NATO Mulls 'Preemptive Strike' Against Russia's Hybrid Warfare, Claims 'More Aggression' Needed

At a moment Washington under President Trump is busy issuing rare calls for restraint, de-escalation, and to enact a peace deal in Ukraine, a top NATO commander says the conflict needs more aggression by the Western military alliance directly against Russia.

Admiral Giuseppe Cavo Dragone, chair of NATO’s Military Committee, has told Financial Times as part of a fresh report that NATO is currently mulling more proactive measures in response to Russia’s escalating hybrid warfare. The report cites an alleged rise in Russian-backed cyberattacks, sabotage operations and airspace violations over Europe - which NATO could mirror and more, as any potential "pre-emptive strike" on Russian targets would be justified.

Adm. Giuseppe Cavo Dragone, via ANSA English

"We are studying everything… On cyber, we are kind of reactive," Dragone said. "Being more aggressive or being proactive instead of reactive is something that we are thinking about."

That's when he explained his view that a "pre-emptive strike" could under certain circumstances and context be classified as a defensive action. "It is further away from our normal way of thinking and behavior," he conceded.

"Being more aggressive compared with the [aggressiveness] of our counterpart could be an option" - but he said that the questions that remain are: "legal framework, jurisdictional framework, who is going to do this?"

Multiple diplomats and officials from Eastern European and Baltic states are calling for this more proactive stance, or a less merely 'reactive' approach, to make Moscow feel real pain.

"If all we do is continue being reactive, we just invite Russia to keep trying, keep hurting us," one Baltic diplomat was quoted in the FT as complaining.

"Hybrid warfare is asymmetric – it costs them little, and us a lot. We need to be more inventive," the diplomat said.

And yet, there already have been years of covert sabotage operations in place, aimed at Russia and overseen by the West. These efforts, some which long ago were exposed in mainstream publications, are a large reason of why there's been constant escalation of the Ukraine war. 

This has in turn resulted in escalation of nuclear rhetoric and threats between Russia and the West. But the temperature needs to be drastically turned down, but these latest comments by the chair of NATO's Military Committee will only do the opposite.

Young men are continuing to pay the price on the battlefield, even as a peace process slowly and painfully plays out. Reuters has belatedly admitted and documented the immense losses suffered by Ukraine's military:

Pavlo Broshkov had high hopes when he joined the Ukrainian army in March as a fresh-faced recruit eager to defend his country and earn a bumper bonus to buy a home for his wife and baby daughter.

Three months later, the 20-year-old lay broken and prone on the battlefield, his dreams in tatters.

Broshkov is among hundreds of 18 to 24-year-olds who have volunteered to fight on the front lines this year, lured by generous pay and perks in a national youth recruitment drive designed to breathe fresh life into Ukraine's aged and exhausted armed forces of about one million.

Meanwhile, EU nations are finding any way possible to keep up the conflict instead of finding true compromise...

Macron:

In the weeks to come, the pressure on the Russian economy and the capacity of Russia to finance the war effort will drastically change. pic.twitter.com/JOmzDvdKxY

— Clash Report (@clashreport) December 1, 2025

The Kremlin has hit back against the aforementioned remarks of Adm. Dragone, with Kremlin spokesperson Maria Zakharova calling Dragone's remarks "an extremely irresponsible step, indicating the readiness of the alliance to continue to move toward escalation."

Tyler Durden Mon, 12/01/2025 - 14:20

Trump Says Pause On Asylum Decisions Will Be In Place For 'A Long Time'

Authored by Aldgra Fredly via The Epoch Times (emphasis ours),

President Donald Trump said on Nov. 30 that the freeze on asylum decisions, which was imposed following the shooting of two National Guard members in Washington, will likely be in place indefinitely.

Asylum seekers listen to UNHCR workers at the entrance of Mexico's Refugee Help Commission and UNHCR offices in Tijuana, Baja California state, Mexico on Jan. 24, 2025. Guillermo Arias/AFP via Getty Images

His comments came after U.S. Citizenship and Immigration Services Director Joseph B. Edlow announced that the agency has halted all asylum decisions until it can ensure that “every alien is vetted and screened to the maximum degree possible.”

When asked about how long the administration intends to pause asylum decisions, Trump said the measure has “no time limit” and could extend for “a long time.”

“We don’t want those people. We have enough problems,” the president told reporters aboard Air Force One.

Trump said he was referring to “people from different countries that are not friendly to us,” and from “countries that are out of control themselves,” pointing to Somalia as one example.

When asked if there is a list of countries whose nationals would face asylum restrictions in the United States, Trump referred to the 19 nations labeled by his administration as “countries of identified concern.”

“I don’t think they are all third world, but in many cases they are third world. They are not good countries. They are very crime-ridden countries,” he added. “And we frankly, don’t need their people coming into our country telling us what to do.”

The U.S. Citizenship and Immigration Services announced the pause after it stopped processing all immigration requests relating to Afghan nationals pending further review of security and vetting protocols.

For an immigrant to be eligible for asylum, the applicant must “have a fear of persecution due to their race, religion, nationality, political opinion, or their inclusion in a particular social group,” according to the Refugee Council USA.

The move came in the wake of the Nov. 26 shooting of two National Guard members, one killed and the other critically injured, near the White House, which authorities say was carried out by an Afghan national who entered the United States in September 2021 through Operation Allies Welcome, the Biden-era resettlement program launched after the U.S. withdrawal from Afghanistan.

Trump has denounced the shooting as an “act of hatred” and vowed to “permanently pause migration from all Third World countries” to allow for the U.S. system’s full recovery.

He said Nov. 27 that his administration would suspend all federal benefits and subsidies to noncitizens, denaturalize immigrants who undermine domestic tranquility, and deport any foreigners deemed to be “a public charge, security risk, or non-compatible with Western civilization.”

“These goals will be pursued with the aim of achieving a major reduction in illegal and disruptive populations, including those admitted through an unauthorized and illegal autopen approval process,” Trump stated on Truth Social. “Only REVERSE MIGRATION can fully cure this situation.”

Jacki Thrapp contributed to this report.

Tyler Durden Mon, 12/01/2025 - 14:00

UK Girl Barred From School Over Imprisoned Mother's 'Racist' Tweet

Authored by Steve Watson via modernity.news,

Lucy Connolly, the mother jailed for 31 months over a single anti-mass immigration tweet int 2024, has revealed that her 13-year-old daughter Edie has been blocked from starting at a new school after the headteacher discovered her mother’s identity and conviction, citing that “racism doesn’t go down well” in their institution.

The devastating rejection, detailed in a GB News interview, sees Connolly, now free after over a year in prison, blast the decision as “outrageous discrimination” against her innocent child for her own political views.

If true, the development represents yet another another grim chapter in Britain’s speech gulag, where 10,000 were arrested last year for social media posts under vague hate speech laws.

NEW: Lucy Connolly reveals her 13-year-old daughter had her new school place rescinded when a headteacher realised Lucy was her mother.

She said: “They said racism doesn’t go down well at the school and my daughter being there would cause a ruckus.” pic.twitter.com/9mziPgltjt

— Ben Leo (@benleo444) December 1, 2025

Connolly told GB News “They said, ‘we’re going to be honest with you, the headteacher found out about who you were and put a block on the move and racism doesn’t go down well in their school’.”

The family had secured a six-week trial placement for Edie, desperate for stability after months of upheaval, but the discovery of Connolly’s August 2024 sentence for her tweet in the wake of the murder of three young girls in Southport by a second generation Rwandan migrant, led to an abrupt cancellation.

She claims that the headteacher of the school in question told the family the placement would be “too difficult” given the conviction.

“A headteacher at another local school deemed it fit to discriminate against my child because of my political views,” Connolly claimed.

Connolly fumed, “It’s outrageous. My daughter is being punished for my views. She’s innocent, and now she’s the one suffering,” adding “In what world is this ok?”

Connolly’s nightmare began in early August last year, when she was sentenced to 31 months for her tweet, which read “Mass deportation now, set fire to all the f***ing hotels full of the bastards for all I care.”

Judge Melbourne Inman KC called it “grossly offensive,” imposing the maximum under the Public Order Act for “stirring up racial hatred”—despite no direct threats and Connolly’s lack of priors as a childminder.

The punishment was clearly disproportionately severe and set a dangerous precedent, with the likes of former Prime Minister Liz Truss warning it would only fuel “radicalisation.”

Connolly’s fate can be contrasted with freed agitators like Labour councillor Ricky Jones, who incited a call to “cut their throats” against critics of mass migration, yet ultimately ended up with nothing more than a slap on the wrist.

Jones faced no custody while Connolly rotted, her appeal dismissed despite widespread outrage.

Edie Connolly’s school block is another instant of the human cost of Britain’s “speech gulag,” where 10,000 were arrested last year for “offensive” online content under the Communications Act and Online Safety Act.

Your support is crucial in helping us defeat mass censorship. Please consider donating via Locals or check out our unique merch. Follow us on X @ModernityNews.

Tyler Durden Mon, 12/01/2025 - 13:20

Vaccine Stocks Drop After FDA Memo Links COVID Shots To Child Deaths

Vaccine stocks slumped Monday after an explosive memo from FDA vaccine chief Vinay Prasad surfaced late Friday, signaling the agency is preparing to roll out tough restrictions on new vaccines for children. Prasad described a "profound revelation" linking Covid shots to at least ten deaths in children. 

By late morning, Vaccine makers dropped on the memo: Moderna -6%, BioNTech -4.3%, Novavax -4%, Vaxcyte -6.6%.

"This is a profound revelation," Prasad wrote in the memo. "For the first time, the US FDA will acknowledge that COVID-19 vaccines have killed American children."

He added, "It is horrifying to consider that the US vaccine regulation, including our actions, may have harmed more children than we saved. This requires humility and introspection."

Wall Street analysts weighed in on the memo, and all agreed it introduces a new regulatory overhang for vaccine stocks.

Here's what the research desks told clients:

William Blair, Myles R. Minter (rates the MRNA market perform)

• "Our interpretation of the memo is that CBER will focus its efforts on the younger 12- to 24-year-old male population for newly approved Covid-19 vaccines where the myocarditis risk is highest"

• If new regulatory restrictions were to be implemented in the higher myocarditis risk population, analysts see further headwinds toward Moderna's declining Covid-19 franchise "alongside further negative sentiment that this memo and subsequent actions may generate"

• Analyst says Pfizer, BioNTech, Novavax and Sanofi could also be impacted

• "The memo also indicates several upcoming reforms to the CBER vaccine regulatory pathway, most notably the "demand" for pre- market randomized trials assessing clinical endpoints, not just immunogenicity, for most new vaccine products"

Mizuho, Salim Syed (rates PCVX outperform)

• Says the memo notes "pneumonia vaccine makers will have to show their products reduce pneumonia (at least in the post- market setting), and not merely generate antibody titers"

• However, "what investors are missing here is this is already in-line with the current standard" and poses no material change to Vaxcyte

Cantor, Carter Gould (rates PCVX overweight)

• Says not surprised to see selloff in PCVX shares "on the back of the return of perceived regulatory risk after a period of relative calm, particularly with key data weighted to late 2026"

• However, analyst  says there wasn't much in the actual memo language on pneumococcal vaccines (PCVs) that's concerning

• Reminds investors that "this all needs to continue to be viewed in the context of the likely timelines for VAX-31 adult and infants efforts against the backdrop of the time remaining in the current administration's term"

• "We appreciate that there's plenty within the memo that's controversial or worrisome regarding Covid-19 vaccine policy, but the actual language on PCVs shows little evolution vs. prior guidance"

Leerink Partners, Mani Foroohar (rates MRNA underperform)

• Says the memo's inflammatory tone highlights how agency policy/communications continue to contribute to vaccine skepticism and US vaccination rate decline

• "We view this as a continued negative for mRNA vaccine manufacturers in our coverage– especially as it relates to Moderna's recently updated short-to-mid-term revenue guidance"

The memo comes months after the Trump administration signaled it would link Covid shots to children's deaths. Remember, anyone who questioned the vaccines in the early days of the pandemic was demonized by Democrats and "trust the science" regime, which unleashed big-tech and state-sponsored censorship cartel against anyone asking questions.

Tyler Durden Mon, 12/01/2025 - 12:45

Retail Workers Currently Earning 51.6% Less Than Needed To Afford Rent: Report

Authored by Naveen Athrappully via The Epoch Times (emphasis ours),

An American retail worker earns 51.6 percent less than the amount required to afford a typical rental apartment, real estate brokerage Redfin said in a statement released on Nov. 26.

A rent sign seen in Maryland on Nov. 12, 2023. Madalina Vasiliu/The Epoch Times

“The typical retail worker in America earns $34,436 per year,” the company said.

“A renter would need to earn $71,172 to afford the typical apartment, which costs $1,779 per month.”

This signifies a shortfall of $36,736 needed to afford an apartment, even though overall affordability has improved slightly in recent years.

In Cleveland, a typical retail worker earns 32.9 percent less than needed to afford a residence, the smallest shortfall among 40 metropolitan areas analyzed by the brokerage. This was followed by St. Louis, San Antonio, Kansas City, and Milwaukee. These places have some of the lowest rents in the country.

In contrast, the shortfall was highest in New York, where a retail worker earned 71 percent less. This was followed by Boston, San Jose, Miami, and San Diego. These locations rank among the most expensive rental locations.

Besides the rent struggle, the U.S. retail sector is also seeing large layoffs.

