From the Association of American Railroads (AAR) AAR Data Center. Graph and excerpts reprinted with permission.

In recent months the U.S. economy has defied easy characterization, caught between signals of underlying strength and uncertainty regarding the road ahead. Rail freight volumes have followed that lead, reflecting a mix of cautious optimism and lingering hesitation across key sectors. The uncertainty characterizing both the economy and freight markets is likely to continue because key drivers of economic momentum— including the labor market, consumer spending, inflation levels, interest rates, and economic policies across the globe—remain fluid.
emphasis added

On intermodal:

U.S. rail intermodal originations fell 2.9% (31,000 containers and trailers) in June 2025 from June 2024, their first year-over-year decline in 22 months. June’s decline comes amid broader uncertainties impacting global supply chains that have tempered international shipments. In June 2025, U.S. rail intermodal volume averaged 260,834 units per week, below the 2016-2005 average for June of 263,991.

Meanwhile, total U.S. rail carloads (excluding intermodal) rose 2.1% (nearly 19,000 carloads) in June 2025 over June 2024, their fourth straight year-over-year increase— the first time that’s happened since late 2021. In June, 10 of the 20 carload categories tracked by the AAR had year over-year gains. Total U.S. rail carloads averaged 226,259 per week in June 2025, the most for June since 2021. In the 66 months since January 2020, only 14 months had a higher weekly average than June 2025 did.

(Posted with permission). The ISM® Services index was at 50.8%, up from 49.9% last month. The employment index decreased to 47.2%, from 50.7%. Note: Above 50 indicates expansion, below 50 in contraction.

From the Institute for Supply Management: Services PMI® at 50.8% June 2025 Services ISM® Report On Business®

Economic activity in the services sector grew in June after just one month of contraction, say the nation's purchasing and supply executives in the latest Services ISM® Report On Business®. The Services PMI® indicated expansion at 50.8 percent, above the 50-percent breakeven point for 11th time in the last 12 months.

The report was issued today by Steve Miller, CPSM, CSCP, Chair of the Institute for Supply Management® (ISM®) Services Business Survey Committee: “In June, the Services PMI® registered 50.8 percent, 0.9 percentage point higher than the May figure of 49.9 percent. The Business Activity Index returned to expansion territory in June, registering 54.2 percent, 4.2 percentage points higher than the ‘unchanged’ reading of 50 percent recorded in May. This index has not been in contraction territory since May 2020. The New Orders Index returned to expansion territory in June, recording a reading of 51.3 percent, an increase of 4.9 percentage points from the May figure of 46.4 percent. The Employment Index returned to contraction territory for the third time in the last four months; the reading of 47.2 percent is 3.5 percentage points lower than the 50.7 percent recorded in May.

“The Supplier Deliveries Index registered 50.3 percent, 2.2 percentage points lower than the 52.5 percent recorded in May. This is the seventh consecutive month that the index has been in expansion territory, indicating slower supplier delivery performance. (Supplier Deliveries is the only ISM® Report On Business® index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.)

“The Prices Index registered 67.5 percent in June, a 1.2-percentage point decrease from May’s reading of 68.7 percent. The index has exceeded 60 percent for seven straight months, with the May and June readings the highest since November 2022 (69.4 percent).
emphasis added

This was at consensus expectations, but employment was weak and prices paid very high.

The Census Bureau and the Bureau of Economic Analysis reported:

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced today that the goods and services deficit was $71.5 billion in May, up $11.3 billion from $60.3 billion in April, revised.

May exports were $279.0 billion, $11.6 billion less than April exports. May imports were $350.5 billion, $0.3 billion less than April imports.
emphasis added

Click on graph for larger image.

Exports and imports decreased in May.

Exports were up 5.3% year-over-year; imports were up 3.3% year-over-year.
Imports increased sharply earlier this year as importers rushed to beat tariffs.  

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

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

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

The trade deficit with China decreased to $13.9 billion from $23.7 billion a year ago.

The DOL reported:

In the week ending June 28, the advance figure for seasonally adjusted initial claims was 233,000, a decrease of 4,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 236,000 to 237,000. The 4-week moving average was 241,500, a decrease of 3,750 from the previous week's revised average. The previous week's average was revised up by 250 from 245,000 to 245,250.
emphasis added

The following graph shows the 4-week moving average of weekly claims since 1971.

Click on graph for larger image.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased to 241,500.

The previous week was revised up.

Weekly claims were lower than the consensus forecast.

"June Looks Strong": Boeing Monthly Aircraft Delivery Tracker Signals Recovery

Goldman analysts led by Noah Poponak maintain a "Buy" rating on Boeing, citing new Planespotters data that suggests the embattled planemaker may finally be emerging from its manufacturing slump. A series of mid-air incidents and quality control issues had previously forced 737 Max production caps, but June's stronger delivery figures point to a potential turnaround.

Poponak told clients that Planespotters' aircraft delivery tracker for Boeing planes is trending around 58 deliveries for June (57 excluding 1 KC-46A delivery), including 42 737 MAX and 9 787.

"Of the 42 MAX deliveries, we estimate 37 were new production, with 5 from inventory. 58 deliveries is a step function improvement over the mid-40 delivery rate BA has been holding for the last 5 months," the analyst said. 

Poponak noted the uptick in deliveries, calling June "strong" and "another month of progress," as well as the highest in quite some time, adding that it "indicates to us that product quality improvements are holding, enabling higher production rates, and therefore allowing for more deliveries."

"We think BA will stabilize MAX production at ~38/month over the next several months, request a move to 42/month late in 2025, and raise production in increments of 5/month thereafter," he said. 

Here's a breakdown of Boeing's June deliveries by aircraft variant.

Poponak is Buy rated on the stock with a 12-month price target of $226. He said this is derived from targeting a 3.8% free cash flow yield on 2026E free cash. 

Boeing shares are consolidating, a sign that direction could, at some point, be coming. 

Related:

• Goldman Flags Must-Own Defense Stocks Amid Pentagon's Shifting Priorities

Spoiler alert: Boeing is not on the 'must-own' defense stocks... 

Tyler Durden Thu, 07/03/2025 - 09:20

The headline jobs number in the June employment report was above expectations and April and May payrolls were revised up by 16,000 combined.     The participation rate decreased, the employment population ratio was unchanged, and the unemployment rate was decreased to 4.1%.
NOTE: State and local government hiring was reported at 63.5 thousand in June (seasonally adjusted).  On a Not Seasonally Adjusted (NSA) basis, 542.4 thousand education jobs lost.  This happens every June.   However, this year fewer jobs were lost than expected resulting in the large SA gain.  It is possible this is just a timing issue and more than expected educators will be let go in July.

Earlier: June Employment Report: 147 thousand Jobs, 4.1% Unemployment Rate
Prime (25 to 54 Years Old) Participation

Since the overall participation rate is impacted by both cyclical (recession) and demographic (aging population, younger people staying in school) reasons, here is the employment-population ratio for the key working age group: 25 to 54 years old.

The 25 to 54 years old participation rate increased in June to 83.5% from 83.4% in May.
The 25 to 54 employment population ratio increased to 80.7% from 80.5% the previous month.
Both are down slightly from the recent peaks, but still near the highest level this millennium.

Average Hourly Wages

The graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees from the Current Employment Statistics (CES).  
There was a huge increase at the beginning of the pandemic as lower paid employees were let go, and then the pandemic related spike reversed a year later.

Wage growth has trended down after peaking at 5.9% YoY in March 2022 and was at 3.7% YoY in June.   
Part Time for Economic Reasons

From the BLS report:

"The number of people employed part time for economic reasons, at 4.5 million, changed little in June. These individuals would have preferred full-time employment but were working part time because their hours had been reduced or they were unable to find full-time jobs."

The number of persons working part time for economic reasons decreased in June to 4.47 million from 4.62 million in May.  This is above the pre-pandemic levels.

These workers are included in the alternate measure of labor underutilization (U-6) that decreased to 7.7% from 7.8% in the previous month. This is down from the record high in April 2020 of 22.9% and up from the lowest level on record (seasonally adjusted) in December 2022 (6.6%). (This series started in 1994). This measure is above the 7.0% level in February 2020 (pre-pandemic).

Unemployed over 26 Weeks

This graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 1.65 million workers who have been unemployed for more than 26 weeks and still want a job, up from 1.46 million the previous month.
This is down from post-pandemic high of 4.171 million, and up from the recent low of 1.056 million.

This is above pre-pandemic levels.

Job Streak

Through June 2025, the employment report indicated positive job growth for 54 consecutive months, putting the current streak in 2nd place of the longest job streaks in US history (since 1939).  
Headline Jobs, Top 10 Streaks Year EndedStreak, Months 12020113 2Current, N/A541 3199048 4200746 5197945 6 tie194333 6 tie198633 6 tie200033 9196729 10199525 1Currrent Streak
Summary:

The headline jobs number in the May employment report was above expectations and April and May payrolls were revised up by 16,000 combined.   The participation rate decreased, the employment population ratio was unchanged, and the unemployment rate was decreased to 4.1%.
This was a solid employment report; however, a surprising number of state and local education employees were hired in June (63.5 thousand).  

My Wray Or The Highway: New Report Raises Troubling Questions Over The FBI Spiking Report Contradicting Director

Authored by Jonathan Turley,

Newly declassified FBI documents obtained by Fox raise troubling questions over the FBI allegedly spiking findings that contradicted the testimony of  then-FBI Director Christopher Wray.

The FBI had uncovered a Chinese conspiracy to influence the election in favor of then-President Joe Biden, including the creation of false driver’s licenses.

Wray denied that such efforts were occurring and the FBI reportedly proceeded to effectively bury the report.

Agents had found that the Chinese manufactured fake driver’s licenses and shipped them to the U.S. in a scheme to help Biden. That not only contradicted the narrative of the election, but Wray’s testimony.

