Futures Rise For 10th Day In Past 11 With Fed Rate Cut Looming

With just 17 trading sessions left in 2025, stock futures edge higher again and are on pace for 10 gains in the past 11 days. S&P 500 futures were up 0.2% as of 5:32 a.m. in New York, with Nasdaq 100 contracts +0.3%. Pre-market, Mag 7 are mostly unchanged except for a -1.3% decline in TSLA on a downgrade from Morgan Stanley. Most Asian markets clock firm start to the week, while European markets are mixed. Bond yields are 1-2bp higher and the USD is flat after reversing an earlier drop. Commodities are mixed: oil and most base metals are down small, while precious metals are higher. Over the weekend, there were several corporate headlines: (i) MSFT is considering shift custom chip business to Broadcom from Marvell (The Information). (ii) Trump warned the Netflix-Warner deal may post antitrust problem (BBG); (iii) IBM close to buy Confluent. A Fed cut on Wednesday looks like a done deal, but the trajectory after that is less clear. JPMorgan’s Mislav Matejka warned that the recent stock rally could stall after the decision. The Fed is also expected to restart "Reserve Management Purchases" ($45BN per month), which according to BofA's Mark Cabana is not priced in; we also get earnings from Oracle and Broadcom, which may provide an end-of-year test for the AI narrative. 

In premarket trading, Mag 7 stocks are mixed, with Tesla an outlier to the downside following a downgrade by Morgan Stanley from OW to EW (Amazon +0.3%, Nvidia +0.2%, Alphabet -0.1%, Microsoft +0.07%, Meta -0.1%, Apple -0.3%, Tesla -1.3%)

• Agios Pharmaceuticals (AGIO) falls 3% after saying that the FDA has not yet issued a regulatory decision on the supplemental new drug application for mitapivat in thalassemia.
• Carvana (CVNA) rises 9%, CRH (CRH) gains 7% and Comfort Systems USA (FIX) climbs 1% after S&P Dow Jones Indices said they will join the S&P 500 Index before trading opens Dec. 22.
• Confluent (CFLT) is up 28% after the the Wall Street Journal reported International Business Machines Corp. is in advanced negotiations to acquire the data infrastructure firm.
• CoreWeave (CRWV) drops 5% after announcing a $2 billion convertible senior notes offering.
• Fluence Energy (FLNC) falls 4% after Mizuho Securities analyst Maheep Mandloi cut the recommendation to underperform, saying data-center opportunities are still early-stage.
• ITT (ITT) slips 3% after plans to sell 7 million shares to help fund a portion of its SPX Flow deal.
• Kymera Therapeutics (KYMR) rises 29% after the drug developer announced positive results from a Phase 1b clinical trial of KT-621.
• Tesla (TSLA) shares fall 1.4% in premarket trading as Morgan Stanley downgrades the electric-car maker to equal-weight from overweight, saying non-auto catalysts priced into the stock.

In corporate news, Trump raised potential antitrust concerns around Netflix’s planned $72 billion acquisition of Warner Bros. Discovery. IBM is in advanced negotiations to acquire data infrastructure firm Confluent for around $11 billion, the WSJ reported. Robinhood is set to enter the Indonesian market after signing deals to acquire two local brokerages. Unilever spinoff The Magnum Ice Cream Co. will start trading in New York today as part of a three-location listing.

US stocks have rebounded in recent weeks after some Fed officials - and especially vice chair John Williams - signaled they intend to cut rates for a third straight time on Wednesday. Still, the advance has been jittery as uncertainty over the pace of easing in 2026 and wariness about the sustainability of an AI-driven rally temper sentiment.

Investors are now looking ahead to 2026. Over three-quarters of asset managers polled in an informal Bloomberg survey are positioning for a risk-on environment through 2026. Among strategists, Oppenheimer AM’s John Stoltzfus is calling for an 18% rally in the S&P 500 next year, becoming the most optimistic forecaster among those tracked by Bloomberg for a third year running. Still, there are some nuances. Investors are rotating out of the tech behemoths that drove virtually all of this year’s rally in the S&P 500 and are snapping up shares of risky small companies and old-economy transportation names. Yardeni Research now recommends effectively going underweight the Mag 7 versus the rest of the S&P 500, expecting a shift in earnings growth ahead.

For stocks, interviews with 39 investment managers across the US, Asia and Europe showed that a vast majority of allocators were still positioning for a risk-on environment through next year. The thrust of the bet is that resilient global growth, further developments in artificial intelligence, accommodative policy and fiscal stimulus will deliver outsize returns.  

Fabien Benchetrit, head of target allocation for France and southern Europe at BNP Paribas Asset Management, said he remains bullish on 2026 but isn’t planning to increase his stock exposure before year-end. “Like other market participants, we’ve had a good year and it doesn’t make much sense to do it when liquidity typically dries up in the last two weeks of December,” he said. “In terms of AI, 2025 was all about capex, but 2026 will be about these investments delivering revenues, profits and productivity gains.”

Unease that inflation remains too high has also caused divisions among Fed officials, in a rift that’s been exacerbated by the lack of fresh data during the shutdown. After this week’s likely cut, money markets are leaning toward two more moves by the end of 2026, down from three signaled barely a week ago.

While a resilient economy, seasonal support and catch-up positioning are supporting stocks, key risks still loom for investors, said Daniel Murray, deputy chief investment officer and global head of research at EFG Asset Management. Those include “that the Fed is less dovish than investors currently assume,” Murray said, along with “a delayed tariff impact that sees inflation higher for longer and cracks starting to widen in the labor market.”

“The tone of Chair Powell’s press conference and accompanying statement will be critical,” wrote Deutsche Bank AG strategist Jim Reid. “We expect Powell to emphasize that the hurdle for further cuts in early 2026 is high, signaling a near-term pause. This guidance will be key to maintaining credibility.”

The Stoxx 600 is little changed as gains in industrial and insurance shares are offset by losses in consumer products and chemicals. Here are some of the biggest movers on Monday:

• Kloeckner shares climb as much as 27% in Frankfurt, the most since 2008, after the firm said Worthington Steel was conducting due diligence with a view to a potential takeover of the German metals company.
• Galderma shares rise as much as 4.5%, touching a record high, after L’Oreal announced plans to double its stake in the Swiss dermatology firm to 20%.
• FlatexDEGIRO shares rise as much as 5.9% after Berenberg raised its price target on the online brokerage firm.
• AUTO1 shares rally as much as 5.4% after Jefferies initiated coverage of the digital platform for buying and selling used cars with a buy recommendation.
• Absa shares rise as much as 4.8% in Johannesburg, to their highest intraday level on record after the bank said it expects mid-single digit revenue growth in 2025, with stronger growth in non-interest income than net interest income.
• GEA Group shares sink as much as 5%, to their lowest level since April, after Morgan Stanley downgraded the equipment supplier for the food processing industry to underweight.
• Ferrari shares fall as much as 3% after Morgan Stanley downgraded the Italian luxury car maker to equal-weight on account of its decision to strictly limit volume growth until 2030.
• Embracer falls as much as 33% as shares in the Swedish game company traded without rights to the upcoming spinoff of its Coffee Stain Group subsidiary.
• Schott Pharma shares drop as much as 6.8% to the lowest level on record after analysts at Barclays and Deutsche Bank downgraded their ratings on the stock, saying the 2026 fiscal year will be a “transition year” for the German pharma packaging company.

Earlier in the session, Chinese indexes rally after local media reports leverage limit hike for brokerages, and the Politburo pledges more proactive macroeconomic policies. The ChiNext soars more than 3% and the CSI 300 gains about 1.2%. Topix, Taiex and Kospi are also in the green. Hang Seng slides almost 1%.

In FX, the Bloomberg Dollar Spot Index is flat. EUR/USD rose to session highs after ECB’s Schnabel said she is comfortable with investor bets that the next interest-rate move will be an increase. The yen eases back to around 155.50/USD. Offshore yuan stays marginally stronger after a strong trade report.

In rates, treasuries outperform their European counterparts but are still in the red. US 10-year borrowing costs climb 2 bps to 4.15%. Europe led declines in global bond markets after the European Central Bank’s Isabel Schnabel became the first senior official to suggest with any certainty that European rates have reached a floor, and she is comfortable with investor bets that the next interest-rate move will be an increase. German 10-year yields rise 4 bps to 2.84%. Gilts also drop, pushing UK 10-year yields up 4 bps to 4.52%. Japanese bond yields rose across the curve after data showed that the economy shrank in the three months through September, giving some justification for Prime Minister Sanae Takaichi’s stimulus package announced last month. The figures add an element of complexity to the Bank of Japan’s policy decision next week, but likely won’t derail it from its gradual hiking path. Aussie bonds remain heavy as 10-year yield hits a two-year high ahead of Tuesday’s RBA decision. JGB futures are tightly rangebound following lackluster GDP report.

In commodities, WTI crude futures fall 1% to near $59.50 a barrel. Brent crude futures pause around $63.90 and gold rises back above $4,210 an ounce. Spot gold adds $10 while Bitcoin rises 1.9% to around $92,000.

Today's economic calendar includes November NY Fed 1-year inflation expectations at 11am

Market Snapshot

• S&P 500 mini +0.1%
• Nasdaq 100 mini +0.2%
• Russell 2000 mini +0.4%
• Stoxx Europe 600 little changed
• DAX +0.2%
• CAC 40 little changed
• 10-year Treasury yield +1 basis point at 4.15%
• VIX +0.8 points at 16.22
• Bloomberg Dollar Index little changed at 1211.98
• euro little changed at $1.1652
• WTI crude -0.9% at $59.54/barrel

Top Overnight News

• Donald Trump said Netflix’s planned $72 billion acquisition of Warner Bros. Discovery may pose antitrust concerns, warning that the combined entity’s market share “could be a problem.” He confirmed he met with Netflix co-CEO Ted Sarandos recently. BBG
• Trump plans to unveil a $12 billion farm aid package today, including one-time payments for crop farmers hit by low prices amid slow Chinese purchases. Advisers are also weighing measures to curb soaring beef prices, including reopening the border to Mexican cattle. WSJ
• Trump signed a Presidential Memorandum directing the HHS to fast-track a comprehensive evaluation of the vaccine schedules from other countries around the world, and better align the US vaccine schedule.
• White House said it will establish food supply chain security task forces to protect competition.
• US Treasury Secretary Bessent said the US will finish the year with 3% GDP growth.
• China’s trade surplus in goods this year topped $1 trillion for the first time, a milestone that underscores the dominance that the country has attained. For the first 11 months of the year, China’s exports increased 5.4% from the year-earlier period to $3.4 trillion, while the country’s imports declined 0.6% over that same stretch to $2.3 trillion. WSJ
• China's annual car sales dropped 8.5% in November in a second straight monthly decline, for their biggest fall in 10 months, data showed on Monday, amid a waning scramble to buy vehicles before government subsidies dwindle at year-end. RTRS
• Japan's real wages shrank for the 10th consecutive month in October, with an uptick in nominal pay falling short of taming relentless consumer inflation, government data showed on Monday.
• Thailand has launched air strikes on Cambodia after border clashes that killed on Thai soldier, marking the collapse of a Trump brokered peace deal between the south east Asian neighbors. FT
• Industrial production in Europe’s largest economy continued to accelerate in October, with the sector showing further signs of stabilization as it awaits large-scale government investment. October came in at +1.8% M/M (vs. the Street +0.3%). WSJ
• Sen. Bill Cassidy (R-La.) said he planned to present Republican leadership with his health care plan as soon as Sunday night, predicting that the divisive proposal to put money directly in Americans’ health savings accounts could clear the 60-vote threshold needed to pass in the Senate. Politico
• IBM  is in advanced talks to acquire data-infrastructure company Confluent (CFLT) for around $11 billion, according to people familiar with the matter. A deal could be announced as soon as today. WSJ
• Following an 11% drawdown this fall, Consumer Discretionary stocks have rebounded by 7% during the past two weeks. The combination of hawkish Fed commentary, weak labor market data, declining consumer sentiment, and downbeat corporate commentary contributed to a sell-off in Consumer Discretionary stocks between early September and mid-November. During the past two weeks, however, consumer stocks have rebounded, with the equal-weight S&P 500 Consumer Discretionary sector outperforming the equal-weight S&P 500 by 2%: Goldman

Trade/Tariffs

• US President Trump said we'll work it out, when asked if he would restart trade talks with Canada, while it was separately reported that the Canadian PM’s office said PM Carney agreed with US President Trump and Mexican President Sheinbaum to keep working together on the trade deal.
• USTR said China’s trade commitments are going in the right direction and that they are seen to be in compliance so far.
• French President Macron warned that the EU could hit China with tariffs if nothing is done to reduce its widening trade deficit with the EU, according to Les Echos.
• EU is to expand the carbon border tax to garden tools and washing machines, as it seeks to close loopholes in the law to prevent carbon-intensive imports, according to FT.
• US Embassy in India said US Under Secretary of State for Political Affairs Allison Hooker will visit New Delhi and Bengaluru, India, on December 7th-11th.
• German Foreign Minister said a lot of work is still needed to persuade China to issue general export licenses for rare earths.
• China's Vice Commerce Minister said he welcomes EU automakers to continue to invest in China. Urges Germany and the EU auto association to push the EU Commission to resolve the EV anti-subsidy case. On Nexperia, he said the root cause of chaos in the global semiconductor supply chains lies in the Netherlands.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were mixed following a lack of major macro drivers over the weekend and with markets tentative ahead of this week's risk events, while participants also digested data, including the latest Chinese trade figures. ASX 200 was subdued amid somewhat mixed trade data from Australia's largest trading partner and as the RBA kick-started its 2-day policy meeting. Nikkei 225 traded indecisively following a slew of mixed data from Japan, including firmer-than-expected Labour Cash Earnings and disappointing revisions to Q3 GDP, while sentiment was also clouded by geopolitical tensions after Japan accused Chinese fighter jets of aiming military radar at Japan's Self-Defence Force jets. Hang Seng and Shanghai Comp were mixed with the Hong Kong benchmark underperforming as gains in tech were overshadowed by losses in the big banks, while participants also digested the latest Chinese trade data, which showed a stronger-than-expected recovery in Exports but Imports disappointed.

