Zero Hedge

Trump's MAGA Policies Are Widely Popular; New Harvard CAPS-Harris Poll Shows

Trump's MAGA Policies Are Widely Popular; New Harvard CAPS-Harris Poll Shows

A new Harvard CAPS-Harris Poll shows that most Americans support President Trump's agenda to "Make America Great Again," which includes beefing up the southern and northern borders and deporting criminal illegal aliens, unleashing DOGE on the corrupt federal bureaucracy, ending all toxic forms of DEI initiatives in the federal government, military, and corporate America, and ensuring the nation is energy independent. Meanwhile, approval for the Democratic Party has collapsed to record lows as radical leftist lawmakers double and triple down on woke policies.

The new poll captures the nation's vibe during Trump's first month in office, with 52% of respondents approving the president's MAGA agenda, such as coming in like a wrecking ball into the DC Swamp, leveraging DOGE to slash government spending, ending globalist open-border policies, and prioritizing the restoration of American values. Most Americans overwhelmingly supported this approach after four years of globalist disaster under the Biden-Harris regime. 

"The majority of voters support Trump's policies on the border, focus on government expenditures, gender, DEI, and offshore drilling but have concerns on his foreign policies involving tariffs, the Israel-Hamas war, and the war in Ukraine," the report featuring the poll data stated.

Mark Penn, Co-Director of the Harvard CAPS/Harris Poll, commented on the results, stating, "People are taking a generally positive wait-and-see attitude for Trump but have really reassessed their attitudes toward Biden, Harris, and the Democrats, taking a much harsher, more negative attitude," adding, "Trump has a real opportunity here – we're seeing a healthy, trudging approval edging toward real approval based on how the next couple of months turn out."

The 2,443 respondents were asked about their views on the country's direction since Trump took office. 42% of them answered that the country is now on the right track, an increase of 14 percentage points since January. 

Similarly, 38% of respondents say the economy is on the right track, up 10 percentage points from last month. 

Nearly half say the economy is stronger today than it has been since 2021. 

About a third say their personal financial situation has improved, while the number of folks who say the economic environment is getting worse shifted lower. 

Trump's approval rating with voters in the first month stands at 52%. 

Trump is drastically outperforming Biden on key issues... 

Chart of the day: Democratic Party's approval rating has collapsed to record lows. 

Inflation and immigration remain the top issues for voters. 

Democrats lack situational awareness, doubling and tripling down and taking marching orders from Hillary Clinton's bag of dirty tricks, such as continuing to call Trump and Musk "Nazis" etc... 

As we previously noted, many of these polls are skewed to the left. If that's the case here, Trump's approval rating is likely much—much higher. 

With USAID funding slashed, the censorship blob in DC in turmoil, MSM in collapse (look at what happened to Joy Reid), and the left's grip on shaping toxic MSM narratives (division) eroded, the Trump administration now has a unique opportunity to unite the country by addressing crises—emerging as the hero and steering the nation out of the 'Fourth Turning' and into a 'First Turning' of prosperity.

Even a CBS poll a few weeks ago stunned the Democratic Party... 

Tyler Durden Mon, 02/24/2025 - 14:20

Macron Interrupts, Contradicts Trump On 'Getting Our Money Back' From Ukraine: "No!"

Macron Interrupts, Contradicts Trump On 'Getting Our Money Back' From Ukraine: "No!"

Update(1415ET): President Trump said Monday while hosting French President Emmanuel Macron at the The White house Ukrainian President Zelensky could be coming to the Oval Office as soon as "this week" to sign a "final deal" on rare earth minerals access.

"It looks like we're getting very close. The deal's being worked on," Trump told the press pool, with a nervous and anxious-looking Macron sitting next to him.  "We're I think getting very close to getting an agreement where we get our money back over a period of time," Trump added, referencing prior demands to be paid back some $500 billion after years of heavy weapons and funds sent to Kiev.

"I will be meeting with President Zelenskyy. In fact, he may come in this week or next week to sign the agreement... The agreement is being worked on now. They are very close to a final deal," Trump stressed. Watch:

Axios has obtained a draft agreement being currently worked on, and provides the following...

 "The Government of the United States of America intends to provide a long-term financial commitment to the development of a stable and economically prosperous Ukraine," the draft says. It says the fund will be designed "so as to invest in projects in Ukraine and attract investments to increase development," including in areas like mining and ports.

It suggests the US will recoup some its losses "defending, reconstructing, and returning Ukraine" to its pre-war GDP. Zelensky has meanwhile rejected the concept of 'repaying' Washington for what's been given through the course of the war.

An awkward public disagreement happened just as Trump was talking... "No!" Macron openly interjected...

By the end of the tense, unexpected exchange between the two leaders, a visibly annoyed Trump quipped, "If you believe that, it's OK with me...".

* * *

By all accounts the hold-up in the US and Ukraine potentially agreeing to a final mineral deal has been President Zelensky's refusal to sign - seeing in it selling off Ukraine's economic sovereignty; however, sources on both sides strongly suggest a deal is very close.

"I will not sign what ten generations of Ukrainians will have to pay back," said President Volodymyr Zelenskyy at a press conference Sunday. President Trump is seeking access to some $500 billion in the country's minerals, including rare earths, to repay Washington for its wartime aid.