Retailers have announced 88,664 job cuts through October this year, a 145 percent jump compared to the same period last year, according to a Nov. 6 report by outplacement company Challenger, Gray & Christmas.

Incomes and Rent Growth

“As the cost of living has increased, so have the sacrifices renters must make to afford a place to live,” Redfin Chief Economist Daryl Fairweather said.

However, “the good news is rents are no longer rising as fast as they were during the pandemic, so rental affordability has actually improved slightly in recent years,” Fairweather added.

The average rent in a primary city residence grew by almost 3.4 percent between September 2024 and 2025, according to data from the Federal Reserve Bank of St. Louis.

A Nov. 19 report from real estate marketplace Zillow noted that U.S. incomes grew faster than asking rents this year amid a general slowdown in rent growth.

“Affordability is improving most significantly in markets where rents have fallen from year-ago levels, including Austin (where the typical asking rent is down 3.1 percent annually), Denver (-2.1 percent), San Antonio (-0.8 percent), and Phoenix (-0.7 percent),” the report said.

“Though incomes have understandably outpaced rents in markets where rent growth has turned negative, affordability improvements have even reached metros where rent growth remains strong.”

A monthly rental budget of $2,000 will net different types of properties based on the region, according to a Nov. 10 report from online rental marketplace Apartments.

“Renters in smaller cities like Memphis, Buffalo, and Indianapolis can afford three-bedroom apartments within a $2,000 budget, while in big cities like Boston, Los Angeles, and Seattle, that same budget often only covers a studio,” it said.

Meanwhile, there have been proposals to freeze the amount that can be charged on rental properties.

Zohran Mamdani, a self-described democratic socialist who won the New York City mayoral race this month, proposed a rent freeze during his campaign. Washington state, Oregon, and California have already implemented statewide rent control.

Supporters of rent-freeze policies argue that such measures are required to ease the burden on American families. However, critics warn that pursuing these policies could deter investment in the rental market, further exacerbating the issue in the long run.

A survey of The Epoch Times readers conducted on Oct. 29 found that most opposed rent-freeze measures and advocated pursuing market solutions.

Nearly 40 percent suggested that builders cut costs to reduce the housing shortage, which could then bring down rents.

Tyler Durden Mon, 12/01/2025 - 12:20

Hassett Odds Soar As Trump Confirms He's Made Decision On Next Fed Chair

President Donald Trump said on Nov. 30 that he has already decided on his pick to replace Federal Reserve Chair Jerome Powell, adding that an announcement is forthcoming, but declining to identify his nominee.

“I know who I am going to pick, yeah,” Trump told reporters on Air Force One on his way back from Florida to Washington on Sunday.

When asked whether he would nominate National Economic Council Director Kevin Hassett, the current frontrunner to replace Powell according to betting markets, Trump smiled and replied, “I’m not going to tell you, we’ll be announcing it.”

Hassett now has an 75% chance of getting the nomination according to prediction market Polymarket. Former Fed Gov. Kevin Warsh is at 12% with Fed Gov. Christopher Waller down to 8%.

Source: Polymarket

Earlier Sunday, Hassett, on CBS' "Face The Nation," said the market's reaction to reports that Trump was close to a pick is a positive sign.

“Once it became clear that the president’s getting closer to make a decision, the markets really celebrated, interest rates went down, we had one of our best Treasury auctions ever,” Hassett said on Fox.

“I think that the market expects that there’s going to be a new person at the Fed, and they expect that President Trump’s going to pick a new one. And if he picks me, I'd be happy to serve.”

Hassett, who has strongly defended Trump's economic policies, including tariffs and interest rates, said he would be happy to serve as Fed chief if Trump nominated him.

“I’m really honored to be amongst a group of really great candidates,” Hassett told CBS.

“I think that the American people could expect President Trump to pick somebody who’s going to help them, you know, have cheaper car loans and easier access to mortgages at lower rates.”

We do note that rates are higher this morning after Trump's comments (and the yield curve is steeper - policy error), but there are a lot of moving parts after the long weekend (from mixed manufacturing data to a hawkish BoJ) impacting markets.

Market-implied odds have soared to fully price in a rate-cut in December...

Finally, we note that Hassett's financial disclosure reveals at least a seven‑figure Coinbase stake and compensation for serving on the exchange’s Academic and Regulatory Advisory Council, placing him unusually close to the crypto industry for a potential Fed chair.​

Still, crypto has been burned before by reading too much into “crypto‑literate” resumes. Gary Gensler arrived at the Securities and Exchange Commission with MIT blockchain courses under his belt, but went on to preside over a wave of high‑profile enforcement actions, some of which critics branded as “Operation Chokepoint 2.0.”

A Hassett-led Fed might be more open to experimentation and less reflexively hostile to bank‑crypto activity. Still, the institution’s mandate on financial stability means markets should not assume a one‑way bet on deregulation.​

Tyler Durden Mon, 12/01/2025 - 12:00

ZeroHedge Store - Cyber Monday Is Here (Last Chance!)

*  *  * It's now Cyber Monday. Prices go back up at midnight!

After launching ZeroHedge store a year ago, we've been humbled by the overwhelming response. Between die-hard fans of IQ Biologix supplements, ZeroHedge gear, Rancher-Direct clean meats, hand-made knives, and more - your support is greatly appreciated. 

So since everyone else on the planet is doing a Black Friday / Cyber Monday promotion, we did one too. Until Monday at midnight: 

IQ Biologix supplements are 50% off - if you've been on the fence, go for it. If you're a regular, time to stock up. 

Multitools are also 50% off - the perfect stocking stuffers. 

ZeroHedge hats and other gear is 40% off.

Anza Knives (including limited run) and ReadyWise products are 30% off

And finally, water filters are 25% off. 

We don't sell cheap Temu junk you don't need. Our goal is the opposite: to offer you supplies and gear that sharpen your mind, strengthen your body, protect you, and offer ZH gear that makes it clear to those who know that you're not part of the herd. You're not pumped with vaccines, fake meat, SSRIs, and a stream of propaganda that's driving the left into daily epic meltdowns.

What readers have been buying this weekend: 

ZeroHedge Waxed Canvas Hat

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Thank you for your support 

Tyler Durden Mon, 12/01/2025 - 11:55

Strategy Sets Up $1.4 Billion Cash Reserve, Lifts Bitcoin Stash To 650,000BTC

Authored by Helen Partz via CoinTelegraph.com,

Michael Saylor’s Strategy, the world’s largest public Bitcoin holder, is creating a $1.44 billion US dollar reserve to support dividend payments on its preferred stock and interest on its outstanding debt.

Strategy on Monday announced the establishment of a US dollar reserve funded through proceeds from the sale of Class A common stock under its at-the-market offering program.

“Strategy’s current intention is to maintain a USD Reserve in an amount sufficient to fund at least twelve months of its dividends, and Strategy intends to strengthen the USD Reserve over time, with the goal of ultimately covering 24 months or more of its dividends,” the company said.

Alongside the launch of the reserve, Strategy disclosed an additional purchase of 130 Bitcoin for $11.7 million, bringing its total holdings to a symbolic value of 650,000 BTC, acquired for $48.38 billion.

$MSTR announces the formation of a $1.44 billion USD Reserve and an increase in its BTC Reserve to 650,000 $BTC. pic.twitter.com/e1tAhDUo9G

— Michael Saylor (@saylor) December 1, 2025

Notably, while MSTR has been in decline, the last few days have seen the preferreds bid...

The Strategy preferred now yields from 9% to nearly 13%, considerably above the 6% rate on preferred stock from major banks like Bank of America and JPMorgan Chase.

Primary means for funding dividends

According to the Strategy’s company update on Monday, its US dollar reserve will be the primary source of funding dividends paid to holders of its preferred stocks, debt and common equity.

The update details that the $1.44 billion reserve is 2.2% of Strategy’s enterprise value, 2.8% of equity value and 2.4% of Bitcoin value.

Strategy’s funding of the USD Reserve. Source: Strategy

“We believe this improves the quality and attractiveness of our preferreds, debt and common equity,” Strategy said, adding that it raised $1.44 billion in less than nine trading days by selling its common A stock MSTR.

What if we start adding green dots? pic.twitter.com/a19bD33KzD

— Michael Saylor (@saylor) November 30, 2025

USD reserve to complement BTC holdings

“Establishing a USD Reserve to complement our BTC Reserve marks the next step in our evolution,” Strategy founder Saylor said, adding that the new financial tool will better position the company to navigate short-term market volatility.

Strategy CEO and president Phong Le highlighted that the company’s latest BTC purchase — made in the past two weeks — brings its total holdings to 650,000 BTC, or about 3.1% of the 21 million BTC that will ever exist.

An excerpt from Strategy’s Form 8-K. Source: SEC

“In recognition of the important role we play in the broader Bitcoin ecosystem, and to further reinforce our commitment to our credit investors and shareholders, we have established a USD Reserve that currently covers 21 months of dividends,” Le noted.

Strategy lowers 2025 KPI targets

Alongside its reserve and 650,000 BTC holdings, Strategy has significantly lowered its KPI targets and corresponding assumptions for 2025 results.

According to the update, Strategy now expects its BTC yield to end the year between 22% and 26%, with a projected BTC price estimate of $85,000–$110,000 by Dec. 31.

Revised assumptions and corresponding results for 2025. Source: Strategy

The company has also significantly reduced its targeted BTC gains, cutting its previous expectation of $20 billion to a revised range of between $8.4 billion and $12.8 billion.

The revised target for operating income is between $7 billion and $9.5 billion, down from the originally projected $34 billion.

Tyler Durden Mon, 12/01/2025 - 11:40

Sky's The Limit

By Benjamin Picton, Senior Market Strategist at Rabobank

Major US indices closed high on Friday evening as trading resumed following the Thanksgiving holiday. The S&P500 was up 0.54%, the Dow up 0.61% and the NASDAQ up 0.65%, but US equity futures are pointed lower this morning and Asian equity markets are showing mixed performance. Bond yields are mostly higher. Yields on US 10s rose 2.1bps to 4.03% while yields on 2-year JGBs reached their highest level in 17 years after BOJ Governor Ueda hinted that he is seriously considering a rate hike this month.

Brent crude is up 1.20% in early trade following news that Ukrainian drones had struck two Russian ‘Shadow Fleet’ tankers bound for the Novorossiysk oil terminal in the Black Sea. The terminal itself was later struck by Ukrainian drones, prompting a halt in operations, while Moldova reported incursions of Russian drones into its own airspace in an apparent continuation of Russia’s ‘grey-zone’ tactics that has seen Russian drones violate the airspace of Poland, Germany, Denmark, Norway, Romania and the Baltic states in recent months.

NATO allies have stationed fighter jets in Poland under Operation Eastern Sentry that can be scrambled to shoot down Russian drones, but this is a high cost response to the very cheap probing of NATO’s defences that is being conducted by the Kremlin. This as the Wall Street Journal reports that ‘Russia Gains the Upper Hand in Drone Battle, Once Ukraine’s Forte’ and quotes a Ukrainian drone unit commander who says that Russia is receiving superior supply chain support from China than Ukraine is receiving from the United States and Europe combined.

Ukrainian officials met with Secretary of State Marco Rubio, Special Envoy Steve Witkoff and Jared Kushner in Florida to progress talks to end the Russo-Ukrainian war. The Ukrainian delegation was missing erstwhile Zelenskyy Chief of Staff Andriy Yermak, who has resigned his position following anti-corruption raids on his home relating to investigations over illegal kickbacks in Ukraine’s energy sector. Rubio told journalists after the meeting that progress had been made but that there was still more work to be done.

Witkoff is set to travel to Moscow today to meet with President Putin to progress a deal. Yermak’s departure may have placed Zelenskyy further on the back foot in the bargaining process as his image is tarnished by whiffs of corruption at the heart of his government. President Trump speculated as much aboard Air Force One, where he told journalists that he thought there was a “good chance” of a deal to end the war being signed, but that the Ukrainian corruption scandal was “not helpful”.

While negotiations over the fate of Ukraine continue, another risk event for energy markets continues to unfold in Venezuela. President Trump took to Truth Social over the weekend to declare “THE AIRSPACE ABOVE AND SURROUNDING VENEZUELA TO BE CLOSED IN ITS ENTIRETY.” This comes following the largest US deployment of military assets to the region in decades and series of missile strikes on small boats thought to be engaged in drug smuggling.

The purpose of US pressure on Venezuela has very likely now expanded from enforcement action against drug trafficking to efforts toward regime change (see here for RaboResearch’s further thoughts). Donald Trump told journalists aboard Air Force Once that he had been in contact with Venezuelan President Maduro over the phone, but didn’t disclose details of the conversation. He had previously indicated that the US would soon begin land strikes in Venezuela. “If we can save lives, if we can do things the easy way that’s fine. If we have to do it the hard way, that’s fine too.”

Tyler Durden Mon, 12/01/2025 - 11:25

France & UK Still Insist On Sending Troops To Ukraine, In Effort To Sabotage Trump Peace Plan

As we reported earlier, the important Miami meeting wherein American and Ukrainian delegations hammered out a revised ceasefire draft for some five hours on Sunday did not have European participation. But this is where the real deal-making is taking place. Trump envoy Steve Witkoff is en route to Moscow, where he's expected to meet with President Putin on Tuesday, in order to present where things stand on the peace plan.

The Miami meeting reportedly focused on where the new de facto border would be in the east, after the 19-point plan featured significant territorial concessions in the Donbass and Crimea. As for Europe, is still touting a "coalition of the willing" which are vowing ongoing military support to the Zelensky government.