Top Asian News

• China's Politburo held a meeting on the economy and reiterated its stance that monetary policy is to be moderately loose, with fiscal policy being more proactive, while it stated that the economic operation is generally stable and it will implement more active macro policies. Furthermore, it will continue to prevent and resolve risks in key areas, as well as stabilise employment, markets, and enterprises' expectations.
• Hong Kong held its legislative election on Sunday to elect 90 Legislative Council members from the 161 government-vetted candidates.
• Australia Treasurer Chalmers said they will not extend electricity rebates and that the mid-year review will not be a mini budget, while he added that the review will include savings.
• BoJ Governor Ueda to attend Japan's lower house budget committee from 05:35-06:05 GMT on Tuesday, according to a parliamentary source cited by Reuters.
• Chinese President Xi held a meeting with non-party members on the economy, according to Xinhua, and said China to stabilise jobs and markets. said 2025 has been unusual and will smoothly meet the main targets. To reinforce economic growth momentum. Economic goals will be achieved this year. To drive reasonable economic growth.
• China's auto industry body CPCA said China sold 2.24mln passenger cars in November, down 8.5% Y/Y; Tesla (TSLA) exported 13,555 China-made vehicles (prev. 35,491 in October).
• Indonesian Finance Minister said the nation is to impose a coal export tax near year between 1% and 5%.

European bourses (STOXX 600 +0.1%) began the morning mixed, with a slight negative bias. Since the open, indices have held an upward bias with some climbing marginally into the green. European sectors are mostly lower. Industrials and Tech hold towards the top of the pile, whilst Real Estate and Media lags a touch. In terms of a key story, BNP Paribas (+0.7%) is to sell its stake in AG insurance to Ageas (+2.2%) for EUR 1.9bln.

Top European News

• UK PM Starmer said former Deputy PM Angela Rayner will return to the cabinet after resigning in September, while he described her as “hugely talented”.
• Tony Blair is reportedly exploring alternative Labour leadership options amid frustration with UK PM Starmer’s direction, according to The Times.
• ECB's Schnabel said she is 'comfortable' on bets that next move will be a hike. Later on, she also said she would be ready to succeed President Lagarde if she were asked to, via Bloomberg. She said the euro economy is on course to grow above potential despite the headwinds, and the economic outlook has brightened and the downside risks to growth have been reduced significantly, and uncertainty has come down quite quickly, which should further support future economic activity. The global economy and global trade have proven to be more resilient. On inflation, she said it’s in a good place. It’s currently around 2%, and we also project medium-term inflation to be around 2%. Volatile energy prices and related base effects may push headline inflation temporarily below our target. Services inflation has been much stickier than expected. The downward pressure on goods inflation due to a stronger euro, lower energy prices and potential trade diversion from China has been weaker than expected. On policy, she said interest rates are in a good place. Rather comfortable with those expectations of the next move being a rate hike. A first rate hike in June 2026 remains very uncertain.
• ECB's Rehn said the ECB is concerned about central bank independence in the US, via Econostream. Adds that Fed independence is an important issue for "all of us globally". On an insurance cut, said "we are not in the insurance business, not in December, March or June". Inflation expectations have remained quite well anchored around the 2% target. German spending to have a "formidable positive impact" on Germany and the Euro area.
• ECB’s Rehn said they must be aware of upside and downside inflation risks, while he added that inflation risk is slightly tilted to the downside in the medium-term. Furthermore, he said they should not impose unnecessary bars or floors on policy, and that the position on interest rates is not fixed.
• French President Emmanuel Macron called for a change in the ECB’s approach to monetary policy to boost the single market and protect it from the risks of a financial crisis, while he commented that reasserting the value of the European internal market means it can't let inflation be its sole objective, but also growth and employment.
• European Commission may announce a package to support the auto industry on December 16th, according to industry sources.
• German Chancellor Merz and French President Macron are set to discuss the fate of the Franco-German fighter jet project FCAS in the week of December 15th, according to an industry source.
• Germany's auto industry body VDA said it expects 2026 registrations to rise 2% to 2.9mln. Electric car sales in Germany to jump 17% to 979k in 2026. Expects the nation to remain the world's second-largest EV producer in 2026.
• French Socialist Party (PS) leader Faure said the party will vote for the French budget's social security programme.

FX

• DXY has now returned to flat territory after being dragged lower, but EUR strength as ECB hawk Schnabel said she is 'comfortable' on bets that the next move will be a hike, albeit not any time soon, according to Bloomberg. Little notable reaction was seen in ECB marking pricing throughout 2026, which remains unchanged for rates throughout the horizon, although the EUR strengthened and EZ yields rose.
• The Single Currency was also supported by surprisingly upbeat German Industrial Output data. EUR/USD hit a 1.1672 peak, matching Friday's high, before waning back towards 1.1650 levels. Subsequently, DXY fell to a 98.79 trough before trimming losses back towards near-99.00.
• GBP is subdued by the EUR/GBP cross, which briefly eclipsed its 50 DMA (0.8751) from a 0.8726 low on the back of the aforementioned ECB commentary and data. GBP/USD meanwhile closed around its 200 DMA on Friday and traded below the level (1.3331) throughout most of today's session. In terms of weekend UK newsflow, Tony Blair is reportedly exploring alternative Labour leadership options amid frustration with UK PM Starmer’s direction, according to The Times.
• Other G10s are largely flat with Antipodeans mixed following the Chinese Trade Balance data, which showed a stronger-than-expected recovery in Exports but Imports disappointed. Thus, AUD is subdued ahead of the RBA decision tomorrow, whilst NZD is among the better performers as AUD/NZD falls back after meeting resistance at 1.1500.

Fixed Income

• USTs are trading lower by a couple of ticks, having held a negative bias throughout the European morning. Nothing really much driving things for US paper this morning, and action appears to be following peers and in a continuation of Friday’s losses. Traders await the FOMC meeting mid-week, where a 25bps cut is widely expected – but likely to be subject to dissent from several board members. Back to price action, USTs are trading within a narrow 112-14 to 112-19 range, with today’s trough a tick below that made on Friday. Further pressure could see a retest of the trough made on 20th November at 112-10+.
• Bunds are also pressured, and to a larger magnitude than USTs (but less so than UK paper). The benchmark followed US paper overnight, and held a negative bias, before taking a leg lower on comments via Schnabel. The arch-hawk, speaking on Bloomberg, said that she is 'comfortable' on bets that the next move will be a hike, albeit not any time soon. In an immediate reaction, Bund Mar’26 fell from 127.98 to 127.80 over the course of around 5 minutes, before then extending to a trough of 127.74; from a yield perspective, the 10-year rose 3bps to 2.83%, levels not seen since March. Elsewhere, other ECB members have not impacted assets quite so much, with Rehn suggesting that “inflation expectations have remained quite well anchored around the 2% target.”, via Econostream. And finally on the data front, German Industrial Output M/M rose more than expected; ING’s Brzeski said “there are at least tentative signs of a bottoming out” in the German economy.
• Gilts underperform vs peers, and are currently down by around 40 ticks. Price action has been fairly muted this morning, gapped lower at the open and has resided at the bottom end of a 90.90 to 91.11 range. Pressure today in tandem with US/German paper, but with underperformance perhaps explained by ongoing domestic political updates. Focus has been on reports that Tony Blair is reportedly exploring alternative Labour leadership options amid frustration with UK PM Starmer’s direction, according to The Times. Moreover, perhaps some focus on political instability within the Labour Party as PM Starmer floats the return of Angela Rayner. Elsewhere, a KPMG/REC survey showed the UK labour market weakened further in November.

Commodities

• WTI and Brent oscillated in a tight USD 59.98-60.27/bbl and USD 63.63-63.94/bbl, respectively, throughout the APAC session. As the European session got underway, benchmarks failed to extend the highs of the APAC session and reversed lower to dip below USD 60/bbl and USD 63.50/bbl, despite a lack of crude-specific newsflow. Currently, benchmarks are extending on session lows as progress on a potential peace deal between Ukraine and Russia remains in focus.
• Spot XAU edged higher throughout the APAC session amid a weaker dollar ahead of Wednesday's FOMC rate decision, in which the Fed is expected to cut rates by 25bps at its meeting on Wednesday. XAU hit a low of USD 4191/oz as the APAC session commenced and gradually traded higher to a peak of USD 4219/oz as the European session got underway. Data over the weekend showed that the PBoC increased its gold reserves for a 13th consecutive month.
• 3M LME Copper extended to a new ATH of USD 11.75k/t as China's Politburo reiterated its stance that monetary policy is to be moderately loose, setting domestic growth as its top economic priority. This comes amid new demand, fuelled by AI infrastructure build and EVs, coming up against a tight global supply. China's exports also rose in November to 5.9%, compared to the expected 3.8% and the October figure of -1.1%.
• UAE Energy Minister said overall demand for energy will increase, fossil fuels will be "a percentage of it". Adds that natural gas is important and they intend to not only satisfy their local demand but also grow exports of their LNG. Agrees that natural gas demand is more than the projects they are seeing.
• Russia's Kremlin said India buys energy where it is profitable to; as far as Russia understands, India will "continue to do that".
• EU to delay proposals on carbon border tariff and proposals for automotive sector, including Co2 emissions to December 16th, according to a document seen by Reuters.

Geopolitics: Middle East

• Israeli PM Netanyahu said he will meet with US President Trump this month, while he said they believe there is a path to a workable peace with their Palestinian neighbours and that the sovereign power of security from the Jordan River to the Mediterranean will always remain in Israel’s hands. Furthermore, he said political annexation of the West Bank remains a subject of discussion, and the status quo in the West Bank will remain for the foreseeable future, as well as noted that they are close to the second phase of Trump’s Gaza plan.
• Palestinian PM Mustafa said Israel is stepping up the ‘creeping annexation’ of the West Bank and is intensifying efforts to make the West Bank unliveable and drive people out of the occupied territory, according to FT.
• Turkey’s Foreign Minister said Hamas is ready to hand over the Gaza administration to the Palestinian committee to advance the Gaza ceasefire deal. He also commented that Hamas disarmament in the first phase of the Gaza deal may not be a realistic and doable objective, while other steps are needed first.
• US, Israel and Qatar were reportedly holding a trilateral meeting in New York on Sunday to rebuild relations, according to Axios.
• A US official said the US is pushing Ukraine to agree "faster" to the peace plan, according to AFP.

Geopolitics: Ukraine

• Ukraine's President Zelensky says no accord so far on Ukraine's Donbas in US talks, via Bloomberg.
• Ukrainian President Zelensky said he had a substantive call with US envoy Steve Witkoff and Jared Kushner, while he stated they agreed on the next steps and format for talks with America, as well as noted that Ukraine is determined to continue working honestly with the US side in order to bring real peace. Zelensky separately commented that talks with US representatives on a peace plan were constructive but not easy.
• Ukrainian military conducted a strike on Russia’s Ryazan oil refinery.
• Russian Defence Ministry said Russian forces captured Kucherivka in Ukraine’s Kharkiv region and completed the capture of Rivne in Ukraine’s Donetsk region, while they carried out a group strike on Ukraine’s transport infrastructure facilities, fuel and energy complexes, and long-range drone complexes.
• Russia and China held their third joint anti-missile drills on Russian territory.
• Japanese Chief Cabinet Secretary Kihara said China’s claims about the Japan Self-Defence Force’s dangerous flight are inaccurate, while he added it is very important to gain an understanding of other countries, including the US, regarding Japan's stance.
• Japan is reportedly frustrated at the Trump administration’s silence over the row with China and urged the US to give PM Takaichi more public support, according to FT.
• Australia’s Defence Minister Marles said they are deeply concerned about the actions of China following the air incident near Japan, while Marles discussed with Japanese Defence Minister Koizumi common serious concerns about the situation in the South China Sea and East China Sea. Furthermore, they discussed how to work together to maintain a free and open Indo-Pacific, while Marles also commented that they want the most productive relationship they can achieve with China.
• Pakistan and Afghanistan exchanged heavy fire in a border region on Friday.
• Thai Army spokesman said their military launched airstrikes in the disputed border area with Cambodia.
• The Chinese Foreign Ministry said China believes both countries can win from cooperation on the new US defence strategy. Also said it stands ready to work with the US to improve ties and that China will firmly defend its sovereignty.
• Rapid Support Forces confirms control of Heglig oil field, the largest oil field in Sudan, according to Sky News Arabia.
• Russia’s Kremlin said it welcomed the removal of Russia from the list of US direct threats in the new national security strategy.

Geopolitics: Other

• Japanese Defence Minister Koizumi said Chinese military planes directed radar at Japan's self-defence forces twice. It was separately reported that Japanese PM Takaichi said the incident involving Chinese fighter jets directing radar at Japanese planes is extremely regrettable, while she said they will respond calmly and resolutely to the development.

US Event Calendar

• November NY Fed 1-year inflation expectations at 11am

DB's JIm Reid concludes the overnight wrap

All roads this week will point to Wednesday’s FOMC. Markets and DB expect the Fed to deliver a final and third 25bps rate cut for 2025, making it 6 cuts and 175bps in this easing cycle since September 2024. The decision is unlikely to be unanimous, with dissent anticipated from both hawkish and dovish members. Should four or more officials break ranks, it would mark the largest split since 1992. Beyond the headline move, the tone of Chair Powell’s press conference and the accompanying statement will be critical. We expect Powell to emphasise that the hurdle for further cuts in early 2026 is high, signalling a near-term pause. This guidance will be key to maintaining credibility ahead of likely softer labour market data due later in December.  

Beyond the Fed, the global calendar features several other central bank decisions and important data releases. Maybe tech earnings from Oracle (Wednesday) and Broadcom (Thursday) will be the most interesting, with the two names diverging considerably over the last couple of months. The former is down -34% over this period with the latter only -3% off its all-time-high seen a couple of weeks ago. In terms of central banks, the Reserve Bank of Australia meets tomorrow, where policymakers are expected to hold rates steady, but with a hawkish tilt likely after recent inflation increases. The January 7th inflation data could encourage markets to price in a hike as soon as February. The Bank of Canada follows on Wednesday, with the Swiss National Bank on Thursday with both expected to stay on hold. Canada saw a +16bps rise in 2yr yields on Friday after another strong labour market release with traders now suddenly, and fully, pricing in a hike by October next year. Meanwhile, the SNB are trying to avoid negative rates next year with rates now around zero.  

