October 31, 2025: Far From It

The S&P500 added 0.7% (up 16.3% y-t-d), and the Dow increased 0.8% (up 11.8%). The Utilities dropped 2.5% (up 17.7%). The Banks were unchanged (up 17.5%), while the Broker/Dealers declined 0.7% (up 29.1%). The Transports jumped 2.8% (unchanged). The S&P 400 Midcaps fell 1.6% (up 4.0%), and the small cap Russell 2000 lost 1.4% (up 11.2%). The Nasdaq100 rose 2.0% (up 23.1%). The Semiconductors surged 3.6% (up 45.2%). The Biotechs advanced 1.5% (up 16.6%). With bullion down $110, the HUI gold index declined 1.5% (up 110.8%).

Three-month Treasury bill rates ended the week at 3.715%. Two-year government yields jumped nine bps to 3.57% (down 67bps y-t-d). Five-year T-note yields rose eight bps to 3.69% (down 69bps). Ten-year Treasury yields gained eight bps to 4.08% (down 49bps). Long bond yields increased six bps to 4.65% (down 13bps). Benchmark Fannie Mae MBS yields jumped 12 bps to 5.12% (down 72bps).

Italian 10-year yields declined three bps to 3.38% (down 14bps y-t-d). Greek 10-year yields slipped two bps to 3.26% (up 4bps). Spain’s 10-year yields declined two bps to 3.14% (up 8bps). German bund yields added a basis point to 2.63% (up 27bps). French yields dipped one basis point to 3.42% (up 23bps). The French to German 10-year bond spread narrowed about two to 79 bps. U.K. 10-year gilt yields fell two bps to 4.41% (down 16bps). U.K.’s FTSE equities index increased 0.7% (up 18.9% y-t-d).

Japan’s Nikkei 225 Equities Index surged 6.3% (up 31.4% y-t-d). Japan’s 10-year “JGB” yield added a basis point to 1.67% (up 57bps y-t-d). France’s CAC40 declined 1.3% (up 10.0%). The German DAX equities index fell 1.2% (up 20.3%). Spain’s IBEX 35 equities index added 1.1% (up 38.3%). Italy’s FTSE MIB index gained 1.6% (up 26.3%). EM equities were mostly higher. Brazil’s Bovespa index rose 2.3% (up 24.3%), and Mexico’s Bolsa index jumped 2.6% (up 26.8%). South Korea’s Kospi surged another 4.2% (up 71.2%). India’s Sensex equities index slipped 0.3% (up 6.9%). China’s Shanghai Exchange Index was little changed (up 18.0%). Turkey’s Borsa Istanbul National 100 index added 0.3% (up 11.6%).

Federal Reserve Credit declined $4.4 billion last week to $6.541 TN. Fed Credit was down $2.349 TN from the June 22, 2022, peak. Over the past 320 weeks, Fed Credit expanded $2.814 TN, or 76%. Fed Credit inflated $3.730 TN, or 133%, over 677 weeks. Elsewhere, Fed holdings for foreign owners of Treasury, Agency Debt recovered $23.3 billion last week to $3.085 TN. “Custody holdings” were down $244 billion y-o-y, or 7.3%.

Total money market fund assets (MMFA) rose another $20.6 billion to a record $7.418 TN (9-wk gain $212bn). MMFA were up $912 billion, or 14.0%, y-o-y – and ballooned a historic $2.834 TN, or 61.8%, since October 26, 2022.

Total Commercial Paper gained $8.0bn to $1.329 TN. CP has expanded $241 billion y-t-d and $146 billion, or 12.4%, y-o-y.

Freddie Mac 30-year fixed mortgage rates slipped two bps to a one-year low 6.17% (down 55bps y-o-y). Fifteen-year rates dipped three bps to 5.41% (down 58bps). Bankrate’s survey of jumbo mortgage borrowing costs had 30-year fixed rates down six bps to 6.44% (down 89bps).

Currency Watch:

October 27 – Bloomberg (Youkyung Lee, Susie Kang, and Ruth Carson): “Kim Ji-yeon is so worried about South Korea’s currency that she’s moving all the money she can into US stocks and gold. A key reason: Korea’s pledge to invest $350 billion in the US, a figure that has stoked fears of spiraling losses in the currency. ‘The Korean won is turning into toilet paper,’ said Kim, a 32-year-old office worker… Kim is joining a rush among Korea’s 14 million mom-and-pop investors, whose march to overseas markets risks turning into an exodus. Their holdings of US stocks and bonds hit $184 billion this month… the highest on record.”

For the week, the U.S. Dollar Index gained 0.9% to 99.804 (down 8.0% y-t-d). On the upside, the South Korean won increased 0.6%, the Australian dollar 0.5%, and the Brazilian real 0.2%. On the downside, the British pound declined 1.2%, the Swiss franc 1.1%, the Norwegian krone 1.1%, the Swedish krona 1.0%, the euro 0.8%, the Japanese yen 0.7%, the Mexican peso 0.5%, the New Zealand dollar 0.5%, the South African rand 0.4%, the Singapore dollar 0.2%, and the Canadian dollar 0.1%. The Chinese (onshore) renminbi increased 0.04% versus the dollar (up 2.53% y-t-d).

Commodities Watch:

October 29 – Bloomberg (Preeti Soni and Sybilla Gross): “Central banks accelerated gold purchases in the third quarter… The 220 tons purchased in the July-September period marked a 28% increase over the preceding quarter and reversed a slowdown in the early part of the year, according to… the World Gold Council. The National Bank of Kazakhstan was the largest single buyer, while Brazil’s central bank bought gold for the first time in more than four years.”

October 29 – Wall Street Journal (Giulia Petroni): “Copper prices on the London Metal Exchange climbed to a record high Wednesday, driven by concerns over global supply after a series of disruptions at major mines and weaker forecasts from leading producers.”

The Bloomberg Commodities Index was little changed (up 8.6% y-t-d). Spot Gold declined 2.7% to $4,003 (up 52.5%). Silver was about unchanged at $48.6894 (up 68.5%). WTI crude slipped 52 cents, or 0.8%, to $60.98 (down 15%). Gasoline rose 1.7% (down 6%), and Natural Gas surged 24.8% to $4.124 (up 14%). Copper dipped 0.7% (up 26%). Wheat rallied 4.2% (down 3%), and Corn gained 1.9% (down 6%). Bitcoin declined $900, or 0.8%, to $110,230 (up 17.6%).

Market Instability Watch:

October 26 – Financial Times (Sam Fleming, Amy Kazmin, and Claire Jones): “The US government’s debt burden is on track to exceed levels in both Italy and Greece for the first time this century, according to IMF forecasts… General government gross debt in the US will rise by more than 20 percentage points from now to reach 143.4% of the country’s GDP by the final year of the decade, IMF forecasts show… That comes as the IMF estimates that the US budget deficit will hover above 7% of GDP every year until 2030 — the highest of any rich nation tracked by the fund for this year and the rest of the decade.”

October 31 – Bloomberg (Greg Ritchie, Alexandra Harris and Wenjin Lv): “Pockets of global money markets are coming under strain as central banks have been pulling back easy money policies just as governments are boosting debt issuance, luring cash away from the financial system. Key gauges of secured borrowing have risen in the US and UK, reaching levels not seen in years. While the drivers in each case may differ, the signs of tighter liquidity are flashing across markets. The ripples suggest a normalization after years of central bank bond purchases flooded funding markets with excess cash. But investors are also wary of risks, such as a repeat of the spike in US short-term interest rates that rocked markets in September 2019 — prompting the Federal Reserve to pump half a trillion dollars into the financial system.”