At this moment, France and the United Kingdom especially are continuing to push for the deployment of troops from NATO-member states to Ukraine as part of their version of peace settlement, despite this being very obviously unacceptable to Moscow. 

Image source: British prime minister's office, 10 Downing St

Last week Politico reported that when US Secretary of State Marco Rubio joined a discussion involving the coalition of the willing via phone call, he made clear to all that the White House wants a peace agreement in place before committing to any long-term security guarantees for Kiev.

But UK Prime Minister Kier Starmer tried to push back, arguing that a "multinational force" would be essential for ensuring Ukraine’s future security.

Bloomberg then followed with a report saying that UK officials have already selected the military units they plan to deploy, based on several reconnaissance trips to Ukraine.

France's President Emmanuel Macron proposed that such troops could operate in the capital area or western regions of the country, far from the front lines. But this would flagrantly cross all Russia's red lines. NATO troops on its doorstep was key Putin's decision-making in launching the 'special military operation' in the first place.

It must be recalled that the original US-drafted 28-point peace plan, which leaked to the press and more recently was condensed down to 19 points, included an explicit prohibition on deploying NATO troops to Ukraine.

The European-proposed counter-plan, which was also quickly leaked to the media, greatly softened that stance and laid out that instead of a blanket ban, NATO would not "permanently station troops under its command in Ukraine in peacetime."

At a moment Trump's peace plan advances, and with Witkoff on his way to meet with President Putin, hawks in Europe are growing even more hawkish:

⚡️BREAKING: NATO may carry out a preemptive strike against Russia

For the first time, the alliance is discussing the possibility of a preemptive strike on Russia in response to its hybrid attacks. Admiral Giuseppe Cavo Dragone, the head of NATO’s Military Committee, told… pic.twitter.com/57RgfyNZpn

— NEXTA (@nexta_tv) December 1, 2025

Such intentionally vague language leaves open the possibility of NATO troop rotations into Ukraine. The Kremlin has time and again said it would not tolerate this, and such a move would lead to direct war with the West.

Europe's plan also seeks to leave open a Ukrainian path to NATO, but this is also a sticking point which the US plan leaves out, given it would of course be dead on arrival if presented to Putin.

Tyler Durden Mon, 12/01/2025 - 11:05

Multiple Failures In Vetting Process Of Afghans, Says Tom Homan

Authored by Naveen Athrappully via The Epoch Times,

There has been a massive failure in the vetting process that allowed Afghan nationals to enter the United States under the Biden administration, border czar Tom Homan said in a Nov. 30 interview with Fox News.

When the United States withdrew from Afghanistan in 2021, the Biden administration initiated the Operation Allies Welcome program to resettle thousands of Afghan nationals in America, which included those who worked alongside U.S. authorities in Afghanistan over the previous two decades.

“It’s the biggest national security failure in the history of the nation,“ Homan said, noting that the DHS Inspector General came out with a report at the time stating multiple failures in the vetting process.

“People need to understand, in these third-world nations, they don’t have systems like we do. So, a lot of these Afghans, who did get here to get better, they had no identification at all. Not a single travel document, not one piece of identification. And we’re going to count on the people that run Afghanistan, the Taliban, to provide us any information who the bad guys were or who the good guys are? Certainly not.”

On Nov. 26, a gunman shot two West Virginia National Guard members. One of the victims has since died, while the second remains in critical condition. The suspected shooter was identified as 29-year-old Rahmanullah Lakanwal from Afghanistan, who entered the country as part of Operation Allies Welcome. In 2022, the operation was renamed Enduring Welcome.

More than 190,000 Afghan nationals were resettled in the United States as part of the effort, according to the State Department.

A 2022 report from the Department of Homeland Security’s (DHS’s) Office of Inspector General, mentioned by Homan in the interview, said that the Biden-era DHS failed to fully vet some of the 80,000 Afghans allowed entry into the United States at the time.

An audit of 88,977 evacuee records inspected by authorities found that more than 11,000 recorded their birth date as Jan. 1. In addition, 7,800 had missing or invalid travel document numbers, the report said.

More than 36,000 records listed “facilitation document” as the travel document type, and Customs and Border Protection (CBP) was unable to define what the “facilitation document” was, according to the DHS.

The Epoch Times reached out to the DHS Office of Inspector General for comment but did not receive a response by publication time.

Inspector General Joseph V. Cuffari was confirmed by the Senate to his post in 2019 during the first Trump administration.

Following the attack on the two National Guard members, the State Department announced on Nov. 28 that it had “IMMEDIATELY paused visa issuance for individuals traveling on Afghan passports.”

On the same day, Citizenship and Immigration Services Director Joseph B. Edlow said in an X post that the agency had halted all asylum decisions “until we can ensure that every alien is vetted and screened to the maximum degree possible.”

President Donald Trump said the asylum restriction applies to 19 nations, which he had labeled as “countries of identified concern” via a presidential action in June. The list includes Afghanistan, Iran, Somalia, and Turkmenistan.

In the interview, Homan said approximately 10.5 million illegal immigrants had crossed into the United States under the previous administration.

This figure does not include the hundreds of thousands who came via the CHNV program and the more than 2 million known gotaways, he said.

CHNV was a Biden-era parole program for Cubans, Haitians, Nicaraguans, and Venezuelans, while gotaways refers to illegal immigrants who evaded U.S. border patrol and law enforcement authorities after crossing the border.

Since the Afghans were allowed entry via government programs, there are at least photographs and fingerprints of some of these individuals, Homan said, adding that the government has no details on the millions of gotaways.

The current administration’s policies have ensured “the most secure border in the history of this nation,” Homan said.

“Now we know who’s coming, now we clear who’s coming. We don’t have 10,000, up to 12,000 people a day, entering this country illegally,” he added.

In a Nov. 13 statement, the CBP said the Trump administration delivered the sixth straight month of zero releases at the border in October. There were 7,899 Border Patrol apprehensions on the southwest border, approximately 95 percent lower than the monthly average of the prior administration.

Tyler Durden Mon, 12/01/2025 - 10:45

UK Man Arrested For Posing With Gun In Photo Taken While In The US

Last year during sweeping British protests triggered by the stabbing murders of three young girls at a dance recital by the radicalized 17-year-old child of Rwandan migrants, London Metropolitan Police Commissioner Mark Rowley threatened to have American citizens "arrested and extradited" to the UK for "stoking racial violence" (i.e. pointing out that third world migrants and often the children of third world migrants are a societal net negative and should be deported). 

The event sparked a series of thousands of arrests of UK citizens for crimes as meager as posting memes online and hoisting British flags in the presence of immigrants.  In the past year at least 12,000 such arrests have been made in the name of "quelling hate speech", an ill defined violation based on arbitrary guidelines and left up the whims of leftist bureaucrats. 

No US citizens have been extradited, likely because the action would start 1776 Part II and a handful of armed Americans delivered on a Carnival Cruise Liner would end up conquering the UK in a week or less.

However, it would seem that the British authorities have decided to take out their frustrations on their own citizens who dare to visit the US to enjoy some of the freedoms they don't have at home.  

A British IT consultant was arrested by West Yorkshire Police after posting pictures on LinkedIn of himself holding guns during an American vacation.  Jon Richelieu-Booth, 50, shared the photograph taken at a Florida homestead on August 13.  The post sparked a 13-week ordeal, which began with a police warning at his residence.  Officers cautioned him about online content and its "potential impact on others' feelings".

Despite Mr Richelieu-Booth’s offer to demonstrate the photograph's American origin, authorities chose to arrest him on August 24.  All charges were ultimately thrown out, but police continued to harass Booth until October, when they arrested him yet again for "bail violations".  

Whilst the original firearms and stalking charges were dismissed, prosecutors pursued a public order offense regarding a separate social media post.  Mr Richelieu-Booth was scheduled to face Bradford magistrates on November 25th for allegedly displaying material intended to cause distress, but this charge was also eventually withdrawn.  He originally faced a potential prison sentence of six months if convicted.

Elon Musk, who has been highly critical of the UK's censorship policies, reposted a summary of the story to his 229 million followers on X, writing:

“And this is why we have the first and second amendments in America...The first amendment in the US protects freedom of speech, while the second amendment relates to the right to bear arms..."

Though the incident has ended with Booth avoiding jail time, there is a cottage industry of Europeans traveling to the US to experience life away from progressive authoritarianism.  This includes shooting firearms for recreation.  Often these adventures are documented on YouTube and other platforms, and might be considered an embarrassment for some officials overseas.  

Booth's arrest could be an attempt to chill the waters on British travelers who make life in America look "too good". 

Some firearms are technically "legal" in the UK, but the application process is arduous and subject to arbitrary police examination, which is why only 0.25% of the population has successfully acquired a firearms certificate.  The behavior of UK police is reminiscent of a communist regime; no crime has been committed, but the government wants to dissuade from certain behaviors anyway. 

A conviction isn't necessarily the goal.  Instead, the process is the punishment.  The ongoing struggle session for one man sends a warning to the rest of the populace.  The goal is to frighten the public into walking on eggshells.  It's much easier to control a population that censors itself.  The message is clear:  No matter where you travel in the world, the government at home owns you.  

*  *  * CYBER MONDAY IS HERE - LAST DAY!

Tyler Durden Mon, 12/01/2025 - 10:30

'Inside NYT's Hoax Factory': Trump's AI/Crypto Czar Dismisses Hit-Piece As 'Nothing Burger'

Authored by Jesse Coghlan via CoinTelegraph.com,

White House AI and crypto czar David Sacks has fired back at The New York Times over a report detailing how his government advisory role could benefit his investments and those of his close associates.

Sacks said in a post to X that despite having “debunked in detail” the Times’ reporting over the past five months, the outlet continued to publish the article on Sunday about his supposed conflicts of interest.

“Today they evidently just threw up their hands and published this nothing burger,” Sacks wrote. “Anyone who reads the story carefully can see that they strung together a bunch of anecdotes that don’t support the headline.”

Sacks is a co-founder and partner at the venture firm Craft Ventures, and his special government employee role at the White House has drawn scrutiny in the past, with Democrat Senator Elizabeth Warren saying in May that he is “financially invested in the crypto industry, positioning him to potentially profit from the crypto policy changes he makes at the White House.”

Source: David Sacks

Before he became crypto czar, Sacks and Craft divested over $200 million in crypto and crypto-tied stocks, at least $85 million of which Sacks owned, but Sacks retained an interest in several illiquid investments of “private equity of digital asset-related companies.”

Sacks retains 20 crypto investments, The Times reports

The Times reported that its analysis of Sacks’ financial disclosure found he has retained 708 tech investments, 449 of which are AI-related and 20 are tied to crypto, all of which could benefit from the policies Sacks supports.

In one example of a perceived conflict in Sacks’ role, the outlet stated that Craft Ventures is invested in the crypto infrastructure company BitGo, which offers a stablecoin-as-a-service.

BitGo filed to go public in September, with regulatory filings showing Craft owned 7.8% of the company.

The Times noted that Sacks was a major backer of the stablecoin-regulating GENIUS Act, which was signed into law earlier this year. Many crypto commentators predicted that this would boost the use and adoption of the tokens by institutions.

Other examples noted by the Times involved Sacks’ and Craft’s ties to companies involved with AI, which have skyrocketed in value as the White House and Wall Street bet on the technology’s potential.

The Times noted that Sacks’ ethics waivers, shared in March, stated he would sell his interests in AI and crypto; however, they don’t disclose when he sold the assets and do not detail the value of his remaining investments.

NYT created “bogus narrative,” says Sacks

In his X post, Sacks shared a letter to the Times sent by his lawyers at Clare Locke accusing the outlet of setting out “to write a hit piece” and giving their reporters “clear marching orders” to find conflicts of interest.

Sacks added it was “very clear how NYT willfully mischaracterized or ignored the facts to support their bogus narrative.”

Sacks’ spokesperson Jessica Hoffman told the Times that he has complied with rules for special government employees, and the Office of Government Ethics said that Sacks should sell his investments in certain types of companies but not others.

Sacks’ role as a special government employee is limited to 130 days, and in September, Democratic lawmakers questioned whether he had exceeded the number of days allowed with his appointment.

However, Sacks reportedly carefully manages the days he spends as a special government employee to ensure that he stays under the limit.

Tyler Durden Mon, 12/01/2025 - 10:15

'Worse Than COVID': Weak US Manufacturing Surveys Signal Stagflation In November

This morning's survey data on the US manufacturing economy comes as the post-shutdown slump in 'soft' data has dominated desk conversations amid the vacuum of hard macro data...

But the picture remains mixed:

• S&P Global's US Manufacturing PMI BEAT expectations in November but dipped on a MoM basis from 52.5 to 52.2 (still in expansion territory and up from the 51.9 flash print).

• ISM's Manufacturing PMI MISSED expectations, dropping from 48.7 to 48.2 (well below the 49.0 expectation) and in contraction for the ninth month in a row.

Although the headline PMI signalled a further expansion of factory activity in November, "the health of the US manufacturing sector gets more worrying the more you scratch under the surface," according to Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.

"The main impetus came from a strong rise in factory production, but growth in new order inflows slowed sharply, hinting at a marked weakening of demand growth."

Under the hood, ISM shows Price Paid higher, and new orders and employment worsening...

For two successive months now, warehouses have filled with unsold stock to a degree not previously seen since comparable data were available in 2007. This unplanned accumulation of stock is usually a precursor to reduced production in the coming months.

