (using average monthly prices) since 1970. Notice that the market usually declines YoY in a recession.
...
So calling a recession isn’t just an academic exercise, there is some opportunity to preserve capital.

Note: From June 2015: ECRI Admits Incorrect Recession Call

CR Note: I will be returning on October 21st (unless I change my mind or get lost), and I should start posting soon. Best to all!

My end-of-week morning train WFH reads:

• Revisiting “Intelligence Drift” Why AI models still feel like they’re getting dumber. Anecdotal but widespread experience of LLMs seeming great at first, then getting progressively “dumber” over time. With models like GPT-4 and Claude 3.5 Sonnet, users reported worse answers, incomplete responses, and outright refusals to work. (Artificial Ignorance)

• Your Emotions Can Throw You Off Your Investing Game. A Vanguard Pro Explains How. The head of investor research at the fund giant outlines how early market experiences can shape investors’ risk tolerance. (Barron’s) see also Staying Focused Through Volatility: The Long-Term Case for this Bull Market: All these factors suggest that we’re still in a multi-year growth phase. Is this an opportunity to create “generational wealth?” Will AI create more millionaires in 5 years than the internet did in 20?   Stay focused on the strongest growth stocks, stay focused on the bigger picture, but also take profits along the way. (Joe Fahmy)

• What the graduate unemployment story gets wrong: People with a degree are faring better, not worse than their non-graduate counterparts. (Financial Times)

• Why a Traditional Investment Portfolio is Better than Real Estate: If you want to invest in real estate because you want passive income, keep this in mind: There is no kind of investing that produces income more passively than a traditional investment portfolio. (Flow Financial)

• The 25 Most Interesting Ideas I’ve Found in 2025 (So Far): Charts and history lessons—across culture, politics, AI, economics, health, science, and the long story of progress. (Derek Thompson)

• It’s the Internet, Stupid: What caused the global populist wave? Blame the screens. (Persuasion)

• The Very Hungry Microbes That Could, Just Maybe, Cool the Planet: They feast on bubbles of methane seeping out of the ocean floor. Could their appetites be harnessed to slow climate change? (New York Times)

• Everybody Around Trump Hates the Unhinged Laura Loomer. Except Trump. She has zero qualifications, zero experience, zero talent except self-promotion. So how’d she get the national security adviser fired? (New Republic)

• They Call it ‘Magic Brew’—and It Makes MLB Stars Play Like They’re Completely Hammered: When opposing teams face the Brewers, something weird happens: highly-paid professionals seemingly forget how to throw and catch the ball. (Wall Street Journal)

• The Astonishing Versatility of Diane Keaton: Keaton wasn’t just a gifted performer; she also proved to be a fine director. She took wonderful photographs. She could sing, in a fine, clear voice with the charm of a robin’s warble. She adopted children in her early 50s. She never married. She always looked great, expressing radical, rapturous individuality with her clothing, her eyewear, her retro jewelry. But most significantly, she was one of the most sparkling actors of her generation, and though many people associate her mostly with the brainy doodle of a performance she gave in Annie Hall—a brilliant one—she was astonishingly versatile. (Time)

Be sure to check out our Masters in Business interview this weekend with Henry Ward,  CEO and co-founder of Carta. The firm works with more than 50,000 companies, 8,500 investment funds, and 2.5+ million equity holders to manage capitalization tables, compensation, valuations, and liquidity, tracking over $2.5 trillion in company equity.

 

3% pullbacks occur every 1-2 months on average and 5% ones every 3-4 months. We’re currently at 6 months. There have been 14 longer runs since WWII without a 3% sell-off.

Source: Jim Reid, Deutsche Bank

 

Sign up for our reads-only mailing list here.

 

 

The post 10 Friday AM Reads appeared first on The Big Picture.

Germany's Steel Industry Collapse: The March Toward Green Socialism

Submitted by Thomas Kolbe

On the eve of an emergency crisis summit with the steel industry, Germany’s ruling Social Democrats (SPD) have unveiled their “crisis roadmap.” If subsidies and protectionism fail, the sector will be nationalized. Just like that.