October 29 – Bloomberg (Swati Pandey): “Australian Treasurer Jim Chalmers said global investors are on edge and capital flows are ‘jumpy’ as uncertainty builds over whether the world economy can withstand mounting headwinds or will slip into a correction. During a recent trip to North America and Asia, Chalmers said economic uncertainty was the major focus of discussions with international counterparts and major investors. He pointed to a massive surge in gold prices this year to underline the point. ‘What came through clearly in almost every conversation was that risks to the global economic outlook are accumulating – from every angle, all at once,’ Chalmers said… ‘Geopolitical tensions. Strains and stresses in financial markets. And the complex transitions underway in our economies, across energy, technology and demography.’”

U.S. Credit Trouble Watch:

October 28 – Bloomberg (Aaron Weinman, Jeannine Amodeo, and Eliza Ronalds-Hannon): “Healthcare services firm Sevita is withdrawing a $2.5 billion leveraged loan sale, according to people familiar with the matter, the latest multibillion-dollar deal to be pulled as investors ramp up their scrutiny of borrowers. Sevita is now weighing a revised sale in the loan and junk-bond markets in December, after it presents audited financial statements for the fiscal year ended Sept. 30 to prospective investors, said the people…”

October 31 – Bloomberg (Kat Hidalgo, Neil Callanan and Olivia Fishlow): “It was supposed to be a quick fix for a sudden problem in credit markets. Payment-in-kind debt, the argument went, would give struggling borrowers breathing room to deal with soaring interest rates — by letting them push back payments until the debt itself had to be repaid. But the pile of this expensive debt keeps on swelling, and is now raising concern in some circles that private credit funds are using PIK to mask a deterioration in loan quality.”

October 30 – Bloomberg (Francesca Veronesi and Kat Hidalgo): “Private credit firms are in the business of lending, not owning. But as more borrowers start to struggle with their liabilities, lenders are swapping their debt positions for equity stakes to try and stem losses. There’s been a string of debt-for-equity swaps in recent weeks, including for British auction house Bonhams, telecommunications supplier Netceed, Italian sportswear maker Dainese and French radiology-center specialist Oradianse. While these swaps can produce upside, the original investment was designed to be a loan that provided stable income over time, rather than an equity play. The latter requires a different set of skills and offers more unpredictable returns.”

October 30 – Bloomberg (Dorothea Quallis, Kyle Ashworth and Todd Cooper): “The boom in CLO exchange-traded funds cooled in October as a flagship fund saw its biggest outflow since April. The Janus Henderson AAA CLO ETF, which invests in the highest-rated collateralized loan obligations, saw a monthly outflow of $537 million as the bankruptcy of First Brands cast a spotlight on credit risks.”

October 29 – Bloomberg (Eliza Ronalds-Hannon, Scott Carpenter, and Natalie Wong): “A distressed-debt fund is seizing control of one of the largest malls in America after a series of moves that wiped out some creditors and even left holders of bonds once rated AAA nursing steep losses. The trade was set in motion after Black Diamond Capital Management bought more than 70% of the top-ranking slice in a commercial mortgage-backed security tied to the struggling Palisades Center shopping mall in West Nyack, New York. The firm then used its position to acquire the sole mortgage backing the CMBS at a discount, triggering the bond’s liquidation…”

October 30 – Bloomberg (Todd Gillespie): “The mounting level of US debt risks a ‘reckoning’ for the economy if the pace of growth doesn’t improve, according to the chief executive of Goldman Sachs… ‘If we continue on the current course and we don’t take the growth level up, there will be a reckoning,’ David Solomon said… ‘The path out is a growth path.’”

First Brands Ramifications Watch:

October 31 – Bloomberg (Jonathan Randles): “A group of First Brands lenders have accused the auto parts supplier of ‘widespread fraud’ and are seeking to end part of the auto parts supplier’s bankruptcy. Lenders to certain First Brands-related special purpose vehicles said in a… court filing that besides existing allegations that the company double-pledged assets, new information has come to light indicating the business ‘made misrepresentations in numerous financial statements, credit agreements, and borrowing base certificates.’”

October 28 – Bloomberg (Amedeo Goria): “Goldman Sachs… Chief Executive Officer David Solomon downplayed concerns that have surfaced following the collapse of US firms First Brands Group and Tricolor Holdings, and said he doesn’t see any systemic risk looming in the credit market. ‘I don’t see anything in the context of a handful of bad credit situations that’s leading me to say we have a systemic issue around the corner,’ Solomon said… He reiterated his comments that the recent losses at regional banks tied to alleged fraud were ‘idiosyncratic events’…”

Global Credit and Financial Bubble Watch:

October 26 – Bloomberg (Heesu Lee, Shery Ahn, and Soo-hyang Choi): “South Korean President Lee Jae Myung warned that the country’s property market is a bubble on the point of bursting, as he backed the Bank of Korea’s decision to hold rates last week. Amid concerns that cheaper borrowing may further fuel the rally in property prices, Lee said it was imperative to avoid triggering the kind of economic malaise that afflicted Japan for decades. ‘The truth is, the Republic of Korea is sitting on a very dangerous potential crisis, a ticking bomb — that is excessive real estate investment,’ Lee told Bloomberg… ‘If we were to lower interest rates, this could stimulate real estate prices, which is already an issue for us. The BOK made the right decision by keeping rates unchanged instead of cutting them.’”

October 28 – Financial Times (Sarah White): “BNP Paribas… said it suffered a €190mn hit from a fraud case involving an unidentified client, as increased provisions against soured loans overshadowed its third-quarter results… BNP only referred to a ‘specific credit event’ in its earnings statement but later confirmed some details of what it said was a ‘fraud case’ affecting its global markets unit in a call with analysts.”

October 30 – Bloomberg (Brian W Smith and Caleb Mutua): “BlackRock Inc. and other creditors are grappling with the fallout from loans made to two telecom firms that the companies are now accusing of fraud. Lenders are suing Broadband Telecom and Bridgevoice, accusing the firms of fabricating accounts receivable in a fraud that the collateral agent’s lawyers call ‘breathtaking’ in scope… BNP Paribas SA helped BlackRock’s private-credit arm, HPS, make the loans…”

October 28 – The UK Times: “HSBC’s chief financial officer has warned that the bank is on high alert for difficulties experienced by hedge funds and smaller banks exposed to private credit losses… ‘The thing that worries me most is the second and third order risks from counterparties that might be affected,’ Kaur said. Smaller institutions might not have the loss absorbing capacity to withstand a high level of defaults by borrowers, she added. This was ‘a prime area of focus for us’.’”

October 27 – Bloomberg (Taiga Uranaka): “Norinchukin Bank isn’t letting recent credit blowups in the US deter it from a plan to increase investments in the space. The agricultural lender, one of Japan’s biggest institutional investors, remains sanguine over corporate and household credit in the US, according to its Chief Investment Officer Katsuhiko Ushikubo. ‘We won’t stop investment,’ he said…”

October 27 – Bloomberg (Loukia Gyftopoulou and Preeti Singh): “Scene: The Gold Rush, 1849. Prospectors gaze up at a snow-capped peak. ‘Now let’s go get that gold!’ a newcomer exclaims, trudging up the trail to the twang of spaghetti-western music. ‘I got a better idea,’ says another. His brainstorm: Rather than hunt for gold, they’ll get rich selling picks and shovels. Welcome to ‘Blackstone Town,’ as a crew member later calls it – the set of an old-timey TV western that’s been repurposed for, of all things, an advertisement for the world’s largest private equity firm. Long the preserve of institutions and the wealthy, Blackstone Inc., Apollo Global Management Inc., Carlyle Group Inc. and other industry giants today are rushing to sell their rarefied brand of investing to everyday Americans.”

Trump Administration Watch:

October 26 – Wall Street Journal (Editorial Board): “The MAGA crowd likes to dismiss Ronald Reagan as irrelevant today, but apparently he still matters to President Trump. How else to explain Mr. Trump’s tantrum against Canada after the province of Ontario invoked the Gipper on trade in a television ad? The Ontario government had the temerity to buy ad time to run clips of Reagan’s 1987 remarks warning about the dangers of protectionism. Mr. Trump pitched a social-media fit in response…, claiming Ontario ‘fraudulently used an advertisement, which is FAKE, featuring Ronald Reagan speaking negatively about Tariffs’… Ontario then said it would pull the ad, but when it still ran during sporting events on the weekend, Mr. Trump escalated with an additional 10% tariff on Canadian goods on top of the taxes he has already imposed.”