Wray testified before Congress that the FBI had not seen any coordinated voter fraud ahead of the 2020 election:

“We have not seen historically any kind of coordinated national voter fraud effort in a major election, whether it is by mail or otherwise.”

However, that does not appear to be true.

The FBI “recalled” the reporting after his testimony “in order to re-interview the source.” It also directed “recipients” of the original report to “destroy all copies of the original report and remove the original report from all computer holdings.”

In a letter to Sen. Chuck Grassley (R, Iowa), Assistant FBI Director Marshall Yates stated that “Although the source was reengaged and provided additional context to support the initial IIR, FBI Headquarters maintained its position not to republish the report.”

Of course, there is little interest in most of the media on this foreign interference story despite the allegations of a cover up before the election.

Critics are alleging a cover up with FBI agents effectively told that it is my Wray or the highway when it came to Chinese interference with the election.

Tyler Durden Thu, 07/03/2025 - 09:00

 

 

“We fear the awesome predatory perfection of the great white shark, and have made the Discovery Channel’s “Shark Week,” “the longest-running cable television programming event in history.”

This seems somewhat disproportionate, given that 10 people a year die from shark attacks — out of more than 7 billion people. If you want to fear a living creature, than logic suggests it’s the mosquito — they kill more human beings than any other animal on the planet. Man, be it through wars or murder or wanton disregard or simple benign neglect, comes in a distant second.”

–Bloomberg, October 22, 2014

 

It is inescapable: Heading into the July 4th weekend, local media are filled with accounts of shark sightings. It’s SOP this time of year, but then add in the 50th anniversary of the movie Jaws, and it’s even worse than usual. It’s true on Long Island, and it’s likely the case up and down the East Coast. It is simply a function of living near an ocean and having a media landscape that is desperate for eyeballs and clicks.

Yes, there are fish in the ocean. Mammals, too. We see sharks and dolphins and all manner of sea-based wild life.

I burn a few chapters in “How Not to Invest” explaining why the focus on sharks a manifestation of two specific psychological issues. The first is simply emotional: Sharks are big and scary; the thought of being eaten alive is terrifying.

Secondly, shark attacks – like terrorism and market crashes – are rare events that are often discussed out of context. These are very low-probability occurrences compared to daily human experiences; we frequently lack a proper frame of reference for understanding just how unlikely these events are.

In 2024, there were 28 “unprovoked” shark attacks in the United States — and one fatality. (Globally, there were 47  shark bites)

More people died driving to the beach than were done in by sharks.

The nearby chart, via Gates Notes, reveals just how misplaced our fears are. Regardless, you should plan to enjoy the long holiday weekend, with minimal worry about the ocean’s predatory perfection…

 

 

 

See also:
Why fear is an investor’s worst enemy (Morningstar, Sep 25, 2017)

How NOT To Invest: Views From The Escarpment (Escarpment Advisory, April 29, 2025)

 

Previously:
What Kills You and Your Investments (May 21, 2014)

You Are Worrying About the Wrong Things (October 22, 2014)

Crashes & Terrorists & Sharks – Oh, My! (November 9, 2015)

Shark vs. Mosquito Deaths (April 26, 2018)

Shark Attacks Illustrate an Investing Problem (January 28, 2019)

Denominator Blindness, Shark Attack edition (February 5, 2019)

Your Chances of Dying (July 25, 2019)

 

 

 

 

 

 

 

For more information about “How Not to Invest” and where to buy hardcovers, e-books, and audio versions, please see this.

 

 

The post Beware! Shark Week! appeared first on The Big Picture.

'Deep TriState' Layoffs Leave Continuing Jobless Claims 'Stuck' At Highest Since 2021

While payrolls data dominates the news on the labor market, the higher frequency (and perhaps less 'sanitized') jobless claims data remains noteworthy.

Initial claims dropped from 237k to 233k last week, rolling over from 9 month highs...

Source: Bloomberg

Continuing jobless claims were flat at 1.964mm Americans - the highest since Nov 2021...

Source: Bloomberg

The 'Deep TriState' dominated the rise in continuing claims, moving to its highest since Dec 2021

Source: Bloomberg

At the very least, Musk should be proud of this trend.

Tyler Durden Thu, 07/03/2025 - 08:42

From the BLS: Employment Situation

Total nonfarm payroll employment increased by 147,000 in June, and the unemployment rate changed little at 4.1 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in state government and health care. Federal government continued to lose jobs.
...
The change in total nonfarm payroll employment for April was revised up by 11,000, from +147,000 to +158,000, and the change for May was revised up by 5,000, from +139,000 to +144,000. With these revisions, employment in April and May combined is 16,000 higher than previously reported.
emphasis added

Click on graph for larger image.

The first graph shows the jobs added per month since January 2021.

Total payrolls increased by 147 thousand in June.  Private payrolls increased by 74 thousand, and public payrolls increased 73 thousand (Federal payrolls decreased 7 thousand).

Payrolls for April and May were revised up by 16 thousand, combined.
The second graph shows the year-over-year change in total non-farm employment since 1968.

In June, the year-over-year change was 1.81 million jobs.  Employment was up solidly year-over-year.

The third graph shows the employment population ratio and the participation rate.

The Labor Force Participation Rate decreased to 62.3% in June, from 62.4% in May. This is the percentage of the working age population in the labor force.

The Employment-Population ratio was unchanged at 59.7% from 59.7% in May (blue line).
I'll post the 25 to 54 age group employment-population ratio graph later.

The fourth graph shows the unemployment rate.

The unemployment rate was decreased to 4.1% in June from 4.2% in May.

This was above consensus expectations and April and May payrolls were revised up by 16,000 combined.  
I'll have more later ...

Futures Coiled At Record High Ahead Of Closely Watched Jobs Report

US equity futures are slightly higher with small caps outperforming into the payrolls report. As of 8:10am ET, S&P 500 futures are up 0.2% while Nasdaq 100 contracts were up 0.1%. The tax/budget bill appears likely to pass later this morning after a dramatic overnight session, so keep an eye on yields though any impact may be delayed until next week given the holiday. Payrolls are the key event of a trading day which finishes at 1 pm. Consensus has the print at 106K, while the whisper number is 96K and the Bloomberg Economics’ Nowcast model forecasts job gains of 119k, higher than consensus while Goldman expects a downbeat 85K number. Scenarios laid out by JPMorgan see the S&P as most likely to rise after the data, though a reading of less than 85k would lead to a 2% to 3% drop for the index. A poor number ( especially after the negative ADP jobs reading) would strengthen the case for a July rate cut and would add to pressure on Fed Chair Powell, who has repeatedly declined to say whether he will step down when his term as chair expires in May. European stocks are also little changed; Siemens is higher after saying the US has dropped its restrictions on software, used to design semis, exports to China, CDNS/SNPS are both up more than 6%. The Dollar is mixed but trading in tight ranges across G10: sterling is recovering this morning in tandem with GILT's after the UK Prime Minister Starmer confirmed Chancellor Reeves has his backing yesterday, alleviate further fiscal uncertainty. US bond yields are lower reflecting heighten downside risk to NFP today; the 10Y at 4.26%. Commodities are higher led by ags, base/precious, and oil. Besides the jobs report, we also get the ISM services index for June, the weekly initial jobless claims, as well as the trade balance and factory orders for May

In premarket trading, Magnificent Seven stocks are mixed (Tesla, Meta +0.6%, Amazon +0.2%, Microsoft -0.03%, Alphabet -0.03%, Nvidia -0.06%, Apple -0.5%). 

• ASML (ASML) falls 1.6% after a Nikkei Asia report that Samsung Electronics is delaying completion of a chip factory in Texas, as it struggles to find customers for the plant’s output.
• Datadog (DDOG) gains 9.6% as the company will replace Juniper Networks in the S&P 500, effective prior to the opening of trading on July 9.
• FedEx (FDX) climbs 1.2% after being double-upgraded at BNP Paribas Exane, with the broker saying the stock is “arguably oversold,” expecting the firm’s relative operational outperformance vs. rival UPS to continue.
• Synopsys (SNPS) gains 5% and Cadence Design (CDNS) rises 5% after the US lifted export license requirements for chip design software sales in China, clearing the way for the companies to resume services in the world’s second-biggest economy.
• Xponential Fitness (XPOF) soars 20% after saying that after cooperating with an SEC probe, the regulator concluded its investigation without action.

Markets will be laser focused on the latest US employment numbers this morning including NFP and the unemployment rate, keeping in mind we have a shortened NY trading session today going into a long weekend. Consensus expects nonfarm payrolls to rise +106k today and that unemployment rate will round up to 4.3% (full preview here).  US stock trading is set to close at 1 p.m. New York time for the July 4 holiday, with bond dealing wrapping up an hour later.

Thursday’s cross-asset moves underscored cautious optimism as traders contend with areas of uncertainty ahead of the employment report that will help identify the path ahead for Federal Reserve interest rates. A weak report may boost Fed doves and support stocks near record highs, while stronger data could complicate the outlook.

“Markets might be getting ahead of themselves if we see a negative number,” said Susana Cruz, a strategist at Panmure Liberum. “Powell has been clear that any decision on rate cuts will depend on the data. But it is too early to assess that data, particularly inflation.”

Investors are also closely tracking the US fiscal situation, as House Republican leaders worked urgently to secure enough support for Trump’s massive tax and spending package, with the process moving toward a final vote. Concerns about mounting US deficits may weigh stronger on bond investors’ minds than the jobs report, said Frederique Carrier, head of investment strategy for RBC Wealth Management in the British Isles and Asia.

“It’s a structural deficit at a time of full employment,” Carrier said. “It doesn’t mean that a disaster is imminent, but it does mean that it’s something that the market at one point will deal with. There is definitely a lot of complacency.”