Getty Images

Kiev as well as many of its European partners have complained that the deal offers no clear security guarantees or even the promise of future aid in return. Instead it appears set up to repay the US billions in past aid, and Ukrainian officials and the media have described it as punitive. 

The Ukrainian leader described this weekend:

“Let’s first clarify the $500 billion figure. I know that we had $100 billion [in US aid provided to Ukraine], and that’s a fact. But I’m not going to acknowledge $500 billion, regardless of what anyone says, with all due respect to our partners,” Zelensky told reporters at the “Ukraine Year 2025” forum.

Still, there appears have been some weekend progress, and the Zelensky government knows it's in no position to fiercely push back, also given that the Trump administration is essentially calling for a near-future change in leadership at this point, having blasted Zelensky as a 'dictator'.

"Ukrainian and U.S. teams are in the final stages of negotiations regarding the minerals agreement. The negotiations have been very constructive, with nearly all key details finalized. We are committed to completing this swiftly to proceed with its signature," Ukrainian Deputy Prime Minister and Minister of Justice Olga Stefanishyna stated on X Monday.

"We hope both US and UA leaders might sign and endorse it in Washington the soonest to showcase our commitment for decades to come," Stefanishyna added.

A fresh description from US officials involved say the deal will commit to a "free, sovereign and secure" Ukraine and achieving a "lasting peace" as part of it. This will include the US agreeing to "durable partnership" between Washington and Kiev, the texts shows as reported by Bloomberg.

The latest draft also stipulates that those who "acted adversely" to Ukraine in the war should not "benefit from its reconstruction" - Bloomberg has also noted.

Earlier this month, when talk of a mineral deal plan was first being floated by the White House, Zelensky expressed openness, though he was also likely attempting to be diplomatic and conciliatory, not thinking such an agreement would be pushed this hard by Trump, or realistically get off the ground.

"If we are talking about a deal, then let’s do a deal, we are only for it," Zelensky had told Reuters at the time. The Ukrainian leader insisted the deal wouldn’t involve "giving away" Ukraine's resources but framed it as a partnership.

But now with the details being hammered out and put into place, he clearly understands it to be very heavily skewed in Washington's favor, and not benefiting future generations of Ukrainians.

Tyler Durden Mon, 02/24/2025 - 14:15

Solana Vs Ethereum - A Tale Of Two Blockchains

Solana Vs Ethereum - A Tale Of Two Blockchains

Authored by Marie Poteriaieva via CoinTelegraph.com,

The Solana-Ethereum blockchain duel has never been more exciting to watch. While the ambitious newcomer showcases its high speed, user-friendliness, and low fees, the revered incumbent still boasts the most developed ecosystem among smart contract platforms.

Market reactions vary widely. Some analysts expect Solana to continue outperforming Ethereum in terms of user activity and DApp revenues, which could drive SOL’s price higher. The increasing likelihood of a SOL ETF approval adds further momentum. Others, however, anticipate Ethereum reclaiming dominance in 2025, citing historical price trends, growing ETH accumulation by whales, and upcoming technological upgrades.

Is ETH price on the verge of bottoming out?

Ether’s price performance in 2024 was underwhelming, appreciating by just 65%, compared to SOL’s 95% gain. In Jan. 2025, SOL claimed a new all-time high, while ETH remained below its peak from Nov. 2021.

SOL/USD 1-day chart. Source: Bloomberg

Currently, ETH is down 33% from its cycle high of $4,116, prompting speculation that a bottom may be forming. On Feb. 10, crypto analyst IncomeSharks posted a chart on X suggesting ETH is ranging, with the recent wick to $2,156 signaling a potential bottom.

“Everyone is afraid to call that wick a bottom, but it is. The largest volume candle and liquidation event are even more confirmation.”

ETH/USD 1-day chart. Source: IncomeSharks on TradingView

Another X user specialized in crypto charting, Tony “The Bull” Severino, noted that “ETH/BTC is oversold on the monthly RSI for the first time ever in its history.” RSI stands for relative strength index, a momentum indicator that measures the magnitude of recent price changes. Typically, when an RSI is in the “oversold” zone, i.e. below 30, it signals an impending trend reversal. On Feb. 10. Ether’s RSI fell to 28, later returning to the 41 level.

Another notable trend is ETH accumulation. French crypto analyst Crypto Futur pointed out that since December, the number of whale ETH addresses (holding over 1,000 ETH) has been steadily growing. Over the past two months, only four days have been negative in whale addresses 30-day change.

Ethereum Whale Address Count. Source: Glassnode

Regarding SOL’s price performance, some analysts believe that as a “younger version” of Ethereum, it could mirror Ether’s price trajectory. As noted by the crypto analyst Inmortal on X, 

“In early 2021, a lot of people were trying to guess the top on $ETH. But in spite of everything, we continued to make higher lows. It reminds me of $SOL this year.”

SOL/ETH chart. Source: Bloomberg

With ETH’s market cap being three times that of SOL, a similar trajectory for Solana could push its price beyond $500.

Is “utility” the metric investors associate with value?

