It might have been subtle, but it was reminiscent of early April. During Tuesday and Wednesday trading, KKR’s stock suffered a 6.1% drop – the largest two-day downdraft since April 10/11. Fellow “private-Credit” players Apollo fell 4.7%, Blackstone 4.1%, and Ares Management 7.6%. AI behemoth Nvidia suffered a 3.6% drop, correlation with the “private-Credit” stocks that recalled April’s market swoon. Oracle dropped 6.0% and the MAG7 index declined 1.3% over two sessions.
For the week, KKR sank 10.0%, Ares Management 7.6%, Blackstone 6.6%, and Apollo 4.7% – for the most part the largest weekly declines since April’s “liberation day” losses. Leveraged loan prices slipped 0.15% this week, the largest weekly decline since late July (week ended 8/1) – and ended the week at the lowest level since June 29th.
Nvidia sank 14.6% during April 3rd and 4th market mayhem, as KKR cratered 23.3%, Apollo 23.2%, Blackstone 15.3%, and Areas 23.6%. Markets were in near panic. A fledgling bout of de-risking/deleveraging was at the cusp of wreaking bloody havoc, starting with the piercing of tightly intertwined AI and “private-Credit” Bubbles. But President Trump backed down. His tariff “pause” triggered a powerful short-squeeze and reversal of hedges, a liquidity onslaught that unleashed FOMO, manic speculative excess, and a major shot in the arm for AI and “private-Credit” excess. Bubble inflation went into high gear.
September 26 – Bloomberg (Gowri Gurumurthy): “New bond sales in the US junk bond market soared past $48b this month to make it the busiest September ever, surpassing September 2020’s $47b. Issuers have priced $17.5b so far this week, the busiest week in five years. The last time the market was more active was the $18.3b notched in the week ended Sept. 18, 2020… This has also been the busiest month overall for issuance since April 2021.”
September 24 – Bloomberg (Caleb Mutua and Victor Swezey): “From tech behemoths to power producers, companies have pushed US corporate-bond sales to historically high levels this month as firms capitalize on falling borrowing costs and unquenched investor demand. Amid Oracle Corp.’s $18 billion deal Wednesday, investment-grade issuance has topped $190 billion for just the seventh month ever in September… The high-grade market on Tuesday set an issuance record for September, typically one of the busiest months of the year, as average spreads last week hit their tightest level in nearly three decades.”
September 25 – Wall Street Journal (Eliot Brown and Robbie Whelan): “The windswept town of Ellendale, N.D., population 1,100, has two motels, a Dollar General, a Pentecostal Bible college—and a half-built AI factory bigger than 10 Home Depots. Its more than $15 billion price tag is equivalent to a quarter of the state’s annual economic output. The artificial-intelligence boom has ushered in one of the costliest building sprees in world history. Over the past three years, leading tech firms have committed more toward AI data centers like the one in Ellendale, plus chips and energy, than it cost to build the interstate highway system over four decades, when adjusted for inflation. AI proponents liken the effort to the Industrial Revolution. A big problem: No one is sure how they will get their investment back—or when. The building rush is effectively a mega-speculative bet that the technology will rapidly improve, transform the economy and start producing steady profits.”
September 22 – Bloomberg (Saritha Rai): “Artificial intelligence companies like OpenAI have been quick to unveil plans for spending hundreds of billions of dollars on data centers, but they have been slower to show how they will pull in revenue to cover all those expenses. Now, the consulting firm Bain & Co. is estimating the shortfall could be far larger than previously understood. By 2030, AI companies will need $2 trillion in combined annual revenue to fund the computing power needed to meet projected demand, Bain said in its annual Global Technology Report… Yet their revenue is likely to fall $800 billion short of that mark as efforts to monetize services like ChatGPT trail the spending requirements for data centers and related infrastructure, Bain predicted.”
AI borrowing requirements will be without precedent. It’s a replay of the late-nineties Internet infrastructure buildout – times (at least) a hundred. We can only hope the underlying Credit fuel is not akin to hundreds of Worldcoms, Global Crossings, and Lucent Technologies. Years of high-risk lending and speculative leveraging had created extraordinary Credit system fragility – even before the historic high-risk AI Credit onslaught.
September 23 – Financial Times (Toby Nangle): “Private equity investors know that not every portfolio company will double or triple in value. And for really good PE funds, outsized returns from their winners will more than carry the remainder that turn out to be either a bit meh, or a totally urgh. But private creditors who lend money to portfolio companies couldn’t give a monkey’s if the firms they lend to double or triple in value. All they want to know is whether they’ll get their money back. As such, they care a lot whether companies bomb so badly that they’re unable to repay their loans. Alphaville isn’t sure quite what proportion of private credit direct lending ends up financing private equity portfolio companies. So we had a go sampling the Blackstone Private Credit Fund’s massive $71bn portfolio of borrowers, sorting alphabetically the 713 entities to which they lend money and then looking up how they are classified by PitchBook. After the first 100 we got bored, but noted that 90% of the non-CLO borrowers were classified as ‘Private Equity-Backed’.”
Analogous to private equity, AI equity and debt investors have distinctly different priorities. And the crazier the equities mania and spending arms race, the greater the risk to lenders. The manic AI bull case assumption of unlimited cheap finance will prove terribly misguided.
September 24 – Yahoo Finance (Jennifer Schonberger): “Treasury Secretary Scott Bessent said… the Trump administration is looking for someone with an ‘open mind’ to be the next chair of the Federal Reserve as he interviews 11 candidates to replace Jerome Powell. ‘Everyone asks me what am I looking for when I interview potential Federal Reserve chairs, and it’s just someone with an open mind, who’s not looking in the rearview mirror, who’s looking forward,’ Bessent said… Bessent expects to complete the first round of interviews by the first week in October… The new comments are the latest indication that Bessent is widening his scope…”
Secretary Bessent’s “someone with an open mind” comment calls to mind his recent interview of Blackrock’s Rick Rieder: “Whoever ends up being the Fed chair, there’s so many innovative things… how to use the balance sheet, how to use liquidity, where the yield curve is.” There’s no mystery behind the markets’ extraordinary complacency with respect to the administration’s assault on Fed independence (and general mayhem). Sharply lower rates and market yields, along with a grander “MAGA Fed Put.” A virtual speculators’ dream come true.
September 23 – Bloomberg (Neil Callanan): “Marathon Asset Management’s Chairman Bruce Richards sees the next Fed chair cutting rates after they start in May. ‘They are going to bring rates almost immediately down to the neutral rate of 3%, but I believe it goes more than that,’ he said… ‘I think the next Fed chair is going to do probably QE with a twist and the twist is buying long-term Treasuries to bring those rates down.’ Leveraged buyout and private debt will be among beneficiaries of lower rates. ‘It’s going to be a bonanza looking forward, not looking back,’ he said. Private equity will overpay for certain companies but toughest times are behind for LBOs and there can be no bubble in the space as they pay lower multiples. Sees $3 trillion spend needed on data centers, half of it debt.”
What might undo Financial Nirvana? An upside inflation surprise and hawkish Fed are not a bad place to start. Market pricing for the Fed policy rate out one year (9/16/26) jumped 14 bps this week to 3.16% – and is now 22 bps higher than lows from September 17th (day preceding Fed statement and Powell press conference). Powell this Tuesday: “If we ease too aggressively, we could leave the inflation job unfinished and need to reverse course later…”
Atlanta Fed president Raphael Bostic: “I am concerned about the inflation that has been too high for a long time… And so I today would not be moving or in favor of [another 2025 cut]…” Chicago Fed president Austan Goolsbee: “I’m uncomfortable with overly frontloading a lot of rate cuts on the presumption that [inflation] will probably just be transitory and go away…” Cleveland Fed President Beth Hammack: “I think that we should be very cautious in removing monetary policy restriction. It worries me that if we remove that restriction from the economy, things could start overheating again.’”
Monthly employment (JOLTS, Challenger Job Cuts, ADP, and Non-Farm Payrolls) updates come next week. A well-timed Wall Street narrative of economic weakness worthy of aggressive rate cuts held through the Fed meeting. Leaks were springing this week. Q2 GDP was revised up to 3.8% from 3.3%, with Personal Consumption revised to 2.5% from 1.6%. The Services (53.9) and Manufacturing (52) PMI indices were solid. August Durable Goods Orders (2.8%) were much stronger than expected (negative 0.3%). Initial Jobless Claims dropped to a two-month low of 218k (expected 233k). August New Home Sales (800k) blew away forecasts (650k).
Notably, August Personal Income was reported at a stronger-than-expected 0.4%, with only two of the past 12 months reporting below 0.4%. Confirming strong Retail Sales numbers, Personal Spending increased a stronger-than-expected 0.6% for the August. August’s strong reading followed solid 0.5% gains for both June and July. Bottom line: Loose conditions are working their magic. The Atlanta Fed GDPNow Forecast has jumped to 3.90%.
September 22 – Reuters (Howard Schneider and Michael S. Derby): “New Federal Reserve Governor Stephen Miran said… the Fed is misreading how tight it has set monetary policy and will put the job market at risk without aggressive rate cuts, a view countered in remarks by three of his colleagues who feel the central bank needs to remain cautious about inflation… ‘The upshot is that monetary policy is well into restrictive territory. Leaving short-term interest rates roughly two percentage points too tight risks unnecessary layoffs and higher unemployment,’ Miran said. ‘Insufficiently accounting for the strong downward pressure on the neutral rate resulting from changes in border and fiscal policies is leading some to believe policy is less restrictive than it actually is.’”