Elsewhere, UK monthly GDP for October will be released on Friday, alongside German industrial production today and trade figures on Tuesday. China inflation is released on Wednesday where our economists expect CPI inflation to rise by 0.5ppt to 0.7% YoY and PPI to improve by 0.2ppt to -1.9% YoY. Nordic inflation prints are also due midweek, with Denmark and Norway publishing November CPI reports. Also watch out for the BoJ Ueda who speaks in London tomorrow ahead of a fascinating BoJ meeting next Friday just as the market winds down for Xmas.  

Expanding further on the FOMC now, according to our economist’s preview here, the updated Summary of Economic Projections (SEP) should show only modest revisions. Growth forecasts for 2025 and 2026 are likely to be nudged higher, consistent with the October staff update, while inflation projections should be trimmed for this year and next. The unemployment path is expected to remain broadly unchanged. The dot plot should continue to point to one cut per year over the next two years, reinforcing the message that policy is approaching the neutral range (3.5–3.75%). Our economist’s baseline remains that the Fed stays on hold through the first half of 2026, with risks skewed towards another cut in Q1 if labour market weakness persists. Under new leadership later in the year, they anticipate a September cut as disinflation resumes, taking the trough in the fed funds rate to around 3.3%.

While the Fed dominates, a handful of other releases could provide additional nuance. Tomorrow brings combined September–October JOLTS data, offering a backward-looking snapshot of hiring and quits trends. Recent figures have underscored a “low hiring/low firing” dynamic, with private hiring at multi-year lows and quits subdued. Wednesday’s Employment Cost Index for Q3 is forecast at DB to hold steady at +0.9%, keeping annual growth around 3.6%. Thursday rounds out the docket with September trade numbers (-$69.6bn expected vs. -$59.6bn prior) and initial jobless claims (225k vs. 191k), the latter likely to increase after holiday distortions.

Asian equities are relatively quiet ahead of an important week. As I check my screens, the Nikkei is flat, impacted by Japan’s revised Q3 GDP data (details below). In other markets, Chinese stocks are diverging with the Hang Seng (-1.05%) lower, while the CSI (+1.05%) and the Shanghai Composite (+0.67%) are higher, buoyed by better-than-expected China exports and a larger trade surplus compared to the previous month. Additionally, the KOSPI (+0.77%) is also rising. S&P 500 (+0.18%) and NASDAQ 100 (+0.25%) futures are both trading higher.

Returning to China, outbound shipments increased by +5.9% year-on-year in November, surpassing market expectations for +4.0% growth, marking a recovery from an unexpected -1.1% decline in October — the first contraction since March 2024. Imports rose by +1.9% last month, falling short of the anticipated +3.0% increase, as a prolonged housing downturn and rising job insecurity continued to hinder domestic consumption. This growth was an improvement compared to the 1% recorded in October. Elsewhere, in Japan, the revised annualised Q3 growth contraction was reported at -2.3%, compared to an earlier estimate of -1.8% and a market forecast of a -2.0% decline.

On a quarter-on-quarter basis, GDP decreased by -0.6%, which is steeper than the initial -0.4% contraction and exceeded the forecast of a -0.5% decline. Separately, real wages fell by -0.7% in October compared to the previous year, a slower decline than the revised -1.3% drop in September, but it extended a losing streak that began in January. Meanwhile, average nominal wages, or total cash earnings, rose by +2.6% year-on-year in October, marking a three-month high that followed a +2.1% increase in the previous month.

In bond markets, yields on the 10-year Australian government bonds are +2.2bps, reaching 4.71%, marking the highest level in two years in anticipation of the RBA meeting tomorrow. New Zealand's 10-year government bond are +8.8bps. 10 and 30yr JGBs are +2bps and +3bps higher respectively.

Recapping last week now and markets continued to grind higher, with the S&P 500 (+0.31%; +0.19% Friday), NASDAQ (+0.91%; +0.31% Friday), and the STOXX 600 (+0.41%; -0.01% Friday) all edging higher. The Mag-7 (+1.40%; +0.35% Friday) was boosted by strong performances from Tesla (+5.77%; +0.10% Friday) and Meta (+3.93%; +1.80% Friday), the latter on a Bloomberg report of budget cuts up to 30% for its metaverse division. In contrast, Microsoft fell -1.80% (+0.48% Friday) amid a press report of lowered AI sales quotas, which the company subsequently denied. The overall risk-tone saw the VIX volatility index (-0.55pts) fall to a two-month low of 15.41, and credit spreads tighten, with both US IG (-3bps) and HY (-5bps) rallying.

On the data front, we saw mixed US labour market releases, as the ADP report showed US private payrolls falling by 32k in November (vs. +10k expected) driven by highest job losses for small businesses since the pandemic (-120k) but weekly initial jobless claims (191k vs. 220k expected) painted a more robust picture, although Thanksgiving distortion likely dominated. In terms of survey releases, ISM services was slightly stronger than anticipated at 52.6 (vs. 52.0 expected), while its prices paid component fell to a seven-month low of 65.4 (vs. 68.0 expected). And on Friday, the University of Michigan consumer sentiment (53.3 VS 51.0 expected) rebounded from its November slump as 5-10 year inflation expectations (3.2% vs 3.4% expected) fell to their lowest since January.

While a December Fed rate cut is more than 95% priced, the conflicting data drove a hawkish adjustment further out with the amount of cuts priced by end-26 declining by -9.3bps (-3.4bps Friday). This led to a rise in Treasury yields, with the 2yr yield up +7.0bps to 3.56%, while the 10yr saw its biggest weekly sell-off since April (+12.1bps to 4.14%, +3.7bps Friday). Higher yields were also driven by developments in Japan, as comments from BoJ Governor Ueda led investors to anticipate a December rate hike. 10-year JGB yields rose by +13.5bps to a post-2008 high of 1.94% and 30-year yields by +1.5bps to 3.35%, its highest since the tenor was introduced in the late-1990s.

In Europe, 10yr bunds (+10.9bps), OATs (+11.4bps), and BTPs (+8.5bps) joined the global bond sell-off. That came as the Euro Area flash CPI for November was higher than expected at +2.2% (vs. +2.1% expected), while the composite PMI was revised up to 52.8, its highest in two-and-a-half years. The data supported modest equity gains, with the DAX +0.80% higher though the CAC 40 (-0.10%) was marginally lower. European credit spreads were also tighter for both IG (-6bps) and HY (-8bps).

In commodities, Brent crude saw a modest rally of +2.20% to $63.75/bbl, as no concrete plans for a ceasefire in Ukraine emerged. Cryptocurrencies experienced a volatile week. Bitcoin ended the week down -1.88%, but that included a -5.19% move on Monday and +5.97% on Tuesday. Gold was down -0.98% to $4,198/oz following an almost 5% rally the previous week.

Tyler Durden Mon, 12/08/2025 - 08:42

The post In Search of Donald Trump’s Booming Economy appeared first on CEPR.

Altos reports that active single-family inventory was down 2.7% week-over-week.  Inventory usually starts to decline in the fall and then declines sharply during the holiday season.
The first graph shows the seasonal pattern for active single-family inventory since 2015.
Click on graph for larger image.

The red line is for 2025.  The black line is for 2019.  
Inventory was up 15.3% compared to the same week in 2024 (last week it was up 15.6%), and down 4.1% compared to the same week in 2019 (last week it was down 4.3%). 
Inventory started 2025 down 22% compared to 2019.  Inventory has closed most of that gap, but it appears inventory will still be below 2019 levels at the end of 2025.
This second inventory graph is courtesy of Altos Research.
As of December 5th, inventory was at 795 thousand (7-day average), compared to 817 thousand the prior week.  
Mike Simonsen discusses this data and much more regularly on YouTube

My back-to-work morning train WFH reads:

• Trump’s Tariffs Could Be Overturned. Companies Are Rushing to Get Refunds. Dozens of importers, including major companies, are filing lawsuits to preserve their right to tariff refunds ahead of a key December 15 deadline.The Supreme Court is expected to rule soon on the legality of tariffs, with potential refunds exceeding $30 billion.The administration has a backup plan to re-create the tariff structure using other types of tariffs if the current ones are struck down. (Barron’s)

• How Netflix stole Warner Bros from David Ellison: Old-guard Hollywood underestimated streaming pioneer that has upended the industry over two decades. (Financial Times) see also How the “Albanian Army” Took Over the World Or: How an infamous quip by Time Warner’s former CEO dismissing Netflix became one of the most infamous quotes in entertainment history. (Hollywood Reporter)

• For Gen Z, cash isn’t king. It’s a joke. ‘It’s money that doesn’t exist”: Gen Z is treating cash like fake money. (Business Insider)

• The wealthy 1% are turning to new status symbols that can’t be bought—and it’s hurting Dior, Versace, and Burberry. Having a Hermès Birkin was once the litmus test for being extremely wealthy. With yearslong wait-lists and eye-popping price tags, the purse was the ultimate symbol of luxury—until Walmart started selling an aesthetically identical version for $80 instead of $25,000. (Fortune)

• Americans Are Microdosing Obesity Drugs, Driven by ‘Thin Is In’ Marketing Blitz: Telehealth companies are aggressively marketing GLP-1s as cosmetic elixirs for anyone who wants to lose a few pounds. (Bloomberg)

• She Managed His Fortune. How Did She End Up Inheriting It? After the death of his first wife, Gulf & Western president David Judelson married his former banker and left her millions when he died. Now his kids are accusing their stepmom of something sinister. (Wall Street Journal)

• In the Line of Fire: During the Trump era, political violence has become an increasingly urgent problem. Elected officials from both parties are struggling to respond. (New Yorker) see also Mike Johnson’s red alert on members quitting Congress. Members of the House of Representatives are quitting Congress at a record rate, with Republican retirements and resignations outpacing Democrats by a nearly 2-to-1 ratio in the first 11 months of the year. (Axios)

• Blame Our Love of Booze on Our Primate Ancestors: Our preference for alcohol stems from ancient primates’ fruit-munching habits, research indicates. (Wall Street Journal)

• Steve Bannon Was Epstein’s Comeback Consultant. Where’s the Uproar? The MAGA architect is escaping opprobrium for his chummy relationship with the notorious pedophile. (The Bulwark) see also Stephen Miller Is an Immigration Hypocrite. I Know Because I’m His Uncle. If my nephew’s ideas on immigration had been in force a century ago, our family would have been wiped out. (Politico)

• Netflix Is Gambling $72 Billion on Buying Instead of Building. Netflix Inc. has won the fight for Warner Bros. Discovery Inc. with a $72 billion cash-and-stock deal, which is worth $83 billion including debt. The strongest logic for the deal lies in giving Netflix subscribers more content to keep them glued to the platform, including phenomenal franchises like Harry Potter and the DC Universe. (Bloomberg)

Be sure to check out our Masters in Business interview with Paul Zummo, Chief Investment Officer and Co-founder of JPMorgan Alternative Asset Management. The JPM group manages $35 billion in external hedge fund solutions for institutional and high-net worth investors. He also heads the Portfolio Management Group, and is a member of the JPMAAM Investment Committee.

 

How Couples Meet, 1940-2020

Source: @SteveStuWill

 

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

Hedge Fund CIO: "Trump's NSS Report Reads Like A Cold War Playbook. Deploy Capital Accordingly"

By Eric Peters, CIO of One River Asset Management

“What are America’s core foreign policy interests? What do we want in and from the world?” wrote the authors of the newly released ‘National Security Strategy (NSS) of the United States of America.’ The NSS is the kind of report I like to read. Because sometimes, policy people tell you what they’re thinking. It’s helpful to take it at face value, incorporating it into your mental model. “We want to ensure that the Western Hemisphere remains reasonably stable and well-governed enough to prevent and discourage mass migration to the United States.” 

The new National Security Strategy of the United States:

"As Alexander Hamilton argued in our republic’s earliest days, the United States must never be dependent on any outside power for core components—from raw materials to parts to finished products— necessary to the nation’s… pic.twitter.com/XWsBL6hxjL

— Under Secretary of State Jacob S. Helberg (@UnderSecE) December 5, 2025

“We want a Hemisphere whose governments cooperate with us against narco-terrorists,cartels,and other transnational criminal organizations,” continued the NSS. The USS Gerald R. Ford,off the coast of Venezuela,its oil,China watching. “We want a Hemisphere that remains free of hostile foreign incursion or ownership of key assets,and that supports critical supply chains; and we want to ensure our continued access to key strategic locations. In other words, we will assert and enforce a “Trump Corollary” to the Monroe Doctrine.” 

Source: Kayla Haas

“We want to halt and reverse the ongoing damage that foreign actors inflict on the American economy while keeping the Indo-Pacific free and open,preserving freedom of navigation in all crucial sea lanes,and maintaining secure and reliable supply chains and access to critical materials; We want to support our allies in preserving the freedom and security of Europe, while restoring Europe’s civilizational self-confidence and Western Identity.” The report savaged Europe, its over-regulation, stagnant economy, immigration policies, free speech limits. 

“We want to prevent an adversarial power from dominating the Middle East,its oil and gas supplies,and the chokepoints through which they pass while avoiding the “forever wars” that bogged us down in that region at great cost; and we want to ensure that U.S. technology and U.S. standards—particularly in AI, biotech, and quantum computing—drive the world forward. These are the United States’ core, vital national interests. While we also have others, these are the interests we must focus on above all others, and that we ignore or neglect at our peril.” I expect US spending/support to start looking more Beijing-like in these areas. 

“The US must at the same time invest in research to preserve and advance our advantage in cutting-edge military and dual-use technology, with emphasis on the domains where U.S. advantages are strongest. These include undersea, space, and nuclear, as well as others that will decide the future of military power, such as AI, quantum computing, and autonomous systems, plus the energy necessary to fuel these domains.” The NSS report reads like a cold war playbook. Deploy capital and invest accordingly. 

“Additionally, the U.S. Government’s critical relationships with the American private sector help maintain surveillance of persistent threats to U.S. networks, including critical infrastructure. This in turn enables the U.S. Government’s ability to conduct real-time discovery, attribution, and response (i.e., network defense and offensive cyber operations) while protecting the competitiveness of the U.S. economy and bolstering the resilience of the American technology sector. Improving these capabilities will also require considerable deregulation to further improve our competitiveness, spur innovation, and increase access to America’s natural resources.” 

Anecdote

“After the end of the Cold War, American foreign policy elites convinced themselves that permanent American domination of the entire world was in the best interests of our country,” wrote the authors of the ‘National Security Strategy of the United States of America,’ released this week, signed by the President [here], who is not yet one full-year into his term. What follows speaks for itself.