Beyond price speculation, a blockchain’s native coin’s value is closely tied to the blockchain’s performance. The more active the blockchain’s ecosystem is and the more revenue its DApps generate, the stronger the coin’s price fundamentals become.

In the Solana-Ethereum duel, Solana seems like a clear leader in revenues, often exceeding Ethereum’s daily earnings tenfold. Moreover, according to Nansen’s CEO Alex Svanevik, 

“Solana has beaten Ethereum on almost every metric: active addresses, transactions, DEX volume, total gas fees. The only one missing is TVL.”

Yet, not everyone is convinced. 

As IncomeSharks notes,

“So much has already been built on [Ethereum] chain. People say “SOL” is fast and cheap as they lose 99% of their position on a useless meme that rugs. There’s nothing unique being built on SOL other than more casinos.”

The launch of Uniswap’s Uninet on Feb. 11 marks another step in the Ethereum ecosystem development. 

However, Ethereum’s L2 solutions still face a major challenge: they are siloed. While bridges exist to connect Ethereum to its L2s and between L2s themselves, they remain complex and potentially insecure for both users and developers. To remedy that, several notable Ethereum L2 upgrades, such as Polygon’s Agglayer, Uniswap’s Across, or Base’s RIP-7755, are expected to come in 2025, potentially solving the interoperability problem.

ETH and SOL battle for institutional investor adoption

Spot ETH ETFs were approved in July 2024, with nine firms, including BlackRock and Fidelity, launching their own funds. Initially, their performance was disappointing, with outflows from Grayscale’s (ETHE) converted fund dominating the first five months. However, since Nov. 2024, inflows have started picking up, now totaling $3.18 billion of net inflows, according to CoinGlass.

Meanwhile, anticipation for a Solana spot ETF has been growing. On Feb. 10, Bloomberg analyst James Seyffart updated his forecast, assigning a 70% probability for a SOL ETF approval in 2025. His colleague Eric Balchunas added that these odds were “

Yet, ETF approval does not guarantee strong performance. According to the onchain analytics firm Messari, “Even with an SOL ETF, ETF bidders are far more likely to choose ETH over SOL.”

Tyler Durden Mon, 02/24/2025 - 14:00

"Keep Lowering Rates, Please!" - Tariff Scare Slams Texas Manufacturing Survey Down Most Since COVID Lockdowns

"Keep Lowering Rates, Please!" - Tariff Scare Slams Texas Manufacturing Survey Down Most Since COVID Lockdowns

Admittedly second-tier data, but this morning has seen two disappointing signals for US growth as The Chicago Fed's National Activity Index dropped to 0.03 (thanks to a plunge in Personal Consumption & Housing...

Source: Bloomberg

...and The Dallas Fed Manufacturing survey clumped into contraction (from its highest level since Oct 2021), dramatically worse than expected, as tariff fears loom large for many. The general business activity index tumbled 22 points to -8.3 (biggest miss since Jan 2024 and biggest MoM drop since COVID lockdowns), and the company outlook index fell 24 points to -5.2. 

Source: Bloomberg

Texas factory activity fell in February after rising notably in January, according to business executives responding to the Texas Manufacturing Outlook Survey. 

The production index, a key measure of state manufacturing conditions, fell 21 points to -9.1. Other measures of manufacturing activity also declined this month. 

The new orders index fell 11 points to -3.5, and the capacity utilization index slid 14 points to -8.7. 

The shipments index remained positive but edged down to 5.6. Perceptions of broader business conditions worsened in February.

In fact across the entire spectrum, every indicator is a disastrous stagflationary signal:

Input cost pressures intensified in February, while wage pressures retreated slightly. The raw materials prices index pushed up 18 points to 35.0, a multiyear high.

The outlook uncertainty index shot up to 29.2 from a near-zero reading last month, reaching a seven-month high.

Fear-mongering over the impact of Trump's tariff plans appear to be the main driver of the sudden slump in sentiment:

  • Tariff threats and uncertainty are extremely disruptive.

  • With some of the new Buy America changes and tariffs incoming, we are looking at closing the business.

  • The back-and-forth tariff talk has been very stressful, but it has not been disruptive so far.

  • It is very hard to plan. Interest rates? Tariffs? Wow.

  • Currently it is very slow...

  • I'm very worried about the possible tariffs affecting some of our material costs, which we will have no choice but to pass along to our customers. This is a terrible policy decision and hopefully will not be very long lived.

  • The new tariffs will have a big impact on the demand for our products.

  • The Trump tariff situation is creating uncertainty about our future material costs later this year.

And then there's those who live off the government teat:

President Trump’s freeze on government contracts has had a dramatic impact on us. USAID [United States Agency for International Development] is our major customer.

But, it's not all doom and gloom:

  • Last month was our best month in over a year. We are seeing much more business activity and expect this trend to continue. We are finally seeing a bright future for our business.

  • The proposed 25 percent tariffs on steel imports will directly and favorably improve the bottom line as a domestic steel manufacturer. However, uncertainty is sky high.

  • The phone is ringing. There's some trepidation  about inflation and tariff impact, but we have confidence that orders are about  to come. More importantly, our industry feels better in general about where our country is going as a whole.

And then there is this comment, that sums up many businesses' hopes:

  • Keep lowering interest rates, please.