Stephen Miran’s (and the administration’s) central banker credibility is off to a rather rocky start. Miran’s call for another 125 bps of cuts this year is at odds with ongoing loose conditions, economic resilience, elevated inflation, and highly speculative markets. It’s perfectly consistent with the administration’s agenda.
September 26 – Bloomberg (Lauren Dezenski, Madison Muller and Jennifer A. Dlouhy): “President Donald Trump announced a fresh round of tariffs on pharmaceuticals, heavy trucks and furniture, including a 100% duty on patented drugs unless the producer is building a manufacturing plant in the US. ‘Starting October 1st, 2025, we will be imposing a 100% Tariff on any branded or patented Pharmaceutical Product, unless a Company IS BUILDING their Pharmaceutical Manufacturing Plant in America,’ Trump posted…”
September 26 – Reuters (Paul Arnold): “Swiss companies Roche and Novartis on Friday flagged they did not expect to be hit by President Donald Trump’s latest pharmaceutical tariff announcement because they are in the process of building new U.S. sites and investing there.”
It’s a novel approach – certainly leaving no stone unturned. Structure tariffs to incentivize an investment boom ahead of the midterms – and beyond. While the timing of capital investment projects is unclear, “Japan’s finance ministry said on Friday that it will set up an investment facility at a state-owned development bank to support a $550 billion investment package agreed in Tokyo’s tariff deal with Washington (Reuters)”. “Donald Trump has said South Korea’s pledge to invest $350 billion in the US under a bilateral trade accord must be paid ‘up front,’ as tensions rise over the structure of the deal, while Washington signals it could push Seoul for even more (Korea Economic Daily).”
Overheating risks are mounting. Ten-year Treasury yields rose five bps this week to a four-week high of 4.18% – with five-year yields up a notable nine bps to a one-month high of 3.77%. Meanwhile, global bonds continue to indicate vulnerability. UK 10-year gilt yields traded to 4.77% in early Friday trading (closed week at 4.75%), within only 12 bps from the highest yield back to 2008. Japanese JGB yield added a basis point this week to 1.65%, the high since 2008. French yields traded Thursday at the highest yield (3.61%) since the 2011 European debt crisis. Australian yields jumped 15 bps this week to 4.39%.
I refer to the “global government finance Bubble” for good reason. Especially since the great 2008 crisis reflation, U.S. Bubble Dynamics have taken firm hold throughout international policymaking, markets, and economies. Credit and liquidity excesses are global phenomena. Derivatives command all corners of global finance. Leveraged speculation and speculative Bubbles are almost universal. The AI mania and arms race are international sensations.
September 25 – Bloomberg (Hannah Benjamin-Cook): “Issuance in Europe’s public debt market has set a new September record as borrowers from sovereigns to high-yield companies make the most of favorable conditions. Marketwide sales of euro, sterling and dollar reg S debt has reached €208.9b ($244bn) this month, topping a previous record of €200.78b set in 2021… Issuance in the region has been on a tear all year, with sovereigns, supranationals and agencies leading the charge as nations such as the UK and France wrangle with sizable budget deficits.”
September 18 – Bloomberg: “Just as China’s long bull run for bonds is fading, the nation’s banks have loaded up on government debt at the fastest pace since 2019. In each of the past two months, commercial banks such as China Construction Bank Corp. raised their overall central and local government debt holdings by more than 20% year-over-year, reaching 72 trillion yuan ($10 trillion) by August… That will add to woes for banks that are already struggling with a growing pile of bad loans and record low margins, as well as threaten the government’s ability to push through more stimulus to boost the economy. ‘Banks had to increase bond investments, even though the recent selloff due to booming stocks and a lack of monetary easing was a pain,’ said Liao Zhiming, an analyst at Huayuan Securities Co… China had about 9 trillion yuan of government debt at the end of July, and commercial banks held about 70% of such debt in the interbank market… That demand, to some extent, ensures that China can effectively carry out a proactive fiscal policy and keep financing costs low.”
September 24 – Bloomberg: “Quantitative hedge funds are expanding rapidly in China… Registration of quant funds rose 100% year on year to over 3,500 in the first eight months of this year, accounting for 45% of all new private funds…”
Chinese bank assets surged another $3.2 TN during the first half, or 10% annualized, to $65.5 TN. And from the above Bloomberg article, we know that China’s banking system now holds $10 TN of government debt, after having “loaded up on government debt at the fastest pace since 2019… by more than 20% year-over-year…” This is crazy monetization and leveraging, rivaling Japan’s recklessness. Latent fragility is a global phenomenon. To be sure, perilous global finance explains gold’s $75 jump this week to a record $3,760, boosting y-t-d gains to 43%, with silver’s 7% surge powering 2025’s advance to 59%.
Prone to turbulence, the fourth quarter starts next week. I doubt we get to year-end without another bout of market instability, with the potential to unleash de-risking/deleveraging. Bonds are increasingly vulnerable to overheating risks. A surprise backup in yields would place myriad speculative Bubbles in harm’s way. The AI mania and arms race are acutely vulnerable to deleveraging and associated liquidity issues. Are the “private Credit” stocks a canary? And with the Trump administration increasingly unhinged and the geopolitical backdrop deteriorating by the week, there are ample potential crisis catalysts.
For Posterity:
“Pam: I have reviewed over 30 statements and posts saying that, essentially, “same old story as last time, all talk, no action. Nothing is being done. What about Comey, Adam ‘Shifty’ Schiff, Leticia??? They’re all guilty as hell, but nothing is going to be done.” Then we almost put in a Democrat supported U.S. Attorney, in Virginia, with a really bad Republican past. A Woke RINO, who was never going to do his job. That’s why two of the worst Dem Senators PUSHED him so hard. He even lied to the media and said he quit, and that we had no case. No, I fired him, and there is a GREAT CASE, and many lawyers, and legal pundits, say so. Lindsey Halligan is a really good lawyer, and likes you, a lot. We can’t delay any longer, it’s killing our reputation and credibility. They impeached me twice, and indicted me (5 times!), OVER NOTHING. JUSTICE MUST BE SERVED, NOW!!! President DJT” (September 20, 2025)
“After getting to know and fully understand the Ukraine/Russia Military and Economic situation and, after seeing the Economic trouble it is causing Russia, I think Ukraine, with the support of the European Union, is in a position to fight and WIN all of Ukraine back in its original form. With time, patience, and the financial support of Europe and, in particular, NATO, the original Borders from where this War started, is very much an option. Why not? Russia has been fighting aimlessly for three and a half years a War that should have taken a Real Military Power less than a week to win. This is not distinguishing Russia. In fact, it is very much making them look like ‘a paper tiger.’ When the people living in Moscow, and all of the Great Cities, Towns, and Districts all throughout Russia, find out what is really going on with this War, the fact that it’s almost impossible for them to get Gasoline through the long lines that are being formed, and all of the other things that are taking place in their War Economy, where most of their money is being spent on fighting Ukraine, which has Great Spirit, and only getting better, Ukraine would be able to take back their Country in its original form and, who knows, maybe even go further than that! Putin and Russia are in BIG Economic trouble, and this is the time for Ukraine to act. In any event, I wish both Countries well. We will continue to supply weapons to NATO for NATO to do what they want with them. Good luck to all! DONALD J. TRUMP, PRESIDENT OF THE UNITED STATES OF AMERICA” (September 23, 2025)
September 25 – Axios (Dave Lawler and Barak Ravid): “Ukrainian President Volodymyr Zelensky told ‘The Axios Show’ that if Russia won’t end the war, officials working in the Kremlin should make sure they know where the nearest bomb shelter is. Zelensky said he had President Trump’s explicit backing to hit Russian targets like energy infrastructure and arms factories. And he said that if Ukraine gets additional long-range weaponry from the U.S., ‘we will use it.’”
September 25 – NewsNation (Taylor Delandro): “Russia‘s former president said Americans should remember ‘that Russia can use weapons a bomb shelter won’t protect against.’ In a post on X…, Dmitry Medvedev, now deputy chair of the Russian security council… ‘The Kiev drug addict said the Kremlin should know where a bomb shelter is so its occupants can hide when he uses long-range American weapons… What the freak needs to know is that Russia can use weapons a bomb shelter won’t protect against. Americans should also keep this in mind.’”
For the Week:
The S&P500 slipped 0.3% (up 13.0% y-t-d), while the Dow was little changed (up 8.7%). The Utilities surged 3.0% (up 13.9%). The Banks dipped 0.3% (up 20.9%), while the Broker/Dealers were about unchanged (up 31.8%). The Transports increased 0.8% (down 1.0%). The S&P 400 Midcaps declined 0.5% (up 4.7%), and the small cap Russell 2000 dipped 0.6% (up 9.2%). The Nasdaq100 declined 0.5% (up 16.6%). The Semiconductors gained 1.2% (up 26.6%). The Biotechs fell 2.2% (up 6.1%). With bullion surging another $75, the HUI gold index jumped 4.6% (up 119.3%).