“Yet the affairs of other countries are our concern only if their activities directly threaten our interests. Our elites badly miscalculated America’s willingness to shoulder forever global burdens to which the American people saw no connection to the national interest. They overestimated America’s ability to fund, simultaneously, a massive welfare regulatory-administrative state alongside a massive military, diplomatic, intelligence, and foreign aid complex. They placed hugely misguided and destructive bets on globalism and so-called “free trade” that hollowed out the very middle class and industrial base on which American economic and military preeminence depend. They allowed allies and partners to offload the cost of their defense onto the American people, and sometimes to suck us into conflicts and controversies central to their interests but peripheral or irrelevant to our own. And they lashed American policy to a network of international institutions, some of which are driven by outright anti-Americanism and many by a transnationalism that explicitly seeks to dissolve individual state sovereignty. In sum, not only did our elites pursue a fundamentally undesirable and impossible goal, in doing so they undermined the very means necessary to achieve that goal: the character of our nation upon which its power, wealth, and decency were built.”

Tyler Durden Mon, 12/08/2025 - 06:30

Once Again, London Has The Most Pathetic Christmas Tree On The Planet

Authored by Steve Watson via Modernity.news,

This weekend, London officially turned on it’s Christmas tree lights… Revealing once again the most tired looking pathetic tree and decorations on the planet.

The London Mayor Sadiq Khan was there, pretending to be impressed by a display into which less effort has gone than than your Dad’s half baked effort in the early 1980’s with 20 year old stuff scraped together from out of the attic.

The Christmas lights switch on and tree in Trafalgar Square, London. I was expecting better than last years diabolical cactus with bland white lighting. I guess expectations were too high. ? @MayorofLondon is a disgrace! We NEED @antmiddleton pic.twitter.com/tgaU97aoFR

— Real British Media (@RBMSteve) December 4, 2025

OK, we get it, it’s a “traditional” spruce from Norway. They’ve been sending one since 1947. But can they not send a better one?

Hope you guys over in the UK enjoy the tree this year ? This is the 79th time the City of Oslo sends a Christmas tree to London as a thank-you for the help during the Second World War. pic.twitter.com/XrmiiYvATl

— Joakim ????? (@joakial_) December 3, 2025

And get some better lights on it?

Of course the replies are closed. We all know why.

Khan also freaked out when he had to sing about Jesus.

Muslim Mayor of London Sadiq Khan nearly crashes out the moment he realizes he has to sing “Christ is born the newborn King” during a Christmas Carol event in Londonpic.twitter.com/zr6RI1ZbZN

— Jason Jones (@jonesville) December 6, 2025

Khan then actually had the gall to also post this video of a Christmas tree lighting ceremony in Covent Garden, which is PRIVATELY funded, and pass it off as his doing.

Nowhere compares to London at Christmas ?pic.twitter.com/YuNJI1TWPb

— Mayor of London, Sadiq Khan (@MayorofLondon) November 15, 2025

They HATE Christmas.

Just to confirm, the Mayor of London doesn't pay for the Covent Garden Christmas tree or lights featured in the video & they are arranged & entirely funded by local retailers & the estate landlord.

The tree Sadiq Khan is responsible for erecting & decorating looks like this: https://t.co/DKp1PPUmY4 pic.twitter.com/OeKGThd6v6

— Ike Ijeh (@ikeijeh) November 17, 2025

What an embarrassment.

Prague – that’s how you do it!!! pic.twitter.com/GHQsQnvWDS

— Dave (@vuvazela) December 6, 2025

Even non-christian nations have infinitely better displays.

Bangkok, Thailand… Not even a Christian nation ? pic.twitter.com/98gTN4PCW1

— Pongkung (@Pongkung_eiei) December 6, 2025

Eventually they won’t even bother.

Listen to the sad clapping in London. Is it not obvious to you that the UK Christmas tree was intentionally barely lit or decorated? Remember the lavish tree decorations of the recent past? This is deliberate. Slow but deliberate. https://t.co/JDqGFwU658

— Dr. Naomi Wolf. 8 NYT Bestsellers. DPhil, Poetry. (@naomirwolf) December 7, 2025

Memo. It is all coordinated. This, the sad London Christmas tree, the attacks on Christmas markets, the no Christmas lights in South Station Boston…all of it. https://t.co/FGKNASjRaY

— Dr. Naomi Wolf. 8 NYT Bestsellers. DPhil, Poetry. (@naomirwolf) December 7, 2025

The turning on of the Christmas tree lights in London, UK compared with Warsaw, Poland.

Do not tell me that London Mayor Sadiq Khan cares about the city or about Christmas… pic.twitter.com/OIRQ58AQoI

— ??? (@AntSpeaks) December 5, 2025

2025 Christmas tree comparison:
1) Sadiq Kahn's London tree
2) Wrowclaw's tree (Poland)

Which way western man? pic.twitter.com/by25KYhT0V

— Samson (@SH_lotuseater) December 6, 2025

Dear Londoners,

I present London’s new £149.99 C’mas Tree.

Merry Christmas

From – Your Mayor

Sadiq Kahn

Ps. I hate you all pic.twitter.com/hrInyhvQz0

— Concerned Citizen (@BGatesIsaPyscho) December 5, 2025

??New York’s Rockefeller Center Christmas tree vs London’s Trafalgar Square tree. ?? pic.twitter.com/3369DrhjNp

— Oli London (@OliLondonTV) December 5, 2025

Wait for it… Christmas tree in Islamic London…pic.twitter.com/kY58a9pxxf

— Pippa B ????????? ? ?? ?? (@pippaisright) December 6, 2025

Not a fan of Sadiq but I have to fact check: the Trafalgar Square Christmas tree is an annual gift from Norway to London as a token of gratitude for Britain's support during World War II. That's why it just looks like a pine tree with lights on it, it doesn't look super elaborate… pic.twitter.com/LliUz2J4tn

— xpfmnbvc????????? (@gdlhagg) December 6, 2025

love every year when people point out that the london christmas tree looks terrible and then get quote tweeted like 'wow op clearly does not know that we have had terrible tree for 80 years on purpose and in fact it is culturally vital that our trees remain very bad forever'

— Adnan (@aouadnan) December 7, 2025

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Tyler Durden Mon, 12/08/2025 - 05:00

US Issues NATO's European Members New Self-Defense Deadline

European members of NATO have been warned by Washington that they must assume greater responsibility for the alliance's intelligence operations and missile production - which will require significantly more defense spending by 2027, Reuters has reported.

Reuters in its exclusive Friday report said that the United States "wants Europe to take over the majority of NATO's conventional defense capabilities, from intelligence to missiles, by 2027, Pentagon officials told diplomats in Washington this week, a tight deadline that struck some European officials as unrealistic."

"The message, recounted by five sources familiar with the discussion, including a U.S. official, was conveyed at a meeting in Washington this week of Pentagon staff overseeing NATO policy and several European delegations," the report continued.

The directive was coupled with a warning behind the scenes, reportedly involving Pentagon officials cautioning representatives from several European nations that the US may scale back its role in certain NATO defense efforts if this target and deadline is not met.

US Army/NATO file image

It was noted in the report that some European officials consider the 2027 goal unrealistic, saying that rapidly substituting American military support would demand far greater investment than current plans and NATO member approved defense budgets allow.

This generally reflects the Trump administration's long verbalized dissatisfaction with with Europe's progress on shouldering more of NATO's collective defense burden. 

But the Reuters report also underscored that European officials were not offered tangible metrics whereby failure or success would be assessed:

Conventional defense capabilities include non-nuclear assets from troops to weapons and the officials did not explain how the U.S. would measure Europe's progress toward shouldering most of the burden.

It was also not clear if the 2027 deadline represented the Trump administration position or only the views of some Pentagon officials. There are significant disagreements in Washington over the military role the U.S. should play in Europe.

One NATO official was cited as saying "Allies have recognized the need to invest more in defense and shift the burden on conventional defense" from the US to Europe.

As we described previously the Trump administration's new National Security Strategy really hits out hard at Europe, stating saying "it is far from obvious whether certain European countries will have economies and militaries strong enough to remain reliable allies" to the United States.

The document further highlights that this current reality of European weakness could have certain negative implications for potential for heightened Western escalation with Russia:

"Managing European relations with Russia will require significant U.S. diplomatic engagement, both to reestablish conditions of strategic stability across the Eurasian landmass, and to mitigate the risk of conflict between Russia and European states," the document reads.

Most analysts see the language in the document as opening the door for greater Washington meddling in European affairs.

Source: Visual Capitalist

"Washington is no longer pretending it won’t meddle in Europe’s internal affairs" Pawel Zerka, a senior policy fellow at the European Council on Foreign Relations, observed.

"It now frames such interference as an act of benevolence (‘we want Europe to remain European’) and a matter of US strategic necessity. The priority? ‘Cultivating resistance to Europe’s current trajectory within European nations'," he concludes.

Tyler Durden Mon, 12/08/2025 - 04:15

Europe's Innovation Is Drowned In A Sea Of Government Intervention

Authored by Mihai Macovei via The Mises Institute,

Europe became prosperous through a burst of innovation and capital accumulation during the eighteenth-century industrial revolution that allowed individual freedom to replace feudalistic rents and privileges.

A new industrial revolution based on digitalization, advanced artificial intelligence (AI) and automation is in the making, but the reputed analyst Wolfgang Münchau claims that Europe is about to miss it.

In his view, Europe has forgotten how to innovate, because it may still have the aptitude, but it has lost the right attitude to foster creative destruction.

Münchau and other analysts put down this failure on European government’s inability to pick winners like China or capitalize on military investment like the US, in order to promote cutting-edge technologies and research.

In our view this is wrong - Europe does not need more and better targeted government intervention, but considerably less.

Europe lags behind in productivity growth and innovation

For almost four decades, Europe has been falling behind the US, and now China, in digital technology sectors, such as internet, semiconductors, ICT equipment and software, and AI. These sectors are recording the highest productivity growth rates and account for most of the widening productivity gap between the EU and the US (Graph 1).

Graph 1: EU vs US labor productivity 1890-2022

Source: The Draghi report: A competitiveness strategy for Europe (Part A)

European decision makers could not just ignore the productivity growth problem and turned their attention to closing the innovation gap with the US. However, despite strong competition from China and the US, Europe still appears to retain a decent capacity to produce innovative ideas. According to Mario Draghi’s report on EU competitiveness, the EU produces almost one-fifth of the world’s scientific publications, lagging behind China, but ranking ahead of the US. It also has a strong position in patent applications with 17% of the world’s patent applications. EU’s public spending on R&D at 0.74% of GDP is slightly larger than 0.7% in the US, and 0.5% in both Japan and China. Overall, according to the European Innovation Scoreboard, the EU continues to trail the US closely in terms of scientific research (Graph 2), while China comes strongly from behind and outranked Germany in the latest Global Innovation Index 2025.

Graph 2: Innovation performance of EU, China and the US

Source: The Draghi report: A competitiveness strategy for Europe (Part B)

It seems that Europe’s main problem is not lack of scientific discoveries, but of providing the right conditions for businesses to develop them into marketable products. The links between higher education and businesses are weak. Only about one-third of the patented inventions by European universities or research institutions are commercialized. Successful commercialization in high-tech sectors is linked to innovation “clusters” of networks of universities, start-ups, large companies and venture capitalists (VCs) which are less developed in Europe.

The insufficient scaling up of tech start-ups is another key issue. Europe is creating a large number of start-ups, comparable to that in the US, but they often fail to grow. Many barriers, such as overregulation and bureaucracy, a heavy tax burden and insufficient access to finance force companies in Europe to stay small or relocate, mostly to the US. Only one in ten unicorns (i.e. start-ups with a valuation exceeding USD 1 billion) are active in Europe, relative to the US and China. According to Politico, nearly 30 percent of the bloc’s unicorns have transferred to the US since 2008. Young talent is also fleeing for the U.S. and Asia, while Europe’s economy is falling behind in modern industries.

Innovation does not work without capital accumulation

A disproportionate focus on innovation is not helpful, especially when Europe does not seem to lack innovative ideas. Ludwig von Mises explains how the scarcity of capital goods is the key factor impeding technological progress and the use of scientific knowledge. Throughout history, underdeveloped countries had relatively open access to the scientific methods used by advanced economies, but lacked the capital structure to implement them. The latter is the outcome of sustained market-oriented investment, where Europe seems to fail today.

Only around 40% of European companies report that they invest in R&D, compared to 56% in the US. The overall R&D investment of the private sector in the EU was only 2.2% of GDP in 2022, compared to 3.5% of GDP in the US, 3.3% in Japan and 2.4% in China. In general, European companies invest somewhat less than the US, and considerably less than China, (Graph 3), which also explains the anemic capital accumulation and productivity growth.

Graph 3: Corporate sector investment

Source: OECD Data Explorer

Private investment in Europe is not low because of insufficient domestic savings, but because of heavy government intervention that renders the business environment unattractive. Domestic savings are actually plentiful in several old member states such as Denmark, Germany, Ireland, the Netherlands and Sweden, but are mainly invested abroad. It results in very high current account surpluses (to the tune of 5 to 12% of GDP). As regards foreign investment, France, Germany and Italy have recorded a predominantly negative and volatile net foreign direct investment (FDI) balance, while US and China remain major destinations of FDI inflows in both absolute and relative terms.

Investors complain about the high regulatory and administrative burden, not least on account of severe labor market rigidities and the intrusive green legislation. Moreover, the tax burden is one of the heaviest in the world in order to finance an over-seized welfare state. According to the OECD, France, Italy, and Germany collect more than 40% of GDP in tax revenues, compared with less than 30% in the US and China. The perverse incentives of the generous welfare systems affect both companies and workers as it discourages education and hard work. Europe has an acute shortage of skilled employees in particular in the fields of science, technology, engineering and mathematics (STEM), undermining innovation. Despite the very large public spending on education, a steep decline in the level of basic skills and top performers took place in recent years, as evidenced by falling PISA scores. In terms of labor incentives, Germans and French work about 20% less hours per year than Americans and 30% less than Chinese.

Does Europe need more or less government intervention?