Germany’s steel sector has become the perfect parable for the pitiful state of the country’s broader industrial base. Its decline over the past eight years is almost without precedent in modern economic history. Output has plunged by more than 30% since 2018, with the first half of this year alone showing a brutal 12% year-on-year drop — a collapse accelerating at high speed.

In absolute numbers: crude steel production fell from its 2018 peak of 42.4 million tons to what will likely be only 29 million tons this year. It’s simple: producing in Germany no longer pays. So capital is fleeing to more profitable locations. China — and now increasingly the U.S. — is where business gets done.

Unprofitable Location

The capital exodus from once-mighty producers like ThyssenKrupp and Salzgitter AG has left deep social scars: roughly 30,000 of what were once 120,000 steel jobs have already vanished.

And the capital flight isn’t confined to steel — it’s happening across the entire industrial landscape. No surprise, then, that the particularly expensive and technically demanding “green steel” production — the CO₂-free moral gold standard — is collapsing just as fast as conventional steelmaking.

Politically, this might cause some “concern,” but intellectually no one is budging. What bureaucrats label “market failure” is answered with yet another round of subsidies. Both Brussels and Berlin have already mobilized fresh billions on the bond market to flood the dry channels of this “green planned economy.”

It’s remarkable how German politics resolves cognitive dissonance by throwing ever more taxpayer money at it. This has nothing to do with real policy-making or setting a viable framework for business. It’s the ritual execution of a green cult.

Talk-shop Mode

This obvious disconnect with economic reality is being papered over with a steady stream of “summits.” Politicians seem stuck in permanent talk-shop mode — gatherings that change nothing but look busy.

A “steel summit” is now supposed to follow the recent auto industry summit.

In these ritualized roundtables, industry demands subsidized electricity, unions call for job guarantees and short-time work schemes, and politicians promise to cut red tape — an empty phrase that has become grotesque in light of the regulatory flood they themselves created.

These “talk shops” serve one purpose: defending the status quo. They simulate reform, projecting “action” and “awareness” to a public that increasingly tunes out.

But the collapse of Germany’s industrial base requires no more fake summits. It demands a new understanding of the state’s role in society: only a minimal state, setting clear rules for a free market and then disappearing from view, can enable real problem-solving.

SPD’s “We Understand” Moment

The date of the steel summit is not yet set, but given the catastrophic figures, it will be on the agenda soon. In North Rhine-Westphalia, once the heartland of coal and steel and an SPD stronghold, the party has already launched a cosmetic PR operation.

Under the slogan “We have understood,” local SPD officials are pretending to reconnect with the people they lost long ago.

They now claim to “focus on the real problems” and “fight for every job.” It’s classic social-romantic rhetoric, straight out of the party’s postwar playbook. One might think they’ve dug up an old speech by Johannes Rau.

Socialism in Small Steps

But the real direction was revealed in a new SPD parliamentary position paper.

The language is clear: in “exceptional cases,” the state should take equity stakes in struggling steel companies. And since crises tend to multiply in this environment, “exceptions” will soon become the rule.

Before outright nationalization, of course, the SPD wants to deploy the full toolbox: subsidies, tariffs, and protectionism — the usual. And if one intervention fails, the answer is always the same: double down.

Without dismantling this eco-socialist nightmare, there is no turnaround for German industry. And, as always, the center-right opposition will comply, offering token criticism while fundamentally agreeing on the green transformation agenda. The course set in Brussels will be defended at any cost — against all economic logic.

We are witnessing the step-by-step construction of a new, real-world socialism. This time, it’s green.

The Causes Are Obvious

The causes of Germany’s industrial collapse are hardly a mystery: a self-inflicted energy crisis, a cult-like CO₂ fixation metastasizing through every layer of EU policy, and the slow suffocation of competitiveness.

More troubling still is how deeply this eco-socialist faith has penetrated the political class. Climate dogma is so deeply embedded in the population’s mindset that a swift return to U.S.-style economic pragmatism is almost unthinkable.