Three-month Treasury bill rates ended the week at 3.875%. Two-year government yields rose seven bps to 3.64% (down 60bps y-t-d). Five-year T-note yields jumped nine bps to 3.77% (down 62bps). Ten-year Treasury yields rose five bps to 4.18% (down 39bps). Long bond yields were little changed at 4.75% (down 3bps). Benchmark Fannie Mae MBS yields jumped 10 bps to 5.22% (down 62bps).
Italian 10-year yields gained five bps to 3.58% (up 6bps y-t-d). Greek 10-year yields rose four bps to 3.43% (up 22bps). Spain’s 10-year yields added two bps to 3.31% (up 25bps). German bund yields were little changed at 2.75% (up 38bps). French yields increased two bps to 3.57% (up 37bps). The French to German 10-year bond spread widened two to 82 bps. U.K. 10-year gilt yields gained three bps to 4.75% (up 18bps). U.K.’s FTSE equities index increased 0.7% (up 13.6% y-t-d).
Japan’s Nikkei 225 Equities Index added 0.7% (up 13.7% y-t-d). Japanese 10-year “JGB” yield added a basis point to 1.65% (up 555bps y-t-d). France’s CAC40 increased 0.2% (up 6.6%). The German DAX equities index added 0.4% (up 19.2%). Spain’s IBEX 35 equities index gained 0.6% (up 32.4%). Italy’s FTSE MIB index rose 0.8% (up 24.7%). EM equities were mixed. Brazil’s Bovespa index slipped 0.3% (up 20.9%), while Mexico’s Bolsa index rallied 1.8% (up 25.8%). South Korea’s Kospi dropped 1.7% (up 41.1%). India’s Sensex equities index fell 2.7% (up 2.4%). China’s Shanghai Exchange Index increased 0.2% (up 14.2%). Turkey’s Borsa Istanbul National 100 index declined 1.3% (up 13.4%).
Federal Reserve Credit increased $1.2 billion last week at $6.560 TN. Fed Credit was down $2.329 TN from the June 22, 2022, peak. Over the past 315 weeks, Fed Credit expanded $2.834 TN, or 76%. Fed Credit inflated $3.750 TN, or 133%, over 672 weeks. Elsewhere, Fed holdings for foreign owners of Treasury, Agency Debt increased $2.6 billion last week to $3.122 TN – just off the low back to November 2016. “Custody holdings” were down $194 billion y-o-y, or 5.9%.
Total money market fund assets (MMFA) jumped $31 billion to a record $7.315 TN. MMFA were up $890 billion, or 14.1%, y-o-y – and have ballooned a historic $2.730 TN, or 59.6%, since October 26, 2022.
Total Commercial Paper declined $5.0 billion to $1.378 TN. CP has expanded $290 billion y-t-d and $146 billion, or 11.8%, y-o-y.
Freddie Mac 30-year fixed mortgage rates increased four bps to 6.30% (up 22bps y-o-y). Fifteen-year rates jumped eight bps to 5.40% (up 33bps). Bankrate’s survey of jumbo mortgage borrowing costs had 30-year fixed rates down four bps to a 20-month low of 6.49% (down 27bps).
Currency Watch:
For the week, the U.S. Dollar Index gained 0.5% to 98.152 (down 9.5% y-t-d). On the upside, the Mexican peso increased 0.2%, and the Swedish krona inched 0.1% higher. On the downside, the New Zealand dollar declined 1.5%, the Canadian dollar 1.1%, the Japanese yen 1.0%, the South Korean won 0.9%, the Australian dollar 0.8%, the Singapore dollar 0.6%, the British pound 0.5%, the Brazilian real 0.4%, the euro 0.4%, the Norwegian krone 0.3%, and the Swiss franc 0.3%. The Chinese (onshore) renminbi declined 0.23% versus the dollar (up 2.31% y-t-d).
Commodities Watch:
September 25 – Bloomberg (Sybilla Gross and Mark Burton): “Silver rose above $45 an ounce for the first time in 14 years while gold neared another record high, bolstered by a risk-off mood in equity markets and ongoing worries about the trajectory of the US economy.”
The Bloomberg Commodities Index rallied 2.1% (up 6.4% y-t-d). Spot Gold jumped 2.0% to a record $3,760 (up 43.3%). Silver surged 7.0% to $46.0803 (up 59.4%). WTI crude rallied $3.00 to $65.72 (down 8%). Gasoline recovered 3.4% (up 1%), and Natural Gas surged 11.0% to $3.206 (down 11%). Copper jumped 3.1% (up 19%). Wheat declined 0.5% (down 6%), and Corn slipped 0.5% (down 8%). Bitcoin dropped $5,900, or 5.1%, to $109,700 (up 17.1%).
Market Instability Watch:
September 24 – Bloomberg (James Hirai): “The UK’s gilt market jitters are starting to impact demand at government auctions as fiscal concerns grow ahead of the budget in November. The Debt Management Office’s sales of five and 30-year bonds this week both saw measures of demand hit the lowest in at least two years, while some signs of weakness also appeared at offerings of nine-year and 13-year debt via tenders on Thursday.”
September 23 – Bloomberg (Carter Johnson): “The effective federal funds rate edged higher on Monday, a rare move that sparked selling in futures tied to the benchmark and may signal tighter financial conditions ahead. The rate rose one basis point to 4.09% from 4.08% the prior session… It remains inside the Federal Open Market Committee’s 4% to 4.25% band, set last week when policymakers cut borrowing costs. For the past two years, the metric has been stuck near the lower end of the range.”
September 25 – Bloomberg (Alex Harris): “The US banking system’s reserves, a key factor in the Federal Reserve’s decision to keep shrinking its balance sheet, tumbled for the seventh straight week to below $3 trillion as liquidity continues to drain from the financial system. Bank reserves fell by about $21 billion to $2,999.7 trillion in the week through Sept. 24… The drop comes as the Treasury has ramped up debt issuance to rebuild its cash balance following the increase in the debt ceiling in July. That drains liquidity from other liabilities on the Fed’s ledger, like the central bank’s overnight reverse repurchase agreement facility and bank reserves.”
Global Credit and Financial Bubble Watch:
September 24 – Bloomberg (Rene Ismail, Scott Carpenter and Charles Williams): “Bonds backed by private credit loans are now among the hottest financial products on Wall Street with heavyweight firms like Blackstone, Apollo Global Management and Golub Capital selling them at the fastest pace on record. The securities, known as collateralized loan obligations, are taking up an ever larger part of the $1.7 trillion private credit market. While most CLOs are backed by loans that banks give companies, known as broadly syndicated loans, private credit firms have muscled into the space with the loans they give smaller firms also being securitized and sold. Firms like Blackstone are increasingly bundling their private credit debt into CLOs — which offer some of the industry’s highest returns — to meet booming investor demand as spreads shrink across corporate bond markets.”
September 24 – Financial Times (Eric Platt and Robert Smith): “US debt investors have raised the alarm over lax lending standards in credit markets after the unravelling of two companies that just weeks ago were deemed to be in strong health. The failure of subprime auto lender Tricolor Holdings at the start of this month followed by the exploration of bankruptcy proceedings by car parts supplier First Brands Group have wrongfooted investors. Tricolor had won pristine triple-A ratings as it borrowed in credit markets, while First Brands may have amassed as much as $10bn in debt and off-balance sheet financing and was close to raising even more last month.”
September 26 – Bloomberg (Francesca Veronesi): “Moves by private credit giants to muscle into lending to blue-chip firms took center stage at a gathering of executives in Paris this week, given the potential to propel the industry’s future growth. The likes of Apollo Global Management and Blue Owl Capital have already made waves with their multi-billion dollar high-grade deals and now other large investment firms want in. This is seen as the next frontier, particularly with the opportunity to fund huge data centers to cater for AI… ‘Investment-grade private credit is the new topic all investors have been asking us about today,’ said Daniel Leiter, the international head for Blackstone Inc.’s credit & insurance unit… There was particular interest from insurers, he added.”
September 24 – Bloomberg (Sinead Cruise): “Bumper demand for corporate credit exposure is helping Wall Street banks recover ground lost to private lenders… JPMorgan…, Goldman Sachs and Citigroup have won ultra-competitive mandates on buyout financings from the likes of KKR and Advent International in recent weeks… thanks in part to a welter of new collateralized loan obligation funds that are giving banks the opportunity to slash the rates they can offer borrowers. Around 160 new structures have put a rocket under syndicated loan markets, pushing borrowing costs to the lowest levels seen for years, according to Daniel Rudnicki Schlumberger, JP Morgan’s head of leveraged finance for EMEA… Investment firms sold more than $320 billion of bonds backed by loans this year through mid-August, a record volume…”
September 23 – Bloomberg (Rachel Graf): “Loans with strong financial safeguards have largely disappeared from credit markets as borrowers backed by private equity are driving a surge of riskier loans that return less money in a default, according to a Moody’s Ratings report. Lenders recovered an average of 57% on first-lien so-called cov-lite loans between 2023 and mid-2025, compared to 66% on a ‘small and shrinking’ number of loans that include financial maintenance covenants… Almost three-quarters of rated borrowers with cov-lite loans are private equity-backed, Moody’s wrote.”