October 26 – Wall Street Journal (Alexander Ward, Gabriele Steinhauser and Meridith McGraw): “World leaders have developed something of a blueprint for President Trump when he comes to visit: produce a lavish welcoming ceremony and launch a charm offensive in hopes of securing relief from U.S. tariffs and demands to spend more on defense. Recent overseas trips have involved escorting Air Force One with jet fighters during its final approach and lining red carpets with uniformed soldiers and traditional dancers. Upon Trump’s arrival, foreign hosts often exalt him for his role in reaching a significant trade or peace deal. There have been repeated pledges to nominate the president for the Nobel Peace Prize.”

October 28 – Reuters (Trevor Hunnicutt and Susan Heavey): “U.S. President Donald Trump… said there was a long list of people who could take over the Federal Reserve, slamming current chairman Jerome Powell as the central bank prepared to meet this week. ‘We have an incompetent head of the Fed… we got a bad Fed guy, but he’ll be out of there in a few months, and we’ll get somebody new,’ Trump told business leaders at a dinner in Tokyo… Powell’s term ends in May.”

October 26 – Bloomberg (Emily Birnbaum and Bill Allison): “President Donald Trump is constructing a $300 million White House ballroom with the force of a political campaign, tapping his former campaign finance director to raise money for the high-profile but controversial project… The ballroom donors so far include some of the largest tech companies in the world — Amazon.com Inc., Microsoft Corp., Alphabet Inc.’s Google, and Meta Platforms Inc. — as well as major crypto firms like Coinbase Inc., Ripple Labs Inc. and Tether Holdings Ltd… Other contributors include longtime Trump donors like billionaires Steve Schwarzman and Miriam Adelson.”

October 31 – Miami Herald (Antonio María Delgado): “The Trump Administration has made the decision to attack military installations inside Venezuela and the strikes could come at any moment, sources with knowledge… told the Miami Herald, as the U.S. prepares to initiate the next stage of its campaign against the Soles drug cartel. The planned attacks… will seek to destroy military installations used by the drug-trafficking organization the U.S. says is headed by Venezuelan strongman Nicolás Maduro and run by top members of his regime… While sources declined to say whether Maduro himself is a target, one of them said his time is running out. ‘Maduro is about to find himself trapped and might soon discover that he cannot flee the country even if he decided to… What’s worse for him, there is now more than one general willing to capture and hand him over, fully aware that one thing is to talk about death, and another to see it coming.’”

October 30 – Wall Street Journal (Michael R. Gordon and Robbie Gramer): “A day after President Trump vowed to resume testing of nuclear weapons, the White House wasn’t answering questions about the details, leaving members of Congress, experts and even the administration’s nominee to command U.S. nuclear forces uncertain what he meant. ‘I don’t have insights into the president’s intent,’ Vice Adm. Richard Correll said at his Senate confirmation hearing…, after he was asked whether Trump wanted to step up missile flight tests or resume underground nuclear detonations for the first time in more than three decades. Trump announced… on social media that he had ‘instructed the Department of War to start testing our Nuclear Weapons,’ minutes before he met with Chinese leader Xi Jinping…”

October 28 – Bloomberg (Will Wade and Rachel Morison): “Keen to bolster a domestic nuclear industry that’s built just three reactors this century, the Trump administration is opting to use a government-investment strategy it’s applied to the mining, steel and semiconductor industries. Under a pact announced Tuesday, the administration is committing more than $80 billion to buy reactors from Westinghouse Electric Co. It follows moves to take equity positions in chip giant Intel Corp. and United States Steel Corp. The goal: help ease financing concerns that have deterred project development — even as enthusiasm for new reactors mounts.”

October 30 – Financial Times (Claire Jones): “The Federal Reserve’s top banking supervisor plans to shrink the… board’s regulatory staff by 30%, amid a push by the Trump administration to deregulate the financial sector. Michelle Bowman, the Fed’s vice-chair for supervision, on Thursday unveiled a proposal to lower the headcount of the central bank’s supervision and regulation department from 500 to roughly 350 employees by the end of 2026.”

China Trade War Watch:

October 30 – Associated Press (Chris Megerian, Didi Tang and Paul Wiseman): “Three-digit tariffs are off the table, but import duties on each other are higher than in January. Rare earth materials will flow more smoothly, but China has put in place an export permitting regime that it can tighten or loosen as needed. Port fees will go away, but only for one year. And Beijing is again buying U.S. soybeans after it had abruptly cut off American farmers. After months of posturing, arguing and threatening, U.S. President Donald Trump and Chinese leader Xi Jinping have essentially turned back the clock. While the meeting between the two leaders was hailed by Trump as a ‘roaring success,’ the agreement that came out of it may only serve to undo some of the damages Trump inflicted with his trade war… ‘It is hard to see what major gains the U.S. has made in the bilateral relationship relative to where things stood before Trump took office,’ said Eswar Prasad, an economist at Cornell University.”

October 30 – Wall Street Journal (Editorial Board): “President Trump and Chinese leader Xi Jinping struck their third trade truce in a year…, and the best we can say is that the deal averted more economic damage. Mr. Trump called the deal a ‘12 out of 10,’ but markets were nearer to the truth when they yawned. The deal mostly restores the status quo that prevailed in May.”

October 30 – Bloomberg (Justin Sink and Colum Murphy): “US President Donald Trump emerged from his meeting with Chinese leader Xi Jinping beaming, labeling the conversation ‘truly great.’ But the one-year truce struck… in South Korea is likely to only stabilize relations between the world’s two largest economies rather than resolve fundamental differences, with both sides buying time to further reduce dependence on each other in strategic areas. And it made clear just how much stronger China has become since Trump’s first term in office’… ‘China gave some ground, but the clear dynamic is how Chinese threats have gotten the US to back off a series of proposed restrictions,’ said Scott Kennedy, senior adviser at the Center for Strategic and International Studies… ‘Xi has created more safe space for China’s economic system and its efforts to achieve greater global leadership.’”

October 30 – Bloomberg (Jenny Leonard, Shawn Donnan, and Joe Deaux): “Donald Trump sounded triumphant afterwards. But in his first meeting with Chinese counterpart Xi Jinping since returning to office in January, the US president had to give at least as much as he got. Trump declared the two leaders had ‘settled’ their differences on one of the thorniest issues, and a major source of Beijing’s leverage: access to China’s rare earths. ‘There’s no roadblock at all on rare earth,’ he said… ‘That will hopefully disappear from our vocabulary for a little while.’ What Trump chalked up as a win… was China’s agreement to wait one year before implementing a sweeping regime of export controls for critical minerals that are crucial in all kinds of industries.”

October 31 – Bloomberg: “After Donald Trump and Xi Jinping met in South Korea on Oct. 30, China released a statement on the outcomes of the landmark summit while US officials made public remarks. In places, those comments didn’t quite match, while for other areas — such as the deal to keep Chinese social media app TikTok alive in the US — many details await clarification. China’s statements were broader than the specifics offered by Trump administration chiefs. Some of the language on what rare earth licensing measures China is suspending already suggest the two sides could have different understandings of what was agreed.”

October 30 – Financial Times (Joe Leahy and Demetri Sevastopulo): “China’s President Xi Jinping sought to cement a personal connection with his mercurial American counterpart when he met Donald Trump to hammer out a trade war ceasefire this week. Xi found common ground with Trump’s ‘Maga’ agenda, which parallels the Communist party’s own ambitions of restoring China’s past glory, known as the ‘great rejuvenation of the Chinese nation’. ‘I always believe that China’s development should go hand in hand with your vision to make America great again,’ the Chinese president told Trump… But behind the niceties, the change in the balance of power between the two men was unmistakable. Unlike nearly 10 years ago, when Trump’s first trade offensive caught Beijing by surprise, this time a better prepared and economically more powerful China has been able to fight its once far mightier opponent to a standstill.”