 

Tyler Durden Mon, 02/24/2025 - 12:25

Microsoft "Strongly Refutes" Cowen Report It Is Canceling Data Center Orders... But Questions Remain

Microsoft "Strongly Refutes" Cowen Report It Is Canceling Data Center Orders... But Questions Remain

After the TD Cowen report on Microsoft data center order cancellations - which we first profiled yesterday for our subscribers, well before Bloomberg - spooked European energy and US AI infrastructure stocks sending them sharply lower, and with the market on the verge of a brutal selloff (as Goldman cautioned last night) it was incumbent on the biggest Mag 7 member to step in... or otherwise the following hockeysticking Mag7 chart would have a very painful reacquaintance with gravity.

Sure enough, while Microsoft was unable to come out and directly refute what TD Cowen said - because it is accurate - Microsoft did damage control using everyone's favorite mouthpiece-for-hire, Jefferies, which in the back of a salesnote, so as to avoid giving it too much prominence even though everyone knew the entire market would read it immediately, the bank said that there has been "a lot of back and forth this weekend post a competitors note / call that highlighted MSFT is cancelling DC leases. Competitor is basically saying that MSFT is cancelling and ORCL is picking up the majority of the capacity."

And so, to give MSFT a chance to respond, but not really respond so it is not in violation of Reg FD or some other materially misleading comment, Jefferies was used as a broken telephone by the 2nd largest company in the world to convey the following message: We’re currently hosting MSFT IR in Sydney, please see below for notes from those discussions. Thank you to our Australian Equities team for passing these along.

MSFT is strongly refuting any change to their DC strategy. They make investments based on a 10-year view on demand for cloud and AI demand. They tweak their forecasts up and down on this over time on a regional basis depending on which regions need to be prioritized.

MSFT thinks AI supply demand should be more inline by the end of their current FYI supply will grow more in line with demand going forward rather than being in short supply.

The broker report may also have some misunderstanding about MSFT’s definition of leasing. It includes deals over 15 years in length where the underlying owner of the DC servers is not MSFT but they operate it. MSFT use of third party REITs is in fact quite low.

They don’t see any difference between AI and cloud in terms of the long term outlook in terms of ROCE ROI and margins.

MSFT says they have already invested heavily in DC in the last few years and on the recent call they guided for capex growth to slow y/y from the 50-60% rate to more inline with revenue.

And the note in question:

Which is all great... but why did MSFT not immediately publish as Press release this morning, or at least send an agent to CNBC to discuss the report? Simple: because what TD Cowen said is 100% true and accurate, and now the spin begins.... and just like one month ago the narrative was goalseeked away from DeepSeek to Javan's law, or some other bullshit, this time MSFT was forced to admit that it is in fact cutting leases but, you see, it's perfectly normal and the company "tweaks" their forecasts depending on which "regions need to be prioritized."

We wonder how much time this buys MSFT and the Mag7 bubble, but it is becoming obvious that the half life of these self-serving mental acrobatics is getting short and shorter... and one of these days MSFT will be forced to throw in the towel and slash its capex forecast by 20%, 30% or more, starting the next market crash.

* * *

Earlier:

Just about a month ago, when Wall Street first realized the existential threat that China's (far cheaper and much more efficient) DeepSeek technology posed to the grand AI narrative - which has almost singlehandedly pushed stocks higher for much of the past two years - we speculated (so to speak) that Wall Street's forecasts for Mag7 capex may be just a... tad excessive.

And for a few hours, Wall Street did the same, sending tech names plunging, and NVDA crashing the most on record, wiping out nearly a trillion dollars in market cap in a single session. But it didn't last, and the very next day Wall Street held a masterclass in mass delusion, whereby the narrative of collapsing capex was promptly goalseeked away with some 19th century deus ex machina called Jevon's paradox, which simply states that if the price of a technology tumbles its widespread adoption will more than make up for sunk capital costs (try explaining that to Global Crossing). Or something along those lines... and while HFT algos had no idea what any of this meant, the fact that momentum shifted from sell to buy was enough - and in the ensuing 4 weeks everything ripped straight up, as if the entire embarrassing DeepSeek episode had never happened and everyone forgot all about it.

That was - until this weekend, because as a report from TD Cowen strongly suggests, the first kneejerk reaction to the DeepSeek news may have been the correct one.

It turns out that while everyone was patting themselves on the back for not reading too much into the DeepSeek shocker, the companies responsible for the very Capex binge that is supposed to propel markets ever higher and justify the S&P's ludicrous 22x PE multiple, were quietly cutting their losses, because - in the immortal words of John Tuld, "it sure is a hell of a lot easier to just be first" to get out of a losing position.

According to TD Cowen's Michael Elias, "channel checks indicate that MSFT has 1) canceled leases in the US, totaling 'a couple of hundred MWs' with at least two private data center operators, 2) has pulled back on the conversion of SOQs to leases, and 3) has re-allocated a considerable portion of its international spend to the US."

"When coupled with our prior channel checks,"Eilas concludes, "it points to a potential oversupply position for MSFT."

And if Microsoft is first in canceling leases and generally blowing up the "Capex to the Sky" narrative (on which the "market to the sky" narrative is built), which it would have to be since it has the biggest projected capex hockeystick of all its Mag7 peers...