“Profit margins are meanwhile coming under pressure from a combination of disappointing sales, stiff competition and rising input costs, the latter widely linked to tariffs.

In short, Williamson notes that manufacturers are making more goods but often not finding buyers for these products. 

"This combination of sustained robust production growth alongside weaker than expected sales led to a worryingly steep rise in unsold inventories."

ISM Respondents were pretty clear with blame for weakness being placed at Trump's feet in Washington:

• “New order entries are within the forecast. We have increased requests from customers to get their orders sooner. Transit time on imports seems to be longer.” (Machinery)

• “We are starting to institute more permanent changes due to the tariff environment. This includes reduction of staff, new guidance to shareholders, and development of additional offshore manufacturing that would have otherwise been for U.S. export.” (Transportation Equipment)

• “Tariffs and economic uncertainty continue to weigh on demand for adhesives and sealants, which are primarily used in building construction.” (Chemical Products)

• “No major changes at this time, but going into 2026, we expect to see big changes with cash flow and employee head count. The company has sold off a big part of the business that generated free cash while offering voluntary severance packages to anyone.” (Petroleum & Coal Products)

• “Business conditions remain soft as a result of higher costs from tariffs, the government shutdown, and increased global uncertainty.” (Miscellaneous Manufacturing)

• “The unstable market has made pricing fluctuate in a very volatile way; I have had to reduce suppliers for raw materials to maintain a better direct cost structure. Reducing my suppliers has reduced the availability of some items and created longer lead times.” (Fabricated Metal Products)

• “Business continues to be a struggle regarding long-term sourcing decisions based on tariffs and landing costs. External (or international) sourcing remains the lowest-cost solution compared to U.S. production/manufacturing. The delta is smaller now, reducing margins.” (Computer & Electronic Products)

• “The government shutdown has impacted our access to agricultural data, impacting agricultural markets and, as a result, decisions we make. Optimism for a tariff exemption on palm oil percolated but hasn’t come to fruition at this time.” (Food, Beverage & Tobacco Products)

• “Trade confusion. At any given point, trade with our international partners is clouded and difficult. Suppliers are finding more and more errors when attempting to export to the U.S. — before I even have the opportunity to import. Freight organizations are also having difficulties overseas, contending with changing regulations and uncertainty. Conditions are more trying than during the coronavirus pandemic in terms of supply chain uncertainty.” (Electrical Equipment, Appliances & Components)

• “Domestic and export business have been lackluster. Our customers are taking prompt orders only and still don’t have confidence to build inventory, much less make expansion plans. In fact, most of any kind of ‘planning’ has been undermined by unpredictability due to inconsistent messaging from Washington. Artificial intelligence is in its infancy stages, producing confusing and most often inaccurate information. This also causes apprehensive consumer buying patterns, contributing to the challenge of forecasting demand.” (Wood Products)

However, there is hope, as manufacturers have grown more optimistic about the year ahead, with the ending of the government shutdown helping lift confidence from the sharp drop suffered in October.

"Optimism is being fueled by hopes of improved policy support, including lower interest rates, as well as greater political stability, though it is clear that uncertainty remains elevated and a drag on business growth in many firms, holding confidence well below levels seen at the start of the year.”

Tyler Durden Mon, 12/01/2025 - 10:08

Key Events This Busy Week: ISM Mfg and Services, ADP, Core PCE And More

As noted earlier, Asia kickstarted December in a weak mood with Bitcoin down another -6% this morning and Nasdaq and S&P 500 futures both notably lower. 10yr US Treasuries are +3bps and 10yr JGBs are +6.7bps as Ueda said at a speech this morning "At the Monetary Policy Meeting (MPM), the Bank will examine and discuss economic activity and prices at home and abroad as well as developments in financial and capital markets, including the point I just mentioned, based on various data and information, and will consider the pros and cons of raising the policy interest rate and make decisions as appropriate."

DB's Japanese economist believes this strongly suggests an interest rate hike at the December meeting and has pushed forward his view of a hike from January to the meeting later this month, the Friday before Christmas. Market pricing has increased from a probability of just under 60% to 83%. This story brings shades of the 2022 meeting just before Xmas when the BoJ lifted its cap on 10yr JGBs from 0.25% to 0.5%. That saw the market spooked a little. The Yen has risen by +0.39% and the Nikkei is -2.04% lower this morning with 2yr yields +5bps, surpassing the 1% threshold and reaching their highest point since June 2008. 

This coming week will allow forecasters to also fine-tune their Fed views ahead of that. There is plenty of data to get through, both shutdown-delayed and routine. Globally, we have European CPI tomorrow and PPI on Wednesday, following German and French CPI prints today. Various global PMIs are also out today, and we also have Cyber Monday, which follows what seems to have been a decent Black Friday weekend. As an example, Mastercard’s SpendingPulse index was up +4.1% on Friday, up from 3.4% last year. Newsflow continues to bubble up around peace negotiations for the war in Ukraine, so that’s one to watch as well.

Focusing in on the US, the Federal Reserve is firmly in its pre-meeting communications blackout ahead of the 10 December FOMC decision, leaving economic releases to do the talking. Markets have already priced an 80% chance of a 25bp cut next week, and this week’s data will help shape that view as well as expectations for 2026.

The US calendar begins today with the ISM Manufacturing Index, expected to hold near recent averages at 48.5, signalling continued softness in factory activity. Tomorrow brings unit motor vehicle sales, forecast at 15.8 million units, a modest improvement from October. Wednesday is the busiest day, featuring the ADP employment report, expected to show a gain of 50,000 jobs versus 42,000 previously. This report will take on added significance as it will be the most up-to-date labor market data available to Fed officials before they meet. Also due Wednesday are industrial production, likely to rise 0.1% after a slight decline last month, and the ISM Services Index, projected at 51.8, close to its two-year trend. On Thursday, factory orders should show a 0.5% increase, pointing to resilient capital spending. Friday rounds out the week with the delayed September personal income and consumption report, and within it, the more important core PCE. This is expected to hold at 0.23% month-on-month, keeping the annual rate near 2.9%, a tenth above what the Fed was tracking when they only had CPI to use. The preliminary University of Michigan consumer sentiment survey is also anticipated to edge up to 54.0 from 51.0. While sentiment remains depressed—its 24-month average is comparable to Great Recession levels according to our economists—real GDP growth of 2.6% annualized over the past eight quarters and inflation-adjusted consumer spending growth of 2.8% underscore the economy’s resilience. Note that the combined September and October JOLTS report has been rescheduled for 9 December, while October and November payrolls and unemployment data will not arrive until 16 December, well after the FOMC meeting.

Across Europe, inflation will dominate the agenda. Country-level CPI prints for Germany and France set the tone today, followed by the Eurozone flash CPI for November tomorrow. Switzerland reports inflation figures on Wednesday, and Sweden follows on Thursday. These data points will be closely watched for confirmation that disinflation trends remain intact across the continent.

In Asia, the focus turns to manufacturing and policy signals. Most of China’s PMI data came out yesterday and this morning, but we still have the private-sector services PMI on Wednesday.

Geopolitical developments will also feature prominently. US and Ukrainian delegates met in Florida yesterday without any incremental headlines of note. The US’s main negotiator Witkoff is expected to travel to Moscow today and likely meet Putin tomorrow. EU defence ministers meet today on the same topic, followed by NATO foreign affairs ministers on Wednesday for further strategic discussions. French President Macron undertakes a state visit to China from Wednesday to Friday, underscoring diplomatic engagement in Asia.

Courtesy of DB, here is a day-by-day calendar of events

Monday December 1

• Data: US November ISM index, China manufacturing PMI, UK October net consumer credit, M4, Japan November monetary base, Italy November manufacturing PMI, budget balance, new car registrations, Canada November manufacturing PMI
• Central banks: BoJ’s Ueda speaks, ECB’s Nagel speaks, BoE's Dhingra speaks
• Other: EU foreign affairs council (defence)

Tuesday December 2

• Data: US November total vehicle sales, Japan November consumer confidence index, France October budget balance, Italy October unemployment rate, PPI, Eurozone November CPI, October unemployment rate
• Central banks: Fed's Powell and Bowman speak, ECB’s Dolenc speaks
• Earnings: Crowdstrike, Marvell
• Other: OECD economic outlook

Wednesday December 3

• Data: US November ISM services, ADP report, September industrial production, import price index, export price index, capacity utilisation, China services PMI, UK November official reserves changes, Italy November services PMI, Eurozone October PPI, Canada Q3 labor productivity, Australia Q3 GDP, Switzerland November CPI
• Central banks: ECB's Lagarde and Lane speak, BoE's Mann speaks
• Earnings: Salesforce, Snowflake, Inditex, Macy’s, Dollar Tree, Royal Bank of Canada
• Other: NATO foreign affairs ministers meeting

Thursday December 4

1. Data: US initial jobless claims, UK November new car registrations, construction PMI, Japan October household spending, Germany November construction PMI, Eurozone October retail sales, Sweden November CPI
2. Central banks: Fed's Bowman speaks, ECB's Kocher, Cipollone and Lane speak, BoE's Mann speaks, BoE’s DMP survey
3. Earnings: Kroger, Dollar General, HPE

Friday December 5

• Data: US September PCE, personal income, personal spending, December University of Michigan survey, October consumer credit, Japan October leading index, coincident index, Germany October factory orders, France October trade balance, current account balance, industrial production, Italy October retail sales, Canada November labour force survey
• Central banks: ECB's Lane speaks

Finally, looking at just the US, Goldman writes that the key economic data releases this week are the ISM manufacturing and services indexes on Monday and Wednesday and core PCE inflation and the University of Michigan report on Friday. There are no speaking engagements by Fed officials this week, reflecting the FOMC’s blackout period.

Monday, December 1 

• 09:45 AM S&P Global US manufacturing PMI, November final (consensus 51.9, last 51.9)
• 10:00 AM ISM manufacturing index, November (GS 49.0, consensus 49.0, last 48.7): We estimate that the ISM manufacturing index rebounded 0.3pt to 49.0 in November, reflecting slight improvement in our manufacturing survey tracker (+0.1pt to 51.6).

Tuesday, December 2 

• 05:00 PM Lightweight motor vehicle sales, November (GS 15.4mn, consensus 15.5mn, last 15.3mn)

Wednesday, December 3 

• 08:15 AM ADP employment change, November (GS -20k, consensus +10k, last +42k)
• 08:30 AM Import price index, September (consensus +0.1%, last +0.3%)
• 09:15 AM Industrial production, September (GS flat, consensus +0.1%, last -0.1%): Manufacturing production, September (GS flat, consensus +0.1%, last +0.1%); Capacity utilization, September (GS 75.8%, consensus 77.3%, last 75.8%): We estimate that industrial production was unchanged in September, as declines in auto manufacturing and natural gas production were offset by increases in non-auto manufacturing and electricity, oil and gas production. We estimate capacity utilization was unchanged at 75.8%, following the recent downward adjustment implied by the annual revision to the industrial production index. 
• 09:45 AM S&P Global US services PMI, November final (consensus 55.0, last 55.0)
• 10:00 AM ISM services index, November (GS 52.5, consensus 52.0, last 52.4): We estimate that the ISM services index increased 0.1pt to 52.5 in November, reflecting sequential improvement in our non-manufacturing survey tracker (+0.6pt to 53.1).

Thursday, December 4 

08:30 AM Initial jobless claims, week ended November 29 (GS 215k, consensus 222k, last 216k): Continuing jobless claims, week ended November 22 (consensus 1,956k, last 1,960k)

Friday, December 5 

• 10:00 AM Personal income, September (GS +0.3%, consensus +0.4%, last +0.4%); Personal spending, September (GS +0.2%, consensus +0.3%, last +0.6%); Core PCE price index, September (GS +0.22%, consensus +0.2%, last +0.2%); Core PCE price index (YoY), September (GS +2.85%, consensus +2.8%, last +2.9%); PCE price index, September (GS +0.29%, consensus +0.3%, last +0.3%); PCE price index (YoY), September (GS +2.81%, consensus +2.8%, last +2.7%): We estimate that personal income and personal spending increased by 0.3% and 0.2%, respectively, in September. We estimate that the core PCE price index rose 0.22% in September, corresponding to a year-over-year rate of +2.85%. Additionally, we expect that the headline PCE price index increased 0.29% in September, corresponding to a year-over-year rate of +2.81%. We estimate that market-based core PCE rose 0.23% in September.
• 10:00 AM University of Michigan consumer sentiment, December preliminary (GS 52.5, consensus 52.0, last 51.0): University of Michigan 5-10-year inflation expectations, December preliminary (GS 3.3%, last 3.4%)

Source: DB, Goldman

Tyler Durden Mon, 12/01/2025 - 09:40

Watch: Unrepentant Trump Unloads On Fake News Reporters

Authored by Steve Watson via Modernity.news,

A gaggle of fake news reporters gathered around President Tump aboard Airforce One Sunday as he traveled back to Washington D.C. after the Thanksgiving weekend, and he let them all know exactly what he thought of them.

Trump dropped several truth bombs as the panicked reporters attempted gotcha questions regarding his third world migration moratorium.

When asked how long he intends to pause migration from countries including Afghanistan and Somalia, Trump shot back, “A long time. We don’t want those people, we have enough problems…You know why we don’t want them? Because many of them are no good and they should NOT be in our country.”