European decision makers focus on strategic solutions that favor more government intervention and policy centralization at EU level, such as higher public spending for innovation and education, faster decarbonization of the industry shielded by green tariffs, higher defense spending and strategic autonomy. They also target regulatory simplification, but remain conspicuously silent about reducing the tax burden and the welfare state, the real elephant in the room. European governments took a similar approach of protecting the welfare state, when recently confronted with fiscal and growth woes, either going for higher taxation in France, the UK, or Italy, or higher government spending in Germany.

Münchau also argues for more government intervention and believes Europe should emulate China in getting better at picking winners. But, the EU is no stranger to heavily subsidizing the industrial sector to the tune of 1.5% of GDP annually. It is also the originator of an artificial market for “climate change” compliant products, such as solar panels, wind mills, large capacity batteries, electric cars, etc. Normally, EU companies should be leaders in these markets, benefitting from the advantage of the first entrant. Yet, Chinese and other Asian producers took over “green” markets because they are cheaper and more competitive. If foreign companies investing in China in the early nineties were complaining about a “forced technology transfer,” now it is the EU requiring Chinese investors to transfer advanced technology know-how to their European peers.

In conclusion, it is not true that China has proven wrong the Western economic policy consensus that governments should never pick winners. China has only proven right the classic Western capitalist mentality that economic freedom stimulates hard work and capital accumulation, fostering prosperity. A relatively unencumbered capitalist system can be very productive at creating wealth so that, within limits, governments can waste some of it by subsidizing less efficient activities. But, if government intervention and redistribution reach a point where they stifle incentives to work, save and invest, privately created wealth may not be enough to cover government misadventures. Hence, the illusion that China is better than others at picking winners, and that better calibrated socialist policies could solve Europe’s problem of too much intervention in the economy.

Tyler Durden Mon, 12/08/2025 - 03:30

Can Europe Keep Ukraine Armed With Limited US Aid?

Over the past two years, Western support for Ukraine has undergone a drastic change, marked by a surge in European commitments and a notable retreat in U.S. engagement.

According to the Kiel Institute for the World Economy's Ukraine Support Tracker, European countries have become the leading providers of government aid to Ukraine, allocating almost €50 billion from January to August 2025, including military, financial and humanitarian support.

On the other hand, the United States had committed over €100 billion in government aid under the Biden administration (2022-2024).

But as Statista's Tristan Gaudiat shows in the chart below, the return of President Trump to office in early 2025 stalled U.S. support, the current administration having paused any new funding.

You will find more infographics at Statista

As the war enters its fourth year, Europe's role as the primary backer of Ukraine is now clear, while U.S. aid uncertainty raises questions about the sustainability of Western support in the long term.

 

 

Tyler Durden Mon, 12/08/2025 - 02:45

How Resilient Is BRICS In The Storm Of Geopolitics?

Authored by Peter Hanseler / René Zittlau via ForumGeopolitica.com,

BRICS is a huge power factor whose members, partners, and candidates are currently undergoing a severe test. Today, we look to the future.

Introduction

In the first part of this series, we looked at the facts about BRICS and the major economic trends that can currently be observed.

The second part dealt with the environment in which BRICS must develop as the most important organization of the Global South. We assessed the warlike circumstances in general, the great danger that would arise from a nuclear war, and the unpredictability of the geopolitical situation, which leads us to describe the current situation as a “storm.”

In this third and later fourth part, we will first highlight the aggressive attitude of the US toward its friends. We will then point out the difficult economic situation in the US, which appears better than it is due to the AI hype. Finally, we will describe the US's efforts to maintain its hegemonic status in various geographical catchment areas.

Aggression Above All - Against Everyone

It does not take a genius to see that the tug-of-war between the Global South and the Collective West is already in full swing. We will discuss this further below, using specific examples.

“If you have America as a friend, you don't need enemies.”

However, the aggressive approach of the United States is not limited to members of the Global South or BRICS exponents, but is directed against anyone from whom there is something to be taken. This includes countries that are “friends” of America – such as Switzerland – or American colonies, such as most members of the G7 and others. See my thoughts on the “colonial empire of the US” in the article “The war between two worlds has begun – Part 1.”

Trump's approach toward friends and allies is so aggressive that one is inclined to say, “if you have America as a friend, you don't need enemies.” There are solid reasons for this aggressive behavior. On the one hand, Trump has set himself the goal of reindustrializing his country. This comes after Wall Street bankers, supported by President Clinton and his successors, deliberately deindustrialized the country just to line their own pockets in the short term.

This strategy also had the side effect of exacerbating income inequality among different social classes, which meant that a few people benefited greatly from this strategy while many industrial workers lost their jobs and became impoverished. Another consequence of this is the loss of industrial expertise among the population.

Trump has realized that he needs to do something. However, I doubt that he intellectually understands multipolarity and thus the concept of BRICS. He doesn't even have a clue which countries belong to BRICS. On January 21, 2025, he asked journalists whether Spain was a BRICS nation.

Furthermore, in January 2025, Trump still believed that he could bring BRICS to its knees simply by imposing tariffs and sanctions. He also threatened BRICS for not using the dollar:

"We are going to require a commitment from these seemingly hostile Countries that they will neither create a new BRICS Currency, nor back any other Currency to replace the mighty U.S. Dollar or, they will face 100% Tariffs,"

President Trump, January 30, 2025

Trump seems to have recognized that BRICS poses a threat to the US dollar's hegemony. The fact that the US has its own behavior to blame for the avoidance of the US dollar in the Global South, because the hegemon uses its own currency as a weapon, seems to be lost on Americans in their hubris, which makes the situation all the more threatening for the US. We have commented on this behavior by the US and its consequences on several occasions, including in the section “The use of the US dollar as a weapon leads to a decline in the use of the US dollar as a reserve currency” in our article “How BRICS could overcome its biggest challenge – payment settlement.”

The behavior of the US so far does not suggest that it recognizes the danger posed by a BRICS payment system without the US dollar. If that were the case, Trump would try to make the use of the US dollar as attractive as possible for the Global South, but he is not doing so.

His actions to date have been aimed purely and simply at generating revenue through tariffs and extortion. Extortion because, in the case of the EU, for example, in addition to imposing 15% tariffs, investments and arms purchases in the trillions were extorted (see, for example, Reuters). This approach looks like a typical American “quick fix,” probably to avert the complete collapse of the US federal budget.

Fake but funny – AI can also be amusing – submissive European leaders wait to be dismissed by Trump – Source: Lucifer

The lack of intellectual understanding of the dangers that BRICS actually poses is also the reason why Trump sees China as a major adversary and fears that the Chinese are seeking to knock the US off its pedestal as the world's dominant power. For Trump, who prefers simple paradigms, this is easier to understand and communicate than the BRICS constellation, which the US population neither knows nor comprehends.

The Economic Situation in the US

If we are to believe the statements made by Jerome Powell, Chairman of the US Federal Reserve, at his last press conference on October 29, there is no cause for concern—at least that is how it sounds.

"the economy looks like it’s solid and stable and hasn’t really changed"

Transcript of Chair Powell’s Press Conference October 29, 2025

The term “looks like” already indicates that this whitewashing is built on sand.

Anyone who does not get his information from sources sponsored by banks and other financial organizations, such as CNBC and other mass media outlets that claim to be “experts,” but instead looks behind the scenes and occasionally visits ZeroHedge, is well aware of the pitiful financial situation of the US, or rather the Collective West. We described this catastrophe and its origins from a geopolitical perspective in our article “The war between two worlds has begun – Part 1.” It is not the purpose of our blog to analyze economic data; others are better at that. Nevertheless, today we would like to point out a phenomenon that is characteristic of our time.

AI – The Mother of All Bubbles?

Those who view American stock indices as a benchmark for the economy are still cheering, albeit more hoarsely than before, as the price bonanza is limited to fewer and fewer stocks and AI is not only the savior, but must be the savior in order to keep the dance around the golden calf alive. The drivers of the stocks – people who tie their careers to this hype – dismiss objections that question how the predicted huge investments on which the valuations are based can even be raised and how a business model can be created in which users are supposed to amortize these huge investments. Most users pay a few dollars to use these artificial brains – nothing more. It is also striking that gigantic investments are passed around in a circle – according to the motto: You send me 100 billion under the heading X and I send the money back under the heading Y: Total investments then amount to 200 billion, but nothing has been invested. Instead of many: New York Times.

For those who want to have a laugh: Ronny Chieng explores the promises of AI

In 2000, there were companies listed on NASDAQ that had nothing to do with the internet, but added “.com” to their names and then saw their share prices jump by 500%. Something similar is happening again now. With these valuations, everyone can be sure that every pension fund in the Western world is invested in this bubble, because the big difference to the dot-com bubble is that back then, it was mainly high-earning doctors and lawyers who lost a lot of money when the bubble burst. Today, every pensioner is caught up in it.

According to the Swiss business newspaper Finanz & Wirtschaft, the current AI bubble (red) is almost twice as big—or rather, twice as bad—as the dot-com bubble of 2000.

Source: Finanz & Wirtschaft

No one knows when this bubble will burst, but it will burst, and this will lead to such upheavals on the financial markets that the geopolitical plans of the Collective West will be called into question.

How Ill-informed is Trump?

To what extent Trump is aware of the catastrophic situation facing his nation and the financial markets in the Collective West seems once again difficult to assess. Trump himself—as a real estate mogul—loves the leverage of credit, which has made him rich and has repeatedly ensured that it was not he personally but his lenders who had to write off billions. Trump therefore loves debt and low interest rates. On December 3, 2025, the New York Times wrote:

"Mr. Trump has made clear that he wants a Fed chair who will support substantially lower interest rates, something that the central bank under Mr. Powell’s leadership has rebuffed given the economic backdrop. Inflation has picked back up with Mr. Trump’s tariffs, while the labor market has shown signs of slowing."

Source: New York Times

He is therefore unaware that lower interest rates will not only harm the US dollar in the long term, but that he will soon find no buyers for this currency. This circumstance would further reinforce the aversion of the Global South to the US dollar described above, as the US dollar would be shunned not only for geopolitical reasons, but also for purely economic reasons.

A close friend of mine is acquainted with someone who regularly dines with Donald Trump at the Mar-a-Lago dinner club. The talkative president speaks freely about many topics at these private gatherings. A few days ago, for example, he said that the Russian economy was in ruins and that the Russians were suffering catastrophic losses. I am on the ground here and can confirm to our readers that both statements are simply false. This is not about assessing the Russian economy or the situation on the front lines, but this example shows that President Trump is being misinformed by his advisors. Whether this is intentional or due to the incompetence of his administration, I have no way of knowing, but it does make his many suboptimal decisions this year seem more comprehensible, and one can assume that the president, who believes in simple thought patterns, sees the insane rally of a few AI stocks as a sign of a healthy and resilient economy.

How Will Trump Deal with BRICS? Short-term Solutions to Money Problems

We have established so far that Trump is extremely aggressive economically and also very ruthless toward friends and allies in order to achieve his goals. His most pressing short-term goal is easy to identify: money. In May, we published the article “Mar-a-Lago will fail—without credibility, nothing works anymore.” In it, we critically analyzed Trump's economic plans. We demonstrated that these plans are partly contradictory and will ultimately fail due to the greatest weakness of the US: Americans are completely unreliable partners and only honor contracts as long as they benefit from them, only to break them afterwards for the flimsiest of reasons. We have already commented on this weakness of the US several times, for example in June in “Diplomacy on its deathbed,” where we quoted Professor Mearsheimer as follows:

"Any country on the planet to trust the United States is remarkably foolish."

Professor Mearsheimer 

Medium- and Long-Term Solutions – Weakening BRICS

To achieve its medium- and long-term goals, the US is employing other means. As we have already outlined in our series “The war between two worlds has already begun,” the Americans are avoiding direct military confrontation with China and Russia. With regard to Russia, we believe that the confrontation in Ukraine is a direct one—see our comments in the second part of this series, “Has World War III already begun?” However, the Americans disagree, and the Russians are letting the Americans believe this for diplomatic reasons.

The US can only maintain its status as a hegemon if it destroys BRICS as an organization or weakens it to such an extent that it becomes what the West describes it as: a failed or embarrassing attempt by a few developing countries to rise above insignificance. In doing so, they are taking action against BRICS members, partners, and candidates, using every means imaginable. They are courting them to get them to switch sides (e.g., Saudi Arabia), weakening or destroying them (e.g., Venezuela).

Below, we outline the pressure points divided into geographical catchment areas on which the Collective West has or intends to exert massive influence.

Catchment Area: Western Flank of Russia Ukraine

Currently, the Collective West is working on Russia in Ukraine in the Western catchment area. For the origins, I refer to my lecture of March 22, 2024.

The West has been conducting military operations for almost four years with absolutely no success. The losses suffered by the Ukrainians are horrendous, and it looks as though it will be the Russians who determine where their future borders will lie. It is very possible that Russia will turn Ukraine into a landlocked country by capturing Odessa, partly because of the ongoing attacks on Russian ships in the Black Sea, which are probably coordinated from London. Professor Mearsheimer's argument on this subject is compelling (AI-generated).

It is also obvious that it is the Europeans who are torpedoing the US's peace efforts; the reasons for this are multi-layered:

Firstly, the leaders of the EU and the leaders of the coalition of the willing are acting as ministers of war, protecting Europe from the evil Russians.

A Muppet show for the Western press – Coalition of the Willing, May 10, 2025

The moment peace “breaks out,” these leaders will lose their raison d'être, as it will quickly become apparent that the clamor for war was not staged to protect the countries concerned or the EU, but to preserve the jobs of this caste.

Furthermore, it appears that it was not only the ladies and gentlemen in Kiev who helped themselves to the money flowing in from Washington, the EU, and European countries. The official figure cited in relation to corruption, around 100 million euros, is a drop in the ocean when viewed realistically. It can be assumed that between 40% and 60% of all funds have disappeared. We are therefore talking about a figure of up to 100 billion that has been stolen. Why much of the aid money had to flow through Estonia, for example, raises questions. Did Ms. Kaja Kallas, the spoiled girl, also have her hand in the till? She does have experience with sleazy scandals.

Has experience with sleaziness – Kaja Kallas

We will soon report on these unsavory stories, which have not yet been proven. If Zelensky's power passes to others, the chances of the ladies and gentlemen in Europe being convicted of corruption increase exponentially. Another reason for Europeans to continue the war.