... then everyone else will promptly follow.

Below we excerpt from the full note because, well, it may be more market moving than even the DeepSeek news:

Our Channel Checks Indicate Microsoft Has Cancelled Select US Data Center Leases and Has Pulled Back on SOQ To Lease Conversion; Pulls Back on International Market Expansion.

Our recent channel checks indicate that Microsoft has terminated select leases with at least two private data center operators across multiple U.S. markets, totaling a couple of hundred MW. Our checks indicate that in some situations, Microsoft is using facility/power delays as a justification for the termination. Recall, as we highlighted in our 2022 Takeaways from PTC, this is the same tactic that Meta used to cancel multiple data center leases in the U.S. after we learned in our checks that Meta had then canceled a $48B capex program related to the metaverse (Meta subsequently cut its capex guidance by $5.4B two weeks later).

Separately, our channel checks suggest that Microsoft has also pulled back on converting negotiated and signed Statement of Qualifications (SOQ’s) (the precursor to a data center lease) into signed leases. To this point, it is currently unclear to us if this is simply a delay in SOQ-to-lease conversion or if it is an outright termination of the SOQ with no conversion to leasing expected. For context, based on our checks, a SOQ sets forth the terms and conditions for the lease and does not constitute a lease agreement. However, the conversion rate of SOQ’s into a signed lease is close to 100%, with data center operators using this as the signal to start data center construction. In addition, our channel checks indicate that Microsoft is also re-allocating a considerable portion of its projected international spend to the U.S., which suggests to us a material slowdown in international leasing.

So why is this happening?

While Cowen has yet to get the level of color via its channel checks as to why this is occurring, the bank's initial reaction is that "this is tied to Microsoft potentially being in an oversupply position." As Cowen highlighted in its recent takeaways from PTC, the bank learned via its channel checks that Microsoft: 

  1. Walked away from multiple 100MW deals in multiple markets that were in early/mid-stages of negotiations. 
  2. Let +1GW of LOI's on larger footprint sites expire. 
  3. Walked away from at least five land parcels that it had under contract in multiple Tier I markets. 

At the time, the bank also highlighted that the magnitude of both potential data center capacity it walked away from and the decision to pull back on land acquisition (which supports core long-term capacity growth) indicates the loss of a major demand signal that Microsoft was originally responding to and that it believed the shift in Microsoft's appetite for capacity is tied to OpenAI, which recent press reports appear to confirm. 

To that point, report author Elias asks to consider this: Microsoft was the most active lessee of capacity in 2023 and 1H24, at which time it was procuring capacity relative to a capacity forecast that contemplated incremental OpenAI workloads. However, as TD Cowen believes is indicated by its decision to pause construction on a data center in Wisconsin — which prior channel checks indicated was to support OpenAI — there is capacity that it has likely procured, particularly in areas where capacity is not fungible to cloud, where the company may have excess data center capacity relative to its new forecast. 

This is the bank's (polite) interpretation of the current situation. The less polite interpretation is that the CapEx bubble - which was supposed to inject up to half a trillion dollars in new growth capital in just a few years to keep up with an exponential AI demand curve - just went pop.

And for those who need a refresher on why it "sure is a hell of a lot easier to just be first", here you go...

More in the full note available to pro subs in the usual place.

Tyler Durden Mon, 02/24/2025 - 12:20

Gold Revaluation: Solution Or Desperation?

Gold Revaluation: Solution Or Desperation?

Authored by Matthew Piepenburg via VonGreyerz.gold,

Topics like bond yields, dollar debates, or yield curves can be admittedly, well, boring.

And things like politics can be, well… emotional at best or divisive at worst.

Shared Concern Among So Much Division?

In the current Zeitgeist, it’s hard to get through the fog of market complexity or the self-censorship of political polarization to arrive at anything even resembling a shared concern.

But we should all be concerned if we are collectively sinking on a global debt ship with not enough lifeboats to save our fiat current’s absolute purchasing power.

And when it comes to the water over-filling the air-tight compartments of the U.S. debt Titanic, we need to look soberly at what the Trump America is facing.

Toward this end, let’s be blunt.

Can’t We All Agree that America is Broke?

Public debt – $37T, unfunded liabilities at $190T. A debt/GDP ratio above 120%, etc.

The USA is in an unprecedented debt trap/spiral, the math, details, history and consequences of which we have been tracking for years.

And history (ignored) tells us an even darker yet simpler truth: debt destroys nations.

Every time and without exception.

Boring Bond Yields

Given that the USA in particular (and the world in general) is witnessing the greatest debt crisis of human history, should we not be equally concerned rather than politically divided when it comes to such boring things like bond yields (which reflect the very cost of debt)?

As for those boring bond yields, let’s just keep it broad and simple.

Yields on the 10-year U.S. Treasury represent the cost of money/debt for nearly everyone on the globe, in general and Uncle Sam in particular.

This means that when those yields start to climb too high, just about everything and everyone (including the country you reside in) starts to fall deeper into “uh-oh.”

And those yields rise when demand (i.e., purchasing) of those bonds starts to fall.

Read that last line again. Let it sink in.