In Europe the Stoxx 50 is little changed. FTSE 100 outperforms peers, adding 0.5%, while FTSE MIB lags, dropping 0.3%. Consumer products, telecoms and travel are the worst performing sectors. Following yesterday's "Truss-like" crash, Gilts rebounded, outperforming peers, after PM Starmer said Reeves will stay on as chancellor “for many years to come.” The UK 30-year yield drops 11 bps, close to erasing Wednesday’s surge.  The pound is also the only G-10 currency that’s up versus the dollar this session. Here are the biggest movers Thursday:

• Siemens shares rise as much as 3% after the company said the US has lifted export license requirements for chip design software sales in China, allowing it to resume sales in the country
• Redcare Pharmacy shares rose as much as 7.8%, the most in almost three months, after the German online pharmacy reported preliminary second quarter revenue growth of 26%
• Currys shares rise as much as 9.8%, extending year-to-date gains, after results that analysts said point toward a change in emphasis toward growth
• Stolt-Nielsen shares climb as much as 6.7% after the bulk liquid transportation and logistics company delivered earnings above expectations in the second quarter, with its full-year target also running ahead of consensus, according to DNB Carnegie
• Virbac shares jumped as much as 7.4% after Oddo BHF upgraded its rating and price target for the French healthcare care group, expecting momentum to build in the second half of the year
• Grenke gains as much as 5.2%, climbing to the highest since mid-March, as Warburg says the German lease finance provider saw solid new business in the second quarter
• Pluxee rises as much as 9.4%, extending gains into a sixth day, after the employee benefit provider today maintained its targets for the full-year. The firm delivered third-quarter results that analysts view as generally in-line, or perhaps a small beat
• Novartis shares fall 1% as the Swiss pharma giant’s Cosentyx missed primary endpoint in a novel indication. As a result, Vontobel removes peak sales estimates of $150m for the drug
• Nordic Semiconductor falls as much as 4.3% after BofA Global Research cut its recommendation to underperform from buy, saying FY25/26E consensus revenue estimates are too high, given IoT/broad market weakness and low visibility
• Watches of Switzerland shares drop as much as 10%, the most in three months, after the company warned its margin could contract this year, which analysts at Shore said is disappointing following the recovery in profitability seen in FY25

Earlier in the session, A key Asian equity benchmark advanced, boosted by a rally in South Korean stocks and technology names in the region. The MSCI Asia Pacific Index rose as much as 0.4%, with Samsung Electronics, BHP Group and TSMC among the biggest contributors. South Korea’s Kospi Index closed at a near four-year high after its parliament passed an amendment to Commercial Act which aims to protect the rights of minority shareholders. Stock benchmarks also rose in Taiwan, India and Japan. Asian shares have traded sideways this week after rallying to a four-year high, as investors await the outcome of talks for various nations ahead of Donald Trump’s July 9 tariff deadline.  An index of Chinese stocks listed in Hong Kong led decliners around the region. China’s services activity slipped more than forecast in June to reach a nine-month low, a worry for the economy as higher US tariffs threaten exports. Vietnam’s key equity gauge edged lower Thursday despite the announcement of a deal with the US overnight.

In FX, USD is trading mixed and within tight ranges across the G10 complex this morning ahead of NFP where we see clearer asymmetry for the Dollar in a weaker report today. GBP is leading gains across G10, trading +20bps higher, retracing some of yesterday’s losses on headlines confirming Rachel Reeves "will stay in her role for many years". GBP vol is now coming off across the curve, but led by the front end with 1m now trading at 8.1vols, down from the highs of 8.75vols yesterday. JPY (-15bps vs USD) is underperforming this morning despite the move lower in US yields and headlines that BOJ member Takata confirmed that the bank is still looking to raise interest rates. Looking ahead towards the 8:30am NFP print, the market has priced in a 55bp gap in EUR, 50bp gap in AUD, and 60bp gap in JPY. Our trading desk see a clear market asymmetry to an NFP release sub 100k and any unemployment rate at or above a rounded 4.3%. In this scenario, we could see the market price increased odds of a Fed cut and send the Dollar to fresh lows. On the other hand, our research team notes that a stronger report should counter some of the recent Dollar weakness we’ve seen, although believe Dollar positioning is close to neutral levels, and in terms of the tariff narrative, think a stronger set of data could more easily be dismissed as a timing mismatch on the impact from tariffs

In rates, USTs are bull flattening this morning vs yesterday's 3pm level, supported by bid & recovery in UK Gilts in early London trade. PMI data and supply from Spain and France had little market impact as focus shifts on OBBB going through the house and US NFP later this morning. Overnight was busy with UK rates retracing 10bps in the long end and parting yesterday's sell off, flows on the desk were biased towards steepeners in USD rates and buying in front end spreads from RM. As mentioned above, following yesterday's "Truss-like" crash, Gilts rebounded and are outperforming peers, after PM Starmer said Reeves will stay on as chancellor “for many years to come.” The UK 30-year yield drops 11 bps, close to erasing Wednesday’s surge.

In commodities, WTI trades within Wednesday’s range, falling 0.8% near $66.90. Spot gold falls roughly $7 to trade near $3,350/oz. Spot silver gains 1.2% near $37.

Looking at today's calendar, we get the June jobs report at 8:30am New York time, where the median estimate for nonfarm payrolls increase is 106k; Bloomberg’s crowd-sourced whisper number is 97k.US economic data slate also includes weekly jobless claims and May trade balance (8:30am), June final S&P Global US services PMI (9:45am), June ISM services index and May factory orders (10am). Fed speaker slate includes Bostic at 11am, speaking on monetary policy in Frankfurt

Market Snapshot

• S&P 500 mini little changed
• Nasdaq 100 mini +0.1%
• Russell 2000 mini +0.6%
• Stoxx Europe 600 +0.2%
• DAX little changed
• CAC 40 little changed
• 10-year Treasury yield -2 basis points at 4.26%
• VIX +0.1 points at 16.71
• Bloomberg Dollar Index little changed at 1189.55
• euro little changed at $1.1791
• WTI crude -0.9% at $66.87/barrel

Top Overnight News

• House Republicans overcame a key procedural hurdle to advance Donald Trump’s tax and spending bill. The final vote may come later in the morning in Washington, with Speaker Mike Johnson confident it’ll pass shortly. BBG 
• Trump posted on Truth Social calling for Fed Chair Powell to "resign immediately" and linked an article regarding calls by Fannie Mac and Freddie Mac Chairman, Bill Pulte, who called on Congress to investigate Fed Chair Powell due to his political bias and deceptive Senate testimony, which is enough to be removed "for cause".
• The United States has lifted restrictions on exports to China for chip design software developers and ethane producers, a further sign of de-escalating U.S.-Sino trade tensions including concessions from Beijing over rare earths. Siemens said it restored full access for Chinese customers, while Synopsys and Cadence said they’re in the process. RTRS, BBG 
• A private gauge of China’s services sector activity expanded in June, but at a softer pace despite efforts by businesses to attract new customers. China’s Caixin services PMI for June came in below expectations at 50.6 (down from 51.1 in May and under the consensus estimate of 50.9). WSJ 
• The BOJ should be ready to resume policy tightening if U.S. trade talks progress, policy board member Hajime Takata said, confirming that the bank is still looking to raise interest rates. WSJ 
• Japan’s 30-year bond auction saw strong demand, with a bid-to-cover ratio of 3.58, the highest since February. BBG 
• June Nonfarm payrolls are expected to rise by 106k in June, down from May's 139K and below the three-month average of +135k.
• U.S. and India trade negotiators were pushing on Wednesday to try to land a tariff-reducing deal ahead of President Donald Trump's July 9 negotiating deadline, but disagreements over U.S. dairy and agriculture remained unresolved, sources familiar with the talks said. BBG
• The Treasury is likely to meet its increased borrowing needs w/short-term bills rather than notes or bonds in an effort to remove upward pressure on yields at the long-end of the curve. BBG 
• Trump said Jerome Powell should resign “immediately” after FHFA head Bill Pulte urged Congress to investigate the Fed chair, alleging his Senate testimony about the central bank’s planned renovations was “deceptive.” BBG 

Reconciliation Bill

• US House Republicans have now opened the way for final bill vote; rule vote passes with 219-213.
• The Democrat leader in the House began his Magic Minute at around 10:00BST/05:00ET; expected to last for one hour. After this, speaker Johnson will take the floor and then the final vote can begin.

Trade/Tariffs

• Siemens (SIE GY) said the US rescinded curbs for the Co. related to chip design software sales to China, according to Bloomberg. Siemens later confirmed it has resumed sales and support to Chinese customers after it was recently notified by the US Commerce Department that export control restrictions on EDA software and technology to customers in China are no longer in place.
• South Korea's President Lee said he cannot say if they can conclude US tariff talks by July 8th and the two sides are not really clear on what they want concerning tariff talks, while he added that US tariff negotiations are looking very difficult.
• Senior CCP official on US-China relations, says setting up barriers and thresholds will eventually harm both, says the US should recognise how much it has to gain from US-China cooperation.
• Vietnamese Foreign Minister says US and Vietnamese negotiating teams are coordinating to finalise the trade deal. Agreement creates expectation and hope for businesses. To continue boost exports and expand ties with other countries

A more detailed look at global markets courtesy of Newsquawk

APAC stocks failed to sustain the mostly constructive handover from Wall St counterparts with sentiment in the region cautious as participants braced for the key US jobs data and digested Chinese Caixin Services and Composite PMIs. ASX 200 marginally declined amid weakness in telecoms, financials and the consumer sectors, while trade data showed a monthly contraction in Australian exports. Nikkei 225 lacked conviction in the absence of tier-1 data from Japan and following mixed rhetoric from BoJ's Takata, while US-Japan trade uncertainty lingered and trade negotiator Akazawa recently reiterated that an agreement which would hurt Japan's national interests for the sake of timing should not be made. Hang Seng and Shanghai Comp were ultimately mixed following Chinese PMI data in which Caixin Services PMI missed expectations but Caixin Composite PMI accelerated and returned to expansionary territory.