Romania/Moldova/Transnistria

We have pointed out several times that Transnistria could well be drawn into this conflict, which would directly involve both Moldova and Romania. For more on this, see our article “Moldova – EU testing ground for political reprisals against non-Western forces.”

The Collective West achieved its goals in Romania and Moldova not through military means, but through NGOs and blatant election fraud. We discussed this in our article “Review of the parliamentary elections in Moldova.”

In Moldova and Transnistria, too, the West is provoking confrontation with Russian and Russian-speaking citizens and their culture in order to create the conditions for open confrontation with Russia.

Baltic States

The Baltic states are a particular focus. By demonizing large sections of their own population—Russians—and depriving them of their legitimate rights under EU law, attempts are being made to weaken Russia. These citizens, who are not citizens, are in fact called “non-citizens,” do not have EU passports, and their right to vote and stand for election is restricted. They are also only allowed to use their own language to a very limited extent; there is even a language police force, and Russian-speaking citizens have had to take language tests, failure of which can lead to expulsion from the country for pensioners living there. As a result, more than 800 pensioners living in Latvia with valid residence permits have been expelled from the country for these reasons, as the news portal News.ru credibly reports.

The information that Estonia intends to increase the fines for the incorrect use of language—meaning the use of the Russian language—to €1,280 for natural persons and €10,000 for legal entities also points in the same direction. The dubbing of films into Russian is now also to be banned in Estonia.

Estonia is the homeland of the EU's top diplomat, Kaja Kallas. Under normal circumstances, diplomacy also involves maintaining and developing cultural relations and preventing discrimination. Article 21 of the EU Charter states:

« 1. Any discrimination based on any ground such as sex, race, colour, ethnic or social origin, genetic features, language, religion or belief, political or any other opinion, membership of a national minority, property, birth, disability, age or sexual orientation shall be prohibited.»

EU-Charta Article 21 

Have you heard any criticism of the Baltic states' treatment of their Russian-speaking citizens over the past 30 years? That's how long this violation of the law has been going on. In this respect, the Baltic states are on a par with the regime in Kiev.

Hungary/Slovakia

Hungary and Slovakia are the only EU countries striving for a non-aggressive relationship with Russia. This is due, among other things, to their continuing close economic ties with Russia. The Collective West is interfering massively in the internal affairs of Hungary and Slovakia via NGOs and direct pressure from the EU. In this way, attempts are being made to get rid of Prime Ministers Orban and Fico, if necessary by physical means. In Fico's case, this almost succeeded when an assassination attempt was made on him in Banska Bystrica on May 15, 2024.

Serbia

As a non-EU country completely surrounded by NATO countries, a landlocked country, the traditionally pro-Russian enclave is exposing itself to a significant extent in favor of Russia. The pressure is mounting. On the one hand, the country wants to become part of the EU, but on the other hand, there is considerable resistance to this in Serbia. Furthermore, Serbia's only refinery, which is majority-owned by Lukoil, has fallen victim to new American sanctions. Serbia has not yet found a solution, i.e., no buyer for Lukoil's stake. Russia was then given one and a half months to sell Lukoil's stake in order to have the US sanctions lifted.

In any case, this problem will lead to higher energy prices, which could cause unrest. Whether the West will succeed in turning Serbia into an enemy of Russia is uncertain and probably depends on whether Vucic finds a way to defend his policies and remain firmly in the saddle.

Catchment Area - Caucasus Azerbaijan/Armenia

The two Caucasus states have been striving toward the West for several years. The reasons for Azerbaijan's efforts lie in its close alliance with Turkey, which in turn works very closely with Great Britain in the Caucasus. This is reflected in Azerbaijan's procurement of Western weapons for its conflict with Armenia. Furthermore, the country is Israel's main energy supplier, via Turkey. The energy sources (gas and oil) themselves are mostly under British control (BP). This also applies to other mineral resources (gold, copper, etc.). Azerbaijan is also a huge producer of fruit and vegetables. Russia remains the main buyer of these products. The fruit and vegetable trade in Russia is dominated by Azerbaijanis. Since Russia accounts for around 50 percent of the country's agricultural production, the political leadership must take this constellation into account, especially since well over 30 percent of the workforce is employed in this sector. Another factor to be taken into account is the large number of Azerbaijani migrants in Russia. For Russia, they fill a gap in the labor market, while for Azerbaijan, they fill the state coffers with their substantial remittances. These examples illustrate the complexity of mutual dependencies.

The illegitimate seizure of power by the current Prime Minister Pashinyan accelerated Armenia's shift away from Russia. As in the case of Azerbaijan, this trend does not reflect the opinion of the majority of the population, but rather the interests of a small segment of the political class. The latest step in this direction is Yerevan's announcement a few days ago that it will leave the Russia-led Collective Security Treaty Organization (CSTO), which includes Belarus, Kazakhstan, Kyrgyzstan, and Tajikistan in addition to Russia and Armenia. This step is also the logical consequence of the signing of an agreement with the US to regulate the situation on the Armenian-Azerbaijani-Iranian border following the loss of Nagorno-Karabakh after the war with Azerbaijan over this region.

The border strip between the Azerbaijani enclave of Nakhchivan and the Azerbaijani mainland on the Iranian border will in future be controlled by a private American military company. Armenia itself gains practically nothing from this. Azerbaijan gains American-controlled land access to its enclave and thus to Turkey and NATO.

For 100 years, the US will receive approximately 75 percent of all revenue from traffic volume and control of a key region on Iran's northern border. What was secretly established during the Israeli-Iranian war in June 2025—the complicity of Azerbaijan and Turkey in the attack on Iran—is hereby given a veneer of legality.

Kazakhstan

Kazakhstan is an extremely important strategic partner for Russia, and Russia is an extremely important strategic partner for Kazakhstan.

The land border is enormous (7,644 km) and the population density on both sides is low. It is therefore essential for both countries to have good relations, as it is impossible to guard such a long border. Both states are among the world's raw material giants. The Kazakh company Kazatomprom, for example, produces 40% of the world's uranium. Kazakhstan also produces natural gas, oil, coal, iron ore, etc. The list is almost as long as Russia's.

Politically speaking, Kazakhstan is performing a balancing act. On the one hand, the country is strategically important as a member of the CSTO, while on the other hand, as a member of the Organization of Turkic States and a Turkic-speaking country, it also plays a significant role in Turkey's strategic considerations. In addition to Kazakhstan and Turkey, this organization includes the post-Soviet states of Kyrgyzstan, Uzbekistan, and Azerbaijan. Hungary and Turkmenistan have observer status. And American experts recommend that only with the accession of Tajikistan and Armenia would the organization reach its full potential and strength.

Just a few days ago, Kazakh President Kassym Tokayev signed a memorandum of understanding in Washington on deepening cooperation with the US, particularly in the field of raw materials, before stopping off in Moscow on his return journey to sign a strategic partnership agreement with Russia.

The overlap between the strategic interests of the West on the one hand, Russia and China on the other, and the particular interests of Turkey and a number of other states is obvious.

Kazakhstan is a good example of how the Americans – through companies such as Halliburton – want to exert peaceful influence (for the time being). If this does not succeed, which we assume will be the case due to the pro-Russian sentiment of the population – Kazakhs speak Russian without any accent, as Russian is also an official language – the Americans will probably resort to more aggressive means. The reason for this is simple: a Kazakhstan under American control would be a dream for the US and hell for the Russians.

Our journey continues...

Tyler Durden Mon, 12/08/2025 - 02:00

The Key To Understanding The Cult Of Globalism's War On The West

Authored by Brandon Smith via Alt-Market.us

The culture war in the western world is currently hitting a crescendo. At first the media said it was all “conspiracy theory” being amplified by a “fringe minority” of radical right wingers. Then, they admitted the conflict was real but claimed that conservatives were monsters trying to “dismantle democracy”. Today, the culture war has become the dominant issue of our age with the debate echoing through the halls of the White House.

Leftists hoped they could make it all go away by dismissing it. They hoped they could continue with their ideological takeover at their leisure. They failed.  The rebellion in the US is a product of decades of effort by liberty advocates and it is finally bearing fruit.

However, I think many Americans and some Europeans are discovering that movements like progressive wokism (essentially Cultural Marxism) are much more than a mere reaction to the return of conservatives to the cultural space. The fight that’s happening in front of the curtain is only a dim reflection of the fight that’s going on behind the curtain.

Almost every facet of leftist political and social activism is bankrolled by some of the wealthiest organizations and individuals on the planet. In fact, I would argue that without the billions of dollars in global funding provided by NGOs, government entities and corporations, the political left as we know it would not exist and the world would be much quieter.

A prime example is anti-ICE organizations: These groups have access to extensive cash reserves to finance call networks, they pay for hundreds or even thousand of protesters and agitators, they pay for legal representation and bail to get their activist agents out of jail, and they often obtain inside information on ICE operations before those operations occur.

These groups function less like homegrown civil rights efforts and more like clandestine government agencies. And, if you check the tax backgrounds of all of them you will find, without fail, that they’re propped up by NGOs like the Open Society Foundation, Ford Foundation, Rockefeller Foundation, global corporations like Vangaurd and Blackrock, and government bureaucracies like USAID (before it was shut down).

Nothing about these movements is natural, they are purely astroturf. It might look like chaos, but every time you see leftist mobs on the news trying to interfere with ICE arrests and deportations, what you are watching is a highly organized machine flush with globalist cash working to undermine US sovereignty.

The mass immigration of third worlders is coordinated by globalists. The protests against deportations are funded by globalists. The politicians that promote open border policies and enable the invasion of the west are closely associated with prominent globalists. The war on the west is a globalist war; radical activists are mindless soldiers and paid mercenaries. They are not the source of the conflict; they shield the source.

Unfortunately there are too many conservative commentators out there that REFUSE to accept the reality that the actions of the political left are coordinated by a deeper conspiracy. I don’t know why they deny the existence of this cabal, I can only surmise that the idea of an top-down conspiracy to bring about the downfall of western culture is too frightening for them to ponder.

There is also the problem of motive. There’s plenty of conservatives and patriots with a vague notion of why the globalists do the things they do.  Evil exists, that’s not up for debate.  But beyond the underlying mental factors of psychopathy and delusions of godhood, the issue of relativism is ever present. It is a globalist obsession.

Globalism is rooted in cultural relativism, moral relativism, legal relativism, even biological relativism. Western culture is basically the antithesis of relativism, and thus, it must be destroyed in order for globalism to thrive. Everything else is just a tactic, a strategy to destroy the west while taking none of the blame.

Only the west codifies the idea of inherent liberties into its legal framework. Only the west (specifically the US) places individual citizen rights as equal to or greater than the policies of government. Only the west values free thought over uniformity. Only the west (largely the US) preaches the necessity of popular revolt in the wake of collectivist tyranny.

The problem is, most of the world has no concept of these ideals. They have spent their lives acclimating to cultures where “rights” are also relative – Relative to the whims of socialist and authoritarian regimes.

It therefore makes perfect sense for globalists to fund the importation of millions of foreigners, mostly from the third world, into the west. These are people whose minds are already enslaved by a lifetime of submission to collectivism and oligarchy. The migrants go along with the plan because the incentives are too enticing. Their masters are aiming them at the west and saying:

“Go and pillage, take what you can! We will let you plunder these wealthy places as long as you do as we say after the coffers are looted and the blood in the streets is dry in the sun…”

In other words, the globalists are giving the oppressed third worlders a steam valve, an opportunity to “chimp out” and act on their worst impulses. It is a sad but pervasive observation that the majority of enslaved minds HATE the existence of free people, even if those people live on the other side of the planet.

This doesn’t only apply to hostile migrants, it also applies to the progressives that live next door to us. Look at what happened during the pandemic. Look at how they act when faced with facts that contradict their political beliefs. They snap, they crash out, they go insane. The spit and froth and rage like animals. They revile us and nothing would make them happier than to see us dead. All because we don’t blindly embrace their doctrine.

Wokeness, along with multiculturalism, is a globalist construct adapted as a new world religion and all of its tenets are designed as an attack on western values. We respect meritocracy, so they create DEI and equity.  We promote personal responsibility, so they promote narcissism and self worship.  We revere free markets, so they enable expanding socialism. We respect biological science and the biblical definitions of man and woman, so they create gender fluid ideology. We respect moral objectivity and the reality of good and evil, so they conjure up the philosophy of moral relativism as a license for ubridled degeneracy.

To be sure, there are other cultures that do not embrace wokeness, but they don’t present a legitimate threat to globalism. They don’t have a legacy of free thought, they have no interest in rebellion and they are mostly disarmed so they wouldn’t be able to fight back if they wanted to.

Wokeness was specifically tailored as a weapon against the west; a weapon that targets our belief in liberty and attempts to use it against us. For if an individual has a right to choose their own path, how far does this right extend? Do individuals have the rights and the freedom to congregate into mobs and systematically burn the west down?  Liberals would say “yes”, and if anyone tries to stop them those people are tyrants.

Are we tyrants if we fight back? Are we fascists if we defend out culture and borders from erasure? Are we hypocrites if we ignore the sovereignty of people whose only goal is to eliminate our sovereignty?

My counter-argument to this philosophy is that leftists and globalist have no right to socially engineer the west. They only have the right to leave the west and start their own systems somewhere else. If they hate the west so much, why don’t they relocate instead of staying here, or inviting in millions of immigrants that also have no respect for our heritage?

Because this is not a civic disagreement between citizens with a mutual love of country – This is a war between mortal enemies who share nothing in common. They don’t want to live peacefully in another place where they can experiment with socialism to their heart’s content. They want to conquer and subjugate. Globalism must be global. If any competing systems are allowed to exist they will act as proof that the relativist method is an inferior method.

The key to understanding the globalist war on the west is first to recognize that a conspiracy of “elites” is a hard, irrefutable fact. Second, we must accept that war has been declared on us and this war is one of total conquest. We are not allowed to live separately and peacefully, our very existence is seen as a threat to the establishment. Third, globalists view western culture as antithetical to their future aims. Globalism cannot prevail as long as western ideals exist.

Finally, as noted, most of the world is against us whether they know it or not. Even old allies in Europe are becoming enemies. Import masses of third worlders into America and they don’t become American, America becomes the third world. Import millions of socialists into the US and the US becomes increasingly socialist. This is very simple to understand, but leftists (and some libertarians) refuse to acknowledge the truth.