When trust, love and/or demand and price for UST’s falls, pain for just about everything but the USD (and now gold) spikes.

Boring? Yes.

But relevant?

Absolutely.

From Boring Bonds to Just About Everything

So, what does such boring bond/UST talk have to do with your currency, your wealth or your lives?

And what does such boring bond talk have to do with market risk, gold prices, BTC’s direction or the fate of Trump’s America or even world trade and peace?

A lot.

Trump Change

Trump is a disruptor. A political outsider to a DC setting for which the term “swamp” is probably too kind.

He’s making bold statements and directives on everything from tariffs and immigration to JFK’s assassination (no great mystery there…) and DOGE spending cuts.

Love or hate him – he’s certainly busy making change…

And although he may know far more about real estate capitalism than he does about government debt or US history, his Treasury Secretary, Scott Bessent, knows a heck of a lot about the latter – which means he’s dealing with a lot of contradictions coming out of today’s White House.

No Change Without Consequence or Contradiction

Trump’s administration is making headlines, for example, about a stronger USD, ending inflation, optimizing tariff revenues, saving big oil and getting those boring UST yields down.

But there’s just one catch – no one, not even Trump or Santa Clause, can do all that without radically re-shaping the prior notion of American exceptionalism.

And ironically, no one knows this better than Trump’s own Treasury Secretary.

Why?

It’s simple – and even a bit “boring” – but the forces at play will directly impact YOU, so it’s worth a few reality checks and simple fact-reminders here.

It All Starts (and Ends) with the Dollar

If Trump, for example, pushes for a stronger dollar and aggressive tariffs (love or hate em), such a policy would not only create a drag on the global economy (which owes over $14T in USD-denominated debt), it would also be knife wound to Uncle Sam, oil production and the very yields the Trump White House wants to reduce.

That is, a rising dollar forces foreigners (and nations) to sell/dump USTs to get more liquidity to pay debts.

And if USTs continue to sell off, then prices fall, and yields rise; and when yields rise, even Uncle Sam reaches a point where he can’t afford his own bar tab.

See the paradox? The trap? The boring yet incredibly important relationship between bonds, currencies and economic life itself?

The USD: Weaker By Necessity

This relationship between a strong dollar and UST yields is clear and direct, and although the headlines and consensus still see a strong dollar ahead, I’ve long argued the oppositefor the simple reason that America itself can’t afford a strong dollar.

And deep down, Scott Bessent (a private gold buyer) knows this, too.

He’s openly admitted to the “counterparty” risk of a strong USD, but he won’t publicly confess that one of those counterparties at risk is the U.S. itself.

So, what is to be done?

How can Trump afford short-term tariff costs, cut spending/waste in DC (via DOGE), pay for the needed re-shoring of American jobs, or even win the war on inflation without risking debt issuance to the moon and hence bond yields even higher (which recently rose from 4.3% to 4.65% in just three trading days)?

Well, as even his own Treasury Secretary knows under his breath, the answer is simple: he can’t.

Unless…

Unless …an already openly declining, and hence openly desperate, debt-soaked nation does what all desperate individuals or nations do: resort to desperate measures.

Only Desperate Options Left

Bessent knows that for anything Trump wants to enact to grow the American economy; he must first get Uncle Sam’s debt to GDP levels to a place where growth is even mathematically feasible.

At current debt/GDP levels, for example, such growth is mathematically impossible.

So, what can the US do under Trump?

1) Inflate Away Our Debt?

We could end up inflating away our debt.

For that to happen, we’d need years of inflation and negative real rates at well over 15% to even come close to “inflating away” such debt.

This would not only be fatally painful for U.S. citizens but also political suicide for Trump.

2) Play the Yellen Card?

Bessent could try his predecessor’s playbook of just issuing more UST’s (IOUs) from the short end of the yield curve or emptying the reverse repo market and TGA accounts to buy more time/liquidity and create more debt.

But with the world dumping USTs and bracing itself for more tariff and trade wars, there just isn’t enough love, trust or buyers for those American IOUs anymore…

More importantly, such wimpy measures can no longer save a nation whose bar tab (interest expense on outstanding debt, entitlements and defence) is 140% of its tax receipts.

That, folks, is neon-flashing evidence of desperation, which means we are now at an inflection point where the only measures left are entirely emergency measures – and they come with a cost. A serious cost.

3) Create BTC Bubble?

The U.S. could also help pay down some debt by speculating in a politicized BTC bubble, and then use the speculation proceeds (not actual BTC “currency”) to pay down debt in an emerging-market-desperation play akin to El Salvadore?

This is desperation at its highest, yet masquerading as “tech” nirvana to the rescue…

I’ve written and spoken about this option at greater length here and here.

4) Revaluing Gold?

Finally, and perhaps most importantly, the topic of gold revaluation is also ripping through the precious metal pundit circles at a galvanic pace, and for good reason.

Based upon “reported” U.S. gold holdings, if gold were politically re-priced to just $4000 per ounce, that would create an additional $1.2T of instant liquidity (i.e. inflationary M2), which the Treasury Department could then direct deposit into an ever-drying TGA.

(This direct deposit is made legal under Section 2.10 of the Financial Accounting Manual for Federal Reserve Banks.)