No pressure from the grassroots. No ideological rethink.

The full rollback of the climate complex — the deliberate dismantling of this vast crony economy, the end of CO₂ taxes, the clearing of the regulatory jungle — will fall to a future generation forced to clean up this mess.

It’s not a pleasant prospect. But if a prosperous, free society is the goal, returning to market principles and a minimal state as guarantor of security — without ideological baggage — is the only way to unleash the forces needed for renewal.

* * * 

About the author: Thomas Kolbe, born in 1978 in Neuss/ Germany, is a graduate economist. For over 25 years, he has worked as a journalist and media producer for clients from various industries and business associations. As a publicist, he focuses on economic processes and observes geopolitical events from the perspective of the capital markets. His publications follow a philosophy that focuses on the individual and their right to self-determination.

Tyler Durden Fri, 10/17/2025 - 05:00

China Caught In 'Large Scale Espionage' Against UK... Yet Case Collapses Over Beijing Appeasement: Officials

China's intelligence service conducted "large scale espionage operations" against the UK - accessing classified government computer systems for over a decade - a senior British government official told prosecutors in a case against two Brits allegedly involved - which collapsed in court. 

Xi Jinping, Keir Starmer

And why did said case collapse? Because the left-wing Labour government failed to refer to China as a threat to national security, so prosecutors could not produce evidence to bolster that claim, the UK's director of public prosecutions - as well as opposition conservatives who say Labour has been "too weak to stand up to Beijing on a crucial matter of national security."

Starmer has been criticized by conservative politicians for pursuing a thaw in relations with Beijing, despite a mountain of evidence that China is behind various cyber-attacks and espionage attacks in the UK. He also faces pressure from members of his own cabinet not to approve China's new mega-embassy in London.

As Bloomberg reports, Chinese hackers infiltrated UK computer systems for over a decade, routinely accessing "low- and medium-level classification information on UK government servers," including information marked "official-sensitive" and "secret"  - along with some material on the government's secure IT networks, according to anonymous sources. 

The data accessed included confidential documents relating to the formulation of government policy, private communications and some diplomatic cables, the people said. One described Chinese efforts to access British government systems as endless. Information and intelligence deemed top secret was not believed to have been compromised and is held securely, the people said, pushing back against a report Wednesday in The Times newspaper.

One compromise related to a data center in London used to store some sensitive government information, which was sold to an entity aligned to China when the Conservatives were in power, flagging major security concerns, one of the people said, confirming a report in the Spectator. Ministers in the then government briefly proposed a plan to destroy the data center before it was made secure in a different way, they added. -BBG

The UK's documents classification system has three levels;

• Official - which "includes routine business operations and services, some of which could have damaging consequences if lost, stolen, or published in the media, but which are not subject to a heightened threat profile."

• Secret - some of which was asked accessed by China, and is "where compromise might seriously damage military capabilities, international relations or the investigation of serious organized crime."

• Top Secret - the government's "most sensitive information, requiring the highest levels of protection from the most serious threats, where compromise might cause widespread loss of life or else threaten the security or economic wellbeing of the country."

According to Matthew Collins, the UK's deputy national security adviser, the alleged activities of two men accused of spying for China were "prejudicial to the safety or interests of the UK," and that "information and material" passed along to Beijing would be "directly or indirectly" useful to the Chinese state. Collins also emphasized to prosecutors that Britain was committed to "pursuing a positive relationship with China to strengthen understanding, cooperation and stability." 

Christopher Cash, 30, a former researcher for a Conservative MP, and Christopher Berry, a 33-year-old teacher, both denied allegations that they passed sensitive information to an alleged Chinese intelligence agent between 2021 and 2023. The Crown Prosecution Service unexpectedly dropped the charges against them last month, prompting a political backlash. -Politico

"I cannot understand why the CPS took the nuclear option of collapsing this case rather than leaving it to a jury,"  Emily Thornberry, who chairs the House of Commons Foreign Affairs Committee, told the House of Commons on Thursday. 