October 30 – Bloomberg (Catherine Lucey and Skylar Woodhouse): “The US will proceed with an investigation that opens the door to new tariffs on goods from China, despite the two nations’ fresh truce, President Donald Trump’s top trade negotiator said. US Trade Representative Jamieson Greer last Friday opened a probe into China’s compliance with a limited trade agreement reached during Trump’s first term. That move was seen as potential leverage for the US president in his meeting with his Chinese counterpart, Xi Jinping. While the leaders agreed to suspend plans for higher tariffs and stricter export controls during their summit, the investigation is still moving forward, Greer said…”

October 30 – Bloomberg (Mackenzie Hawkins): “US President Donald Trump said he didn’t discuss approving sales of Nvidia Corp.’s Blackwell chips to China with his counterpart Xi Jinping, dampening speculation that Washington will allow exports of the powerful AI accelerators to the world’s largest semiconductor market.”

October 27 – Bloomberg: “Chinese and US trade negotiators have lined up an array of diplomatic wins for Donald Trump and Xi Jinping to unveil at a summit this week. Those easy hits are pleasing investors, but leave deeper core conflicts unresolved… ‘Picking the low-hanging fruit makes the path ahead inherently tougher because it leaves the hard, high-stakes conflicts for last,’ said Sun Chenghao, a fellow at Tsinghua University in Beijing. ‘The ‘grand deal’ requires tackling profound disagreements on state subsidies, tech competition and national security — areas where both sides’ fundamental models clash.’”

Trade War Watch:

October 28 – Wall Street Journal (Ontario Premier Doug Ford): “Your editorial ‘Reagan vs. Trump on Tariffs’ (Oct. 27) begins by pointing out that Ronald Reagan and his legacy still matter to Donald Trump. There’s nothing wrong with that. The 40th president still matters to me too. I’m not American, but like millions of Canadians I admire Reagan and his commitment to free trade, free markets and closer ties between our two countries. His friendship with another great leader, Prime Minister Brian Mulroney, set the stage for decades of cooperation and shared prosperity on both sides of the border. The numbers don’t lie: Last year cross-border trade between the U.S. and Canada hit nearly $1 trillion. Every day, millions of Americans wake up, go to work and earn a paycheck making something for or providing a service to a company based in Canada. Together we have built the most secure, prosperous and mutually beneficial partnership between any two countries in the history of the world. I believe that is Reagan’s legacy—built on free trade. It’s now at risk.”

October 27 – Bloomberg (Josh Wingrove and Brian Platt): “US President Donald Trump said he doesn’t anticipate meeting with Canadian Prime Minister Mark Carney ‘for a while,’ despite Carney’s insistence that the two sides were close to a trade deal on lowering metals tariffs. Trump halted the talks last week in reaction to a TV advertisement by the province of Ontario that criticized his tariff regime… ‘I don’t want to meet with him,’ Trump said… ‘No, I’m not going to be meeting with them for a while. I’m very happy with the deal we have right now with Canada. We’re going to let it ride.’”

October 27 – Reuters (Satoshi Sugiyama): “U.S. Commerce Secretary Howard Lutnick said Japan’s $550 billion U.S.-bound investment package would focus on areas such as power and pipelines that are fundamental to national security and ‘have virtually no risk’… Lutnick said 10 to 12 Japanese companies involved in areas such as power supply and shipbuilding are preparing to explore investment opportunities in the U.S…”

October 27 – New York Times (Daisuke Wakabayashi): “When South Korea’s newly elected president, Lee Jae Myung, visited Washington in August, he was asked about anmigyeongjung, the nation’s well-established policy of maintaining strategic neutrality between the United States and China. The Korean phrase, loosely translated as ‘the United States for security and China for the economy,’ refers to how the country must balance its reliance on America for national defense and the economic importance of China as a critical market for South Korean companies… ‘It is no longer possible to maintain that type of logic,’ Mr. Lee said. Increasingly, South Korea must choose, and it has not been in a position to deviate from the policies of the United States, he acknowledged.”

October 28 – Wall Street Journal (Anvee Bhutani): “The Senate voted 52-48 to approve a measure blocking President Trump’s tariffs on Brazil, with a handful of Republicans siding with Democrats in rebuking a central piece of the White House’s economic agenda. Five GOP senators voted in favor of the resolution…”

October 28 – Associated Press (Eileen Ng and David Rising): “China signed an expanded version of a free trade agreement… with the Association of Southeast Asian Nations, with Premier Li Qiang pitching expanded economic ties with Beijing as an alternative to the protectionist policies of U.S. President Donald Trump. Li Qiang told an ASEAN-China summit meeting after the signing that closer cooperation could help overcome global economic uncertainties. He said ‘pursuing confrontation instead of solidarity brings no benefit’ in the face of economic coercion and bullying, in a swipe at the U.S. ‘Unity is strength,’ he said, citing remarks by President Xi Jinping made during a Southeast Asia visit earlier this year.”

Constitution Watch:

October 28 – Reuters (Phil Stewart): “U.S. military officials involved with President Donald Trump’s expanding operations in Latin America have been asked to sign non-disclosure agreements, three U.S. officials say, a development that raises new questions about a military buildup that Venezuela fears may lead to an invasion. The step is highly unusual, given that U.S. military officials are already required to shield national security secrets from public view, and comes as lawmakers in Congress say they are being kept in the dark about key aspects of the mission.”

October 25 – Financial Times (Steff Chávez, James Politi and Stefania Palma): “Seated next to each other at a White House event…, Donald Trump and defence secretary Pete Hegseth promised more lethal attacks off the coasts of Latin America and new ones on land. ‘I think we’re just going to kill people that are bringing drugs into our country. OK? We’re going to kill them. You know, they’re going to be, like, dead,’ Trump said. Hegseth dismissed suggestions the strikes might be illegal, saying: ‘We know our authorities, they’re locked tight.’ The defence secretary then addressed the cartels: ‘We will treat you like we have treated al-Qaeda. We will find you. We will map your networks. We will hunt you down and we will kill you.’”

October 28 – Associated Press (Konstantin Toropin): “Defense Secretary Pete Hegseth announced… the U.S. military has carried out strikes in the eastern Pacific Ocean on four boats accused of carrying drugs, killing 14 people and leaving one survivor in the deadliest single day since the Trump administration began its divisive campaign… It was the first time multiple strikes were announced in a single day as the pace of the attacks has escalated.”

Government Shutdown/Budget Deficit Watch:

October 27 – Axios (Avery Lotz): “Food banks are already seeing a surge as tens of millions of families prepare for their Supplemental Nutrition Assistance Program benefits to freeze. The federal government shutdown will stop food aid Nov. 1 for some 42 million Americans, the latest blow for low-income families already struggling with rising costs and shrinking federal benefits. When SNAP benefits run out this week, food banks say they will face a demand they can’t possibly meet alone… ‘We were already seeing the working class facing unprecedented attacks,’ said George Matysik, the executive director of… Share Food Program. ‘…What the shutdown is doing is it’s just, instead of throwing water on the fire, it’s throwing gasoline on it.’”

October 26 – Reuters (Idrees Ali and David Shepardson): “More than 8,000 flights were delayed across the U.S. on Sunday as air traffic controller absences continued to disrupt travel and a federal government shutdown reached its 26th day.”

October 28 – Axios (Kate Santaliz and Andrew Solender): “Republican dissent over House Speaker Mike Johnson’s (R-La.) shutdown strategy spilled out on a private GOP call this afternoon, with Rep. Dan Crenshaw (R-Texas) adding himself to the growing list of lawmakers questioning whether they should still be home in their districts.”