Such a gold revaluation policy would take a lot of pressure off Bessent’s Treasury Department and buy the U.S. more time and money for the aforementioned Trump policies to “Make America Great Again.”

But could a potential series of gold revaluations to inject new money into the TGA piggy bank truly make America, well… great?

Or would it just save the U.S. economy from crumbling to the ground?

Kissinger’s Ghost

In the 1970s, Kissinger was very concerned when Europe, which collectively owned more gold than the U.S., wanted to revalue their gold to similarly cover their own debt disasters at home.

This would mean the U.S. would have to do the same, thereby playing its last Trump card (pun intended) of desperation (reverting to its gold vaults) in 1974.

And why was Kissinger so terrified of having to resort to the ultimate “red button” act of desperation in the form of revaluing its last real form of sound money/wealth?

Because Kissinger knew then what many of us know.

That is, if the USA shows its hand and starts revaluing gold to higher and higher levels to pay down higher and higher levels of debt (to keep politicians in power and the masses free of pitchforks), this would mean the end of American supremacy, hegemony and/or the Pax Americana.

Why?

Because he who has the most gold wins, and despite what the World Gold Council reports, it’s an open secret that America does not have the most gold (in a world of central banks stacking gold at record levels and COMEX revolving doors).

The Dilemma: Greatness or Survival?

Trump, Bessent, and the USA itself thus face a debt trap and, hence, a sovereign dilemma of historical import.

Yes, certainly, the U.S. can and may revalue its gold holdings to dig itself partially out of debt and hence spur more growth.

But once/if the U.S. revalues, the rest of the world will naturally follow, and that will make the US just one more economically average nation among many, but certainly not the strongest anymore.

Kissinger knew this.

Do Bessent and Trump?

Either Way, Gold Wins

Regardless of whether such a formal gold revaluation occurs from the top down in DC, the gold price will continue to rise (re-value itself) naturally from the bottom up for the simple reason that debt-soaked nations = debased currencies.

Gold, which only rises because fiat money inevitably suffocates under debt, sits at a different kind of historical moment.

It gets the last laugh because sovereign debt, led by sovereign mismanagement, has killed its sovereign currency in a death by a thousand cuts.

So, yes, gold gets the last laugh – but the circumstances couldn’t be sadder.

Tyler Durden Mon, 02/24/2025 - 12:00

All Roads Lead To Mar-A-Lago

All Roads Lead To Mar-A-Lago

Authored by Peter Tchir via Academy Securities,

We covered some of the most important topics in last weekend’s A Million Things to Parse. From DOGE, to Ukraine/Russia, to tariffs, to the so-called Mar-a-Lago Accord, much of what is shaping the global landscape is coming out of D.C. (though the Trump administration seems to be doing a lot of it out of Mar-a-Lago). Academy also wound up being quoted in the FT – Musk and markets: why DOGE is not cutting through, and in Barron’s Up & Down Wall Street. 

Clearly the topics are resonating as investors and corporations try to navigate these times. With another week of headlines behind us, we should be closer to “knowing” the answers, but I’m not sure that is the case. As we look at so many issues, it is possible to see a “successful” path where negotiations and actions occur, leaving the economy and markets in a much better spot. It is also possible to see this playing out in a way that leads us to a much worse economy and weaker markets. And in between those two “binary” options, there are a lot of other possibilities. 

Here is what I think we can add to last weekend’s report along with an update on how we are trying to interpret the policies and likely outcomes. 

Re-Trading Is Worrisome 

In capital markets a “deal is a deal.” You really cannot go back and change the terms later, and certainly not unilaterally. For much of my career I traded bonds and credit derivatives. You agreed on price and size and moved on. Occasionally you had trade disputes, but it was rare. But sometimes traders developed the reputation of being “flaky.” They didn’t live up to their word. Very few people who developed that reputation went on to thrive. 

I think this is important because I cannot help but characterize two things as “re-trading:” 

  • Making Ukraine pay for things already given seems like re-trading to me. Whether or not we liked how aid to Ukraine was given, it was done legally (as far as I know). Does this mean that every time the U.S. does something, we can later go back and retroactively say that the terms aren’t what you thought? How will countries engage with the U.S. when a deal might not be a deal? 

    • Raising new tariffs on Canada and Mexico, while the USMCA, which was implemented under the first Trump term, is still in place, seems a bit odd as well. Not alarming and well within the president’s rights, but still… 

  • Part of the Mar-a-Lago Accord chatter is around forcing countries to buy or convert Treasury holdings into zero-coupon bonds that cannot be traded. The argument is that countries need to pay for the security that the U.S. provides and has provided. Some of the logic makes sense. The U.S. spends a lot of money and protects the world’s supply chains. The U.S. benefits as do other countries. It may even be a reasonable ask to get paid for undertaking that role going forward. But, from the chatter I’m hearing and seeing, there is an element that the countries need to pay for what was already provided. How will that affect countries dealing with the U.S. in the future, if in the back of their minds, they are concerned that they will get coerced into something?

    • If countries bulk up their own defenses, they will have less need for this in the future (European Defense stocks have done incredibly well of late, in anticipation of such spending).