Top Asian News

• BoJ's Takata said the price stability target is close to being achieved and careful monitoring continues to be warranted, while he added that the BoJ should continue to further adjust the degree of monetary accommodation if it can confirm the positive corporate behaviour is being maintained. Takata also commented that given uncertainties regarding various US policies remain high, the BoJ should conduct monetary policy in a more flexible manner without being too pessimistic and to maintain momentum toward hitting its price target, the BoJ also needs to maintain its current accommodative monetary policy stance. Furthermore, his view is that the BoJ needs to support economic activity for the time being by maintaining its current accommodative monetary policy stance but at the same time, he believes the BoJ should gradually and cautiously shift gears in its monetary policy.
• PBoC has asked European financial institutions for advice on dealing with the effects of low interest rates, according to the FT.
• European Commission VP Kallas and Chinese Foreign Minister Wang reaffirmed EU's commitment to engage constructively with China to address global challenges, while Kallas called on China to end distortive practices, including restrictions on rare earth exports, which pose significant risks to European companies and endanger the reliability of global supply chains. Kallas also highlighted the serious threat Chinese companies' support for Russia's war poses to European security.
• Japan Trade Union Rengo says final data shows avg. wage hike of 5.25% for fiscal 2025 (prev. 5.10% hike in 2024).

European bourses began the session with gains into a packed afternoon agenda; however, as session has progressed this strength has waned a touch and the picture is now more mixed. Euro Stoxx 50 -0.2%; FTSE 100 +0.3% outperforms after the pressure seen on Wednesday. Sectors primarily in the green at first, though as above the picture has turned to more of a mixed one. Retail outperforms led by the initial readthrough of US-Vietnam updates, though the higher-than-expected tariff levy has caused this to fade. Real Estate also strong given UK yields.

Top European News

• UK PM Starmer said Rachel Reeves will be the Chancellor for years to come and will be the Chancellor at the next election.
• ECB officials question whether the euro has strengthened too much as policymakers at the central bank fret that a surging currency increases the risk of inflation undershooting, according to FT

FX

• DXY is broadly flat intraday in typical pre-NFP trade. DXY just firmer in a 96.686 to 96.879 band, within yesterday's 96.62-97.16 parameter. ING does not believe that the FX market has reached "peak bearishness" on the USD, despite widespread negative sentiment and forecasts
• G10s are contained, but generally softer, vs the USD. Antipodeans have at points been at the bottom of the pile, with the AUD hit by primarily weaker Australian trade data overnight and potentially focus on the US-Vietnam deal.
• EUR contained on either side of 1.1800 throughout the morning. Since, has come under some modest pressure and slipping towards lows of 1.1787, clear of yesterday's 1.1746 base. Specifics light thus far, no move to Final PMIs. Awaiting US events.
• JPY and CHF mixed. USD/JPY lacked conviction overnight amid the flimsy risk appetite in the region, little move to a Rengo update for FY25; JPY under slight pressure but shy of 144.00. CHF a touch firmer after domestic inflation came in above market consensus, but roughly in-line with the SNB's quarterly view.
• Sterling outperforms, bouncing as markets in the UK welcome PM Starmer backing Chancellor Reeves after the sell off seen after PMQs. GBP/USD currently resides in a 1.3624-1.3675 range, well within yesterday's 1.3560-1.3752 parameter.
• PBoC set USD/CNY mid-point at 7.1523 vs exp. 7.1618 (Prev. 7.1546).

Fixed Income

• Gilts bounce as Starmer supports Reeves in extensive media rounds. Benchmark gapped higher by 23 ticks before extending further to a 92.74 peak. However, this still leaves it shy of Wednesday’s 93.41 peak and the WTD high above at 93.76. Amidst these moves, focus on yields as they recover from yesterday’s spike; 10yr down to 4.51% vs a 4.68% peak on Wednesday, 30yr to 5.30% vs 5.45%.
• USTs firmer, but only modestly so, into a frontloaded US agenda headlined by NFP (exp. 110k, prev. 139k). Thus far, the focus has been on the Reconciliation Bill; Rule vote passed, full vote expected in the next few hours, at this stage it should pass without too much issue. USTs in a slim sub-10 tick band, entirely within yesterday's slightly more expansive 111-16+ to 111-30+ parameter.
• Bunds bid and firmer by just over 30 ticks at best. Picked up gradually throughout the European morning with newsflow light aside from modest revisions to Final PMIs, no reaction to the prints. Supply well received, but again no reaction. Awaiting direction from the above US events.
• Spain sells EUR 6.049bln vs exp. EUR 5.0-6.0bln 2.40% 2028, 3.15% 2035, 3.50% 2041 Bono & EUR 0.735bln vs exp. EUR 0.25-0.75bln 1.15% 2036 I/L
• France sells EUR 11.95bln vs exp. EUR 10-12bln 3.20% 2035, 3.60% 2042 & 3.75% 2056 OAT

Commodities

• Crude benchmarks are softer, despite limited newsflow. Bearishness potentially emanating from the lack of escalations regarding Iran, although a sixth round of US-Iranian negotiations is expected to be held in Oslo next week. More broadly, focus is beginning to turn to the weekend's OPEC+ meeting, where a production increase is expected.
• WTI resides in a USD 66.65-67.50/bbl range while its Brent counterpart trades in a USD 68.32-69.00/bbl range.
• Precious metals generally firmer into data. XAU has pulled back from WTD bests, but remains bid overall. As high as USD 3365/oz, vs USD 3329/oz from June 23rd.
• Base metals mixed, given the cautious typical pre-NFP tone. 3M LME Copper topped USD 10k/t and has been trading on either side of the level since.
• UAE's ADNOC restores most Murban crude oil supply for equity holders in July after earlier cuts.

US Event calendar

• 8:30 am: Jun Change in Nonfarm Payrolls, est. 106k, prior 139k
• 8:30 am: Jun Change in Private Payrolls, est. 100k, prior 140k
• 8:30 am: Jun Change in Manufact. Payrolls, est. -2k, prior -8k
• 8:30 am: Jun Unemployment Rate, est. 4.3%, prior 4.2%
• 8:30 am: Jun Average Hourly Earnings MoM, est. 0.3%, prior 0.4%
• 8:30 am: Jun Average Hourly Earnings YoY, est. 3.8%, prior 3.9%
• 8:30 am: Jun 28 Initial Jobless Claims, est. 240.5k, prior 236k
• 8:30 am: May Trade Balance, est. -71b, prior -61.62b
• 8:30 am: Jun 21 Continuing Claims, est. 1962k, prior 1974k
• 9:45 am: Jun F S&P Global U.S. Services PMI, est. 53.1, prior 53.1
• 9:45 am: Jun F S&P Global U.S. Composite PMI, est. 52.8, prior 52.8
• 10:00 am: Jun ISM Services Index, est. 50.6, prior 49.9
• 10:00 am: May Factory Orders, est. 8.15%, prior -3.7%
• 10:00 am: May F Durable Goods Orders, est. 16.4%, prior 16.4%
• 10:00 am: May F Durables Ex Transportation, est. 0.5%, prior 0.5%
• 10:00 am: May F Cap Goods Orders Nondef Ex Air, est. 1.65%, prior 1.7%
• 10:00 am: May F Cap Goods Ship Nondef Ex Air, est. 0.5%, prior 0.5%

DB's Jim Reid concludes the overnight wrap

It’s been an eventful 24 hours in markets, with a bunch of competing narratives across different asset classes. On the bright side, the S&P 500 (+0.47%) hit a new record after the US reached a trade deal with Vietnam, which raised hopes they were about to announce multiple deals before the reciprocal tariff deadline on July 9. But in the latest twist of 2025, the UK became the centre of market attention again as investors zeroed in on their public finances again. So 10yr gilt yields (+15.8bps) saw their biggest daily jump since the Liberation Day turmoil in April, alongside a cross-asset slump that dragged down UK equities and the pound sterling as well.

In terms of those UK developments, the market nerves had already begun the previous day, as the government made a significant U-turn over cuts to welfare spending, which raised doubts about fiscal discipline. That was coming at a sensitive time, because they’d just made another U-turn last month over winter fuel payments. 

That selloff gathered pace yesterday thanks to growing question marks around whether Chancellor of the Exchequer Rachel Reeves would remain in post. For markets, the logic is that Reeves has been a big defender of the fiscal rules, and there’ve been growing calls for these rules to be eased and for borrowing to go up. So the concern in bond markets is that a new Chancellor might trigger a fresh wave of borrowing that pushes rates up further. Earlier, Prime Minister Starmer refused to confirm whether Chancellor Reeves would stay in post, but much later he said to the BBC that she would remain chancellor "for many years to come" which seems to take away some of the short term pressure.

Looking forward, the immediate issue is that the government left a very narrow margin in March against their fiscal rules they set themselves. And since then, that margin has disappeared thanks to factors like the spending U-turns and the tariff announcements after Liberation Day. So unless we got a big burst of growth before the Budget, then the government would need to announce further tax rises or spending cuts if they still want to meet the fiscal rules. So this leaves them in a tricky position. On tax, they’ve ruled out raising several large taxes like income tax and VAT, and the tax rises already announced generated unpopularity. On spending, they’ve come under intense pressure in response to the spending reductions so far, which have resulted in U-turns. And if they eased the fiscal rules, the fear would be a fresh market selloff like yesterday. So it’s not obvious which way they turn. Our UK economist thinks tax hikes will bear the brunt of the heavy lifting on any fiscal consolidation, but given the controversy they generated back in the Autumn budget, it’s clearly a difficult situation.