October 24 – Reuters (Pritam Biswas): “European rating agency Scope downgraded the United States’ credit rating by a notch…, citing sustained deterioration in public finances and a weakening of governance standards. Scope cut the U.S. local and foreign currency long-term issuer and senior unsecured debt ratings to ‘AA-‘, from ‘AA’, but revised the outlook to ‘stable’ from ‘negative’… The agency pointed to persistently high federal deficits and rising interest payments as key drivers behind the growing public debt-to-GDP ratio, which it expects to reach 140% by 2030 — a level well above most sovereign peers.”

U.S./Russia/China/Europe/Iran Watch:

October 30 – Financial Times (Max Seddon, Amy Mackinnon and Christopher Miller): “The US cancelled President Donald Trump’s planned Budapest summit with Vladimir Putin after a Russian memo to Washington holding firm to hardline demands on Ukraine was swiftly followed by a tense call between the two countries’ top diplomats… Earlier this month, Trump and Putin agreed over the phone to meet in the Hungarian capital to discuss how to end the Russian president’s war in Ukraine. Days later, Russia’s foreign ministry sent a memo to Washington underlining the same demands to address what Putin calls the ‘root causes’ of his three-and-a-half-year invasion… These include territorial concessions, a steep reduction of Ukraine’s armed forces and guarantees it will never join Nato.”

October 27 – CNBC (Holly Ellyatt): “Russia’s testing of an ‘invincible’ nuclear-powered cruise missile with a potentially ‘unlimited range’ has been met with a less-than impressed response from U.S. President Donald Trump as a new cold front opens up between the countries. Russia announced Sunday that it had successfully tested a new nuclear-powered cruise missile, the 9M730 Burevestnik (or ‘Storm Petrel’)… It boasted that the missile, which can carry conventional or nuclear warheads, and code-named ‘Skyfall’ by NATO, can change direction mid-flight and move vertically and horizontally, meaning it can evade missile and air defense systems.”

October 27 – Reuters (Maxim Rodionov): “Russian President Vladimir Putin asked North Korean Foreign Minister Choe Son Hui during talks in the Kremlin… to tell her country’s leader Kim Jong Un that everything was ‘going to plan’ in bilateral relations. Putin and Kim sealed a strategic partnership treaty last year, which included a mutual defence pact, and North Korea has sent soldiers, artillery ammunition and missiles to Russia to support Moscow’s military campaign in Ukraine.”

New World Order Watch:

October 28 – Reuters (Trevor Hunnicutt and Katya Golubkova): “Japan and the United States agreed to a deal on new-generation nuclear power reactors and rare earths, as Tokyo seeks a way back to export markets for its nuclear technology and both look to reduce China’s dominance over key electronic components.”

October 28 – Bloomberg (Jason Gale): “China is on track to lead the world in science — at least by one revealing measure. An analysis of almost 6 million research papers shows that Chinese scientists are taking the helm in almost half of all collaborations with US counterparts, a shift that underscores Beijing’s growing influence in setting the global research agenda. The study, published… in the Proceedings of the National Academy of Sciences, found that Chinese-based scientists filled 45% of leadership roles in US-China joint studies in 2023, up from 30% in 2010.”

Ukraine War Watch:

October 27 – Financial Times (Fabrice Deprez): “Russia has intensified its offensive in eastern Ukraine as US-led peace efforts falter, with some of Moscow’s forces entering the stronghold of Pokrovsk. Kyiv has denied Russian claims that its troops were completely surrounded in the eastern Ukrainian city, which served as a logistical hub until last year and, if captured, could be used as a staging ground for deeper Russian advances.”

October 27 – Reuters (Lidia Kelly): “Russian air defences shot down dozens of Ukrainian drones heading to Moscow and downed nearly 160 more over other regions in attacks that killed at least one and injured five others, Russian officials said… Nearly four years into the deadliest land war in Europe since World War Two, Russia is trying to smash Ukraine’s energy system while Kyiv is trying to knock out the oil refineries of the world’s second largest oil exporter.”

October 28 – Associated Press (Samya Kullab): “Ukraine’s long-range strikes on refineries inside Russia have reduced Moscow’s oil refining capacity by 20%, Ukrainian President Volodymyr Zelenskyy said… Over 90% of those deep strikes on Russian soil were carried out by Ukrainian-made long-range weapons, according to Zelenskyy. He said Ukraine needs additional foreign financial help to produce more of them. ‘We just need to work on this every day,’ he said…”

Taiwan Watch:

October 30 – Reuters (Yi-Chin Lee): “Taiwan does not want China’s ‘one country, two systems’ and must uphold its freedom and democracy, and resolve to defend itself, President Lai Ching-te said…, rejecting Beijing’s latest push to get the island to come under Chinese control. China said this week it ‘absolutely will not’ rule out using force over Taiwan, striking a much tougher tone than a series of articles in state media that pledged benign rule if the island comes over to Beijing under a system of autonomy it uses for Hong Kong and Macau.”

Middle East Watch:

October 28 – Bloomberg (Galit Altstein and Sherif Tarek): “Prime Minister Benjamin Netanyahu ordered ‘forceful strikes’ against Hamas in response to attacks on Israeli soldiers in Gaza, jeopardizing a US-brokered ceasefire that’s held for just over two weeks. The order to strike in the Palestinian territory came after security consultations, the Israeli leader’s office said… Defense Minister Israel Katz later said Hamas will ‘pay a heavy price’ for attacking Israeli troops and violating a promise to return the bodies of dead hostages.”

AI Bubble/Arms Race Watch:

October 28 – Bloomberg (Ian King, Maggie Eastland and Ed Ludlow): “Nvidia’s first GTC conference held in the nation’s capital — highlighted the partnerships that the company is forging across the industry. The chipmaker is teaming up with Uber Technologies Inc., Palantir Technologies Inc. and CrowdStrike Holdings Inc., among others, aiming to ensure its technology remains at the heart of the AI frenzy… ‘We have now reached our virtuous cycle, our inflection point,’ Huang told thousands of attendees at a convention hall blocks from the White House. ‘This is quite extraordinary.’”

October 29 – New York Times (Andrew Ross Sorkin, Bernhard Warner, Sarah Kessler, Michael J. de la Merced, Niko Gallogly, Ian Mount, Lauren Hirsch and Grady McGregor): “Going by corporate announcements and analyst forecasts, Amazon, Microsoft, Google and Meta alone are expected to spend roughly $350 billion this year (or in the current fiscal year) on A.I.-related capital expenditures. Much of that is on the development of A.I. data centers, which require staggering amounts of electricity. To beef up the surrounding grids, Google, Microsoft and others have been striking partnerships with utilities to bring in the needed power. A fascinating data point: Many economists credit A.I. spending with bolstering the overall economy. ‘In the first half of this year, A.I.-related capital expenditures contributed 1.1 percent to G.D.P. growth, outpacing the U.S. consumer as an engine of expansion,’ Stephanie Aliaga, a strategist at J.P. Morgan Asset Management, wrote…”

October 30 – Axios (Ben Berkowitz): “The AI spending spree continues. It’s only getting bigger, in fact, and the sums more astronomical. The longer the boom can keep carrying the economy, the more it can offset other structural changes, like a reordering of global trade and a transformation of the labor market. Meta, Microsoft and Google… all made bullish comments Wednesday on their spending plans. Meta raised its spending forecast, saying its capital expenditures on AI infrastructure and the like will be at least $70 billion this year, and ‘notably larger’ next year. Google parent Alphabet… raised its own spending forecast for the year to at least $91 billion. Microsoft CEO Satya Nadella said strong demand was the reason they ‘continue to increase our investments in AI across both capital and talent’.”