September 20 – Reuters (Ethan M Steinberg): “Investors in US corporate bonds are earning so much money from their interest payments and reinvesting it so quickly that companies can’t keep up with the demand. Blue-chip businesses have sold more than $1 trillion of bonds this year through August… Yet money managers have received even more than that in interest and principal payments, according to BNP Paribas — most of which they will pour back into the market. The bank estimates that investors have about $74 billion more cash to reinvest than there have been bonds sold by companies. Without enough new notes to buy, money managers are turning to the credit derivatives market…, gaining exposure to more than $110 billion of debt through the main North American high-grade credit-default swap index… That’s near the highest in at least three years.”
Trump Administration Watch:
September 23 – Bloomberg (Catherine Lucey, Josh Wingrove and Jennifer A. Dlouhy): “President Donald Trump assailed the United Nations and other countries in a grievance-laden speech that saw him accuse the world body of offering nothing but ‘empty words,’ label climate change a ‘con job’ and warn that open borders are destroying them. Setting aside calls for unity, Trump began his speech to the UN General Assembly by venting his frustration that the UN hadn’t done more to support his diplomatic efforts. He faulted the organization over an escalator that broke down just as First Lady Melania Trump stepped onto it, said his teleprompter was also malfunctioning and ruminated on a two-decade-old grudge over his rejected bid to renovate the UN headquarters. His closing message swept aside some of the UN’s most cherished files: climate change, which Trump repeatedly called a hoax, and uncontrolled migration, which he declared the top political issue of the era. ‘Countries that cherish freedom are fading fast because of their policies on these two subjects. You need strong borders and traditional energy sources if you are going to be great again… Your countries are going to hell.’”
September 21 – Wall Street Journal (Sadie Gurman and C. Ryan Barber): “President Trump all but ordered Attorney General Pam Bondi to prosecute his political foes, in a series of weekend posts… ‘We can’t delay any longer, it’s killing our reputation and credibility,’ Trump wrote in a social-media post, addressed to ‘Pam,’ that called for cases against several of his adversaries: New York Attorney General Letitia James, former Federal Bureau of Investigation Director James Comey and Sen. Adam Schiff. Trump continued: ‘JUSTICE MUST BE SERVED, NOW!!!’ Trump’s demand came after he ousted a top federal prosecutor in Virginia who was pressured to bring criminal charges against James and Comey but hadn’t done so. Later on Saturday night, Trump in a gaggle with reporters said, ‘I just want people to act. They have to act. And we want to act fast.’”
September 22 – Wall Street Journal (Sadie Gurman and C. Ryan Barber): “When Attorney General Pam Bondi swore in a new U.S. attorney for eastern Virginia…, it wasn’t a routine act by the nation’s top law-enforcement official. It marked instead the latest step in an escalating pressure campaign by President Trump to more aggressively target his political enemies. His demand that Bondi prosecute his adversaries has put her in a bind and alarmed some current and former Justice Department officials who say it threatens the institution’s credibility in ways that will be difficult to repair. Trump on Friday ousted the leader of the Virginia office, Erik Siebert, a veteran prosecutor with conservative credentials who had Bondi’s support but who hadn’t been able to muster a case against New York Attorney General Letitia James on allegations of mortgage fraud, which she denies. The president on Saturday then picked one of his former personal lawyers to take Siebert’s place: Lindsey Halligan. She has spent much of her career as an insurance lawyer…”
September 25 – Axios: “Former FBI Director James Comey was indicted… in Virginia federal court and charged with making false statements to Congress, a source familiar with the matter told Axios. The indictment of a former FBI director is unprecedented and the culmination of a years-long feud between Comey and President Trump… ‘No one is above the law,’ Attorney General Pam Bondi said… ‘Today’s indictment reflects this Department of Justice’s commitment to holding those who abuse positions of power accountable for misleading the American people. We will follow the facts in this case.’”
September 25 – Associated Press (Konstantin Toropin, Emma Burrows and Ben Finley): “Defense Secretary Pete Hegseth has summoned the military’s top officers — hundreds of generals and admirals — to a base in northern Virginia for a sudden meeting next week, according to three people familiar with the matter. The directive did not offer a reason for the gathering next Tuesday of senior commanders of the one-star rank or higher and their top advisers at the Marine Corps base in Quantico.”
September 24 – Bloomberg (Daniel Flatley and John Harney): “Treasury Secretary Scott Bessent expressed disappointment that Federal Reserve Chair Jerome Powell hasn’t clearly established an agenda for cutting interest rates. ‘Rates are too restrictive, they need to come down,’ Bessent told Maria Bartiromo… ‘I’m a bit surprised that the chair hasn’t signaled that we have a destination before the end of the year of at least 100 to 150 bps.’”
September 24 – Financial Times (Ciara Nugent, Claire Jones and Joseph Cotterill): “US Treasury secretary Scott Bessent said that Washington was in talks to provide a $20bn swap line to Argentina and was prepared to buy its dollar debt, vowing support for libertarian President Javier Milei in defeating ‘speculators’. Bessent said the White House would be ‘resolute in our support for allies of the US’, as it sought to calm a market crisis engulfing Milei, the only Trump ally leading a major Latin American economy. In a post…, Bessent said that ‘the Treasury is currently in negotiations with Argentine officials for a $20 billion swap line with the Central Bank’. He added: ‘The US Treasury stands ready to purchase Argentina’s USD bonds and will do so as conditions warrant.’”
September 23 – Wall Street Journal (Ryan Dubé): “Argentine President Javier Milei is staking the future of his free-market overhaul on his relationship with President Trump… ‘We’re going to help them,’ Trump told reporters… after meeting with Milei… ‘If he can continue to do the job that he’s been doing, it’s going to really be something special.’”
September 23 – Bloomberg (Jonathan Levin): “Rookie Federal Reserve Governor Stephen Miran — who’s on loan from his regular job with President Donald Trump’s Council of Economic Advisers — on Monday laid out the theoretical justification for his far-out-of-consensus call for steep and swift rate cuts. In a speech at the Economic Club of New York, he claimed that the US economy’s ‘neutral rate’ has dropped significantly and that, therefore, current interest rates are unduly restrictive, risking higher unemployment. Does Miran really believe that? Or is he providing a rationalization for the president’s long-desired rate cuts? Wherever one lands, these nagging questions show why previous administrations have drawn clear (or at least clearer) lines between the executive branch and the independent central bank.”
September 19 – CNBC (Jeff Cox): “White House confidante Steve Bannon has an unusual solution for who should take over as Federal Reserve Chair Jerome Powell next year… Bannon recommended that Treasury Secretary Scott Bessent helm the central bank — while also keeping his current position. ‘I am a big believer that on an interim basis, that Scott Bessent should be both the head of the Federal Reserve and the secretary of Treasury, and maybe get through the midterm elections, step down at Treasury and take over the Federal Reserve,’ Bannon said…”
September 20 – Reuters (Katharine Jackson and Phil Stewart): “U.S. President Donald Trump on Saturday threatened ‘bad things’ would happen to Afghanistan if it does not give back control of the Bagram air base to the United States, and declined to rule out sending in troops to retake it. ‘If Afghanistan doesn’t give Bagram Airbase back to those that built it, the United States of America, BAD THINGS ARE GOING TO HAPPEN,’ Trump said…”
September 21 – Associated Press: “The Taliban government… rejected U.S. President Donald Trump’s bid to retake Bagram Air Base, four years after America’s chaotic withdrawal from Afghanistan left the sprawling military facility in the Taliban’s hands.”
September 21 – ABC: “Charlie Kirk was remembered as a ‘martyr’ and ‘warrior’ by some of the leading lights of the conservative movement, the Trump administration, friends as well as his grieving widow during a packed memorial service in Arizona Sunday. As President Trump and others noted, the service felt more like a ‘revival’ rather than a memorial, and Kirk’s connection to and efforts for his Christian faith were on full display throughout. Kirk was recalled for the movement among young conservatives that he helped spark, his willingness to debate and his fearlessness in the face of threats. In a poignant moment, Kirk’s widow, Erika said that she forgives her husband’s alleged assassin.”
China Trade War Watch:
September 23 – Bloomberg: “The US-China dispute over Beijing’s control of rare earth supplies has yet to be resolved, the head of a visiting US congressional delegation said after meeting Chinese officials… Representative Adam Smith described continuing challenges on the matter in a press briefing on Tuesday in the Chinese capital, where he’s leading the first official visit by US House lawmakers since 2019… ‘I don’t think we resolved the rare earth question,’ Smith said, without specifying what the sticking points are. ‘I think that that still needs to be worked on.’”
September 25 – New York Times (Kevin Draper): “Each week, the Agriculture Department publishes a summary of the latest exports of American crops. Lately, they have all been missing the same thing: The sale of soybeans to China. Soybeans are the single largest American export to China in terms of value, $12.6 billion worth last year. But as the fall harvest gets underway across the country… the country that bought 52% of all American soybean exports last year is completely absent. Sept. 1 was the beginning of the new marketing year for soybeans, the starting point for big sales. Instead, China hasn’t bought any American soybeans since May.”
September 22 – Bloomberg (Jonnelle Marte): “President Xi Jinping’s export engine has proved unstoppable during five months of sky-high US tariffs, sending China toward a record $1.2 trillion trade surplus. With access to the US curtailed, Chinese manufacturers have shown they aren’t backing down: Indian purchases hit an all-time high in August, shipments to Africa are on track for an annual record and sales to Southeast Asia have exceeded their pandemic-era peak.”