This backdrop led to a heavy selloff among UK assets yesterday. Gilts were at the epicentre, with the 10yr yield (+15.8bps) up to 4.61%. That selloff was particularly clear at the long-end of the curve, and the 30yr yield (+19.1bps) saw an even bigger rise to 5.42%. Interestingly, the pound sterling slumped as well, which isn’t what normally happens when longer-term interest rates are rising, as that should make the currency more attractive, other things equal. So that was reminiscent of the market patterns seen after Liz Truss, and the pound fell -0.80% against the US Dollar, making it the worst-performing G10 currency yesterday. That spread to UK equities too, with the FTSE 100 (-0.12%) being the only major European index to lose ground. And notably, the FTSE 250, which is a more domestically-focused index, fell by -1.34%, which was its biggest daily decline since the Liberation Day turmoil in early April.

Whilst the UK was dominating attention, it wasn’t all bad news yesterday, and the S&P 500 (+0.47%) climbed to a new record as hopes mounted about potential trade deals. The main catalyst was Trump’s announcement of a deal with Vietnam, which he said would see them pay a 20% tariff on goods exported to the US, whilst the US would pay a zero tariff on their own exports. So that raised hopes about further announcements before the July 9 reciprocal tariff deadline next week. And some of the more trade-sensitive sectors did particularly well, with the Philadelphia Semiconductor index up +1.88% on the day and the S&P 500 Autos subsector was up +4.64%.

Looking forward, attention will remain on the US today, as the jobs report for June is coming out later on. This month it’s on a Thursday because of the Independence Day holiday tomorrow, and our US economists at DB expect nonfarm payrolls to come in at +100k. That’s a bit slower than recent months, with the 3-month average currently at +135k, but they point to higher initial jobless claims in the survey week, and a pattern of subdued summer payroll gains over the last couple of years. In turn, they think the unemployment rate will rise to 4.3%, although the risk is that it could round down.

Ahead of that reading, there was some nervousness about the US labour market yesterday, as the ADP’s report of private payrolls contracted by -33k in June (vs. +98k expected). That was the first negative print since March 2023, and it’s the 3rd month in a row that the ADP print has slowed, so it added to fears that the economy might be starting to show the signs of a slowdown after Liberation Day. Indeed, futures moved to price in marginally more rate cuts this year, with the amount expected by the December meeting up +0.5bps on the day to 65bps. But long-end Treasuries were more influenced by the global bond selloff and fiscal fears, with a decent steepening that took the 10yr yield (+3.5bps) up to 4.277%. They've rallied back around -1.2bps overnight.

While the White House continued to make progress on trade deals, President Trump’s tax bill seemed to hit a snag. House Republicans delayed a vote on Wednesday as some of the more fiscally conservative members took issue with the amount of spending the Senate’s amendments added to the bill. Speaker Johnson can only lose three votes on a bill that only passed 215-214 last month. President Trump’s self-imposed July 4th deadline would be in trouble if the House were to make significant changes that could cause the bill to be sent back to the Senate.

Elsewhere in Europe, the mood was a lot more positive outside the UK. In part, that came about thanks to optimism about the Vietnam trade deal, raising hopes that something might also be agreed between the EU and the US. So most indices put in a decent performance, including the DAX (+0.49%) and the CAC 40 (+0.99%), although the Europe-wide STOXX 600 (+0.18%) was dragged down by the UK’s weakness. Meanwhile for bond markets, the UK selloff didn’t help elsewhere, with yields on 10yr OATs (+7.0bps) and BTPs (+6.5bps) both rising. And for 10yr bunds there was a change in the specific bond used with a new 10yr auction, but the generic 10yr yield was up +9.0bps.

In Asia, markets are mixed. The Hang Seng is -0.96%, around its largest drop in two weeks, while the S&P/ASX 200 is also slightly lower at -0.13%. Meanwhile, the Nikkei is flat but the KOSPI (+0.95%) and the CSI (+0.47%) are up alongside US equity futures which are up around a tenth of a percent.

Early morning data indicated that the Chinese services sector expanded less than anticipated in June, as weak domestic and overseas demand significantly impacted new business activity. The Caixin services PMI fell to a 9-month low of 50.6 in June, below the expected 50.9 and down from the 51.1 recorded the previous month. This disappointing services PMI contrasts with the relatively positive manufacturing data released earlier in the week. Although official PMIs indicated a slowdown in manufacturing, the Caixin PMI data released yesterday suggested a rapid return to growth in the manufacturing sector.

In other news, Australia’s trade surplus sharply decreased to A$2.24 billion in May, compared to A$5.0 billion, marking its lowest level since November 2019, as weak global demand has adversely affected exports. This decline was primarily driven by a -2.7% month-on-month decrease in exports.

To the day ahead now, and US data releases include the jobs report for June, the ISM services index for June, the weekly initial jobless claims, as well as the trade balance and factory orders for May. Otherwise we’ll get the final services and composite PMIs for June in the US and Europe. From central banks, we’ll hear from the Fed’s Bostic, and the ECB will publish the account of their June meeting

Tyler Durden Thu, 07/03/2025 - 08:21

The Last Time Gold Moved Like This Was 1929

Authored by Peter Reagan via BirchGold.com,

Speaking on the Money Sense podcast, Alasdair Macleod chimed in on why he believes we are in an environment similar to 1929, or the start of the Great Depression.

In recent times, we have seen things compared often to infamous economic downturns, like the inflation and recession of the 1970s. We have also seen invocations of the Great Depression when the lockdowns happened, and gold accordingly leapt in massive bounds back then.

But these days, the price of gold is nearly doubled since the start of the lockdowns, so there might very well be something to MacLeod's idea. Rather than buying into the narrative that reopenings prevented a 1929-style economic environment, Macleod thinks we are merely in the opening acts of a new global economic depression.

Macleod calls it the U.S. debt trap, mentioning how gold might have already overtaken U.S. dollars in terms of central bank reserves. As I’ve mentioned frequently since 2022, appetite for long-term U.S. government debt is hitting historical lows. Very few entities are willing to wager that the U.S. dollar, in 20-30 years, will still be a desirable asset.

The economy isn't growing anymore (and there are questions of whether it can), and an annual budget deficit of 6%+ means stagnation is a serious concern.

Somewhat touching upon our own idea of a disassociation between gold and armed conflict, Macleod says that U.S. dollar and debt are actually the preferred safe haven during such times. This, in turn, makes the U.S. economy even more vulnerable if or when the threat of that military conflict subsides, as investors then start moving out of U.S. assets.

Looking back on it now, Macleod believes that the narrative of China dedollarizing to boost the yuan was just a way of making the dollar look better in comparison.

We are seeing that unfold month after month, as a recent report detailed how 32% of central banks are expected to buy gold just in the short-term.

As both the report and Macleod note, the situation is so bad that central banks are even taking on other currencies as reserves, so long as it means less exposure to the dollar.

Besides being under-owned, Macleod's analysis of COMEX open interest suggests that gold might still be underbought, making the climb to $3,500 all the more remarkable. This is the first time since 1977 that U.S. assets have all broadly fallen in conjunction while gold has gone up, but, as said, 1929 might be a closer comparison.

Central banks are buying gold because they have a vision of the future, and this vision doesn't appear to involve the currencies they print having any real money.

Macleod is also one of the many analysts convinced that China's gold heap exceeds 30,000 tons, and he also says that silver is not to be overlooked here.

He says that informed accusations of silver price suppression go back more than two decades, with JPMorgan being consistently listed as a key culprit.

The idea, he notes, is to artificially deflate silver's spot price to sell massive amounts of the physical variety.

But to whom?

China is again pointed to, with Macleod saying that China's silver reserves might be even more stupefying than their gold stockpile.

He reminds us that the Shanghai Gold Exchange is wholly owned by the PBoC and appears to exist primarily as an instrument for the state to acquire more bullion while suppressing reports of purchases.

Although he says gold might be starting its summer doldrums, it's interesting to note that it's double the price of its summer doldrums from two years back.

Not much has changed in terms of fundamentals since then, so we have to ask what investors can expect over the next two years.

And, if we are indeed in a not-so-hidden 1929-style environment, what can gold investors in turn expect over the coming decade?

Tyler Durden Thu, 07/03/2025 - 07:45

Trade Thaw: US Lifts Curbs On Ethane & Chip Design Software Exports To China

With just six days until President Trump's 'reciprocal' tariff pause ends worldwide, the Trump administration is accelerating efforts to secure trade deals with key countries. On Wednesday, Trump signed a new trade agreement with Vietnam, and emerging headlines in financial corporate media only suggest negotiations with China may also be gaining traction. 

The first encouraging sign comes from a Bloomberg report stating that the Trump administration rescinded license requirements for ethane exports to China, allowing companies like Enterprise Products Partners and Energy Transfer LP to resume direct shipments without seeking additional approval.

The restrictions, introduced a few months ago, had disrupted US-China petrochemical trade, forcing tankers to reroute or idle. With the rollback, exports are expected to rebound to seasonal levels of 240,000 barrels per day in July. 

In a series of notes, we've outlined how American petrochemicals—particularly ethane—are critical to Chinese plastics manufacturers, and how the Trump administration's export restrictions, used as leverage in the trade war, risked triggering supply shocks (read here) and mass factory shutdowns across China's industrial base.

With ethane flows set to rebound, another encouraging sign materialized overnight, as reported by Bloomberg in a separate article, the Trump administration lifted export license requirements for U.S. chip design software sales to China. 

The Commerce Department notified top electronic design automation (EDA) software companies — Synopsys, Cadence, and Siemens — that licenses are no longer needed to sell to Chinese clients. Siemens has resumed full service, while Synopsys and Cadence are restarting operations.

The rollback reverses May's crackdown, which came in response to China's curbs on rare earth exports. Under the new trade agreement, finalized in London, the U.S. agreed to ease restrictions on EDA software, ethane, and jet engines, contingent on China accelerating export approvals for critical rare earth minerals. 

All of this suggests that the U.S. and China are making progress in trade talks ahead of the July 9 deadline, when Trump's suspended "reciprocal" tariffs are set to take effect. Hopefully, the Chinese export channel of rare earths can finally reopen for U.S. companies plagued with shortages. 