Not all cultures are equal.  Some are better than others.  It’s fascinating how liberals continue to pretend as if different nations and cultures don’t produce tribes that are contrary to each other. We are not the same and natural coexistence is a myth.  Coexistence of such groups is created through intimidation, extortion and force.  The liberal Utopian ideal of multiculturalism requires oppressive centralization and tyranny.

Globalism is the mechanism by which total and eternal oligarchy is achieved. They use open borders, mass immigration, woke cultism, economic crisis, international conflagration, engineered pandemics, anything you can think of and more to tear their enemies down. We are their enemy. We didn’t choose this fight, they did, and they will continue changing strategies until they find one that works (or until we end their little experiment).

Tyler Durden Sun, 12/07/2025 - 23:55

Over 20,000 Pounds Of Cocaine Seized By US Coast Guard

More than 20,000 pounds of cocaine were seized by the crew of USCGC Cutter Munro, the “largest at-sea interdiction in 18+ years,” the U.S. Coast Guard (USCG) said in a Dec. 5 post on X.

“Through #OperationPacificViper, @USCG has accelerated counter-narcotics operations across the Eastern Pacific and delivered historic results in the fight against narco-terrorists,” the post stated.

“Our maritime fighting force is leading America’s drug interdiction operations, protecting the Homeland, and keeping deadly drugs out of American communities.”

The Department of Homeland Security (DHS) said in a Dec. 5 post on X that 20,000 pounds of cocaine was enough to create over 7.5 million potentially lethal doses of the drug.

Naveen Athrappully reports for The Epoch Times that Operation Pacific Viper directs U.S. forces to the Eastern Pacific region to counter criminal and cartel organizations, essentially cutting off drug and human smuggling activities before they reach U.S. shores, the DHS said in a statement on Aug. 20.

At the time, DHS Secretary Kristi Noem said that “80 percent of illicit drug seizures occur at sea.”

Another major drug seizure this week took place on Dec. 2 when a Coast Guard Station Miami Beach law enforcement boat crew seized roughly 3,715 pounds of cocaine, estimated to be worth $28 million, from a vessel suspected to be used for drug smuggling, the Customs and Border Protection (CBP) said in a Dec. 5 statement.

“Disrupting maritime narcotics smuggling like this demonstrates the power of teamwork in safeguarding our nation and holding criminals accountable,” said Andy Blanco, executive director of CBP Air and Marine Operations Southeast Region.

“Smugglers should be warned that our whole-of-government team is watching, and they will be caught.”

Lt. Matthew Ross, Coast Guard Station Miami Beach commanding officer, said this was the “largest USCG Small boat station cocaine seizure since 1995.”

Crackdown on Drug Trafficking

Under the Trump administration, military activity against alleged drug traffickers has intensified. Strikes against suspected drug trafficking boats began in the sea around Venezuela, and have expanded into the eastern Pacific Ocean near the Colombian coastline.

One of the recent strikes was carried out on Dec. 4 against a drug trafficking boat in the Eastern Pacific. The action was taken after Secretary of War Pete Hegseth ordered a “lethal kinetic strike” on the boat, the U.S. Southern Command (SOUTHCOM) said in a Dec. 4 post on X.

The boat was traversing international waters and was being operated by a Designated Terrorist Organization, SOUTHCOM said, which oversees military operations in the Caribbean and near Latin America.

“Intelligence confirmed that the vessel was carrying illicit narcotics and transiting along a known narco-trafficking route in the Eastern Pacific. Four male narco-terrorists aboard the vessel were killed,” according to SOUTHCOM.

On Dec. 2, President Donald Trump said that land strikes in Venezuela against drug trafficking groups were under consideration.

“We’re going to start doing those strikes on land too,” Trump said. “We know where they live. We know where the bad ones live, and we’re going to start that very soon.”

Criticism has been raised against the Trump administration’s strikes on suspected drug boats. On Dec. 4, Congress held classified briefings regarding a deadly strike on an alleged drug boat in September in the South Caribbean that killed two people.

Rep. Jim Himes (D-Conn.), the leading Democrat on the House Intelligence Committee, told reporters that the video he saw during the briefing was “one of the most troubling things” he’s seen while in public service.

“You have two individuals in clear distress without any means of locomotion, with a destroyed vessel, killed by the United States,” Himes said.

Sen. Tom Cotton (R-Ark.), who also attended the briefing, said he “didn’t see anything disturbing” about the video.

“What’s disturbing to me is that millions of Americans have died from drugs being run to America by these cartels,” Cotton said.

Meanwhile, drug seizures hit a record in November, according to a Dec. 4 statement from the CBP. Nationwide, 54,947 pounds of drugs were seized last month, up by 33 percent from October.

Methamphetamine seizures totaled 21,935 pounds, up by 118 percent, with cocaine seizures jumping 40 percent to 8,240 pounds.

Authorities seized 1,543 pounds of fentanyl, a 59 percent jump from October and the “highest monthly total since last October,” CBP said.

Tyler Durden Sun, 12/07/2025 - 22:45

AI Illiteracy

Authored by Mark Bauerlein via The Epoch Times,

In the old days, English class meant two things: one, reading Shakespeare, Tennyson et al., and two, learning to write. The classics plus grammar and punctuation—they made English a serious subject respected for its content and skills. Of course, it’s not like that any longer.

The traditional literary canon is ever less central to the field, which now spends lots of time on “media literacy,” critical thinking, “informational texts,” and other topics unrelated to literary history. Those changes have come about from above, we should note, from experts in curriculum and assessment.

As for writing, the changes have been even more dramatic and taken place in just the past few years. Artificial intelligence (AI) has upset everything. It has swept into education so suddenly and profoundly that teachers are scrambling daily to cope with its effects. This time, it’s not the experts who are leading the way—it’s the kids. They aren’t writing anymore; AI does it for them. Some keywords, a few clicks, an adjustment or two, and “Voila!” the paper’s done. What late-teen can resist?

If they’re going to “meet students where they are,” as the ed school saying goes, teachers cannot assign any out-of-class writing tasks and expect students to do the work themselves. The lure is too strong, the process too easy. It’s safer than plagiarism, too, because AI creates a unique script for every student who requests one, not a borrowed script that can be unearthed through a Google search by the teacher using any unusual sentences that pop up in a paper as clues. Also, AI produces such authentic student prose that teachers haven’t the time or energy to scan each submission for subtle signs of AI usage.

The whole practice of English must change—it already is doing so.

No more out-of-class-writing, no extended research papers (AI does research as well as composing sentences), and no more in-class writing such as essay exams using computers. Blue books are back! One teacher told me recently that he plans to give oral exams to each student one-on-one at the end of the semester (his classes are small enough for him to do so). It’s a good idea, because in an oral exam, he can probe the student’s knowledge of specific elements in “The Great Gatsby” and other works on the syllabus, thus verifying that the student actually read the book and not just an AI summary of it.

Unfortunately, however, no amount of AI avoidance on the part of the teacher can replace what has been lost—namely, sustained, independent composition, a youth in a dorm room or the library spending two hours on his own verbalizing ideas, polishing sentences, and smoothing transitions. Those hours are a value in themselves, for writing is developed by practice, not by study. It’s an exercise, not a content. Reading a book on prose style will not make you a good stylist. A skilled wordsmith has spent years building vocabulary, acquiring a feel for sentence length and paragraph structure, and recognizing when to show and when to tell, what diction best suits this and that topic, and where irony and figurative language might be effective. It’s a plodding progress with lots of trial and error. Common errors are persistent (misplaced modifiers, oblique descriptions, too many passive verbs and prepositional phrases, etc.). An attentive coach is needed.

Nobody enjoys it, not the student who stares at the blank page in dismay or who rereads a paragraph he’s just written and knows it’s awful, and not the English teacher who feels the student’s dismay and joins the struggle to squeeze some eloquence out of that disjointed paragraph. I remember many sessions with students in office hours, the two of us going over a rough draft sentence by sentence as I directed her attention to a comma or a “which” or a verb tense and asking, “Is there anything wrong there?” and waited for her to figure it out. I had to be patient. She had to concentrate. Time slowed down. By the finish, she sighed and smiled weakly, while I looked forward to happy hour.

There’s no replacement for this humanistic boot camp, however. Most people can’t learn to write in any other way. If AI saves them from this unpleasant, plodding training, happiness will go up, but competence won’t. The impact will spread far beyond the campus, giving us an AI-dominant culture and a low-literacy society.

We might see in the coming years a curious irony: As AI does more and more of the work of communication, those times in which a more meaningful, unusual, impressive communication is needed—for instance, when a politician strives to deliver a rousing speech at a time of crisis—will make those few individuals who did get strong literary formation appear as rare assets.

Message to parents: Encourage your kids to keep a diary and write the day’s events in it every night.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times or ZeroHedge.

Tyler Durden Sun, 12/07/2025 - 22:10

Mapping US Income Inequality By State

The wealth of America’s top 1% sits around $52 trillion today, rising by $4 trillion over the year.

Overall, the top 1% of U.S. earners need to make around $800,000 or more in salary per household.

Meanwhile, about 30% of American households earned less than $50,000 last year, highlighting clear divides in wage distribution across the country.

This graphic, via Visual Capitalist's Dorothy Neufeld, shows income inequality by state, based on data from the U.S. Census Bureau.

The Spectrum of Income Inequality in America

In 2024, the U.S. Gini coefficient was 0.48, representing a high degree of inequality.

Effectively, a score of one means that a single person would earn all of the income, and 0 would represent perfect equality. Last year, the top 20% of earners pocketed 52.2% of the country’s income according to the U.S. Census Bureau. In contrast, the bottom fifth of earners received just 3.1%.

Yet, income is distributed differently across states. Last year, income inequality was the most severe in Washington, D.C. and New York, each with a 0.52 Gini index score.

State Gini Coefficient 2024 District of Columbia 0.52 New York 0.52 Connecticut 0.50 Louisiana 0.49 California 0.49 Massachusetts 0.48 Illinois 0.48 Florida 0.48 Texas 0.48 North Carolina 0.48 Mississippi 0.48 Pennsylvania 0.47 Tennessee 0.47 Alabama 0.47 Georgia 0.47 Washington 0.47 New Mexico 0.47 Arkansas 0.47 Rhode Island 0.47 New Jersey 0.47 Kentucky 0.47 Oklahoma 0.47 Virginia 0.47 Michigan 0.47 West Virginia 0.47 South Carolina 0.47 Nevada 0.47 Missouri 0.46 Ohio 0.46 Arizona 0.46 Colorado 0.46 Wyoming 0.46 Montana 0.46 North Dakota 0.46 Maine 0.46 Maryland 0.46 Kansas 0.46 Oregon 0.46 Vermont 0.46 Hawaii 0.45 Indiana 0.45 Minnesota 0.45 Delaware 0.45 New Hampshire 0.45 Nebraska 0.45 South Dakota 0.44 Wisconsin 0.44 Alaska 0.44 Iowa 0.44 Idaho 0.43 Utah 0.42

In Washington, D.C. the top 20% of earners made 27 times more than the bottom 20% in 2023 according to the Federal Reserve Bank of St. Louis, which is the highest ratio of any state between the top and bottom quintiles.

New York, on the other hand, is home to more billionaires than any other state except for California, creating huge disparities in income. Since 2019, real wage growth among the Big Apple’s top 3% soared 34.5%, more than triple all other income tiers.

Falling near the U.S. average are Florida, Texas, and Massachusetts, providing a more representative picture of income inequality in the country.

In comparison, Utah ranks lowest overall, a position it has regularly held for some time. Utah has the sixth-highest employment share (65.4%) in the country, keeping average family incomes more even.

Along with this, Utah has one of the best social mobility index scores nationwide, likely influenced by narrower wage disparities.

To learn more about this topic, check out this graphic on wealth inequality by country in 2025.

Tyler Durden Sun, 12/07/2025 - 21:35

America's New National Security Strategy: A Surprise Departure On China Policy

Authored by Arnaud Bertrand via The Ron Paul Institute

In a big development, the final US National Security Strategy was just published and the refocus on the Western Hemisphere (i.e. the Americas) is confirmed. The document clearly establishes this as the US's number one priority, saying that the US will now "assert and enforce a 'Trump Corollary' to the Monroe Doctrine."

In terms of military presence, they write that this means "a readjustment of our global military presence to address urgent threats in our Hemisphere, and away from theaters whose relative import to American national security has declined in recent decades or years."

On China, a couple of points...

The most striking aspect to me is that China is NOT anymore defined as "the" primary threat, "most consequential challenge," "pacing threat," or similar formulations used in previous such documents.

It’s clearly downgraded as a priority. Based on the document’s structure and emphasis, the top U.S. priorities could be characterized as:

1) Homeland security and borders (migration, cartels, etc.)

2) Western Hemisphere (Monroe Doctrine restoration)

3) Economic security (reindustrialization, supply chains)

4) China and Indo-Pacific

To be clear they don’t define China as an ally or a partner in any shape or form but primarily as:

1) an economic competitor;

2) a source of supply chain vulnerabilities (but also a trading partner); and

3) a player who regional dominance should be "ideally" denied because it "has major implications for the U.S. economy."

Interestingly, I believe for the first time ever, they mention the possibility of being overmatched militarily by China. They write that "deterring a conflict over Taiwan, ideally by preserving military overmatch, is a priority" - but "ideally" clearly means that it’s ideal, but not necessarily a given.

Via Anadolu Agency

The fact that they call deterring conflict over Taiwan merely "a priority" also suggests, by definition, that it’s no more a top strategic priority, or a vital interest. On Taiwan they also clearly imply that if the US's "First Island Chain allies" don't "step up and spend – and more importantly do – much more for collective defense," then there might be "a balance of forces so unfavorable to us as to make defending that island impossible."

They still maintain that "the United States does not support any unilateral change to the status quo in the Taiwan Strait" but, clearly, there’s a widening gap between what the US says it opposes and what it’s actually willing to do about it.

Interestingly as well, contrary to previous such document, there is zero ideological dimension in the document when it comes to China. No "democracy vs. autocracy" framing, no "rules-based international order" to defend, no values-based crusade. China is treated as a practical issue to be managed, not an ideological adversary to be defeated.

In fact the document explicitly mentions, I think for the first time ever as well, that US policy is now:

• "not grounded in traditional, political ideology"

• that they "seek good relations and peaceful commercial relations with the nations of the world without imposing on them democratic or other social change that differs widely from their traditions and histories."