October 29 – New York Times (Natallie Rocha): “Microsoft’s big spending on artificial intelligence shows no signs of letting up… The company reported spending a larger-than-expected $34.9 billion on new projects in the three months through Sept. 30 as it races to build data centers…, a 74% increase from a year earlier… ‘We will increase our total A.I. capacity by over 80% this year, and roughly double our total data center footprint over the next two years, reflecting the demand signals we see,’ Satya Nadella, Microsoft’s chief executive, said…”

October 30 – Bloomberg (Matt Day): “The largest technology companies are betting on an AI future powered by gigantic data centers filled with humming servers. Now that the staggering cost of this push is coming into sharper focus, it’s testing nerves on Wall Street. Three bellwethers from different corners of the technology world – Alphabet Inc., Meta Platforms Inc. and Microsoft Corp. — together racked up some $78 billion in capital expenditures last quarter. That’s up 89% from a year earlier.”

October 29 – Financial Times (Stephen Morris, Hannah Murphy and Tabby Kinder): “Google, Meta and Microsoft spent almost $80bn over the past quarter on artificial intelligence infrastructure, but investors had markedly different reactions to their plans to increase this historic spending spree… The varied reaction to their earnings and spending plans that were revealed… ‘underscores how sensitive investors are to how quickly the AI build-out can deliver revenue’, said Dec Mullarkey, managing director of $300bn asset manager SLC Management. ‘Investors are worried that the rush to grab market leadership may cause an overshoot,’ he added. ‘No one needs reminding that history is full of episodes of technology exuberance that eventually left the early investors battered.’”

October 30 – Bloomberg (Caleb Mutua and Emily Graffeo): “Meta Platforms Inc. found record-shattering demand for its bond sale on Thursday even as its shares plunged… The company sold $30 billion of bonds, the largest high-grade US note sale since 2023, drawing the most ever orders at $125 billion. That came on a day where Meta’s shares dropped as much as 14%, after it had posted quarterly earnings late Wednesday, and stock investors recoiled at how much the company planned to spend on AI. Chief Executive Officer Mark Zuckerberg has said that Meta will spend hundreds of billions of dollars over the next decade on data centers and other AI…”

Bubble and Mania Watch:

October 26 – Financial Times (Rana Foroohar): “San Francisco has been economically detached from the rest of America since the internet boom of the mid-1990s. As everything from housing rents to per capita growth rates far higher than the US national average show, the Bay Area exists in its own orbit. I couldn’t help but think of this when I flew into San Francisco a couple of weeks ago. Artificial intelligence, rather than consumer web pages, drives the exuberance today. But the vibe is the same as it was 30 years ago — there is one story, and everyone is buying it. Every single billboard I passed from the airport to the city had something to do with AI. Giant white blocks of brand-new housing and office space lined the highway.”

October 31 – Financial Times (Robin Wigglesworth): “Whenever a bubble bursts, there are some stories from their peaks that morph into endlessly-recounted legends that symbolise how mad people had become. The paragon example is the listing of Pets.com in February 2000… Then there are things like strippers with multiple NINJA loans in 2007; the land under Tokyo’s Imperial Palace being worth more than all of California; a Scottish adventurer inventing an entire country to issue bonds, the formation of a company ‘for carrying on an undertaking of great advantage, but nobody to know what it is’; or 100,000 guilders being paid for a single Semper Augustus tulip bulb. In time, this might end up becoming the emblematic stupidity of the AI boom. Photos and videos of Nvidia Corp.’s CEO having beers and fried chicken at a local restaurant, Kkanbu Chicken, in Seoul — with Samsung Electronics Co. Chair Jay Y Lee and Hyundai Motor Co. Executive Chair Chung Euisun — went viral, and now investors are driving up the stocks that may be a beneficiary.”

October 27 – Financial Times (Oliver Barnes and James Fontanella-Khan): “US companies struck more than $80bn worth of deals over the past 24 hours, the latest sign that the openness of Donald Trump’s administration to large mergers and acquisitions is reviving consolidation across some of the country’s biggest industries.”

October 29 – Wall Street Journal (Inti Pacheco and Rosie Ettenheim): “Surging stock markets lifted the fortunes of many of the world’s richest people last year, leaving a record billionaire class of 3,508 individuals with $13.4 trillion in collective wealth, up 10.3% from a year earlier. About a third of the world’s billionaires—1,135—were in the U.S. and their fortunes accounted for 43% of the collective wealth, according to Altrata… China came in second with 321 billionaires holding about 10% of the world’s wealth.”

October 29 – Bloomberg (Lu Wang, Yiqin Shen, and Vildana Hajric): “In late 2021, as the housing market overheated and the Federal Reserve’s benchmark interest rate hovered near zero, Tony Yang found an unconventional way to fund his down payment. He logged into his Charles Schwab brokerage account, built a trade he’d discovered on Reddit — and unlocked about $650,000 to help finance a Bay Area home. The trade, dubbed a ‘box spread,’ carried a kind of mystique. By combining two opposing options positions — one bullish, one bearish — Yang built a strategy that mimics a fixed-rate loan: upfront cash now, repayment at a set date, and a locked-in cost in between. Yang used it to borrow at just 1.6% for five years — well below the rate on his traditional mortgage — creating a down payment without having to sell assets he wanted to keep in the market… Now, that same strategy powers SyntheticFi, a San Francisco-based fintech Yang co-founded to help others do the same. Box spread loans, also called synthetic borrowing, aren’t accessible to every buyer. They require sizable portfolios to back them. But for those with the assets, they offer speed, flexibility, and often a lower cost than traditional bank credit — plus potential tax advantages. Once a tool for hedge funds and family offices, box-spread loans now sit alongside direct indexing, custom portfolios, and options overlays — all pitched as tax-efficient ways to gain financial control.”

Inflation Watch:

October 29 – The Hill (Nathaniel Weixel): “The rates, pricing and other data for 2026 Affordable Care Act (ACA) insurance plans were publicly posted on the federal Healthcare.gov marketplace on Wednesday… The health research nonprofit KFF said the average increase in premiums for ACA plans will be 26% next year, based on data for ‘benchmark’ silver plans, which are the midtier plans in each region that most people purchase and are used to set the subsidy amounts.”

October 31 – CNBC (Greg Iacurci): “Open enrollment for health insurance bought on the Affordable Care Act marketplace starts Nov. 1 in most states — but millions of people may get a financial surprise when they try to sign up. That’s because a congressional deadlock tied to the extension of enhanced subsidies for insurance premiums has continued with no end in sight. Consumers are ‘going to get huge sticker shock, because prices are going up,’ said Carolyn McClanahan, a physician and certified financial planner based in Jacksonville… That sticker shock could have significant ramifications for consumers’ finances and the choices they make about health coverage, experts say, contributing to a higher population of uninsured and underinsured consumers and soaring premiums in years to come.”

October 28 – Reuters (Vallari Srivastava): “U.S. President Donald Trump’s sweeping tariffs are set to raise operating costs, disrupt supply chains and weaken investment momentum for the oil and gas industry in 2026, a report published by Deloitte showed… The energy industry relies heavily on global supply chains and internationally sourced materials such as drilling rigs, valves, compressors and specialized steel are central to their operations. U.S. tariffs on these components and other key input materials, including steel, aluminum and copper, could increase material and service costs across the value chain by 4% to 40%, potentially compressing industry margins, the report said.”

October 26 – Bloomberg (Michael Sasso): “Many US companies plan to resist boosting prices in the coming months, even as their costs mount and profit margins come under pressure, a new survey from the National Association for Business Economics showed. More than half of panelists reported material costs rising at their firms in the third quarter, according to the survey… However, 65% said there had been no change in prices charged in the quarter, and a similar share expect flat prices in the next three months.”