Trade War Watch:
September 26 – Associated Press (Josh Boak): “President Donald Trump said… he will put import taxes of 100% on pharmaceutical drugs, 50% on kitchen cabinets and bathroom vanities, 30% on upholstered furniture and 25% on heavy trucks starting on Oct. 1. The posts… showed that Trump’s devotion to tariffs did not end with the trade frameworks and import taxes that were launched in August, a reflection of the president’s confidence that taxes will help to reduce the government’s budget deficit while increasing domestic manufacturing.”
September 24 – Financial Times (Haeyoon Kim): “‘The United States seems to have changed,’ South Korean Foreign Minister Cho Hyun said last week in the national assembly. His remarks came against the backdrop of harrowing accounts from South Korean nationals detained in an Immigration and Customs Enforcement agency raid on the Hyundai-LG plant in Georgia and recently released to return home… Having watched how quickly handshakes at a summit in Washington can turn into handcuffs in an immigration raid in Georgia, public sentiment in Seoul towards the deal is showing signs of hardening.”
September 24 – Reuters (Jack Kim, Hyunjoo Jin, Cynthia Kim and Jihoon Lee): “South Korean President Lee Jae Myung told U.S. Treasury Secretary Scott Bessent that trade talks with the United States should be ‘commercially rational’ and meet the interests of both countries, the president’s office said… Lee spoke to Bessent at the United Nations on the sidelines of the General Assembly… The meeting focused on the $350 billion package of investment from South Korea agreed in principle between Lee and U.S. President Donald Trump at a summit in July as part of a deal to lower tariffs against South Korean goods, Kim said. ‘With regard to the investment package with the U.S., (Lee) expressed hope that the discussions would progress based on commercial rationality and in a direction that serves the interests of both countries,’ Kim said.”
September 22 – Reuters (Josh Smith, Hyunjoo Jin and Heejung Jung): “South Korea’s economy could fall into crisis rivalling its 1997 meltdown if the government accepts current U.S. demands in stalled trade talks without safeguards, President Lee Jae Myung told Reuters. Seoul and Washington verbally agreed to a trade deal in July in which the U.S. would lower President Donald Trump’s tariffs on South Korean goods in exchange for $350 billion in investment from South Korea, among other measures. They have yet to put the agreement to paper because of disputes over how the investments would be handled, Lee said. ‘Without a currency swap, if we were to withdraw $350 billion in the manner that the U.S. is demanding and to invest this all in cash in the U.S., South Korea would face a situation as it had in the 1997 financial crisis,’ he said…”
September 22 – Reuters (Aditya Kalra): “Indian Prime Minister Narendra Modi in a public address… asked citizens to stop using foreign-made products and instead use local ones, pushing for a self-reliant campaign when trade ties with the United States have soured. After U.S. President Donald Trump imposed a 50% tariff on imported Indian goods, Modi has been urging use of ‘Swadeshi’, or made-in-India goods. His supporters have started campaigns to boycott American brands including McDonald’s, Pepsi and Apple, which are hugely popular in India.”
Constitution Watch:
September 24 – Bloomberg (Lucas Shaw): “Walt Disney Co. is preparing for President Donald Trump to retaliate against the company for putting late-night host Jimmy Kimmel back on the air Tuesday night. The company had been anticipating the Trump administration might go after its broadcast TV licenses even before ABC’s late-show host made his controversial Sept. 15 remarks about the murderer of activist Charlie Kirk, two people familiar with the company’s thinking said. Under the Trump administration, major media companies have faced unprecedented challenges. The president himself has sued several companies for alleged bias, in some cases winning settlements that angered free-speech advocates, and members of his administration have used their authority to influence coverage.”
September 24 – Financial Times (Editorial Board): “One way to gauge the intentions of would-be authoritarians is to see how far they tolerate the jesters. An early sign of Vladimir Putin’s quest to bring Russian media to heel was the 2001 axing of Kukly (Puppets), a TV show that often satirised the thin-skinned president. There were Putinesque echoes in last week’s suspension in the US of Jimmy Kimmel’s late-night talk show by Disney-owned ABC — two months after his fellow comic Stephen Colbert, to whom President Donald Trump has a similar aversion, was taken off air. Kimmel’s return this week after a noisy backlash is a notable reversal, even if nearly 70 local TV stations refused to screen his show. But the threats to US media freedom are only growing.”
September 25 – Associated Press (Jill Colvin): “President Donald Trump’s unprecedented retribution campaign against his perceived political enemies reached new heights as his Justice Department brought criminal charges against a longtime foe and he expanded his efforts to classify certain liberal groups as ‘domestic terrorist organizations.’ Days after Trump publicly demanded action from his attorney general and tapped his former personal lawyer to serve as the top federal prosecutor in Virginia, former FBI Director James Comey, a longtime target of Trump’s ire, was indicted by a grand jury for allegedly lying to Congress during testimony in 2020. Hours earlier Thursday, Trump signed a memorandum directing his Republican administration to target backers of what he dubbed ‘left-wing terrorism’ as he alleged without evidence a vast conspiracy by Democrat-aligned nonprofit groups and activists to finance violent protests.”
September 25 – Wall Street Journal (Nick Timiraos): “The Supreme Court is poised to decide whether President Trump can remove Lisa Cook from the Federal Reserve’s board in a case that economists and former Fed officials say threatens to severely erode decades of central bank independence. Trump’s broad challenge over interest-rate policy, which began with sustained criticism but has moved to direct action to remove governors, ‘represents an existential crisis for the Fed,’ said Ethan Harris, former head of global economic research at Bank of America. The Trump administration has asked the Supreme Court to overturn lower court rulings that said Cook could stay on the job while she challenges the White House’s attempt to fire her.”
September 22 – Associated Press (Lindsay Whitehurst): “The Supreme Court said… it will consider expanding President Donald Trump’s power to shape independent agencies by overturning a nearly century-old decision limiting when presidents can fire board members. In a 6-3 decision, the high court also allowed the Republican president to carry out the firing of Rebecca Slaughter, a Democratic member of the Federal Trade Commission… It’s the latest high-profile firing the court has allowed in recent months, signaling the conservative majority could be poised to overturn or narrow a 1935 Supreme Court decision that found commissioners can only be removed for misconduct or neglect of duty.”
Budget Watch:
September 23 – Wall Street Journal (Jasmine Li and Natalie Andrews): “President Trump backed out of a planned meeting with Democrats as the country inched toward a government shutdown a week from now, with no negotiations set to find a way out of the impending crisis that would affect government services and hundreds of thousands of federal workers. ‘After reviewing the details of the unserious and ridiculous demands being made by the Minority Radical Left Democrats in return for their Votes to keep our thriving Country open, I have decided that no meeting with their Congressional Leaders could possibly be productive,’ Trump wrote…”
September 25 – Wall Street Journal (Lindsay Wise, Ken Thomas and Katy Stech Ferek): “The U.S. government is hurtling toward a shutdown in a matter of days with no exit ramp in sight, as Republicans and Democrats latch onto starkly different positions and the White House threatens to lay off more federal workers. Republicans are seeking a seven-week extension in federal funding at current levels, and they have dismissed Democrats’ demands for hundreds of billions of dollars in healthcare spending. In a move to raise the political pressure, President Trump’s budget chief late Wednesday vowed to use any lapse in funding to make deeper cuts in the federal workforce, a threat Democrats rejected as blackmail.”
September 24 – Axios (Andrew Solender): “House Minority Leader Hakeem Jeffries (D-N.Y.) drew a clear line in the sand Wednesday on what a deal to stop a government shutdown must look like, telling reporters he will not accept any type of unwritten agreement. It’s the latest stumbling block in the tense and largely fruitless cross-party posturing over the need to extend federal funding past September. Jeffries and Senate Minority Leader Chuck Schumer (D-N.Y.) had initially secured a meeting with President Trump earlier this week, but it was cancelled at the urging of Republican congressional leaders. Funding is set to run out at midnight on Sept. 30, at which point most federal agencies will shut down without a spending agreement from Congress.”
U.S./Russia/China/Europe/Iran Watch:
September 25 – Politico (Gregory Svirnovskiy): “Sergey Lavrov, Russia’s foreign minister, on Thursday suggested his country is at ‘war’ with NATO and the European Union over Ukraine, as President Donald Trump rethinks his approach to ending the conflict Russian President Vladimir Putin started more than three years ago. ‘NATO and the European Union want to declare, in fact, have already declared a real war on my country and are directly participating in it,’ Lavrov said…”
September 24 – Politico (Ketrin Jochecova): “Moscow gave Donald Trump a zoology lesson…, insisting that Russia is ‘a bear’ and not ‘a paper tiger’ on the geopolitical stage. ‘Russia is by no means a tiger. Russia is traditionally seen as a bear. There is no such thing as paper bears. Russia is a real bear… There is nothing paper about it,’ Kremlin spokesperson Dmitry Peskov said… The Kremlin official was responding to Trump’s overtly pro-Ukraine remarks, in which the U.S. president mocked Russia’s failure to win the war swiftly and said Kyiv could get all of its territory back from Moscow’s forces.”
September 26 – Bloomberg (Patrick Donahue, Andrea Palasciano and Alex Wickham): “European diplomats warned the Kremlin this week that NATO is ready to respond to further violations of its airspace with full force, including by shooting down Russian planes, according to officials familiar… At a tense meeting in Moscow, British, French and German envoys addressed their concerns about an incursion by three MiG-31 fighter jets over Estonia last week… Following the conversation, they concluded that the violation had been a deliberate tactic ordered by Russian commanders.”