Tyler Durden Thu, 07/03/2025 - 07:20

My morning WFB (work from beach) reads:

• US dollar suffers worst start to year since 1973: Donald Trump’s trade policies and rising debt levels have sparked decline of more than 10% in first half of 2025, US dollar suffers worst start to year since 1973 (Financial Times)

• The Jobs Market Is Starting to Fall Apart: Even if Thursday’s jobs report comes in strong, a look behind the headline number tells a different story. (Wall Street Journal) see also They’re in the Top 10% of Earners. They Still Don’t Feel Rich. By many measures, the most affluent Americans are thriving. But $250,000 doesn’t mean what they thought it would. (Wall Street Journal)

• Amazon Is on the Cusp of Using More Robots Than Humans in Its Warehouses: The e-commerce giant now counts more than one million of the machines at its facilities. (Wall Street Journal)

• E.T.F.s Are Booming. Mutual Funds Want In on the Action. Asset managers are eagerly awaiting an S.E.C. decision that would allow mutual funds to also trade as E.T.F.s — potentially changing how trillions of dollars are invested. (New York Times)

• Surveillance pricing lets corporations decide what your dollar is worth: What if you show up at the hotel at 9pm and the hotelier can ask a credit bureau how much you can afford to pay for the room? What if they can find out that you’re in chemotherapy, so you don’t have the stamina to shop around for a cheaper room? What if they can tell that you have a 5AM flight and need to get to bed right now? (Pluralistic)

• Call Center Workers Are Tired of Being Mistaken for AI: As more workers are asked by strangers if they’re bots, surreal conversations are prompting introspection in the industry about what it means to be human. (Bloomberg) see also Disrupted or displaced? How AI is shaking up jobs: New technology is starting to have a profound effect on work and employment. (Financial Times)

• How Trump’s Tariffs Could Upend the Auto Industry—and Raise the Price of Your Next Car: President Trump wants an all-American car. U.S. vehicle sales could plunge by as much as 20% if he uses massive levies to get one. (Barron’s)

• Inside Operation Gold Rush, largest health care fraud bust in U.S. history: Officials say they were able to stop Medicare from paying out $10 billion, but perpetrators still collected about $1 billion from other insurers. (Washington Post)

• The seven things that make ADHD much worse: Experts point to a range of lifestyle and environmental triggers that can worsen this neurodevelopmental disorder. Here’s how to fix them  (Telegraph)

• LeBron James’ contract decision marks major Lakers shift — toward Luka Dončić: The Los Angeles Lakers’ Luka Dončić era has officially begun; LeBron James’ decision to pick up his $52.6 million player option for next season. His leverage isn’t what it once was these days, and that has everything to do with Dončić. (New York Times)

Be sure to check out our Masters in Business next week with Kate Moore, Chief Investment Officer of Citi Wealth; responsible for overseeing investments, portfolio strategy and asset allocation for the trillion dollars Citi Wealth manages. Previously, she was Head of Thematic Strategy and PM for the Global Allocation Fund at BlackRock.

 

Processing Cycles: Computing will soon consume more energy air conditioning globally

Source: Tedium

 

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Euro Stablecoin By DWS And Deutsche Bank Gets Regulatory Approval

Authored by Adrian Zmudzinski via CoinTelegraph.com,

AllUnity, a joint stablecoin venture by asset manager DWS and banking giant Deutsche Bank, received a license from the German Federal Financial Supervisory Authority (BaFin), according to a Wednesday announcement.

BaFin has granted an E-Money Institution (EMI) license to AllUnity. With the license, the company plans to issue a regulated and BaFin-licensed euro-pegged stablecoin, EURAU, in compliance with the Markets in Crypto-Assets Regulation (MiCA) framework.

AllUnity said EURAU will feature institutional-grade proof-of-reserves and financial reporting.

The initiative, which also involves US-based Galaxy Digital, aims to provide euro-denominated digital assets that integrate seamlessly into the workflows of regulated institutions, fintech platforms and enterprise treasuries. Amsterdam-based Flow Traders will serve as the project’s liquidity provider.

Source: AllUnity

The stablecoin battle for Europe

The announcement comes as Europe emerges as a key battleground in the global stablecoin race, following the full implementation of MiCA on Dec. 30, 2024.

The development is partially due to the fact that the worldwide stablecoin market leader Tether has so far declined to comply with the MiCA framework. This led to USDt being delisted from Binance, as well as competitors such as Kraken and Coinbase, for users in the European Economic Area.

Stablecoins race for MiCA compliance

Earlier this week, Paxos announced the launch of its MiCA-compliant Global Dollar (USDG) stablecoin in the EU.

Mid-April reports revealed that the market cap of Circle’s MiCA-compliant stablecoin Euro Coin was growing quickly.

Circle’s stablecoins likely benefited from the implementation of MiCA, with Euro Coin and USDC reaping the rewards of its regulatory-friendly approach. The company’s stablecoins are the top euro and US dollar-pegged stablecoins that comply with MiCA.

Still, CoinMarketCap data shows that USDt remains the undisputed market leader, with a market cap of under $158 billion. USDt has a significant lead over the second-largest stablecoin, USDC, with a market cap of less than $62 billion.

Tyler Durden Thu, 07/03/2025 - 06:30

These Are The US Cities With The Most And Least Health Insurance

In 2023, 92% or 305 million Americans had health insurance, either for some or all of the year.

Health insurance coverage varies widely across the country, shaped by differences in state policies, economic conditions, and local job markets.

This map, via Visual Capitalist's Kayla Zhu, shows the top and bottom U.S. metropolitan areas by share of residents with health insurance, based on data from the U.S. Census Bureau.

Data is for 2023 and shows the share of civilian noninstitutionalized population with health coverage, public or private.

Cities With the Highest Rates of Health Insurance Coverage

In this table, we show the top U.S. metro areas by share of residents with health insurance.

Amherst, Massachusetts was the most insured metro area in the U.S. in 2023, with 98.4% of its residents covered under some sort of health insurance.

The cities with the highest rates of health insurance coverage are mostly concentrated in Massachusetts—one of the top states by median income and average hourly wage—and the Midwest.

Massachusetts is also one of the most highly educated states, which has shown to have a correlation with health insurance coverage.

Cities With the Lowest Rates of Health Insurance Coverage

Below we show the bottom U.S. metro areas by share of residents with health insurance.

Laredo, a border city in Southern Texas was the metro area with the lowest share of residents with health insurance at 70.7%.

Texas dominates the bottom of the ranking, with 7 of the 10 lowest-coverage metro areas. Many border cities including Laredo, McAllen (74.7%), and Brownsville (76.5%) have some of the lowest rates of insured populations.

Texas is one of 10 states that did not expand Medicaid under the Affordable Care Act.

It also has some of the highest health care insurance costs in the country, which contributes to its relatively lower share of insured residents.

To learn health care insurance in the U.S., check out this graphic that visualizes life expectancy and health spending per capita across developed nations.

Tyler Durden Thu, 07/03/2025 - 05:45

This Is Where Millionaire Populations Are Growing

The number of millionaires rose fastest over the past 10 years in Montenegro, the United Arab Emirates and Malta, according to a new report by Henley & Partners. 

As Statista's Katharina Buchholz reports, the growth by up to 124 percent was largely driven by millionaires immigrating to the locations, the researchers concluded.

Malta's and Montenegro's investment for citizenship schemes are playing a role here as well as the two countries' mild climate and natural beauty which is attracting the super-rich and has led to a boom in luxury real estate and other lux offerings.

The United Arab Emirates has long been known as a luxury destination for expats and holiday-makers and like the two former countries also features a tax regime favorable to millionaires.

Poland, China and India meanwhile feature among the top 8 of the countries with the fastest-growing millionaire population in relative terms mostly independent of immigration.

You will find more infographics at Statista

All countries have experienced strong economic growth and modernization over the course of the past decades.

Their large workforces have attracted foreign and domestic investments as the nations are moving toward middle and high income status. China and India, however, also feature among the countries with the largest net emigration of millionaires, surpassed in 2024 only by the United Kingdom.

Tyler Durden Thu, 07/03/2025 - 04:15

This Is Where Millionaire Populations Are Growing

The number of millionaires rose fastest over the past 10 years in Montenegro, the United Arab Emirates and Malta, according to a new report by Henley & Partners. 

As Statista's Katharina Buchholz reports, the growth by up to 124 percent was largely driven by millionaires immigrating to the locations, the researchers concluded.

Malta's and Montenegro's investment for citizenship schemes are playing a role here as well as the two countries' mild climate and natural beauty which is attracting the super-rich and has led to a boom in luxury real estate and other lux offerings.

The United Arab Emirates has long been known as a luxury destination for expats and holiday-makers and like the two former countries also features a tax regime favorable to millionaires.

Poland, China and India meanwhile feature among the top 8 of the countries with the fastest-growing millionaire population in relative terms mostly independent of immigration.

You will find more infographics at Statista

All countries have experienced strong economic growth and modernization over the course of the past decades.

Their large workforces have attracted foreign and domestic investments as the nations are moving toward middle and high income status. China and India, however, also feature among the countries with the largest net emigration of millionaires, surpassed in 2024 only by the United Kingdom.

Tyler Durden Thu, 07/03/2025 - 04:15

The Latest Trouble In Russian-Azerbaijani Relations Might Be Part Of A Turkish-US Powerplay

Authored by Andrew Korybko via Substack,

Turkiye sees an opportunity to turbocharge its rise as a Eurasian Great Power along Russia’s entire southern periphery in ways that autonomously align with American grand strategic interests...

Russian-Azerbaijani relations are in trouble as a result of two scandals. The first concerns the recent police raid against suspected ethnic Azeri criminals in Yekaterinburg, during which time two of them died in circumstances that are now being investigated. That prompted Baku to officially complain to Moscow, after which a vicious infowar campaign was launched on social media and even among some publicly financed outlets as well alleging that Russia is “Islamophobic”, “imperialist”, and “persecuting Azeris”.