Federal Reserve Watch:

October 29 – Wall Street Journal (Nick Timiraos): “Federal Reserve Chair Jerome Powell delivered a blunt message for investors who have assumed the central bank would be on cruise control toward a third rate cut in December: Not so fast. Rather than hide behind cryptic and vague language that central bankers often deploy, Powell went out of his way… to play up divisions on the rate-setting committee and play down the idea that a rate cut in six weeks is a foregone conclusion. ‘In fact, far from it,’ he said… Powell’s plain speaking reflected deepening divisions at the Fed over how to interpret an economy where consumer spending remains robust but hiring has slowed sharply… ‘There’s a growing chorus now of feeling like maybe this is where we should at least wait a cycle, something like that,’ said Powell. ‘For some part of the committee, it’s time to maybe take a step back and see whether there really are downside risks to the labor market, or see whether, in fact, the stronger growth that we’re seeing is real.’”

October 30 – Financial Times (Ian Smith, Kate Duguid and Claire Jones): “The Federal Reserve is set to begin expanding its balance sheet again early next year, helping to ease investors’ fears over the daunting borrowing needs of the world’s most important economy. Fed officials called time on their three-year quantitative tightening programme…, with chair Jay Powell acknowledging that the central bank was soon likely to return to becoming a substantial buyer of US Treasuries. ‘At a certain point, you’ll want… reserves to start gradually growing to keep up with the size of the banking system and the size of the economy,’ Powell said. Fed-watchers think that point could come as soon as the turn of the year. ‘We think that the Fed will start buying enough Treasuries to grow the balance sheet again in the first quarter of next year — most likely January and at the latest in March,’ said Marco Casiraghi, of Evercore ISI. Casiraghi added that he expected net purchases of $35bn of Treasuries a month — expanding the Fed’s $6.6tn balance sheet by about $20bn a month…”

October 31 – Bloomberg (Catarina Saraiva, Alexandra Harris and Jonnelle Marte): “Three Federal Reserve officials said they did not support the US central bank’s decision to cut interest rates this week, citing inflation that remains too high. Dallas Fed President Lorie Logan and her Cleveland counterpart, Beth Hammack, said Friday they would have preferred to hold rates steady. Both were speaking… following a statement earlier in the day from Kansas City Fed President Jeff Schmid outlining the reasons for his dissent against Wednesday’s rate cut. The remarks from Logan, Hammack and Schmid were the first salvo in what is likely to be an intense debate over the next six weeks before the central bank’s next policy meeting in December…”

October 30 – Axios (Neil Irwin): “The big surprise from Wednesday’s Federal Reserve policy meeting was chair Jerome Powell’s repeated efforts to throw cold water on expectations that another rate cut is a sure thing by year-end — a reflection of an increasingly vocal, and frustrated, contingent of monetary hawks… Powell acknowledged ‘strongly differing views’ on the committee about a December rate cut and stressed that another move by year-end is ‘not a forgone conclusion — far from it.’ It sure sounds as if this was the most heated closed-door policy debate in quite some time — though the signs that there’s deeper division within the central bank have been evident for a while… It’s hard to recall such an explicit effort by the Fed chair to correct market pricing – all but telling traders that they had become overly confident about another rate cut on the way.”

October 30 – CNBC (Jeff Cox): “Federal Reserve Chair Jerome Powell faces if not the most difficult challenge of his time in office at least the trickiest in his final months as head of the all-powerful U.S. central bank… ‘December could get messy,’ Bank of America economist Aditya Bhave said… ‘We still think the Fed won’t cut rates again under Chair Powell. But barring a clear signal in either direction from the data, the December decision will likely be even more contentious than October’.”

October 27 – Bloomberg (Amara Omeokwe): “Five contenders are still standing in the high-stakes race to be the next Federal Reserve chair. Treasury Secretary Scott Bessent… confirmed the candidate pool has been cut roughly in half, with current Fed governors Christopher Waller and Michelle Bowman, former Governor Kevin Warsh, White House National Economic Council Director Kevin Hassett and BlackRock Inc. executive Rick Rieder remaining. Bessent, who is leading the vetting process, has said he plans to do another round of interviews with the aim of presenting a ‘good slate’ to President Donald Trump after the Thanksgiving holiday.”

U.S. Economic Bubble Watch:

October 27 – Axios (Ashley Gold): “Investing in AI infrastructure will result in significant GDP growth in the next few years, OpenAI predicts in a new regulatory filing… OpenAI’s big idea is that this isn’t just about AI — it’s America’s shot at reindustrialization. In OpenAI’s view, the race to secure computing power, modernize the grid and rebuild supply chains should supercharge U.S. manufacturing and energy production. President Trump’s AI action plan called for companies to tell the government what regulations stand in the way of AI’s development… A new OpenAI internal analysis finds that the first $1 trillion invested in AI infrastructure could add more than 5% to GDP growth over a 3-year period. The company says the next five years will bring an immense need for electricians, mechanics and other construction trade workers — an estimated 20% of those existing workforces for OpenAI’s purposes alone.”

October 31 – Bloomberg (Enda Curran and Mark Niquette): “There’s no official read on how fast the US economy grew last quarter, thanks to the government shutdown. But almost everyone reckons it was a healthy pace — and that’s largely thanks to AI. The technology has emerged as a crucial engine of growth, at a time when hiring is slow and traditional drivers like housing have stalled. Business investment in equipment and software are soaring. Data centers are a rare bright spot for US builders. And the juggernaut keeps rolling: just three tech titans racked up $78 billion of capital spending between them in the third quarter, almost double the year-earlier figure.”

October 28 – Wall Street Journal (Katherine Hamilton): “Visa’s revenue climbed in its fiscal fourth quarter as healthy consumer spending drove payments volumes higher. ‘We saw a broad-based strength, including improvements in retail services and goods, travel and fuel,’ Chief Financial Officer Chris Suh said… Suh expects strong consumer spending to continue into the current fiscal year… ‘The consumer has remained resilient,’ Suh said. ‘That is what we saw in fiscal year 2025 and that is our assumption going into fiscal year 2026.’ Discretionary and non-discretionary spending increased in the U.S. from the prior quarter, driving payments volumes up 9% year-over-year, Suh said. Spending ballooned the fastest among Visa’s highest-earning consumers. Internationally, e-commerce spending increased, continuing to make up about 40% of total international volume, and travel spending grew above pre-Covid levels. Cross-border volume rose 12%.”

October 30 – Bloomberg (Paige Smith): “Mastercard Inc. reported third-quarter earnings that beat analysts’ estimates as consumer and corporate spending remained robust… The earnings performance was ‘driven by healthy consumer and business spending and continued robust performance of our differentiated services,’ Chief Executive Officer Michael Miebach said…”

October 30 – Bloomberg (Nazmul Ahasan and Mark Niquette): “Applications for US unemployment benefits fell last week, according to a Bloomberg News analysis of unadjusted state-level filings… Initial claims decreased to about 218,000 in the week ended Oct. 25 from a revised 231,000 in the prior week…”

October 28 – CNBC (Steve Liesman): “Private sector employers added an average 14,250 jobs per week over the past four weeks, according to… data being released by ADP, a turnaround from the negative September numbers. Stepping into the void created by the government shutdown, ADP will now release a four-week average weekly change in employment with a two-week lag every Tuesday.”

October 27 – Wall Street Journal (Matt Grossman): “An estimate… by the Chicago Fed suggests that the U.S. unemployment rate has held mostly steady over the past two months, while the government shutdown has delayed official figures. The reserve bank’s real-time unemployment rate forecast projects unemployment of 4.35% in October, versus 4.34% in September.”

October 29 – Financial Times (Eva Xiao): “Income growth in the US has slowed to a near-decade low, with young workers especially hard hit, in a sign American consumers are struggling with a weakening labour market and persistent inflation. Real income growth for workers aged between 25 and 54 this year dropped to its slowest pace — excluding periods of pandemic volatility — since the 2010s when the 2008 financial crisis led to high levels of unemployment, according to new research by the JPMorgan Chase Institute… George Eckerd, co-author of the report, told the Financial Times: ‘We’re looking at a level of year-on-year growth that’s actually similar to [the 2010s] when the labour market was a lot weaker and the unemployment rate was higher.’ ‘Inflation is eating into otherwise decent levels of pay gains,’ he added. Inflation has eroded purchasing power across all age groups…”

October 28 – Reuters (Lucia Mutikani): “U.S. consumer confidence eased to a six-month low in October amid worries about the availability of jobs in the near-term… The Conference Board survey… also confirmed what economists describe as a K-shaped economy, with confidence declining among consumers making an annual income of less than $75,000, but consumers earning more than $200,000 a year more upbeat… The Conference Board said references to prices and inflation in write-in comments to the survey remained the main topic influencing consumers’ views of the economy this month.”