September 23 – Bloomberg (Milda Seputyte and Andrea Palasciano): “The North Atlantic Treaty Organization promised a ‘robust’ response to Russian incursions into its airspace and said it would use all options, including military, to defend itself. ‘Allies will employ, in accordance with international law, all necessary military and non-military tools to defend ourselves and deter all threats from all directions,’ NATO said… ‘Allies will not be deterred by these and other irresponsible acts by Russia.’”
September 25 – Wall Street Journal (Sune Engel Rasmussen): “Denmark said it had suffered a hybrid attack by a professional actor after drones were observed over several airports late on Wednesday, the second time in less than a week that unmanned aircraft have disrupted air traffic in the Nordic nation, a NATO member… ‘We currently don’t know who is behind it. But everything suggests that it is a professional actor, given that it is such a systematic operation against so many locations, practically simultaneously,’ Danish Defense Minister Troels Lund Poulsen said…”
September 22 – Bloomberg (Agnieszka Barteczko and Piotr Skolimowski): “Prime Minister Donald Tusk said Poland is prepared to shoot down foreign aircraft that cross into its territory without authorization after a series of Russian incursions into NATO airspace. ‘We will most certainly take decisions to shoot down flying objects when they violate our territory and fly over Poland,’ Tusk said… ‘There is no room for discussion here.’”
September 25 – Reuters: “Chinese drone experts have flown to Russia to conduct technical development work on military drones at a state-owned weapons manufacturer that is under Western sanctions, according to two European security officials… The Chinese experts have visited arms maker IEMZ Kupol on more than half a dozen occasions since the second quarter of last year. During that time, Kupol also received shipments of Chinese-made attack and surveillance drones via a Russian intermediary, according to the documents and two officials.”
September 26 – Washington Post (Catherine Belton and Christian Shepherd): “Russia has agreed to equip and train a Chinese airborne battalion and share its expertise in airdropping armored vehicles that analysts say could boost Beijing’s capacity to seize Taiwan… The agreements allow Beijing to access training and technology in one of the few areas where Russian capabilities still surpass those of the Chinese military: Russia’s more experienced airborne troops, military analysts said. Moscow has become increasingly dependent on China for dual use items to prop up its sanctions-hit military industry and sustain its war in Ukraine…”
September 22 – Financial Times (Chris Cook and Christopher Miller): “A Chinese cargo ship has visited the Russian-occupied port of Sevastopol in Crimea — making an unprecedented series of stops by a major foreign vessel to one of the Ukrainian ports seized by Russia. The use of Sevastopol has been barred by western sanctions since 2014… While China has not adopted the western sanctions regime against Russia, its commercial ships have previously avoided Russian-held ports.”
Ukraine War Watch:
September 23 – Axios (Barak Ravid and Zachary Basu): “President Trump said… he believes Ukraine can ‘win’ the war against Russia and take back all of the territory lost over the course of Moscow’s invasion. Trump’s remarks after meeting with Ukrainian President Volodymyr Zelensky… represent an extraordinary 180-degree shift in his position on the war… ‘After getting to know and fully understand the Ukraine/Russia Military and Economic situation and, after seeing the Economic trouble it is causing Russia, I think Ukraine, with the support of the European Union, is in a position to fight and WIN all of Ukraine back in its original form,’ Trump wrote… He said that ‘with time, patience, and the financial support of Europe and, in particular, NATO, the original Borders from where this War started, is very much an option.’ Trump called Russia’s military ‘a paper tiger’ and said that the people of Russia do not know the full extent of the economic destruction that President Vladimir Putin has caused. ‘Putin and Russia are in BIG Economic trouble, and this is the time for Ukraine to act. We will continue to supply weapons to NATO for NATO to do what they want with them,’ Trump added.”
September 23 – Axios (Stef W. Kight): “Senate Republican foreign policy hawks praised President Trump… for posting that he believes Ukraine can ‘win’ the war against Russia and take back all of its lost territory… Several key GOP congressional leaders on foreign policy were quick to back up the president’s new confidence in Ukraine. ‘President Trump’s strong speech and post today show why he’s the peace-through-strength President,’ Senate Intelligence Chair Tom Cotton (R-Ark.) told Axios… Sen. Lindsey Graham (R-S.C.) wrote… ‘Trump is correct in assessing that the Russian economy is under stress and this will only get worse if we make buying cheap Russian oil and gas toxic for those who choose that path’… Senate Armed Services Chair Roger Wicker (R-Miss.) posted: ‘President Trump and I believe Ukraine can win – a fact President Biden avoided saying for years. It is time to ramp up pressure on Putin to end this senseless bloodshed.’”
September 24 – Wall Street Journal (Editorial Board): “President Trump has the world’s attention with his social-media post… that Ukraine could ‘fight and WIN’ back all of its territory. His remarks this week are his best and toughest to date on the war. But is this another stall tactic—or is the President at last ready to raise the military and economic pressure on Vladimir Putin to end his conquest? ‘With time, patience, and the financial support of Europe and, in particular, NATO, the original Borders from where this War started, is very much an option,’ Mr. Trump wrote… He called Russia a ‘paper tiger’ in ‘BIG Economic trouble.’ He also told reporters that he had thought Ukraine would be an easy war to mediate ‘because of my relationship with Putin. But unfortunately, that relationship didn’t mean anything.’ Asked if European allies should shoot down Russian planes that violate NATO airspace, the President offered a clear ‘Yes’.”
September 25 – Financial Times (Anne-Sylvaine Chassany, Ben Hall, Amy Mackinnon, Christopher Miller and Raphael Minder): “European officials fear Donald Trump’s latest rhetoric on Ukraine aims to set them an impossible mission that will allow the US president to shift blame away from Washington if Kyiv falters in the war or runs short of cash. After months of pressing Ukraine to settle with Moscow and give up Russian-occupied territory, the US president stunned European capitals… by declaring… that Kyiv could ‘fight and win’ all its land ‘with the help of the EU’. While Trump’s new stance was welcomed in some quarters, several European officials concluded he was handing them responsibility for Ukraine’s defence with expectations that Europe would find hard to meet.”
September 23 – Financial Times (Christopher Miller, Malcolm Moore and Anastasia Stognei): “Ukraine’s drone strikes on Russian oil refineries have disrupted domestic supplies and pushed Russia’s diesel exports towards their lowest levels since 2020. Sixteen of Russia’s 38 refineries have been hit since the start of August, some of them multiple times, including one of Russia’s largest fuel-processing facilities, the 340,000 barrel-a-day plant at Ryazan, close to Moscow. The strikes have disrupted more than 1mn barrels a day of Russia’s refining capacity… ‘It seems to be the most effective campaign that Ukraine has carried out so far,’ said Benedict George, head of European petroleum products pricing at Argus…”
Middle East Watch:
September 26 – Bloomberg (Patrick Sykes): “Iran’s parliament will on Sunday debate a letter by its members calling for a change in the country’s stated policy of not pursuing nuclear weapons, raising the stakes in the diplomatic showdown over Tehran’s atomic work ahead of a key UN vote. The letter to the Supreme National Security Council by 71 of parliament’s 290 lawmakers ‘asked for a change in the nuclear strategy’ due to ‘recent events,’ Deputy Speaker Ali Nikzad told Iranian state TV, citing the 12-day war with Israel in June.”
AI Bubble/Arms Race Watch:
September 22 – Wall Street Journal (Robbie Whelan and Bradley Olson): “Nvidia’s move to invest $100 billion into OpenAI to help finance a historic data center build-out has helped reset market expectations about the startup’s shaky finances. It’s a familiar play by the chip giant. Chief Executive Jensen Huang has repeatedly sought to leverage the enormous confidence investors have in Nvidia’s future to help strengthen the company’s supply chain partners. It has used its balance sheet clout to keep the AI boom humming through deals, partnerships and investments in companies that are among its top customers… The deals highlight an issue that some investors are calling ‘circularity’ in Nvidia’s prospects, whereby the company takes steps to boost or shore up demand for its AI chips by supporting startups and other companies. Those companies can then use those funds or new liquidity to buy Nvidia chips. For every $10 billion Nvidia invests in OpenAI, the startup will spend $35 billion on Nvidia chips, according to an analysis from NewStreet Research.”
September 25 – Axios (Scott Rosenberg): “With their latest deals to fund the data center boom, AI firms are making history — in terms of dollar size, convention-busting structure, and astronomical risk. The U.S. is betting its economic fortunes on the belief that OpenAI’s Sam Altman, Nvidia’s Jensen Huang and other AI leaders are wizardly innovators dreaming up novel financing vehicles to drive a golden future — rather than salesmen juggling billions and praying the music never stops. The trillion-dollar question neither Silicon Valley nor Wall Street can answer is whether the AI building spree will end up looking more like Google’s epochal long-term value creation or Enron’s catastrophically faulty financial engineering. Nvidia announced Monday it would invest up to $100 billion in OpenAI in stages, with OpenAI using the money to ‘build and deploy at least 10 gigawatts of AI data centers with Nvidia systems.’”