• and that they seek “good relations with nations whose governing systems differ from ours."

...Which is quite a stunning departure from the rhetoric of the past few decades. We all knew this but it’s now amply clear that the era of missionary liberal internationalism in US foreign policy is dead and buried.

The competition with China is primarily described in economic terms, explicitly so: they write the competition is about "winning the economic future" and that economics are "the ultimate stakes."

Notably, they admit that the tariffs approach "that began in 2017" when it comes to China essentially failed because "China adapted" and has "strengthened its hold on supply chains."

The new strategy, as described in the document, is to build an economic coalition against China that can exert more leverage than the US economy alone – a tacit admission that America just isn't powerful enough on its own anymore.

The contradiction is however obvious: it is unclear how you build an economic coalition against China while simultaneously waging trade wars against your coalition partners, demanding they shoulder more of their own defense, and treating every allied relationship as a deal to be renegotiated in America's favor.

At some point these "allies" will be asking a very obvious question: why sacrifice our economic interests to prop up an America that can no longer compete on its own – and that offers us less and less in return? The document can be found here.

Tyler Durden Sun, 12/07/2025 - 21:00

China Successfully Operates World's First Thorium Molten Salt Reactor

By Haley Zaremba of OilPrice.com

An experimental Chinese nuclear plant reportedly just crossed a historic threshold, successfully operating the world’s first thorium-based molten salt reactor (TMSR). The Chinese Academy of Sciences’ Shanghai Institute of Applied Physics has broken a major scientific barrier by successfully converting thorium to uranium in a historic first.

The Hong Kong-based South China Morning Post reports that the breakthrough, which took place at an experimental reactor out in the Gobi Desert, is “poised to reshape the future of clean sustainable nuclear energy.” 

The process works by using a “precise sequence of nuclear reactions” in which naturally occurring thorium-232 absorbs a neutron, becoming thorium-233. Through a decay process, that isotope breaks down into protactinium-233 and then finally into uranium-233, a potent form of nuclear fuel that can sustain chain reactions for nuclear fission.

While this breakthrough was just publicized this month by a report by Science and Technology Daily, the TMSR has apparently been operational for years. Li Qingnuan, Communist Party secretary and deputy director at the Shanghai Institute of Applied Physics, told the outlet that “since achieving first criticality on October 11, 2023, the thorium molten salt reactor has been steadily generating heat through nuclear fission”.

If the reports are true, this breakthrough would signal an incredible leap forward in a nuclear technology race that China is already winning handily. Although the United States is still the world’s biggest producer of nuclear energy, that status won’t last much longer. In the same time period that the United States built the overdue and over-budget Plant Vogtle, China built 13 reactors of similar scale, and has 33 more on the way. Beijing is also making major forays into the nuclear sectors of emerging economies, with particularly concerted efforts in Africa.

“The Chinese are moving very, very fast,” Mark Hibbs, senior fellow at the Carnegie Endowment for International Peace and expert on the Chinese nuclear sector, told the New York Times. “They are very keen to show the world that their program is unstoppable.”

But while China has invested huge sums of money and manpower into becoming a global nuclear energy innovator and superpower, the nation lacks sufficient uranium to power its lofty goals. While nuclear power production growth is dominated by China, uranium supply chains are dominated by Russia, which is home to nearly half (approximately 44 percent) of all global uranium enrichment capacity. 

China has been buying up more and more of Russia’s uranium, but reliance on exports is both risky and antithetical to China’s ethos of domestic energy independence and international energy dominance. Russia’s outsized presence in the nuclear fuel supply chain has resulted in some degree of risk and market volatility, as the Kremlin has shown that it is not afraid to use enriched uranium for political leverage.

“The nuclear energy supply chain sits atop the clean technology risk pyramid,” warned a recent article from the Carnegie Endowment for International Peace. “Beyond standard supply chain considerations, nuclear exports are subject to a suite of safety and security concerns, and overreliance on a single technology or fuel provider can create significant dependencies given the limited number of suppliers and distinct intellectual property (IP).”

By sidestepping the uranium supply chain issue by using thorium instead, China is leaping over a critical hurdle and straight over the finish line for global nuclear power sector domination. Thorium is much more accessible and abundant than uranium, and could theoretically solve all of China’s nuclear fuel problems. According to the South China Morning Post, just one mining site in Inner Mongolia “ is estimated to hold enough of the element to power China entirely for more than 1,000 years.”

Tyler Durden Sun, 12/07/2025 - 19:50

China & Japan Narrowly Avoid Live Fire Conflict After F-15 Radar Lock Incident

A major and very dangerous incident occurred over waters off Japan's southern islands on Saturday, but has only been publicly revealed Sunday. Chinese PLA military aircraft locked radar on Japanese fighter jets, at a moment Japan-China relations have deteriorated to their worst in many years

Japan and Australia are urging calm in the wake of the aerial encounter, with contrasting accounts and accusations from each side that the other is acting dangerously. Defense Minister Shinjiro Koizumi said his country and allies have formally protested it, calling this "an extremely regrettable" act and "a dangerous" one which exceeds "the scope necessary for safe aircraft operations."

J-15 carrier-based fighters, belonging to the air wing of the Chinese aircraft carrier Liaoning, were involved in the weekend incident. PLA file image

"We have lodged a strong protest with the Chinese side and demanded strict preventive measures," Koizumi said.

According to a description of the event from Tokyo's side:

Japan’s Defense Ministry said China’s military aircraft J-15 took off from the Chinese carrier Liaoning near the southern island of Okinawa on Saturday and "intermittently" latched its radar on Japanese F-15 fighter jets on two occasions Saturday, for about three minutes in the late afternoon and for about 30 minutes in the evening. It was not made clear whether the radar lock incident involved the same Chinese J-15 both times.

Japan had scrambled its own jets apparently to monitor Chinese military flight actions in the region, and as readiness in case some kind of deeper intervention was needed:

Japanese fighter jets had been scrambled to pursue Chinese ones that were conducting aircraft takeoff and landing exercises in the Pacific. They were pursuing the Chinese aircraft at a safe distance and did not take actions that could be interpreted as provocation, Kyodo News agency said, quoting defense officials, when the radar lock happened. There was no breach of Japanese airspace, and no injury or damage was reported from the incident.

As for the Chinese side, its military responded in a statement alleging the Japanese aircraft of "harassment" during routine PLA exercises.

PLA Navy spokesman, Senior Colonel Wang Xuemeng, asserted, "We solemnly asked the Japanese side to immediately stop slandering and smearing, and strictly restrain its frontline actions. The Chinese Navy will take necessary measures in accordance with the law to resolutely safeguard its own security and legitimate rights and interests."

More from the Chinese version of events on the highly dangerous weekend encounter, which could have led to a full-blown shooting conflict:

Japan deployed F-15 fighter jets, rather than reconnaissance aircraft, to the area where China’s aircraft carrier formation was conducting routine training, and these jets repeatedly approached and disturbed the sea and airspace where the Chinese Navy was conducting training.…

— Hu Xijin 胡锡进 (@HuXijin_GT) December 7, 2025

Japanese Prime Minister Sanae Takaichi has slammed the radar lock-in as "extremely disappointing" and declared "We will act calmly and resolutely."

Takaichi herself has taken center stage in the weekslong controversy, which started when she made comments in a parliamentary meeting last month which made clear Japan could possibly intervene militarily in the scenario of China invading Taiwan. China has been retaliating through measures related to curbing trade, cultural exchanges, and tourism - coupled with threats of more punitive action to come.

Beijing has warned that Takaichi's verbalized stance constitute fighting words...

Tokyo files formal protest as Chinese J-15s direct & lock fire-control radars on its jets south of disputed Diaoyu

New female PM Takaichi vows to FIGHT FOR TAIWAN pic.twitter.com/GwBzU6Qkzi

— RT (@RT_com) December 7, 2025

Lately, Chinese and Japanese vessels have also had tense encounters near disputed Japanese-owned islands, and each's coast guard ships have been involved in warnings and threats.

Tyler Durden Sun, 12/07/2025 - 19:15

ChatGPT Accused Of Encouraging Alleged Serial Stalker In Latest OpenAI Controversy

Authored by Jonathan Turley,

We have been discussing how ChatGPT is accused of encouraging the suicide of various individuals as well as the defamation of other individuals.

Various lawsuits have been filed against the company, but now federal prosecutors have indicated that ChatGPT may have played a role in enabling or encouraging an accused criminal stalker.

The New York Post is reporting that federal prosecutors are alleging that ChatGPT served as the “therapist” and “best friend” to Brett Michael Dadig, a Pittsburgh man who violently stalked at least 11 women across more than five states.

Dadig, 31, is a social media influencer who referred to himself as “God’s assassin” and allegedly would threaten to strangle people with his bare hands.

He reportedly used AI to facilitate his conduct and prosecutors say ChatGPT encouraged him to continue his social media posts.

The account is strikingly similar to the suicide cases where ChatGPT allegedly encouraged him to ignore the “haters” and boosted his ego to “build a voice that can’t be ignored.”

Dadig was reportedly convinced that the messages from ChatGPT reaffirmed “God’s plan” for his alleged criminal conduct.

The question is whether any of these stalked women will join others in suing OpenAI as have families of those who committed suicide.

As I previously noted, there is an ongoing debate over the liability of companies in using such virtual employees in dispensing information or advice. 

If a human employee of OpenAI negligently gave harmful information or counseling to a troubled teen, there would be little debate that the company could be sued for the negligence of its employee.

As AI replaces humans, these companies should be held accountable for their virtual agents.

Tyler Durden Sun, 12/07/2025 - 18:40

Weekend:
• Schedule for Week of December 7, 2025

Monday:
• No major economic releases scheduled.

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 and DOW futures are little changed (fair value).

Oil prices were up over the last week with WTI futures at $60.11 per barrel and Brent at $63.76 per barrel. A year ago, WTI was at $69, and Brent was at $74 - so WTI oil prices are down about 15% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.90 per gallon. A year ago, prices were at $2.97 per gallon, so gasoline prices are down $0.07 year-over-year.

Freshly Pardoned Cuellar Says Biden DOJ Tried To Entrap Him; Trump Lashes Out Over 'Lack Of Loyalty'

As many of you know, President Trump pardoned Rep. Henry Cuellar (D-TX) after he fell under investigation for alleged bribery after criticizing Biden's open border policies. As Trump put it on Truth Social, “For years, the Biden Administration weaponized the Justice System against their Political Opponents, and anyone who disagreed with them,” writing that Cueller had “bravely spoke out against Open Borders, and the Biden Border ‘Catastrophe.’”

Cuellar accused the Biden Department of Justice of trying to bribe and entrap him in a failed sting operation, telling Fox News' Maria Bartiromo that DOJ prosecutors went so far as to set up an elaborate sting operation specifically designed to entrap him. He also pointed out that prosecutors found no evidence of any quid pro quo, the very allegation that formed the basis of their case against him. Despite the lack of evidence, they apparently decided to create some.

"Again, no quid pro quo from any of the evidence, from any of the individuals," Cuellar explained. "And therefore, they even did, attempted a sting operation where they were trying to entrap me, and that failed."

Cuellar and his wife were charged last year with bribery, with the Biden DOJ alleging they accepted roughly $600,000 from Azerbaijan and a Mexican bank in exchange for political favors. Cuellar’s allegations reveal a troubling pattern of prosecutorial misconduct at the highest levels of the Justice Department - a pattern all too familiar when Democrats weaponize government power against their opponents. Democrats used the Obama administration’s Russian collusion hoax to hobble the first Trump administration. Democrats later impeached Trump twice. Then, the Biden Justice Department and Democratic prosecutors across the country pursued dozens of politically charged indictments against Trump in an attempt to prevent his return to the White House.

Bartiromo was clearly shocked by the allegations.

“Wow, entrapment, bribery. Uh, Congressman, tell me specifically, who tried to bribe you? You mean Biden's DOJ tried to bribe you?”

"Yes, that, they did," he confirmed when asked if Biden's DOJ tried to bribe him. "You know, we got all the, the testimony, the 302s, the sting operation. They set up a false company, a false account. They took out money. We saw all this. They took out the money, and they said this money was to bribe me."

The scheme allegedly fell apart when they approached his Washington, DC staff with the dirty money. "They tried to use this money. They talked to my DC staff. My DC staff told them no, there was nothing there," Cuellar recalled. Unable to complete their corrupt scheme, the operatives had no choice but to return the money. "So they actually returned the money back to the account because they couldn't bribe me."

Cuellar made it clear this was no rogue operation by overzealous local prosecutors. The entire case was orchestrated from Washington, DC. "So the Biden administration, they tried to entrap me and tried to bribe me, and that failed," he said. "And this is very significant because one more thing, everything came in from the DOJ in DC. Everything came from the office there. The local office, that is the one in Houston, never got enough."

 "And from my sources, they did not get involved because they felt there was not a case, and they said, 'We're not gonna get involved.' The Houston office said, 'We're not gonna get involved.' It's all the DOJ people in Washington, DC," he explained. When local prosecutors who know the territory refuse to touch a case, that should raise red flags about its legitimacy.

Cuellar says he’s already reached out to House Judiciary Committee Chairman Jim Jordan to request a formal investigation. If Cuellar's allegations are true—and he claims to have the receipts in the form of FBI 302 reports and other documentation, it would be an egregious example of prosecutorial misconduct. Biden's DOJ didn't just bring questionable charges against a sitting congressman who dared to speak out against his immigration policies, but also tried to manufacture evidence through bribery and entrapment when they couldn't find any real wrongdoing. 

Despite Cuellar’s allegations against the Biden administration, he assured Democrats that he’d still be loyal despite Trump’s pardon, and announced his intention to seek reelection as a Democrat, a move that President Trump criticized as a sign of a lack of loyalty in a Sunday post on Truth Social.

“Only a short time after signing the Pardon, Congressman Henry Cuellar announced that he will be ‘running’ for Congress again, in the Great State of Texas (a State where I received the highest number of votes ever recorded!), as a Democrat, continuing to work with the same Radical Left Scum that just weeks before wanted him and his wife to spend the rest of their lives in Prison – And probably still do!”

Trump concluded, “Such a lack of LOYALTY, something that Texas Voters, and Henry’s daughters, will not like. Oh’ well, next time, no more Mr. Nice guy!”

Tyler Durden Sun, 12/07/2025 - 18:05