? PRESIDENT TRUMP ON 3RD WORLD MIGRANTS: "We have ENOUGH problems!"

"You know why we don't want them? Because many of them are NO GOOD and they should NOT be in our country."

TRUTH ? pic.twitter.com/iFHb4yUXor

— Eric Daugherty (@EricLDaugh) November 30, 2025

Trump highlighted people from “Countries like Somalia, that have virtually no government, no military — all they do is go around killing each other, then they come into our country and tell us how to run our country. We don’t want them.”

Referring to Democrat Rep. Ilhan Omar, Trump blasted “She supposedly came into our country by marrying her brother. Well, if that’s true, she shouldn’t be a congresswoman, and we should throw her the HELL out of the country!”

? BREAKING: President Trump just showed he is DONE with the Somalian BS ??

"Countries like Somalia, that have virtually no government, no military — all they do is go around killing each other, then they come into our country and tell us how to run our country. WE DON'T WANT… pic.twitter.com/wlEbUp6KMs

— Eric Daugherty (@EricLDaugh) November 30, 2025

Trump clarified that he will strip naturalisation from those who break the oath to America.

“If we have criminals that came into our country, and they were naturalized maybe through Biden or somebody that didn’t know what they were doing, if I have the power to do it… I would denaturalise, absolutely!” he stated.

When asked “What do you mean [by] ‘remigration?'” the President responded, “It means – get people OUT that are in our country. Get ’em out of here! I want to get them out! We got a lot of people who shouldn’t be here.”

? MASSIVE: President Trump stuns reporters by confirming REMIGRATION is about to get underway

"If we have criminals that came into our country, and they were naturalized maybe through Biden or somebody that didn't know what they were doing, if I have the power to do it… I… pic.twitter.com/pEkdPmyv5K

— Eric Daugherty (@EricLDaugh) November 30, 2025

When the gaggle attempted to get Trump to turn on Secretary of War Pete Hegseth over the narco boat strikes, he was having none of it.

? BREAKING: The Fake News just FAILED to get President Trump to turn on SecWar Pete Hegseth

"I have GREAT confidence [in Pete]."

They want to put Hegseth on trial for "war crimes."

NEVER gonna happen! Hegseth is protecting the homeland ??pic.twitter.com/oo6Pjg4FHx

— Eric Daugherty (@EricLDaugh) November 30, 2025

He also stated that he has a replacement in mind for Federal Reserve Chair Jerome Powell, but was not going to tell the fake news.

? BREAKING: President Trump just decided on JEROME POWELL'S replacement as Federal Reserve Chair

"I know who I'm gonna pick!"

REPORTER: "Kevin Hassett?!"

TRUMP: "?I'm not telling you. We'll be announcing it!"

Too Late is on his way out, FINALLY. We need more interest rate… pic.twitter.com/wmfA1vI7du

— Eric Daugherty (@EricLDaugh) November 30, 2025

When asked if he stands by calling Tim Walz “retarded,” in his Thanksgiving message,Trump responded, “Yeah! I think there’s something wrong with him. Absolutely. Sure. You have a problem with it?”

“Anybody that would do what he did – allow those [Somalians] into his state, and pay billions out to Somalia…it’s not even a country, it doesn’t function like a country! There’s something wrong with Walz!” Trump added.

? JUST IN – REPORTER: "Do you stand by calling Tim Walz 'retarded?'"

PRESIDENT TRUMP: "Yeah! I think there's something wrong with him. Absolutely. Sure. You have a problem with it?" ?

"Anybody that would do what he did – allow those [Somalians] into his state, and pay… pic.twitter.com/AbcKPJqOtO

— Eric Daugherty (@EricLDaugh) November 30, 2025

Trump ended the exchange by bodying the two lead Karens at the head of the gaggle, who were pestering him for details of an MRI he recently had.

“It wasn’t on the brain, ’cause I took a cognitive test and aced it! Which you would be incapable of doing,” he told one of the women before turning to the other and bellowing “YOU TOO!”

?LMFAO! President Trump concluded his press avail aboard Air Force One by BODYING every reporter in the room!

REPORTERS: *Pressing him on his MRI*

TRUMP: "It wasn't on the brain, 'cause I took a cognitive test and ACED it! Which YOU would be incapable of doing. YOU TOO!" ?? pic.twitter.com/Tk7rur2LRg

— Eric Daugherty (@EricLDaugh) November 30, 2025

You can clearly see that Trump absolutely loves intellectually demolishing these fake media wage monkeys.

Your support is crucial in helping us defeat mass censorship. Please consider donating via Locals or check out our unique merch. Follow us on X @ModernityNews.

*  *  * CYBER MONDAY IS HERE - LAST DAY!

Tyler Durden Mon, 12/01/2025 - 09:00

Crypto Crushed By Triple-Whammy Overnight

After an ugly November (the worst since 2018), December is continuing that trend with a big drop overnight that shook what had appeared to be a stabilizing market.

Hawkish BoJ

The overnight plunge appeared to be triggered by Japanese government bond (JGB) futures tumbling on expectations that the Bank of Japan would raise borrowing costs at its December meeting.

Japan’s 2-year government bond yield briefly touched 1.01 percent, the highest since 2008, as traders bet the Bank of Japan’s long era of near-zero rates is ending. 

Some 90 minutes later, BOJ Governor Kazuo Ueda said in a speech that his board might increase interest rates soon.

Traders raised the odds of a BOJ rate hike in December to about 80% after Ueda told business leaders that the central bank “will consider the pros and cons of raising the policy interest rate and make decisions as appropriate.”

Any hike would be an adjustment in the degree of easing, with the real interest rate still at a very low level, he said.

As Bloomberg reports, the reaction underscored how crypto investors must now reckon with macro forces far beyond the Fed which is widely expected to ease monetary policy at next week’s meeting.

“In the early days, Bitcoin mostly moved to whatever the Fed was signaling, rate cuts, hikes, or balance sheet shifts,” said Rachael Lucas, an analyst at BTC Markets.

“These days, Bitcoin reacts to the whole central-bank landscape, not just one player.”

The reaction was swift and violent as the the threat to the 'yen carry trade' tanked risk assets broadly, but most of all bitcoin as the largest cryptocurrency plunged from around $92,000 to $84,000 before a small rebound back above $86,000.

“It’s a risk off start to December,” said Sean McNulty, APAC derivatives trading lead at FalconX.

“The biggest concern is the meagre inflows into Bitcoin exchange traded funds and absence of dip buyers. We expect the structural headwinds to continue this month. We are watching $80,000 on Bitcoin as the next key support level.”  

Over 180,000 traders were liquidated in the past 24 hours, with total liquidations at $539 million and the majority of that in the past few hours, reported CoinGlass. Almost 90% of those liquidations were long positions, predominantly in BTC and Ether 

Ethereum also tanked, back below $3,000...

Strategy selling?

Things worsened this morning as Bloomberg reports that concerns are rising that Strategy Inc. soon may be forced to sell some of its roughly $56 billion cryptocurrency haul if token prices continue to fall, leading its shares to wobble in pre-market trading.

Strategy’s mNAV — a key valuation metric comparing the firm’s enterprise value to the value of its Bitcoin holdings — sat at about 1.2 on Monday, according to its website, spurring investor fears it may soon turn negative.

“We can sell Bitcoin and we would sell Bitcoin if we needed to fund our dividend payments below 1x mNAV,” Phong Le, Strategy’s chief executive officer, said on a podcast on Friday, noting that it would only be carried out as a last resort.

“There’s the mathematical side of me that says that would be absolutely the right thing to do, and there’s the emotional side of me, the market side of me, that says we don’t really want to be the company that’s selling Bitcoin,” Le added.

“Generally speaking, for me, the mathematical side wins.”

MSTR is trading down 5% in the pre-market

However, after a week of not adding to its Bitcoin hoard, Strategy Chairman Michael Saylor appeared to hint in a Sunday post on X that it might soon make further purchases.

What if we start adding green dots? pic.twitter.com/a19bD33KzD

— Michael Saylor (@saylor) November 30, 2025

China notices 'speculation', issues re-ban

Finally, we note that China’s central bank has flagged stablecoins as a risk and has promised to refresh its crackdown on crypto trading, which it has banned since 2021.

The People’s Bank of China said on Saturday, after a meeting with 12 other agencies, that “virtual currency speculation has resurfaced” due to various factors, posing new challenges for risk control.

“Virtual currencies do not have the same legal status as fiat currencies, lack legal tender status, and should not and cannot be used as currency in the market,” the bank said, according to a translation of its statement.

“Virtual currency-related business activities constitute illegal financial activities.”

China’s central bank banned crypto trading and mining in 2021, citing a need to curb crime and claiming that crypto posed a risk to the financial system.

So a triple-whammy for an already sensitive crypto market overnight - is this the weak hand flush needed for the Santa Claus rally to start?

Tyler Durden Mon, 12/01/2025 - 08:45

Moscow Paper Claims Ukrainian Drones Hit Russia-Linked Oil Tanker Off West Africa

All eyes are on Russia this week as talks center on a potential Ukraine peace deal that shifts to Moscow. U.S. Special Envoy Steve Witkoff is en route today and expected to meet with President Vladimir Putin to discuss a Washington-backed, 19-point framework aimed at ending the war. 

As Witkoff and Putin discuss a potential peace deal today, pressure on Russia's shadow tanker fleet appears to be intensifying and broadening. 

Ukrainian drones struck two tankers in the Black Sea last week, and now the Russian business daily Kommersant reports that Ukrainian drones off the West Coast of Africa hit another tanker carrying Russian oil. 

"The M/T MERSIN tanker, carrying Russian oil, was attacked by Ukrainian drones off the coast of Senegal, Deniz Haber reported on November 30," Kommersant wrote in a report. 

Alarming signs that the battlefield is widening far beyond Eastern Europe. 

Ukraine and its Western allies have spent the past several years targeting Russia's oil and gas infrastructure with kamikaze aircraft and naval drones in an effort to pressure Moscow's finances. This campaign, accompanied by sanctions, has yet to collapse Russia financially.

However, the Senegal attack only suggests that Ukraine is stopping at nothing to disrupt Russia's shadow fleet of tankers that fuel profits for Moscow, and in return, fund the war in Ukraine. 

Notice that Ukraine's attacks on Russian oil and gas infrastructure jumped to a record last month. The timing comes just as Trump is attempting to bring an end to the nearly four-year war.

The expanding battlefield is a major warning sign.

 

Tyler Durden Mon, 12/01/2025 - 08:35

Stocks Slides After Bitcoin Tumbles On Hawkish BOJ Fears

After a torrid meltup last week to end the month of November on a euphoria, if extremely illiquid note, futures are once again sinking as we start the final month of the year, in a swoon that was again catalyzed by a plunge in bitcoin which appears to have been spooked by hawkish overnight comments by the BOJ which continues to bluster that it may hike rates one day... soon... for real this time. As of 8:00am S&P futures were 0.7% lower while Nasdaq 100 contracts were -1.0%. Bond yields are 1-4bp higher. Bitcoin slid below $86,000, dragging the entire space and pulling crypto-linked stocks into the red. The Magnificent Seven also declined in premarket trading, with Tesla, Meta and Nvidia each falling more than 1%. Global bond yields are all higher this morning: Japan yields are 3-7bp higher led by the 7yr amid hawkish hint from the BoJ. OPEC+ countries agreed to maintain group-wide oil output quotas (i.e., pausing oil output hike) for 2026 yesterday, given the YTD decline in oil; Oil +1.7% since last Friday’s close. Trump said on Sunday that he has decided on his pick for the next Federal Reserve chair after making clear he expects his nominee to deliver interest-rate cuts. The US economic calendar includes November final S&P Global US manufacturing PMI (9:45am) and November ISM manufacturing (10am).

In premarket trading, Mag 7 stocks are all lower (Tesla -1.2%, Meta -1.4%, Nvidia -1.9%, Microsoft -0.6%, Amazon -0.4%, Alphabet -0.9%, Apple -0.6%). 

• Crypto-exposed stocks slip following a drop in Bitcoin prices. Shares of Coinbase (COIN) are down 4%.
• Silver miners including Coeur Mining (CDE) rise as the precious metal extends Friday’s rally on tight supply. Coeur is up 3%.
• Vaccine makers are falling in early trading Monday as William Blair flags reports of a memo from a top FDA official,
• Vinay Prasad, that links Covid-19 vaccines in younger people to deaths associated with myocarditis. Shares of Moderna (MRNA) are down 4%.
• Barrick Mining (B) rises 4% after saying it is exploring an initial public offering of its North American gold assets as the Canadian mining company grapples with operational issues and cost blowouts.
• Canadian Solar (CSIQ) rallies 13% on news that the solar panel manufacturer is transferring the assets of its Chinese unit to Canadian ownership to safeguard sales into the US as Washington steps up scrutiny of imports from the Asian nation.
• Coupang (CPNG) falls 5% as the e-commerce firm faces an investigation by South Korean authorities over a data breach that affected about 33.7 million customer accounts.
• Leggett & Platt (LEG) shares are up 8% after Somnigroup International proposed an all-stock buyout.

Thanks to a powerful ramp on Friday, November marked the seventh straight month of gains for the S&P 500, the longest streak since 2021 as the monthly closed just barely in the green, rising 0.17%. It wasn't enough for the Nasdaq 100 however, which was hampered by concerns about stretched AI valuations, and fell 1.6% in the month.

But so much for November, and December has seen a stark shift in sentiment with Monday's risk-off mood most evident in crypto, with Bitcoin tumbling below $86,000 before paring the drop.