September 23 – Wall Street Journal (Dan Gallagher): “Nvidia has a problem most of its competitors would kill to have: The AI-chip giant has too much money. Nvidia has made big headlines over the past few days not for all the chips that it sells, but for the big checks it can write. The company said late last week it is investing $5 billion into beleaguered chip manufacturer Intel. Then came news Monday of a plan for Nvidia to invest up to $100 billion in OpenAI over an unspecified period that will likely span at least a few years.”
Bubble and Mania Watch:
September 24 – Wall Street Journal (Gunjan Banerji): “The market for cryptocurrencies is known for boom-and-bust trades. It is about to get even wilder. Traders seeking rapid returns have made a speculative bitcoin play one of the most popular crypto bets globally: so-called perpetual futures. These potentially offer returns of 10, 20 or even 100 times an initial investment—or huge losses that could leave a trader with nothing. Known as perps, the contracts give traders access to extreme leverage and have exploded in popularity during a rally that has sent bitcoin prices up more than 70% over the past year.”
September 24 – Reuters (Suzanne McGee and Hannah Lang): “Asset managers are lining up to launch cryptocurrency exchange-traded funds, capitalizing on growing excitement around digital assets while getting a boost from looser regulatory requirements to bring products to market. The U.S. Securities and Exchange Commission’s updated standards for ETFs, announced last week, could encourage demand for exchange-traded products tied to cryptocurrencies ranging from solana to dogecoin.”
September 22 – Financial Times (Nikou Asgari): “Struggling crypto-hoarding companies are launching share buybacks in an attempt to boost their stock prices, in the latest sign that this year’s ‘crypto treasury’ craze is unravelling. An online gaming company and a maker of golf carts are among lightly traded companies that pivoted to buying cryptocurrencies as little as two months ago, yet are now embarking on share buybacks in an effort to lift their falling stock prices. Some are taking on debt to fund the purchases. At least seven companies have taken such steps in recent weeks — five of which have a market value that has sunk below the value of their crypto holdings, as investors worry about a saturated market and raise questions about the crypto treasury business model.”
September 26 – Associated Press (Alex Beiga): “It pays less and less to buy and flip a home these days. From April through June, the typical home flipped by an investor resulted in a 25.1% return on investment, before expenses. That’s the lowest profit margin for such transactions since 2008, according to an analysis by Attom…”
September 22 – Wall Street Journal (Katherine Clarke): “Scott Mitchell is known for designing homes for the 1%, serving high-profile clients like Jeffrey Katzenberg and Tom Brady. Inspired by the profits that some of his homes command when they sell, Mitchell turned his hand to the spec-home market, spending close to a decade designing and building a roughly 22,000-square-foot estate on a promontory in Los Angeles. He is now putting the Hollywood Hills home on the market for $125 million, a price that could set a record for the neighborhood…”
Inflation Watch:
September 25 – Wall Street Journal (Jinjoo Lee): “Utility bills are getting expensive and catching the attention of politicians. That means unpleasant surprises could be building up for utility investors. Power prices have been rising faster than inflation for the past few years. Electricity prices in August were 31% higher than four years earlier… Data centers’ increasing power needs are partly to blame, but so are overdue investments to upgrade aging parts of the grid and costs associated with replacing old coal-fired power plants. Inflation for inputs from steel to labor all contribute to higher electricity bills.”
September 23 – Wall Street Journal (James Glynn): “Inflation pressures are once again building in Australia, with a monthly reading of price pressures hitting its highest level in just over a year in August. The monthly consumer-price index indicator rose 3.0% in the 12 months to August…”
Federal Reserve Watch:
September 23 – Associated Press (Christopher Rugaber): “Federal Reserve Chair Jerome Powell… signaled a cautious approach to future interest rate cuts, in sharp contrast with other Fed officials this week who have called for a more urgent approach. In remarks in Providence, Rhode Island, Powell noted that there are risks to both of the Fed’s goals of seeking maximum employment and stable prices… If the Fed were to cut rates ‘too aggressively,’ Powell said, ‘we could leave the inflation job unfinished and need to reverse course later’ and raise rates. But if the Fed keeps its rate too high for too long, ‘the labor market could soften unnecessarily,’ he added.”
September 24 – Bloomberg (Edward Bolingbroke): “Traders are reducing their expectations for how much the Federal Reserve will cut interest rates in the months ahead, a shift that illustrates how mixed messaging from central bank officials has clouded expectations for monetary policy. Options linked to the Secured Overnight Financing Rate show market participants betting on a scenario that sees just one more 25 bps rate cut in 2025 and a so-called neutral rate… higher than current market expectations. That’s a sharp contrast with last week, when wagers on a 50 bps rate cut by year-end were in demand.”
September 25 – Bloomberg (Amara Omeokwe): “Federal Reserve Governor Stephen Miran said the US central bank risks damage to the economy by not moving rapidly to lower interest rates. ‘I don’t think the economy is about to crater. I don’t think the labor market is about to fall off a cliff,’ Miran said… But given the risks, ‘I would rather act proactively and lower rates as a result ahead of time, rather than wait for some giant catastrophe to occur,’ he said.”
September 22 – Reuters (Shubham Kalia): “Atlanta Fed President Raphael Bostic said he does not currently see the need for further interest rate cuts this year due to inflation concerns… ‘I am concerned about the inflation that has been too high for a long time… And so I today would not be moving or in favor of it, but we’ll see what happens,’ he added, referring to interest rates.”
September 22 – Bloomberg (Jonnelle Marte): “Federal Reserve Bank of St. Louis President Alberto Musalem said he supported last week’s interest-rate reduction as a way to take out insurance against a weakening labor market, but sees limited room for more cuts amid elevated inflation. Musalem said interest rates are now ‘between modestly restrictive and neutral.’ He said he would support further reductions if the labor market worsens further, but emphasized the importance of keeping long-run inflation expectations stable.”
September 24 – Financial Times (Claire Jones and Chris Giles): “A top Federal Reserve official has warned against rushing towards a series of rate cuts, saying a sharp slowdown in the jobs market is not a sign that a recession is looming. Austan Goolsbee backed the quarter-point reduction to US borrowing costs… But the Chicago Fed president told the Financial Times that he could be less willing to support further cuts at forthcoming policy votes. ‘I’m uncomfortable with overly frontloading a lot of rate cuts on the presumption that [inflation] will probably just be transitory and go away,’ he said, adding that many midwest businesses are still concerned that inflation was not under control.”
September 22 – Bloomberg (Jonnelle Marte): “Federal Reserve Bank of Cleveland President Beth Hammack said she remains laser-focused on inflation and officials should be cautious about interest-rate cuts to avoid overheating the economy. Hammack said there are signs the labor market is still robust despite a recent slowdown in job growth… Inflation, meanwhile, has been above the Fed’s 2% target for more than four years and may not return to the central bank’s goal for another couple of years, she said. ‘I think that we should be very cautious in removing monetary policy restriction,’ Hammack said… ‘It worries me that if we remove that restriction from the economy, things could start overheating again.’”
U.S. Economic Bubble Watch:
September 25 – Associated Press (Paul Wiseman): “An uptick in consumer spending helped the U.S. economy expand at a surprising 3.8% from April through June, the government reported in a dramatic upgrade of its previous estimate of second-quarter growth… Consumer spending rose at a 2.5% pace, up from 0.6% in the first quarter and well above the 1.6% the government previously estimated. Spending on services advanced at a 2.6% annual pace, more than double the government’s previous estimate of 1.2%… But private investment fell, including a 5.1% drop in residential investment. Declining business inventories took more than 3.4 percentage points off second-quarter growth.”
September 25 – CNBC (Jeff Cox): “Initial claims for unemployment insurance were well below expectations last week… First-time filings for the week ended Sept. 20 totaled a seasonally adjusted 218,000, down 14,000 from the prior week’s upwardly revised figure and significantly less than the… consensus estimate for 235,000… Continuing claims… were little changed, falling 2,000 to 1.926 million.”
September 26 – Reuters (Lucia Mutikani): “U.S. consumer spending increased slightly more than expected in August as households went on vacation and dined out…, while inflation continued to steadily pick up… Consumer spending, which accounts for more than two-thirds of economic activity, rose 0.6% last month after an unrevised 0.5% advance in July… Spending was boosted by outlays on services like transportation, which includes airline travel. Consumers frequented restaurants and bars, and also stayed at hotels and motels. They also boosted spending on recreation services. Outlays on financial services and insurance rose as did those on healthcare, housing and utilities. Spending on services advanced 0.5%, matching July’s gain.”
September 24 – CNBC (Diana Olick): “Sales of newly built homes rose a much larger-than-expected 20.5% in August compared with July to the highest level since January 2022… It is also the largest one-month gain since August 2022. Sales were 15.4% higher than August 2024… In a separate survey on builder sentiment from the National Association of Home Builders, 39% of builders reported cutting prices in September, up from 37% in August and the highest percentage in the post-Covid period… Strong sales took inventory down to a 7.4-month supply in August from a nine-month supply in July, a nearly 18% drop…”
September 25 – Bloomberg (Josyana Joshua): “Roughly a third of federal student loan borrowers are behind on their payments, resulting in massive hits to their credit scores. About 29% of borrowers — or 5.4 million people — were delinquent on their loans in June… That’s just slightly down from the record high of 31% reached in April. Americans with a collective $1.7 trillion in student debt are now required to pay their monthly loan bills, following years of pandemic-era forbearance.”