Another MP, Matt Western - who chairs the Joint Committee on National Security - told the chamber that his panel will hold an inquiry into the case "as soon as we possibly can.

On Wednesday evening, the UK government published three witness statements provided by Collins to the Crown Prosecution Service (CPS) between December 2023 and August 2025 - in which Collins says Chinese intelligence services are "highly capable and conduct large scale espionage operations against the UK to advance the Chinese state’s interests and harm the interests and security of the UK. China’s espionage operations threaten the UK’s economic prosperity and resilience, and the integrity of our democratic institutions."

Yet, like a stockholmed rape victim he also said that the UK is committed to a "positive" relationship with Beijing, and that the official government position was to "co-operate where we can; compete where we need to; and challenge where we must, including on issues of national security."

Last year, Bloomberg reported that British government officials feared Chinese state actors had made widespread and likely successful efforts to access British critical infrastructure networks.

Earlier on Wednesday, former premier Boris Johnson’s chief of staff in Downing Street, Dominic Cummings, told The Times newspaper that China had hacked secret information from the British government’s classified computer system.

“Vast amounts of data classified as extremely secret and extremely dangerous for any foreign entity to control was compromised,” Cummings said.

China Foreign Ministry spokesman Lin Jian told reporters in Beijing that the accusations are "purely vilification," adding "we urge relevant personnel in the UK to stop their baseless hypes and stop this kind of political manipulation."

Yet, Ciaran Martin - former head of the UK's National Cyber Security Centre, told Bloomberg that "for many years China has been, and continues to be, a significant cybersecurity threat to Britain and British interests," adding that "Chinese state actors target British government, commercial and other networks for espionage purposes."

That said, Martin said that China hadn't managed to access systems containing "highly classified state secrets." 

Tyler Durden Fri, 10/17/2025 - 02:45

Poland "At The Limit" On Ukrainian Refugees, Presidential Aide Warns

Authored by Thomas Brooke via Remix News,

Poland has reached its capacity when it comes to accepting Ukrainian refugees and must instead concentrate on integrating those already living in the country, Marcin Przydacz, head of Poland’s Presidential Office of International Affairs, has said.

“Poland cannot constantly accept Ukrainian refugees because Warsaw should focus on the integration and adaptation of people already staying in Poland,” Przydacz said in an interview with RMF24.

Currently, about 1.5 million Ukrainian citizens live in Poland, but only 26,000 have received Polish citizenship over the past five years. He warned that Poland’s capacity to integrate newcomers is being stretched and that “separate migrant districts” are already forming.

“When the scale exceeds the capacity of inculturation, problems begin. We don’t want such problems in Poland. I think we’re already at the limit – we can’t accept any more,” Przydacz added.

A new study published this week by Germany’s Ifo Institute drove home the challenge facing European nations that have accepted large numbers of Ukrainians, with polling showing a tiny fraction realistically plan to return home after the conflict.

A new study warns that the vast majority of Ukrainian refugees living in Europe may never return home unless Ukraine regains its territory and secures Western security guarantees.

Just 3 percent of Ukrainian refugees in Europe would return to their home country in the most pessimistic post-war scenario, the study found, with respondents regarding territorial integrity and security guarantees as the most decisive factors when weighing up their decision.

While nearly half of refugees (46.5 percent) would return if Ukraine fully restored its 1991 borders, joined NATO, cut corruption, and boosted incomes, this hypothetical is not politically realistic while NATO members like Hungary oppose its accession.

Just 2.7 percent would do so if Russia retained most occupied territories, no peace deal was signed, security guarantees were absent, and the economy worsened.

Przydacz also urged NATO to strengthen its deterrence posture in response to Russian provocations on the eastern flank. He said the alliance’s reaction so far had been “appropriate,” but called for more troops and advanced equipment, “especially anti-drone equipment.”