Sentiment was hammered early after Japan’s two-year bond yield rose to its highest level since 2008 when Governor Kazuo Ueda offered his clearest hint yet that the BOJ may be nearing an interest-rate hike (of course he has been doing this for months and every time the market falls for it). Traders raised the odds of a BOJ rate hike in December to about 80% after Ueda told business leaders that the central bank “will consider the pros and cons of raising the policy interest rate and make decisions as appropriate.” Any hike would be an adjustment in the degree of easing, with the real interest rate still at a very low level, he said. The move weighed on global bonds, lifting the rate on 10-year US Treasuries by three basis points to 4.04%. The yen led gains among major currencies against the dollar.

“The market is still hesitating a bit ahead of the upcoming macro data, and before the Christmas rally people typically expect,” said Andrea Tueni, head of sales trading at Saxo Banque France. “The drop in Bitcoin is weighing on sentiment and so are the comments from the BOJ.”

Given Japan’s role as a major source of global liquidity, any shift toward policy normalization will have implications for carry trades.

“It’s a structural change in global markets that investors need to adapt to,” said Alexandre Baradez, chief market analyst at IG in Paris.

The month opened with traders focused on a slate of economic indicators due before the Federal Reserve’s next policy meeting, following the S&P 500’s seventh consecutive monthly advance in November.  Meanwhile, gold continued its advance, and copper rose to a new record high on fears the global market is heading for a supply crunch. Attention is also turning to the central bank’s leadership, after President Trump said he has decided on a successor to Chair Jerome Powell.

This week’s data include ISM Manufacturing for November, due today, and a much-delayed inflation number for September, set to be released on Friday. A preliminary reading of consumer confidence in December is also due that day. That datapoint will be key given it’s a post-government shutdown reading on the health of the economy.
Markets are now signaling a December rate cut in December is nailed on. And Trump said Sunday he has made his mind up about who will be Fed’s next chairman. Trump’s chief economic adviser Kevin Hassett is seen as the likely choice, people familiar said last week. Hassett signaled markets were ready for the announcement of a new Fed chair. People familiar with the matter last week said that Hassett was seen as the likely choice to succeed Powell. Speaking on CBS’ Face the Nation on Sunday, he declined to address whether he considers himself the front-runner.

“December could prove more challenging than many expected, especially for those who thought last month’s 5% dip was the long-awaited correction,” said Ipek Ozkardeskaya, a senior analyst at Swissquote. “With Fed funds futures pricing nearly a 90% chance of a 25bp cut, there isn’t much room left for additional dovish fuel.”

It's not all gloom: traders are placing bullish bets on small-cap stocks in anticipation of lower rates. The Russell 2000 Index jumped 8.5% in the five trading days through Friday, making up the bulk of its gains this year. 

In strategy, RBC’s Lori Calvasina said the S&P 500 should reach 7,750 over the next 12 months, based on sentiment, valuation, the economic outlook and monetary policy. Calvasina’s forecast, which implies a 14% rally for the benchmark, joins a chorus of strategists with bullish calls for 2026. 

In Europe, the Stoxx 600 falls 0.4%, led by industrial, real estate and financial services. A drop for shares of Airbus also drags on the gauge after weekend news of a software glitch for its A320 jets. Industrial goods and services and real estate are the biggest fallers while the mining sector is rising as copper advanced to a record high. Here are some of the biggest movers on Monday:

• Airbus shares fall as much as 3.1% after the company had to attend to a solftware glitch.
• ASML shares rise as much as 3.1% after the company was added to JPMorgan’s Analyst Focus list and is its top pick in the wider semis sector, in which semiconductor capital equipment is viewed as the most attractive segment.
• European mining shares are among the best-performing sectors in the Stoxx 600 benchmark as copper advanced to a record high on the London Metal Exchange on fears the global market is heading for a supply crunch. Silver traded near a record.
• Reckitt Benckiser shares rise as much as 2.1%, the most in over a month, after Barclays upgraded the consumer goods company to overweight from equal-weight.
• European defense stocks fall after reports of progress in Ukraine-Russia talks over the weekend.
• Melrose Industries shares fall as much as 4.2% after news that CFO Matthew Gregory will retire from his position in 2026.

Earlier in the session, Asian stocks traded in a narrow range on December’s first trading day as investors braced for a data-heavy week, while gains in China helped offset regional weakness. The MSCI Asia Pacific Index was down 0.3% as of 4:50 p.m. Hong Kong time, led lower by tech shares, after earlier oscillating between gains and losses. Advances in Hong Kong and mainland China’s markets briefly lifted the region’s benchmark before losses in Japan, Taiwan and Australia pulled it lower. In Japan, Bank of Japan Governor Kazuo Ueda hinted that the central bank might lift interest rates at its next meeting this month, sending the Topix 1.2% lower. Meanwhile, market gains in China defied weaker-than-expected factory and manufacturing data, highlighting ongoing strains in the nation’s economic recovery.

In FX, the yen is leading gains against the greenback, rising 1% and taking USD/JPY below the 155-handle. The hint of a December interest-rate hike by Bank of Japan Governor Ueda played a role and also helped push Japanese 2-year yields to the highest since 2008. The yen is also likely benefiting from haven demand as broader risk sentiment struggles to recover after an abrupt turn lower during Asian trading hours.

In rates, treasuries fall, pushing US 10-year yields up 3 bps to 4.04%. European government bonds also decline.

In commodities, WTI crude futures rise 1.8% to near $59.60 a barrel as a key pipeline linking Kazakh fields to Russia’s Black Sea coast halted loading. Spot gold climbs $20 to $4257. Bitcoin also tumbled 6%, back below $86,000 after momentum ignition also sparked a rout and Korean momentum kamikazes joined in during Asian hours.

The US economic calendar includes November final S&P Global US manufacturing PMI (9:45am) and November ISM manufacturing (10am). While the Fed enters its pre-meeting blackout period, Powell and Governor Michelle Bowman are scheduled to speak, though they are barred from commenting on the economic outlook or policy. Fed officials will also receive a dated print of their preferred inflation gauge this week ahead of their final policy meeting of the year. Other data due include ADP private employment figures for November.

Market Snapshot

• S&P 500 mini -0.5%
• Nasdaq 100 mini -0.6%
• Russell 2000 mini -0.7%
• Stoxx Europe 600 -0.3%
• DAX -0.9%
• CAC 40 -0.4%
• 10-year Treasury yield +3 basis points at 4.04%
• VIX +1.6 points at 17.95
• Bloomberg Dollar Index -0.1% at 1216.62
• euro +0.2% at $1.1623
• WTI crude +1.8% at $59.62/barrel

Top Overnight News

• President Trump said Sunday he's decided who he'll nominate to be the next Federal Reserve chair, but he wouldn't be drawn on whether the pick is National Economic Council director Kevin Hassett. White House Economic Adviser Hassett said he will be happy to serve if US President Trump picks him as Fed chair.
• Trump said on Friday he is cancelling all executive orders signed by former President Biden using autopen and stated that any document signed by Biden with autopen, which was approximately 92% of them, is hereby terminated and of no further force or effect. Furthermore, Trump stated that Biden was not involved in the autopen process and if he says he was, he will be brought up on charges of perjury.
• US and Ukrainian negotiators said they held productive talks on a potential peace framework but have yet to reach a breakthrough. Steve Witkoff is due to meet Vladimir Putin in Russia tomorrow. BBG
• Black Friday sales climbed 4.1%, Mastercard said, surpassing last year’s growth, a sign US consumers are continuing to spend despite persistent economic concerns. But Adobe Analytics expects growth in Cyber Monday sales to ease from last year. BBG
• The State Department announced a pause on visa issuances for Afghan passport holders, and the US immigration service said it will halt all asylum decisions, while the US Citizenship and Immigration Services Director said USCIS halted all asylum decisions until they can ensure that every migrant is vetted and screened to the maximum degree.
• For years it has seemed no sticker price was too high for American car buyers. Even as average new car prices approached $50,000 this year, dealers fretted more over depleted inventories than losing customers to sticker shock. Those days may be ending as increasingly stretched consumers are starting to draw the line on what they will pay for a new car, according to dealers, analysts and industry data. WSJ
• Trump downplayed his social media post saying Venezuelan airspace should be considered closed. The president confirmed he recently held a phone call with his counterpart Nicolas Maduro, but declined to say how it went. BBG
• Swiss voters overwhelmingly rejected the proposal for a 50% inheritance tax for the super-rich: FT.
• A private gauge of China’s manufacturing sector showed Chinese factories cut back on activity in November, reflecting weaker growth momentum. China RatingDog manufacturing PMI for Nov came in below expectations at 49.9 (vs. the Street 50.5 and down from 50.6 in Oct). WSJ
• Micron will invest $9.6 billion to build a plant in western Japan to make memory chips for AI applications. Nikkei
• The BoJ will thoroughly discuss the possibility of an interest-rate increase at its coming meeting, Gov. Kazuo Ueda said, stoking hopes that it will resume monetary tightening this year. Now that Tokyo’s trade agreement with the Trump administration has reduced external risks, the BOJ governor said the central bank will pay special attention to the outlook for wage increases in Japan next year. WSJ
• Copper rallied to a new record on fears the global market is heading for a supply crunch. Silver extended gains. BBG
• South African President Ramaphosa dismissed US President Trump's threat to exclude the country from next year's G20 summit and reaffirmed South Africa's status as a founding member of the group: Reuters.

Macro

• China’s manufacturing activity contracted in November, according to official and private surveys, as stronger demand overseas after a trade truce with the US failed to reverse a deepening slowdown in the economy.
• Trump said Sunday that people shouldn’t read much into a social media post where he said Venezuelan airspace should be considered closed.
• Russian President Putin signed an order to allow visa-free entry into the country for Chinese citizens as ties between the two nations continue to deepen.

Trade/Tariffs

• China was reported on Friday to have banned imports of pigs, wild boars and related products from Spain's Barcelona province, according to a China Customs document. In relevant news, Mexico’s Agriculture Ministry also suspended pork product imports from Spain due to a swine fever outbreak.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks began the new month mixed, with participants cautious as they digested the weak Chinese PMI data. ASX 200 was dragged lower by weakness in healthcare, telecoms, financials and tech, while sentiment was also not helped by disappointing Chinese PMI data and weaker-than-expected Australian Gross Company Profits and Business Inventories. Nikkei 225 slipped beneath the 50k level amid a firmer currency and risks of a BoJ rate hike in December, while there were hawkish-leaning comments from BoJ Governor Ueda, who said that they will consider the pros and cons of raising rates at the December meeting. Hang Seng and Shanghai Comp were kept afloat despite the discouraging Chinese PMI data, in which the headline official Manufacturing PMI continued to show a decline in factory activity at 49.2 (exp. 49.2) and Non-Manufacturing disappointed with a surprise contraction at 49.5 (exp. 50.0), while RatingDog Manufacturing PMI missed estimates at 49.9 (Exp. 50.5).

Top Asian News

• BoJ Governor Ueda is to deliver a speech at the Japan Business Federation on December 25th, according to the central bank.
• BoJ Governor Ueda said if their projection of economic activity and prices materialise, the BoJ will continue to raise the policy interest rate in accordance with improvements in economy and prices, while he added that even if the policy interest rate is raised, accommodative financial conditions will be maintained and the likelihood of their baseline scenario for economic activity and prices being realised is gradually increasing. Ueda also commented that at the December meeting, the BoJ will examine and discuss economic activity and prices at home and abroad, as well as market developments, based on various data, and consider the pros and cons of raising rates. Furthermore, he said it is important for FX to move stably reflecting fundamentals and that a weak yen works to push up consumer inflation, while they must be mindful that FX moves affect inflation expectations and underlying inflation in guiding policy.
• Japanese Finance Minister Katayama said it is “clear” that volatile swings in the FX market and the rapid weakening of the yen aren’t based on fundamentals.
• China’s financial regulator guides banks and insurers to fully provide financial support services related to the Hong Kong fire and said insurance institutions should promptly handle claims and other procedures for disaster-affected customers, while it added that banks should strengthen financial credit support and actively assist in disaster reconstruction.
• Indonesia said at least 303 people died in three provinces after severe rains caused floods and landslides.
• Vanke has reportedly requested 12-months to pay its bonds under the extension plan, Bloomberg reports.

European bourses (STOXX 600 -0.3%) are on the backfoot, following a cautious mood seen in APAC trade. The AEX (U/C) bucks the trend, with ASML (+1%) keeping the index afloat after positive analyst commentary. European sectors are mixed. Basic Resources leads, given the strength in underlying metals prices whilst Industrials sits at the foot of the pile, with Airbus (-3.5%) pressured after rolling out urgent fixes across its A320 fleet over the weekend. US equity futures are softer across the board (ES -0.5% NQ -0.7% RTY -0.8%), following the pressure seen in Europe. Focus later will be on US ISM Manufacturing figures, which will give further insight into the health of the US economy ahead of the FOMC meeting next week. Softbank (9984 JT) CEO said he did not want to sell a single NVIDIA (NVDA) share, but needed funds to invest in OpenAI and other opportunities.