This was shortly thereafter followed by a police raid on Sputnik’s office in Baku, which had been operating in a legal gray zone after the authorities moved to effectively shut it down in February, thus resulting in the detainment of several Russians. That earlier decision was suspected to be connected to Azerbaijan’s displeasure with Russia’s response to late December’s airline tragedy in the North Caucasus that was caused by a Ukrainian drone attack at the time. Readers can learn more about it here and here.

Before determining who’s responsible for the latest trouble in bilateral ties, it’s important to recall the larger context within which all of this is unfolding. Prior to late December’s incident, Russian-Azerbaijani relations were proceeding along a very positive trajectory in accordance with the strategic partnership pact that President Ilham Aliyev agreed to with Putin on the eve of the special operation in late February 2022. That built upon Russia’s role in mediating an end to the Second Karabakh War in November 2020.

More recently, Putin visited Baku last August, the significance of which was analyzed here and here. This was followed by Aliyev visiting Moscow in October in connection with the CIS Heads of State Summit. Shortly before late December’s airline tragedy, Aliyev then gave an extended interview to Rossiya Segodnya head Dmitry Kiselyov in Baku, where he elaborated on Azerbaijan’s multi-aligned foreign policy and newfound suspicions of the West’s regional intentions towards the South Caucasus.

On that topic, the Biden Administration sought to exploit Armenia’s loss in the Second Karabakh War to more radically turn it against Russia and thus transform the country into a joint French-US protectorate for dividing-and-ruling the region, which worsened relations with Azerbaijan. The Trump Administration appears to be reconsidering that, however, and might have even agreed to let Armenia become a joint Azeri-Turkish protectorate instead. It’s this perception that’s driving the latest unrest in Armenia.

From Russia’s perspective, the French-US protectorate scenario could spark another regional war that might spiral out of control with unpredictable consequences for Moscow if they weaponize the revival of Armenian revanchism. Similarly, the Azeri-Turkish protectorate scenario could turbocharge Turkiye’s rise as a Eurasian Great Power if it leads to an expansion of its influence (especially military) in Central Asia. The ideal scenario is therefore for Armenia to return to its traditional status as a Russian ally.

Having explained the context within which the latest trouble is unfolding, it’s now time to determine who’s responsible. Objectively speaking, the Azerbaijani authorities overreacted to the recent police raid in Yekaterinburg, which signaled to civil society that it’s acceptable (at least for now) to wage a vicious infowar campaign against Russia. Some officials with an unclear connection to Aliyev then authorized the raid on Sputnik’s office as an escalation under the implied pretext of an asymmetrical response.

Given the ambiguity about Aliyev’s role in Azerbaijan’s overreactions, it’s premature to conclude that he decided to jeopardize the strategic ties with Russia that he himself cultivated, though he must still take responsibility even if mid-level officials did this on their own. That’s because Baku’s official complaint to Moscow and its raid on Sputnik’s office are state actions, unlike the recent police raid in Yekaterinburg, which is a local action. He’ll thus likely have to talk to Putin sometime soon to resolve everything.

The abovementioned observation doesn’t explain why mid-level officials might have overreacted to the Yekaterinburg police raid, which can be attributed to the deep-seated resentment that some have against Russia and speculative foreign influence. Regarding the first, some Azerbaijanis (but importantly not all and seemingly not the majority) harbor such sentiments, while the second might be linked to the scenario of the US letting Armenia becoming a joint Azeri-Turkish protectorate.

To elaborate, the US and France would struggle to turn Armenia into their own joint protectorate due to Georgia successfully repelling several rounds of Biden-era Color Revolution unrest, which aimed to pressure the government into opening up a “second front” against Russia and toppling it if it refused.

The military logistics required for turning Armenia into a bastion from which they could then divide-and-rule the region therefore are no longer reliable since they could only realistically run through Georgia.

Accordingly, the Trump Administration might have decided to cut their predecessor’s strategic losses by “giving” Armenia to Turkiye and Azerbaijan, which would repair the troubled ties that he inherited with both. In exchange, the US might have requested that they take a harder line towards Russia if the opportunity emerges, knowing that neither will sanction it since that would harm their own economies but hoping that a future situation would develop to serve as the pretext for escalating political tensions.

Mid-level officials wouldn’t be privy to such talks, but the aforesaid speculative request could have trickled down to them from their superiors, some of whom might have implied state approval for overreacting to any forthcoming “opportunity”. This sequence of events could bestow Aliyev with the ability to “plausibly deny” his role in events as part of a de-escalation deal with Putin. The whole purpose of this charade might be to signal to Russia that a new order is forming in the broader region.

As was earlier explained, that order could be a Turkish-led one upon Ankara and Baku subordinating Armenia as their joint protectorate, after which they’d streamline military logistics across its territory to turn the “Organization of Turkic States” (OTS) into a major force along Russia’s entire southern periphery. To be clear, the OTS isn’t controlled by the West, but its Turkish leader and increasingly equal Azerbaijani partner could still autonomously advance the West’s strategic agenda vis-à-vis Russia in that scenario.

Just like the US and France have unreliable military logistics to Armenia, so too does Russia, so it could struggle to deter an Azerbaijani(-Turkish?) invasion of its nominal but wayward CSTO ally if Baku (and Ankara?) exploits its latest unrest (such as if Prime Minister Nikol Pashinyan falls). Moreover, the most optimal branch of the North-South Transport Corridor (NSTC) runs through Azerbaijan, which could block it if Russia takes decisive action in defense of Armenia (however limited due to the special operation).

To be clear, Russia has no intention to fight Azerbaijan, but Azerbaijan’s overreaction to the recent police raid in Yekaterinburg might be a ploy to preemptively craft the perception that Russia “backed down” as a result if Moscow doesn’t take decisive action to deter Baku if regional tensions over Armenia worsen. Had it not been for that raid, then perhaps some other pretext would have been exploited or concocted, but the point is that Russia and Azerbaijan have polar opposite visions of Armenia’s geopolitical future.

That same future is pivotal for the future of the broader region as was written, but Russia has limited means for shaping the course of events due to its complex strategic interdependence with Azerbaijan vis-à-vis the NSTC and its understandable military prioritization of the special operation. The preceding constraints are self-evident, and Aliyev (and Erdogan?) might be preparing to take advantage of them, emboldened as he(/they?) might be by Russia’s perceived setback in Syria after Assad’s downfall.

Azerbaijan is aware of its irreplaceable role in turbocharging allied Turkiye’s rise as Eurasian Great Power, which is dependent on subordinating Armenia in order to then streamline the OTS’ military logistics between Asia Minor and Central Asia via the South Caucasus. If Aliyev came to believe that his country has a brighter future as part of a Turkish-led regional order instead of a Russian-led one, especially if the US signaled approval of this as speculated, then Baku’s overreaction to recent events makes more sense.

The Moscow-mediated Armenian-Azerbaijani ceasefire of November 2020 calls for the creation of a Russian-controlled corridor across Armenia’s southern Syunik Province, which Baku calls the “Zangezur Corridor”, for connecting both parts of Azerbaijan. Pashinyan hitherto refused to implement this due to pressure from the West and the Armenian diaspora therein, but if Trump decided to “give” Armenia to Azerbaijan and Turkiye instead, then he might do it but only after squeezing Russia out of this route.

Russian control would prevent Turkiye from streamlining its military logistics to Central Asia through this corridor for the purpose of replacing Russia’s influence there with its own as part of a grand strategic powerplay that autonomously aligns with the Western agenda in the pivotal Eurasian Heartland. Azerbaijan (and Turkiye?) might therefore invade Syunik if their envisaged client Pashinyan either flip-flops on squeezing Russia out or before Russia is invited into there by a new government if he falls.

The consequences of Turkiye obtaining unhindered military access to Central Asia through either sequence of events could be disastrous for Russia since its influence there is already being challenged by Turkiye, the EU, and even the UK, which just signed a two-year military agreement with Kazakhstan. That country, with whom Russia shares the longest land border in the world, has been pivoting towards the West as was assessed here in summer 2023 and this troubling trend could easily accelerate in that event.

Reflecting on all this insight, the latest trouble in Russian-Azerbaijani relations might therefore be part of a Turkish-US powerplay, one which Trump could have agreed to with Erdogan and Aliyev later jumped on board but might still have his doubts. That would account for his “plausibly deniable” role in Azerbaijan’s overreaction to recent events. If taken to its conclusion, this powerplay could risk Azerbaijan becoming Turkiye’s junior partner with time, which he’s thus far sought to avoid through his multi-alignment policy.

If that’s the case, then it might not be too late for Putin to avert this scenario so long as he can convince Aliyev that Azerbaijan has a brighter future as part of a different regional order, one that would center on Azerbaijan continuing its Russo-Turkish balancing act instead of turbocharging Turkiye’s rise. The NSTC could figure prominently in this paradigm, but the problem is that Azerbaijan’s ties with Iran and India are very strained right now, so he’d have to prospectively mediate a rapprochement for this to happen.

Anyhow, the point is that it’s premature to assume that the latest trouble in Russian-Azerbaijani relations is the new normal or that it might even precede a seemingly inevitable crisis, though both possibilities are nonetheless credible and should be taken seriously by the Kremlin just in case. The best-case scenario is that Aliyev and Putin soon hold a call to amicably resolve the issues that have abruptly toxified their ties otherwise the worst might be yet to come and it could be disadvantageous for both.

Tyler Durden Thu, 07/03/2025 - 03:30

The Latest Trouble In Russian-Azerbaijani Relations Might Be Part Of A Turkish-US Powerplay

Authored by Andrew Korybko via Substack,

Turkiye sees an opportunity to turbocharge its rise as a Eurasian Great Power along Russia’s entire southern periphery in ways that autonomously align with American grand strategic interests...