September 21 – Wall Street Journal (David Uberti, Ed Ballard and Brian Spegele): “An empty, 1.3-million-square-foot warehouse north of Denver was supposed to be an emblem of cutting-edge manufacturing. Colorado Gov. Jared Polis heralded a California company’s plan to build a battery factory on-site as a push to ‘power the future.’ But an already weakening growth outlook for electric vehicles deteriorated as President Trump’s tax bill wound its way through Congress. Amprius Technologies didn’t wait for the legislation to pass and pulled out of Colorado earlier this year. The technical know-how for such work is ‘still developing in the U.S.,’ Amprius Chief Executive Kang Sun said. ‘Meanwhile, other countries have spent years building mature, cost-efficient battery industries, giving them a significant head start.’”
September 23 – Wall Street Journal (Paul Hannon): “The U.S. and global economies are set to slow less sharply this year than previously expected, but will continue to lose momentum in 2026 as higher tariffs take an increasingly large toll on activity, the Organization for Economic Cooperation and Development said… In a quarterly report, the… research body forecast the U.S. economy will grow 1.8% this year and 1.5% next year, having expanded by 2.8% in 2024. In June, the OECD projected growth of 1.6% this year and 1.5% in 2026.”
September 23 – New York Times (Ryan Mac and Natallie Rocha): “After President Trump signed a proclamation on Friday to add a $100,000 fee for new applicants of H-1B visas for skilled foreign workers, two technology leaders reacted in opposite ways. Selin Kocalar, 21, the chief operating officer of Delve, an artificial intelligence start-up in San Francisco, learned of the change from a new employee who had just been approved for the H-1B visa. She said she was grappling with what the fee meant for hiring at her 23-person company, which has raised $35 million in funding. ‘As a start-up, you’re always tight for cash,’ she said. ‘So you can’t go out and spend a bunch of money or have that kind of luxury that you’d see at a bigger company.’ In contrast, Reed Hastings, the chairman and co-founder of Netflix, did not blink. The $100,000 fee ‘is a great solution,’ he posted…”
China Watch:
September 21 – Bloomberg: “China’s central bank has dusted off a liquidity instrument it last used eight months ago, part of a move to flood the banking system with cash before the Golden Week public holiday. The People’s Bank of China… pumped almost 300 billion yuan ($42bn) of cash into the banking system via 14-day reverse repurchase agreements, an instrument it last used in January. That came alongside around 241 billion injected through seven-day reverse repos, a regular liquidity tool.”
September 24 – Wall Street Journal (Matthew Dalton): “Chinese leader Xi Jinping took an indirect jab at President Trump and criticized countries that are turning away from the fight against global warming as he presented a new plan to cut greenhouse-gas emissions under the Paris accord. ‘Green and low-carbon transition is the trend of our time,’ Xi said in a video message to the United Nations… ‘While some countries are acting against it, the international community should stay focused in the right direction’… The speech showed the sharply diverging attitude of U.S. and Chinese leadership toward clean energy and climate change. China has emerged as the dominant manufacturer of clean-energy technologies and a defender of the Paris accord…”
September 25 – New York Times (Meaghan Tobin and Keith Bradsher): “China is making and installing factory robots at a far greater pace than any other country, with the United States a distant third… There were more than two million robots working in Chinese factories last year, according to… the International Federation of Robotics… Factories in China installed nearly 300,000 new robots last year, more than the rest of the world combined, the report found. American factories installed 34,000.”
Central Banker Watch:
September 23 – Wall Street Journal (Paul Vieira): “Worries about the independence of the Federal Reserve have dampened the U.S. dollar’s appeal as a hedge during turbulent times, Bank of Canada Gov. Tiff Macklem said… Macklem said he expects the U.S. dollar to remain the global reserve currency for the foreseeable future. However, ‘President Trump’s repeated attacks on the Fed are a concern’ because of the spillover to broader financial markets, the Canadian central banker said. Macklem said the U.S. dollar has depreciated roughly 10% and the price of gold has climbed 40% amid the rapid shift from the U.S. on trade policy.”
France/Europe Watch:
September 24 – Bloomberg (Ania Nussbaum): “Marine Le Pen is seeking to exploit President Emmanuel Macron’s moment of weakness as his fifth premier in two years struggles to form a government. The far-right leader is going on the offensive – pushing for fresh elections to raise the pressure on rivals that Prime Minister Sebastien Lecornu needs to pass the budget. That threatens Lecornu’s own efforts to consolidate his position, and maybe even Macron’s own hold on power.”
September 23 – Bloomberg (Alexander Weber): “The euro area’s private sector expanded at the quickest pace in 16 months as outperformance in German services compensated for a slump in France. The Composite Purchasing Managers’ Index compiled by S&P Global rose to 51.2 in September from 51 in August…”
September 23 – Bloomberg (Tom Rees, Irina Anghel, and William Standring): “Bank of England Chief Economist Huw Pill said that structural changes in the UK economy may be keeping inflation elevated, as the Organisation for Economic Cooperation and Development warned Britain will suffer the fastest price growth in the Group of Seven. Pill said… domestic price pressures are easing at only a ‘slow pace’ and pointed to a lack of competition in the labor market that may be causing a ‘lasting shift’ in wage and price setting.”
Japan Watch:
September 22 – Bloomberg (Erica Yokoyama and Yoshiaki Nohara): “Japan’s ruling party leadership race formally kicked off Monday under close market scrutiny, with the outcome likely to determine who will lead the nation following Prime Minister Shigeru Ishiba’s decision to step down. The five candidates will face off in the Liberal Democratic Party’s Oct. 4 presidential election, and the winner will face the urgent task of rebranding the party to stop a drift of supporters to rival populist parties that has stripped the LDP of its majorities in both chambers of parliament in recent elections. The victor is expected to become prime minister through a parliamentary vote.”
September 24 – Bloomberg (Toru Fujioka and Sumio Ito): “The Bank of Japan may raise its benchmark interest rate as soon as next month, according to a former BOJ board member… ‘The BOJ may act in October,’ Makoto Sakurai, a former member of the nine-person board, said… The decision will depend heavily on the degree of certainty authorities are seeking, ‘but economic data by then could be robust because of a delay in the appearance of the tariff impact.’”
Emerging Markets Watch:
September 24 – Reuters (Aida Pelaez-fernandez): “Mexico’s headline inflation sped up in the first half of September, broadly in line with market expectations… Consumer prices were up 3.74% in the 12 months through mid-September…, speeding from a prior figure of 3.49%.”
Levered Speculation Watch:
September 21 – Financial Times (Costas Mourselas): “Even for the hedge fund industry, $100mn is a lot of money. That was how much Izzy Englander’s Millennium Management had to offer to convince Steve Schurr — a senior portfolio manager… Balyasny… to defect earlier this year. ‘It’s a great trade for Schurr Capital,’ said an executive at one of the largest global hedge funds. This is how a select group of hedge funds known as the multi-managers — chief among them Balyasny, Citadel, Millennium and Point72 — created new cost and incentive structures, and rocketed trader pay into the nine figures.”
September 22 – Bloomberg (Denitsa Tsekova): “Risk parity — the investing style popularized by Ray Dalio — is quietly bouncing back. AQR Capital Management’s multi-asset fund is up 15% this year. Columbia Threadneedle’s version has returned about 12%. Even simple ETFs tracking the strategy have gained as much as 19%. For a category long seen as lagging, that’s a notable shift.”
Social, Political, Environmental, Cybersecurity Instability Watch:
September 21 – Axios (Sara Fischer and Erica Pandey): “While policymakers and headlines have traditionally zeroed in on Instagram, Facebook, YouTube, TikTok and X, young people are increasingly gathering on gaming platforms — and having conversations that are typically anonymous and largely invisible to the outside world. Spaces like Discord, Roblox and Steam — built for gamers to connect — have evolved into the social discourse hubs where authentic interactions happen, as mainstream apps chase virality instead.”
September 21 – Financial Times (Kieran Smith): “Hacking groups are increasingly targeting the supply chains of major corporate groups, as criminals hunt for ‘weak links’ in cyber security defences as part of the booming and illicit multibillion-dollar ransomware sector. The number of attacks on third-party suppliers to companies around the world doubled in 2024, according to cyber experts…”
Geopolitical Watch:
September 24 – Associated Press (Edith M. Lederer): “Ukrainian President Volodymyr Zelenskyy told global leaders… the world is in ‘the most destructive arms race in human history’ and urged the international community to act against Russia now, asserting that Vladimir Putin wants to expand his war in Europe. In a bleak view of today’s world, he told… the U.N. General Assembly that weak international institutions including the United Nations haven’t been able to stop wars in Ukraine, Gaza, Sudan and elsewhere, and international law can’t help nations survive. ‘Weapons decide who survives,’ the Ukrainian leader said. ‘There are no security guarantees except friends and weapons.’”
September 24 – Wall Street Journal (Alistair MacDonald): “Iran’s infamous Shahed drones have been used to devastating effect by Russia to strike Ukraine. Now the U.S. and its allies are racing to develop copycat versions of the low-cost, long-range weapon. For decades, advanced militaries used expensive missiles for precise attacks and cheaper artillery for mass bombardment. The war in Ukraine has shown that drones can be both cheap and precise, with Shaheds costing just tens of thousands of dollars apiece and able to fly more than 1,000 miles, by some estimates. The Iranian-designed drone has proved particularly effective at overwhelming air defenses.”