Top European News

• Swiss voters overwhelmingly rejected the proposal for a 50% inheritance tax for the super-rich, according to FT.
• UK PM Starmer and Chancellor Reeves have been accused of misleading the Cabinet by using claims that there was a black hole in the public finances to justify tax rises during the run-up to the Budget, according to The Times’s Swinford, while it was separately reported by Bloomberg that Reeves denied lying about UK finances pre-Budget.
• UK PM Starmer is to defend the Budget after Reeves was accused of misleading the public, and will outline the growth mission after the Budget tax rises during a speech on Monday.
• S&P affirmed Latvia at A; Outlook Stable and affirmed Lithuania at A; Outlook Stable.
• ECB's de Guindos said the current level of interest rates is appropriate and, in terms of future moves, this is data dependent.

FX

• DXY is subdued in the presence of JPY strength and in the absence of any pertinent catalysts and with the Fed in a blackout period, while US President Trump said he knows who he will pick for the Fed chair role, but didn't give any further details. DXY resides towards the bottom of a 99.26-99.51 range (vs Friday's 99.38-99.82 parameter), with the next downside level the 17th November low at 99.25.
• JPY is the marked outperformer this morning, given the risk tone and commentary from BoJ Governor Ueda, who ultimately hinted at a possible December rate rise, although market pricing has been little changed since last week, with a 67% chance of a hold at the 19th December announcement. USD/JPY currently resides towards the bottom of a 155.24-156.15 parameter, the next support level is seen at 155.21 (19th November low).
• EUR and GBP diverge, the former underpinned by the USD, whilst the latter is subdued ahead of UK PM Starmer's speech at 10:30GMT, where he will reportedly outline the growth mission and will defend the Budget after Chancellor Reeves was forced to deny lying to the public about UK finances pre-Budget. No moves were seen in EUR or GBP on the Final Manufacturing PMI data. EUR/GBP reached a 0.8794 peak vs a 0.8754 intraday trough.
• Non-US dollars, CAD, AUD, NZD, are relatively flat with the broader market tone tentative and macro updates light. Upside capped in the antipodeans following overall disappointing Chinese PMIs, where the headline official Manufacturing PMI continued to show a decline in factory activity at 49.2 (exp. 49.2) and Non-Manufacturing disappointed with a surprise contraction at 49.5 (exp. 50.0), while RatingDog Manufacturing PMI missed estimates at 49.9 (Exp. 50.5).

Fixed Income

• USTs Mar'26 down to 113-06, lower by five ticks at worst. Downside echoes peers, but offset by dovish Fed expectations as markets near-enough price a December cut, and we look to updates on the next Fed Chair after President Trump said he knows who he will pick. Polymarket ascribes a 58% chance that Hassett will be appointed. Treasury Secretary Bessent recently said Trump could make an announcement pre-Christmas.
• Bund Dec'25 at a 128.50 low, posting downside of 37 ticks. Support comes into play at 128.37 from the 20th of November. Thereafter, the figure before 127.88 from the last week of September. JGBs and Gilts (see below) driving much of the bearishness, alongside upside in numerous Commodity prices, and particularly crude post-OPEC.
• Gilts Mar'26 opened lower by 12 ticks before falling further to a 91.16 low with downside of 42 ticks at most. Underperformance driven by the Budget and Chancellor Reeves coming under scrutiny over the weekend, with particular reference to the timing of OBR briefings and her pitch-rolling on Income Tax. PM Starmer to speak at 10:30GMT on growth.
• JGBs Dec'25 hit overnight and were lower by c. 50 ticks at worst. Pressure on the back of hawkish BoJ commentary, where Ueda, among other points, said that delaying a rate hike too long could cause sharp inflation and force a rapid policy adjustment. Remarks that lifted BoJ pricing to over a 70% chance of a hike in December vs sub-60% on Friday.

Commodities

• WTI and Brent are currently trading higher by c. 2%, as markets digest the OPEC+ and supply-related concerns following Ukraine’s attack on Russian refineries. WTI and Brent currently reside at the upper end of a USD 58.83/bbl to USD 59.97/bbl and USD 62.29/bbl to 63.35/bbl range respectively. Price action since the European cash open has been exceptionally lacklustre, and generally sideways around highs; some modest downticks have been seen in recent trade.
• Spot gold is firmer today and trades towards the upper end of a USD 4,205.63/oz to USD 4,262/oz range. XAU now at levels not seen since late October 2025; there is now a bit of clear air to the high of 21st October at USD 4,375.62/oz. Perhaps some focus on continued Ukrainian attacks on Russia, as traders now focus on the coming meeting between US Special Envoy Witkoff and Russian President Putin on Tuesday. Elsewhere, marked pressure in the crypto space perhaps sent flows to the more-traditional haven in APAC trade.
• Base metals held a strong positive bias throughout overnight trade, but then gave up some of the upside as the risk tone dipped a touch, with traders focusing on the disappointing Chinese PMI metrics. Focus has also been on the surge in 3M LME Copper, which saw the red-metal surge above USD 11.2k/t to print a fresh ATH at USD 11,297/t, before scaling back down to a current USD 11,189/t. ING opines that the latest bout of demand for the metal is thanks to “an upbeat CESCO Week event in Shanghai” – suggesting that it echoed the markets’ view of tight supply.
• OPEC+ agreed to keep group-wide oil output unchanged for Q1 2026, while it stated that participating countries approved the mechanism developed by the secretariat to assess participating countries’ maximum sustainable production capacity. Furthermore, it announced that the 41st OPEC and Non-OPEC ministerial meeting will be held on 7th June 2026.
• OPEC Secretariat receives update compensation plans from Iraq, the UAE, Kazakhstan, and Oman, according to a statement.
• Saudi Energy Minister said OPEC+ latest decision is the most important and transparent in deciding production level via State TV.

Geopolitics: Middle East

• Israeli PM Netanyahu submitted a letter to President Herzog, while Netanyahu said in a video statement addressing the pardon request that his personal interest was to complete the legal process until the end, while he added that the military and national reality, and national interest, demand otherwise, and that ending the trial immediately would advance much-needed national reconciliation.
• Israeli helicopters fired in the eastern areas of Khan Yunis inside the Yellow Line, according to Al Jazeera.
• Israeli security estimates that Iran may take the initiative and carry out retaliatory operations instead of Hezbollah and estimates preparations for a Houthi response in retaliation for the killing of Hezbollah Top Commander Al-Tabatabai, according to Al Arabiya.
• Hezbollah’s leader said on Friday in response to Israel's killing of its military chief that the group has a right to respond and will set a time for it, while he added that Lebanon's government should prepare a plan to confront Israel.
• Iran’s Foreign Minister Araghchi held talks with Turkey regarding the nuclear issue and Israel, while he also held a meeting with the Saudi Deputy Foreign Minister for Political Affairs in Tehran.

Geopolitics: Ukraine

• Russia's Kremlin said that Russian President Putin is due to meet US envoy Witkoff on Tuesday. On the Russia-Ukraine peace development, the Kremlin adds that they are not going to engage in megaphone diplomacy.
• Ukrainian President Zelensky said a delegation headed by the security council chief travelled to the US for talks, while it was also reported that Zelensky is to visit French President Macron in Paris on Monday.
• US and Ukraine negotiations on Sunday focused on where the de facto border with Russia would be drawn under a peace deal, while the five-hour meeting was said to be difficult and intense, but productive, according to two Ukrainian officials cited by Axios.
• US Secretary of State Rubio said the meeting with Ukrainians was very productive but noted there is more work to be done, while he added that they have been in touch to varying degrees with the Russian side.
• Ukraine’s First Deputy Foreign Minister said there was a good start to US peace talks with a warm atmosphere conducive to a potential progressive outcome.
• Ukraine’s military hit Russia’s Afipsky oil refinery, while it was also reported that Ukrainian sea drones struck two Gambia-flagged tankers off the Turkish coast on Friday, which were said to be part of a Russian shadow fleet used to bypass Western sanctions.
• Russian forces carried out a massive strike on Ukrainian military-industrial and energy facilities.
• Russia’s Foreign Minister said following a Ukrainian drone attack on the CPC Black Sea terminal, that the civilian energy infrastructure that was attacked plays an important role in ensuring global energy security and has never been subject to any restrictions or limitations, while they strongly condemned the ‘terrorist attacks’ on CPC and oil tankers.
• NATO is considering being “more aggressive” in responding to Russia’s cyber-attacks, sabotage and airspace violations, according to its most senior military officer, Admiral Giuseppe Cavo Dragone, cited by FT.
• NATO is reportedly preparing for the scenario of confronting Russia with limited US support, according to a report by Bloomberg citing a wargame in Transylvania that showed European soldiers defending the continent largely without US support as President Trump reduces US deployments in Europe.

OTHER

• US President Trump declared on Truth Social that the airspace above Venezuela is closed. It was separately reported that President Trump held a call with Venezuelan President Maduro, while Trump also commented that Defence Secretary Hegseth told him that he did not order a second boat strike.
• US bipartisan lawmakers raised alarms on Sunday that Defence Secretary Hegseth may have committed a war crime following a report that he ordered a follow-on attack to kill survivors of a boat strike in September, according to POLITICO.
• Venezuela said it rejects US President Trump’s “hostile, unilateral and arbitrary” post about Venezuela’s airspace and noted that the statement shows “colonial pretentions” towards Latin America, while it added that Venezuela demands respect for airspace and will not accept foreign orders or threats.
• China’s Coast Guard carried out law enforcement inspections around the Scarborough Shoal, while the report noted that the Chinese military’s Southern Theatre Command organised combat readiness patrols in the ‘territorial’ waters and airspace of the Scarborough Shoal and surrounding areas on November 29th, according to Xinhua.

US Event Calendar

• 9:45 am: Nov F S&P Global U.S. Manufacturing PMI, est. 51.9, prior 51.9
• 10:00 am: Nov ISM Manufacturing, est. 49, prior 48.7
• 10:00 am: Nov ISM Prices Paid, est. 57.5, prior 58

Central Bank Speakers 

• 8:00 pm: Fed’s Powell Speaks at Memorial Event
• Fed’s External Communications Blackout (November 29 - December 11)

DB's Jim Reid concludes the overnight wrap

Good news from home as we start the month: over the weekend we found out that my daughter Maisie has made the South East England Artistic Swimming Squad. Considering I’m one of the worst swimmers imaginable—and would make an awful gymnast—I’m pretty impressed that she’s managed to stay on the right side of the gene pool lottery. To be fair, when she had Perthes Disease for three years and spent over a year in a wheelchair, swimming was the one thing that kept her going, so this is a fantastic achievement. I won’t book tickets for the 2036 or 2040 Olympics just yet, but you never know!

As it’s the start of the month, Henry will shortly release our usual performance review. November was very much a month of two halves: risk assets initially sold off, before a sharp recovery meant the S&P 500 just about posted a seventh consecutive monthly gain. The main driver was the Fed, as investors first priced out and then back in a December rate cut. Elsewhere, fears of an AI bubble remained prominent, with the Magnificent 7 losing ground for the first time since March. European assets also performed well as expectations rose about a potential peace deal in Ukraine. However, not every asset managed to recover—Bitcoin saw its worst month since February. 

ChatGPT was three years old yesterday and that date could be a landmark moment in history in years to come. As we said in the World Outlook, the ultimate destination for AI will be hotly debated in 2026 and will unlikely reach a conclusion. As such there is plenty of opportunity for both sides of the boom-and-bust narrative to win for periods of time. So expect a volatile ride.

Asia has actually kick started December in a weak mood with Bitcoin down another -6% this morning and Nasdaq (-1.05%) and S&P 500 (-0.80%) futures both notably lower. 10yr US Treasuries are +3bps and 10yr JGBs are +6.7bps as Ueda has said at a speech this morning "At the Monetary Policy Meeting (MPM), the Bank will examine and discuss economic activity and prices at home and abroad as well as developments in financial and capital markets, including the point I just mentioned, based on various data and information, and will consider the pros and cons of raising the policy interest rate and make decisions as appropriate."

Our Japanese economist believes this strongly suggests an interest rate hike at the December meeting and has pushed forward his view of a hike from January to the meeting later this month, the Friday before Christmas (see here for more of his views on this). Market pricing has increased from a probability of just under 60% to 83% as I type. This story brings shades of the 2022 meeting just before Xmas when the BoJ lifted its cap on 10yr JGBs from 0.25% to 0.5%. That saw the market spooked a little. The Yen has risen by +0.39% and the Nikkei is -2.04% lower this morning with 2yr yields +5bps, surpassing the 1% threshold and reaching their highest point since June 2008. More on Asia later.

This coming week will allow forecasters to fine-tune their Fed views ahead of that. There is plenty of data to get through, both shutdown-delayed and routine. Globally, we have European CPI tomorrow and PPI on Wednesday, following German and French CPI prints today. Various global PMIs are also out today, and we also have Cyber Monday, which follows what seems to have been a decent Black Friday weekend. As an example, Mastercard’s SpendingPulse index was up +4.1% on Friday, up from 3.4% last year. Newsflow continues to bubble up around peace negotiations for the war in Ukraine, so that’s one to watch as well.

Focusing in on the US, the Federal Reserve is firmly in its pre-meeting communications blackout ahead of the 10 December FOMC decision, leaving economic releases to do the talking. Markets have already priced an 80% chance of a 25bp cut next week, and this week’s data will help shape that view as well as expectations for 2026.

The US calendar begins today with the ISM Manufacturing Index, expected to hold near recent averages at 48.5, signalling continued softness in factory activity. Tomorrow brings unit motor vehicle sales, forecast at 15.8 million units, a modest improvement from October. Wednesday is the busiest day, featuring the ADP employment report, expected to show a gain of 50,000 jobs versus 42,000 previously. This report will take on added significance as it will be the most up-to-date labour market data available to Fed officials before they meet. Also due Wednesday are industrial production, likely to rise 0.1% after a slight decline last month, and the ISM Services Index, projected at 51.8, close to its two-year trend. On Thursday, factory orders should show a 0.5% increase, pointing to resilient capital spending.