Referring to reports of “little green men” on the Russian-Estonian border, Przydacz warned that Moscow “will constantly test our reaction and our internal cohesion” and said similar incidents could occur on the Polish-Belarusian frontier, where a border wall built by the previous government had proven effective.

The presidential adviser also commented on public frustration with the current government, citing a new Opinia24 poll showing that 80 percent of Poles see no improvement since the change of power, with only 12 percent saying their lives are better and 31 percent saying they have worsened.

“This government was supposed to bring hope,” Przydacz said.

Discussing the situation in the Middle East, Przydacz welcomed a newly signed peace agreement with “cautious optimism” and said that “violations of international and humanitarian law have certainly occurred” in Gaza, which should be “assessed in an appropriate manner by experts.”

Read more here...

Tyler Durden Fri, 10/17/2025 - 02:00

What's The Future Of Russia's Bases In Syria?

Authored by Andrew Korybko via Substack,

Lavrov suggested that they could facilitate the dispatch of aid to Africa, but it’s also possible that they might host complex military-diplomatic talks between all stakeholders in Syria while also helping its armed forces maintain national unity by re-equipping, training, and advising them too.

Russian-Syrian relations are interesting for many observers due to the realpolitik that’s come to define them since Assad’s downfall last December.

Ahmed “Jolani” Sharaa’s Al Qaeda-descended Hayat Tahrir al-Sham was designated as terrorists by Russia prior to their Turkish-backed seizure of power, and they accordingly hated Russia for bombing them, yet both swiftly put that aside. The fact of that matter is that their respective state interests require continued cooperation regardless of whoever’s in power in Syria.

Russian Foreign Minister Sergey Lavrov hinted at the future of his country’s bases there in an interview that aired last week ahead of Sharaa’s trip to Moscow on Wednesday to meet with Putin.

While their summit was certainly important, Lavrov’s remarks shed more light on this subject than the opening statements from their talks (there was no press conference afterwards), which is why his words form the basis of this analysis.

Here’s exactly what he said, which will then be analyzed:

“The function must be reconfigured. One clear task that could benefit the Syrians, their neighbours, and many other countries is establishing a humanitarian hub, utilising the port and airport to deliver humanitarian supplies from Russia and the Persian Gulf states to Africa.

There is a shared understanding that this will be in demand, and we are prepared to coordinate the details. The matter has, in principle, been discussed, and there is mutual interest.”

This is a unique proposal that would allow these facilities to become logistical hubs for supplying Russian, Arab, and possibly others’ aid to Africa. Russia’s continued dispatch of donated foodstuffs, mostly wheat, as well as discounted energy and fertilizer helped avert a chain reaction of tragedies over the past 3,5 years that could have exploded due to the West’s unilateral sanctions.

There might be more to the future of Russia’s bases in Syria than just that, however, judging by what else Lavrov said:

“We understand Israel’s legitimate security concerns (in Syria)…

Yet, the interests of other actors must also be safeguarded. In the northeast, there are the Kurds, whom the Biden administration began courting, actively encouraging separatist sentiments.

Our Turkish counterparts maintain a presence in the north, along their border with Syria. Meanwhile, Alawites and Christians continue to face persecution – recently exemplified by a barbaric attack on a church.”

He then added that all those with influence in Syria must prioritize its unity and declared that “We are prepared to collaborate on these matters with other nations pursuing their interests in the Syrian Arab Republic.”

Accordingly, it can be intuited that Russia’s military facilities could hypothetically host security talks between these conflicting parties, while its armed forces and diplomats could also provide advisory services to their Syrian counterparts to advance their shared goal of maintaining national unity.

Therefore, while the official reason for retaining Russia’s bases in Syria might be to facilitate aid to Africa and possibly host complex military-diplomatic talks, the real purpose might be to re-equip, train, and advise its army, albeit within the unofficial limits imposed by Israel and agreed to by Syria in that event.

This vision was first shared in early February here and thus presciently predicted what’s thus far come to pass. These plans could still be offset, but for the time being, they arguably appear to be on track.

Tyler Durden Thu, 10/16/2025 - 23:25