October 28 – Bloomberg (Prashant Gopal): “Home prices gained the least in over two years, slowing for the seventh straight month in August as buyers gained leverage in negotiations and inventory grew. A national measure of prices rose 1.5% from a year earlier, according to… S&P Cotality Case-Shiller. It was the smallest gain since mid-2023 and followed a 1.6% increase in July.”

October 29 – Bloomberg (Michael Sasso): “Pending sales of existing US homes stalled in September, suggesting anxiety about the job market kept potential buyers sidelined despite a welcome easing in mortgage rates. An index of contract signings held at 74.8 after climbing a revised 4.2% a month earlier to the highest level since March…”

October 31 – Wall Street Journal (Veronica Dagher): “More home-purchase agreements are being scrapped around the country, reflecting an intensifying standoff between buyers and sellers in a largely stalled housing market. About 15% of agreements were canceled in September, up from roughly 13.6% a year earlier, according to… Redfin. The rate has generally been climbing all year. The rising cancellations are being fueled by a range of factors, including uncertainty regarding the economy. More buyers are feeling anxious about their job security, triggering cold feet before closing in some cases, according to real-estate agents.”

China Watch:

October 28 – Wall Street Journal: “China’s communist elites have pledged to let consumption play a bigger role in driving growth over the next five years, while vowing ‘extraordinary measures’ to achieve technological breakthroughs in areas such as semiconductors and advanced equipment. In a proposal of a five-year plan that will guide the world’s second-largest economy for the rest of the decade, China’s ruling party vowed to ‘significantly raise the household consumption rate’… Economists say the line suggests Beijing might be considering setting a specific annual target for consumption growth in the next five years…”

October 29 – Bloomberg: “China pledged to ‘significantly’ boost the share of consumption in its economy over the next five years while keeping tech and manufacturing as the top priorities, in an effort to become less reliant on exports after a steep escalation of trade tensions in 2025. The Communist Party made the pledge Tuesday in a detailed document that was discussed at its fourth plenum held last week in Beijing. China will ‘form an economic development model driven more by domestic demand and powered by consumption,’ it said.”

October 31 – Bloomberg: “China’s new-home sales extended a slump in October, despite recent easing measures introduced by major cities to revive the struggling property market. The value of new-home sales from the 100 largest property companies stood at 253 billion yuan ($35.6bn)… That represents a 41.9% drop from a year earlier…”

October 29 – Bloomberg: “China’s multi-year property crisis is set to drag on in 2026 and further weigh on banks’ asset quality, even after the government stepped up its stimulus push to boost demand, according to Fitch Ratings. The country’s new home sales by area may decline 15%-20% from their current level before the sector stabilizes, Lulu Shi, a director at Fitch… ‘China’s trickling stimulus measures didn’t pull the residential sector from a further slowdown,’ Shi said. ‘A meaningful property recovery will only come after the job market stabilizes and household income rebounds, which would require a basket of policies and a long period of time.’”

October 31 – CNBC (Anniek Bao): “China’s manufacturing activity in October contracted more than expected, shrinking to the lowest level in six months… The official manufacturing purchasing managers’ index came in at 49.0…, missing economists’ expectations for 49.6… The latest reading reversed the recovery in recent months…”

October 30 – Bloomberg: “China Vanke Co. reported a deeper third-quarter loss, highlighting mounting challenges as the prolonged property market downturn continues to weigh on its sales. The… company posted a loss of 16.1 billion yuan ($2.3bn) in the three months ended Sept. 30, roughly doubling its loss in same period a year earlier.”

Central Bank Watch:

October 29 – Reuters (Promit Mukherjee and David Ljunggren): “The Bank of Canada signaled… an end to its cutting cycle after trimming its key overnight interest rate to 2.25%, but Governor Tiff Macklem said he would be ready to respond if Canada’s economic outlook changed materially. The 25-bps cut, the second in a row, brings the rate down to the lowest since July 2022. Macklem said the easing was designed to help the economy deal with the disruption from U.S. tariffs while keeping inflation close to the bank’s 2% target.”

Europe Watch:

October 27 – Wall Street Journal (Ed Frankl): “German business confidence rose a little in October…, driven by companies’ expectations that the economy will gain momentum next year. The Ifo Institute said… its business-climate index, based on around 9,000 monthly responses from businesses, rose to 88.4 in October from 87.7 in September.”

Japan Watch:

October 30 – Reuters (Leika Kihara): “The Bank of Japan’s cautious governor has dropped unusually hawkish hints of an interest rate hike in December or January next year, with the timing likely swayed not just by wage momentum but by moves in the yen. The central bank kept interest rates steady at 0.5%… as expected, but Governor Kazuo Ueda said the likelihood of its baseline scenario materialising has heightened – language he had used in the past to signal a rate hike was imminent.”

October 28 – Bloomberg (Toru Fujioka): “US Treasury Secretary Scott Bessent called on Japan’s new government to give the nation’s central bank the space to combat inflation — marking a stark contrast with his message at home for the Federal Reserve. ‘The Government’s willingness to allow the Bank of Japan policy space will be key to anchoring inflation expectations and avoiding excess exchange rate volatility,’ Bessent said…”

Emerging Market Watch:

October 31 – Bloomberg (Giovanna Bellotti Azevedo, Rachel Gamarski and Vinícius Andrade): “Brazil’s credit flareups are driving up borrowing costs and spooking investors, forcing companies in Latin America’s largest economy to scrap or scale down their plans to tap the debt market. Companies’ issuance of hard-currency bonds fell by more than half in October compared to the same period last year…”

Social, Political, Environmental, Cybersecurity Instability Watch:

October 27 – Axios (Tina Reed): “Migratory birds are driving up avian flu cases across the country, reviving concerns about U.S. readiness to respond to outbreaks, especially during the government shutdown. The most immediate concern is how the spread of the disease in commercial poultry flocks could drive up food prices. But the virus is continuing to evolve and spill over to other species, fueling fears of human-to-human transmissions and a possible pandemic. ‘It’s happening pretty fast and doesn’t seem to be slowing down and I’m really very unclear about what the U.S.’s approach is going to be,’ said Angela Rasmussen, a virologist at the Vaccine and Infectious Disease Organization at the University of Saskatchewan.”

October 28 – Axios (Andrew Solender): “The national fight over redistricting is ramping up in this week, with several states taking new steps to redraw their congressional maps ahead of the 2026 elections. These changes could have reverberations for years as Democrats and Republicans scramble to nullify each other’s gains. Some states, for instance, are taking steps to bypass their independent redistricting commissions in order to embark on mid-decade redistricting. What could lie ahead is a never-ending, zero-sum arms race to squeeze every last drop of partisan advantage out of every congressional map.”

Geopolitical Watch:

October 28 – Financial Times (Demetri Sevastopulo, Leo Lewis and David Keohane): “Japanese Prime Minister Sanae Takaichi has pledged to reinforce Japan’s defence capabilities as she and President Donald Trump vowed to bring the US-Japan security alliance into a ‘new golden age’… Takaichi warned that the two allies faced an ‘unprecedented severe security environment’. Stressing that ‘peace cannot be preserved by words alone,’ Takaichi, a security hawk who took office last week, said Japan was ‘ready to contribute even more proactively to peace and stability in the region’. Trump… said the ‘cherished alliance between the US and Japan is one of the most remarkable relationships in the world’.”