Friday rounds out the week with the delayed September personal income and consumption report, and within it, the more important core PCE. This is expected to hold at 0.23% month-on-month, keeping the annual rate near 2.9%, a tenth above what the Fed was tracking when they only had CPI to use. The preliminary University of Michigan consumer sentiment survey is also anticipated to edge up to 54.0 from 51.0. While sentiment remains depressed—its 24-month average is comparable to Great Recession levels according to our economists—real GDP growth of 2.6% annualised over the past eight quarters and inflation-adjusted consumer spending growth of 2.8% underscore the economy’s resilience. Note that the combined September and October JOLTS report has been rescheduled for 9 December, while October and November payrolls and unemployment data will not arrive until 16 December, well after the FOMC meeting.

Across Europe, inflation will dominate the agenda. Country-level CPI prints for Germany and France set the tone today, followed by the Eurozone flash CPI for November tomorrow. Switzerland reports inflation figures on Wednesday, and Sweden follows on Thursday. These data points will be closely watched for confirmation that disinflation trends remain intact across the continent.

In Asia, the focus turns to manufacturing and policy signals. Most of China’s PMI data came out yesterday and this morning, but we still have the private-sector services PMI on Wednesday.

Geopolitical developments will also feature prominently. US and Ukrainian delegates met in Florida yesterday without any incremental headlines of note. The US’s main negotiator Witkoff is expected to travel to Moscow today and likely meet Putin tomorrow. EU defence ministers meet today on the same topic, followed by NATO foreign affairs ministers on Wednesday for further strategic discussions. French President Macron undertakes a state visit to China from Wednesday to Friday, underscoring diplomatic engagement in Asia.

Yesterday, China’s official manufacturing PMI came in a couple of tenths below expectations at 49.2, marking the eighth successive month below 50. The non-manufacturing equivalent surprisingly fell from 50.1 to 49.5, the first reading below 50 for nearly three years. Consensus was at 50.0. This morning, the RatingDog general manufacturing PMI, conducted by S&P Global, fell to 49.9 in November (compared to the expected 50.5).

Chinese equities are bucking the risk off elsewhere this morning, possibly on stimulus hopes given the data. The Hang Seng (+0.27%) and Shanghai Composite (+0.33%) are higher.  

Recapping last week now and markets rebounded from their recent pullback, buoyed by new hopes of Fed rate cuts, as well as improved tech optimism and accelerating talks on a peace deal between Ukraine and Russia. This saw the S&P 500 advance by +3.73% (+0.54% Friday), its biggest weekly gain since mid-May, when US and China reversed their post-Liberation Day tariff escalation. The NASDAQ rose by +4.91% (+0.65% Friday) and the Magnificent 7 by +5.40% (+0.62% Friday). The Mag-7 rally came despite Nvidia falling -1.05% (-1.81% Friday) following reports that Meta (+9.04%, +2.26% Friday) was in talks with Alphabet (+6.85%, +0.07% Friday) to purchase Google’s AI TPU chips. The VIX volatility index declined by -7.08pts to a four-week low of 16.35. And credit spreads tightened amid the risk-on mood, with US IG (-5bps) and HY (-32bps) spreads seeing the biggest weekly tightening since August and May respectively.

Over in Europe, the peace narrative helped the STOXX 600 gain +2.55% (+0.25% Friday), with similar advances for the DAX (+3.23%) and the CAC 40 (+1.75%). By contrast, the STOXX Aerospace & Defence index (+0.27% on the week) and Rheinmetall (-2.57%) underperformed.

US Treasuries rallied following more dovish commentary from Fed officials as well as reports that Kevin Hassett is viewed as the frontrunner for the Fed Chair post. The pricing of a December rate cut rose from 63% to 83%. It was as low as 24.5% 10 days ago. Those moves came amid mixed US data, most notably with November consumer confidence (88.7 vs 93.3 expected) slumping to a 7-month low but the latest jobless claims suggesting a still resilient labour market as initial jobless claims fell back to 216k in the week ending November 22 (vs. 225k expected). The 2yr Treasury yield was -1.9bps lower at 3.49% (+1.4bps Friday), with 10yr yields down -5.0bps to 4.01%. In continental Europe, yields on 10yr bunds (-1.4bps), OATs (-6.3bps), and BTPs (-5.9bps) saw similar declines as Treasuries.

In the UK, markets welcomed the increase in fiscal headroom to £22bn as the budget revealed mostly back-loaded tightening. The main measures include £26bn of tax rises by 2029-2030 via frozen income tax thresholds, new National Insurance on salary-sacrifice pensions, and higher taxes on dividends, property, and savings. Coupled with lower-than-expected gilt issuance, this left 10yr gilt yields -10.6bps lower on the week, and the FTSE 100 advancing +1.90% (+0.27% Friday). The UK deficit is forecast to fall from 4.5% of GDP to 3.5% next year, and under 2% by the decade's end, but markets still question long-term fiscal sustainability. 

In commodities, Brent crude was +1.02% higher to $63.20/bbl (-0.22% Friday), with oil traders remaining cautious on the prospects of possible peace deal in Ukraine. Meanwhile, gold (+4.29% on the week) and Bitcoin (+6.80%) joined the broader rally after their earlier declines.

Tyler Durden Mon, 12/01/2025 - 08:32

The Impossible Two Percent: Why Central Banks Cannot Afford Price Stability

Authored by Hamoon Soleimani via The Mises Institute,

The Two percent inflation target—monetary policy’s sacred commandment for three decades—has become structurally impossible to achieve. Not because central bankers lack skill, but because every attempt to hit the target destroys the financial architecture that previous monetary expansion built. This is the endgame of central planning: a system that cannot tolerate its own success criteria without collapsing.

The Arbitrary Anchor

New Zealand invented the two percent target in 1989 by looking backward at what inflation had been when things felt stable—hardly rigorous science. Other central banks copied this guess, transforming it into dogma. But the economy of 2025 bears no resemblance to 1989. We’ve financialized every asset class, built supply chains optimized for fragility, and erected a debt tower requiring perpetual refinancing at suppressed rates just to avoid collapse. The two percent target was designed for a world we’ve already destroyed.

The Cantillon Trap: Winners and Losers by Design

Monetary expansion doesn’t spread evenly. New money concentrates where it enters—in financial assets, real estate, and the balance sheets of those with credit access. This creates two economies: one for asset-holders, enriched by expansion; another for wage-earners, crushed by the cost increases that follow.

To hit 2 percent consumer inflation, central banks must restrict money supply enough to destroy demand among ordinary households—the people furthest from the monetary spigot. But they’ve already inflated assets to the point where millions of families, pension funds, and governments depend on continued expansion to stay solvent. Tightening enough to hit 2 percent CPI means liquidating the phantom wealth propping up the entire system. We glimpsed this in 2022-2023: modest rate increases triggered bank failures and sovereign debt crises.

The trap is complete: monetary expansion enriches the few while punishing the many, but contraction would bankrupt both.

The Measurement Mirage

The CPI doesn’t measure what people experience. Housing costs appear through “owner’s equivalent rent”—a fiction understating reality by a significant amount. Healthcare, education, childcare—costs that have doubled or tripled—receive minimal weight. Meanwhile, falling electronics and import prices pull the average down.

A family whose rent has doubled, childcare tripled, and healthcare quadrupled is told inflation is “only” three percent. Central banks fight to hit a target disconnected from lived reality, using tools that damage those already most hurt by mismeasured inflation.

The Sovereign Debt Vise

The United States now carries $38.12 trillion in debt, with deficits locked in structural overdrive. For fiscal year 2025 (ending September 30, 2025), the federal budget deficit totaled approximately $1.8 trillion—marking one of the largest annual deficits in US history in nominal terms. In calendar year 2025 alone (through November), the debt has already climbed by over $1 trillion, representing one of the fastest accumulations outside of pandemic-era spikes.

The Fed cannot pursue “price stability” without triggering sovereign default. It cannot monetize the debt without abandoning its inflation target. Monetary and fiscal policy have fused into a single system where every path leads to ruin.

The Trump Tariff Dividend: Fiscal Lunacy as Stimulus

Trump’s proposed $2,000 “tariff dividend” crystallizes the absurdity. Tariffs might generate $300-400 billion annually. Distributing $2,000 to 150 million Americans costs $300 billion, consuming all revenue and leaving nothing for Trump’s simultaneous promise to “substantially pay down national debt.”

But fiscal arithmetic is merely the surface problem. This is stimulus injected into an economy already overheating from tariff-induced price increases. Tariffs function as a regressive consumption tax, raising prices across the board. What is the proposed solution? Send everyone cash, which immediately bids prices higher in a textbook demand-pull spiral. We learned this during the pandemic: stimulus checks fueled the inflation that hit 9 percent.

The circularity is perfect: American consumers pay the tariffs, raising prices. The government sends that revenue back, and consumers use it to pay higher tariff prices. It’s a perpetual motion machine of economic waste. Tariffs misallocate capital by making inefficient domestic production appear profitable, while dividends provide purchasing power divorced from productive activity. We’re restricting supply through tariffs while boosting demand through dividends—engineering an inflationary explosion while calling it economic nationalism.

The QT Surrender: Why the Fed Can’t Stop Printing

The Federal Reserve announced in October 2025 that quantitative tightening will end in December after reducing its balance sheet from $9 trillion to $6.6 trillion. This isn’t a policy choice—it’s mathematical surrender.

The Fed’s balance sheet remains bloated with low-yielding assets from QE rounds dating to 2008, earning two-three percent while the Fed pays 4.5 percent on reserves it created to buy them. The Fed operated at a loss for three consecutive years.

But the Fed cannot shrink its balance sheet to pre-crisis levels without triggering a liquidity crisis. The modern financial system operates under an “ample reserves framework”—a euphemism for permanent monetary expansion. Banks, pension funds, and Treasury markets have become structurally dependent on massive reserve creation. When the Fed attempted modest QT reductions, repo markets showed stress. They’re stopping, not because inflation is conquered, but because the financial system cannot handle genuine monetary normalization.

The QT cessation sets the stage for QE’s inevitable return. The Fed is now in what Austrian economists call the “crack-up boom” phase—the point where monetary authorities choose between deflation (and cascading debt defaults) or continued inflation (and currency destruction). The QT cessation signals their choice.

The Perfect Storm

The Fed needs tight policy to combat inflation—inflation partly driven by tariffs Trump defends as revenue generators. But tightening is impossible because government debt service already consumes $1 trillion annually and the financial system requires ongoing liquidity support. So the Fed will maintain its swollen balance sheet, ready to expand again at the first crisis signal, while Trump pumps fiscal stimulus through tariff dividends into the economy.

The 2 percent inflation target becomes farcical. How can the Fed hit an inflation target when fiscal policy is overtly inflationary, when monetary policy cannot genuinely tighten without breaking the system, and when political pressure tilts entirely toward more spending? The Fed’s QT announcement is an admission they’ve lost control, even if they won’t admit it.

Policy Checkmate—The Impossible Choice

High inflation destroys savings, distorts price signals, and creates social instability. But we must be honest: the 2 percent target cannot be achieved without either.

The options seem to be: 1) a deflationary depression that liquidates the debt overhang—and likely the social order with it; 2) a financial repression that slowly confiscates wealth through negative real rates; or, 3) a restructuring of how we conceptualize monetary stability in a hyper-financialized economy.

The first option is politically impossible and humanly catastrophic. The second is what we’re already doing, just with more dishonesty. The third requires admitting central banking as currently practiced has failed.

The Austrian Vindication

Precision inflation targeting was always hubris—imposing mechanical control over an organic, complex system. The error wasn’t choosing two percent specifically; it was believing any centrally-planned monetary system could generate sustainable prosperity while coupled with fiscal incontinence.

We’ve created a monetary system that cannot tolerate the price discovery necessary for genuine economic coordination. Every attempt to hit an arbitrary inflation target generates distortions making the next cycle more severe. The Fed’s balance sheet cannot shrink because the economy was restructured around permanent monetary expansion. Interest rates cannot normalize because the debt burden makes higher rates catastrophic.

The 2 percent target isn’t failing because central bankers lack competence—it’s failing because it represents an impossible constraint on a system that has already inflated beyond the point of return.

The Endgame

The question isn’t whether we’ll abandon the two percent target. The Fed’s QT cessation and Trump’s tariff dividend have already abandoned it in practice, whatever they claim in theory. The real question is whether we’ll do so explicitly, through honest debate about what comes after central banking’s failure, or implicitly, through the slow-motion credibility crisis we’re witnessing—where inflation stays persistently above target, the Fed’s balance sheet can never shrink, and fiscal policy becomes increasingly untethered from reality.

This is the endgame of monetary central planning: not with hyperinflationary bang or deflationary whimper, but with the confused stumbling of policymakers who cannot admit their tools have welded them into a cage. The two percent target, tariff dividends, ample reserves frameworks, and technocratic jargon cannot obscure the simple truth: we have built an economic system requiring perpetual monetary expansion to avoid collapse, and we’ve run out of ways to pretend this is sustainable policy rather than slow-motion currency debasement with extra steps.

Tyler Durden Mon, 12/01/2025 - 08:05