Russian-Azerbaijani relations are in trouble as a result of two scandals. The first concerns the recent police raid against suspected ethnic Azeri criminals in Yekaterinburg, during which time two of them died in circumstances that are now being investigated. That prompted Baku to officially complain to Moscow, after which a vicious infowar campaign was launched on social media and even among some publicly financed outlets as well alleging that Russia is “Islamophobic”, “imperialist”, and “persecuting Azeris”.

This was shortly thereafter followed by a police raid on Sputnik’s office in Baku, which had been operating in a legal gray zone after the authorities moved to effectively shut it down in February, thus resulting in the detainment of several Russians. That earlier decision was suspected to be connected to Azerbaijan’s displeasure with Russia’s response to late December’s airline tragedy in the North Caucasus that was caused by a Ukrainian drone attack at the time. Readers can learn more about it here and here.

Before determining who’s responsible for the latest trouble in bilateral ties, it’s important to recall the larger context within which all of this is unfolding. Prior to late December’s incident, Russian-Azerbaijani relations were proceeding along a very positive trajectory in accordance with the strategic partnership pact that President Ilham Aliyev agreed to with Putin on the eve of the special operation in late February 2022. That built upon Russia’s role in mediating an end to the Second Karabakh War in November 2020.

More recently, Putin visited Baku last August, the significance of which was analyzed here and here. This was followed by Aliyev visiting Moscow in October in connection with the CIS Heads of State Summit. Shortly before late December’s airline tragedy, Aliyev then gave an extended interview to Rossiya Segodnya head Dmitry Kiselyov in Baku, where he elaborated on Azerbaijan’s multi-aligned foreign policy and newfound suspicions of the West’s regional intentions towards the South Caucasus.

On that topic, the Biden Administration sought to exploit Armenia’s loss in the Second Karabakh War to more radically turn it against Russia and thus transform the country into a joint French-US protectorate for dividing-and-ruling the region, which worsened relations with Azerbaijan. The Trump Administration appears to be reconsidering that, however, and might have even agreed to let Armenia become a joint Azeri-Turkish protectorate instead. It’s this perception that’s driving the latest unrest in Armenia.

From Russia’s perspective, the French-US protectorate scenario could spark another regional war that might spiral out of control with unpredictable consequences for Moscow if they weaponize the revival of Armenian revanchism. Similarly, the Azeri-Turkish protectorate scenario could turbocharge Turkiye’s rise as a Eurasian Great Power if it leads to an expansion of its influence (especially military) in Central Asia. The ideal scenario is therefore for Armenia to return to its traditional status as a Russian ally.

Having explained the context within which the latest trouble is unfolding, it’s now time to determine who’s responsible. Objectively speaking, the Azerbaijani authorities overreacted to the recent police raid in Yekaterinburg, which signaled to civil society that it’s acceptable (at least for now) to wage a vicious infowar campaign against Russia. Some officials with an unclear connection to Aliyev then authorized the raid on Sputnik’s office as an escalation under the implied pretext of an asymmetrical response.

Given the ambiguity about Aliyev’s role in Azerbaijan’s overreactions, it’s premature to conclude that he decided to jeopardize the strategic ties with Russia that he himself cultivated, though he must still take responsibility even if mid-level officials did this on their own. That’s because Baku’s official complaint to Moscow and its raid on Sputnik’s office are state actions, unlike the recent police raid in Yekaterinburg, which is a local action. He’ll thus likely have to talk to Putin sometime soon to resolve everything.

The abovementioned observation doesn’t explain why mid-level officials might have overreacted to the Yekaterinburg police raid, which can be attributed to the deep-seated resentment that some have against Russia and speculative foreign influence. Regarding the first, some Azerbaijanis (but importantly not all and seemingly not the majority) harbor such sentiments, while the second might be linked to the scenario of the US letting Armenia becoming a joint Azeri-Turkish protectorate.

To elaborate, the US and France would struggle to turn Armenia into their own joint protectorate due to Georgia successfully repelling several rounds of Biden-era Color Revolution unrest, which aimed to pressure the government into opening up a “second front” against Russia and toppling it if it refused.

The military logistics required for turning Armenia into a bastion from which they could then divide-and-rule the region therefore are no longer reliable since they could only realistically run through Georgia.

Accordingly, the Trump Administration might have decided to cut their predecessor’s strategic losses by “giving” Armenia to Turkiye and Azerbaijan, which would repair the troubled ties that he inherited with both. In exchange, the US might have requested that they take a harder line towards Russia if the opportunity emerges, knowing that neither will sanction it since that would harm their own economies but hoping that a future situation would develop to serve as the pretext for escalating political tensions.

Mid-level officials wouldn’t be privy to such talks, but the aforesaid speculative request could have trickled down to them from their superiors, some of whom might have implied state approval for overreacting to any forthcoming “opportunity”. This sequence of events could bestow Aliyev with the ability to “plausibly deny” his role in events as part of a de-escalation deal with Putin. The whole purpose of this charade might be to signal to Russia that a new order is forming in the broader region.

As was earlier explained, that order could be a Turkish-led one upon Ankara and Baku subordinating Armenia as their joint protectorate, after which they’d streamline military logistics across its territory to turn the “Organization of Turkic States” (OTS) into a major force along Russia’s entire southern periphery. To be clear, the OTS isn’t controlled by the West, but its Turkish leader and increasingly equal Azerbaijani partner could still autonomously advance the West’s strategic agenda vis-à-vis Russia in that scenario.

Just like the US and France have unreliable military logistics to Armenia, so too does Russia, so it could struggle to deter an Azerbaijani(-Turkish?) invasion of its nominal but wayward CSTO ally if Baku (and Ankara?) exploits its latest unrest (such as if Prime Minister Nikol Pashinyan falls). Moreover, the most optimal branch of the North-South Transport Corridor (NSTC) runs through Azerbaijan, which could block it if Russia takes decisive action in defense of Armenia (however limited due to the special operation).

To be clear, Russia has no intention to fight Azerbaijan, but Azerbaijan’s overreaction to the recent police raid in Yekaterinburg might be a ploy to preemptively craft the perception that Russia “backed down” as a result if Moscow doesn’t take decisive action to deter Baku if regional tensions over Armenia worsen. Had it not been for that raid, then perhaps some other pretext would have been exploited or concocted, but the point is that Russia and Azerbaijan have polar opposite visions of Armenia’s geopolitical future.

That same future is pivotal for the future of the broader region as was written, but Russia has limited means for shaping the course of events due to its complex strategic interdependence with Azerbaijan vis-à-vis the NSTC and its understandable military prioritization of the special operation. The preceding constraints are self-evident, and Aliyev (and Erdogan?) might be preparing to take advantage of them, emboldened as he(/they?) might be by Russia’s perceived setback in Syria after Assad’s downfall.

Azerbaijan is aware of its irreplaceable role in turbocharging allied Turkiye’s rise as Eurasian Great Power, which is dependent on subordinating Armenia in order to then streamline the OTS’ military logistics between Asia Minor and Central Asia via the South Caucasus. If Aliyev came to believe that his country has a brighter future as part of a Turkish-led regional order instead of a Russian-led one, especially if the US signaled approval of this as speculated, then Baku’s overreaction to recent events makes more sense.

The Moscow-mediated Armenian-Azerbaijani ceasefire of November 2020 calls for the creation of a Russian-controlled corridor across Armenia’s southern Syunik Province, which Baku calls the “Zangezur Corridor”, for connecting both parts of Azerbaijan. Pashinyan hitherto refused to implement this due to pressure from the West and the Armenian diaspora therein, but if Trump decided to “give” Armenia to Azerbaijan and Turkiye instead, then he might do it but only after squeezing Russia out of this route.

Russian control would prevent Turkiye from streamlining its military logistics to Central Asia through this corridor for the purpose of replacing Russia’s influence there with its own as part of a grand strategic powerplay that autonomously aligns with the Western agenda in the pivotal Eurasian Heartland. Azerbaijan (and Turkiye?) might therefore invade Syunik if their envisaged client Pashinyan either flip-flops on squeezing Russia out or before Russia is invited into there by a new government if he falls.

The consequences of Turkiye obtaining unhindered military access to Central Asia through either sequence of events could be disastrous for Russia since its influence there is already being challenged by Turkiye, the EU, and even the UK, which just signed a two-year military agreement with Kazakhstan. That country, with whom Russia shares the longest land border in the world, has been pivoting towards the West as was assessed here in summer 2023 and this troubling trend could easily accelerate in that event.

Reflecting on all this insight, the latest trouble in Russian-Azerbaijani relations might therefore be part of a Turkish-US powerplay, one which Trump could have agreed to with Erdogan and Aliyev later jumped on board but might still have his doubts. That would account for his “plausibly deniable” role in Azerbaijan’s overreaction to recent events. If taken to its conclusion, this powerplay could risk Azerbaijan becoming Turkiye’s junior partner with time, which he’s thus far sought to avoid through his multi-alignment policy.

If that’s the case, then it might not be too late for Putin to avert this scenario so long as he can convince Aliyev that Azerbaijan has a brighter future as part of a different regional order, one that would center on Azerbaijan continuing its Russo-Turkish balancing act instead of turbocharging Turkiye’s rise. The NSTC could figure prominently in this paradigm, but the problem is that Azerbaijan’s ties with Iran and India are very strained right now, so he’d have to prospectively mediate a rapprochement for this to happen.

Anyhow, the point is that it’s premature to assume that the latest trouble in Russian-Azerbaijani relations is the new normal or that it might even precede a seemingly inevitable crisis, though both possibilities are nonetheless credible and should be taken seriously by the Kremlin just in case. The best-case scenario is that Aliyev and Putin soon hold a call to amicably resolve the issues that have abruptly toxified their ties otherwise the worst might be yet to come and it could be disadvantageous for both.

Tyler Durden Thu, 07/03/2025 - 03:30