    • If countries have to pay for something, maybe they would rather fund their own protection forces, rather than paying the U.S. That could reduce the U.S. need to spend but it would come with a cost of a reduced presence globally. Also, will the U.S. really cut back on protection if countries don’t agree? Is the protection other countries get something that can be trimmed out of the U.S. budget, or is it something that occurs by the U.S. protecting its own interests?

Re-trading is not good policy and could lead to countries looking for alternatives to the U.S. and hasten deglobalization, which would not be good for American companies. The S&P 500 is up 2% YTD, while most of Europe is up more than 10% and the Hang Seng is up 17%. 

The Focus on 10-Year Yields 

This administration, at many levels, has made it clear that when they focus on getting lower interest rates, it is across the curve. They aren’t just worried about a Fed cut here or there; they want the 10- year yield much lower. 

Markets have liked that and there are things that are working in their favor, in a positive way:

  • Just talking about it can help. While the Fed, through its transparency, has lost some of its ability to jawbone markets, the president and Treasury Secretary have that ability. The “promise” to not extend the duration of the balance sheet did help bonds. 

  • QE will be ending (though since QE was almost exclusively achieved by allowing debt to mature, I’m not sure that will help that much). 

  • Can DOGE deliver on the deficit? Will tariffs help the deficit? There seems to be some progress on the DOGE front, but it really is at the early stages. Will other policy announcements (like tax cuts) undo any deficit savings? 

4.4% on the 10-year now seems too low, especially given many of the reasons for the recent price action (in the face of higher-than-expected inflation data – which I think is suspect and subject to bad seasonality adjustments). 

The one thing that is concerning is that yields are justified if the economy isn’t that strong! 

Economic Weakness 

Service PMI came in below 50. Not good. 

We have argued that seasonal adjustments to the jobs data are incorrect and have overstated jobs in the first part of the year. While that effect is diminishing over time, it is still real, and we could see some job losses. 

We have no idea (yet) what the economic implications are from the DOGE cuts so far. If it is all “fat” and excess spending, great. However, to the extent it was important and feeding into the economy, we could see some reverberations in the coming months. 

Without a doubt, laying off government employees will affect the economy (with the D.C. area being hardest hit). But how easy is it to find jobs in the market? I think the JOLTS Quit Rate tells us that it is not so easy (and certainly not as easy as you might be led to believe by the NFP prints). 

Look for further signs of economic slowdowns here and the ongoing reversal of the American Exceptionalism trade. I think yields should be higher but I am rethinking that as my concern about the state of the economy evolves. We’ve discussed increasing delinquencies in prior T-Reports, and updated data on that front is doing nothing to assuage our concerns. 

Optimal Supply Chains 

We mentioned that we see the potential for some very good outcomes from what is being strategized in Mar-a-Lago and D.C. Having said that, even if we get to some really positive outcome (which is not my base case), there will be hiccups along the way. 

If you believe, and it seems reasonable, that most companies have designed efficient supply chains given the existing rules, then the changes made to deal with new rules will be suboptimal. 

Any behavior changes in response to new rules (or even the threat of new rules) has to be negative for companies and the economy (if the existing world is optimal). 

There is so much uncertainty. We are halfway through the 30-day stay of execution on the initial Mexican and Canadian tariffs, with little insight into what will happen when the first reprieve expires. 

Start looking for “problems” or signs that the uncertainty is hurting the global economy, which will impact the U.S. and our markets the most. 

Bottom Line 

I am forced to lower my target on the 10-year yield (for the wrong reasons). We’ve been looking for 4.8% or higher, but now 4.6% seems reasonable given what the government can do. That rate level assumes a decent economy, which I’m increasingly worried is too optimistic. Expect 2 rate cuts this year, 1 in May and 1 in autumn, but even with inflation expectations rising, the number of cuts might need to be higher, as disruptions to the global economy and further (potentially rapid) deglobalization is creeping its way up the league table in our list of probable outcomes. 

On equities, I continue to look for trades that will benefit from National Security = National Production. We have been overallocated to Chinese stocks and that has been great. We have been very concerned about the Nasdaq 100 and continue to think that the risk of a 10% or greater pullback is high. A pullback to pre-election levels would be close to 10% from here and given what we are seeing in the economy and economic policy so far, that is now my target. Basically an “unwind” of the gains made since the election as so far policy has done little to convince me that those gains are warranted. 

Credit spreads should widen in sympathy with equities, but I’m still not particularly concerned (though, again, this is dependent on a decent economy, which might not be the case). 

It is difficult to believe that we are “only” one month into Trump 2.0 given the sheer number of headlines we have been forced to digest, but the picture isn’t much clearer to me than it was before he was sworn in, and that makes me nervous for the economy and markets.

Tyler Durden Mon, 02/24/2025 - 11:20

Key Events This Week: Nvidia Earnings, PCE, Consumer Confidence, And Fed Speakers Galore

Key Events This Week: Nvidia Earnings, PCE, Consumer Confidence, And Fed Speakers Galore

As DB's Jim Reid writes in his expansive Daily Reid note this morning, five years ago today, global markets first began to panic after a weekend that saw 11 Italian towns emerge from it in Covid lockdown. Five years later we had a mini panic on Friday as attention focused on a report earlier in the week about a new coronavirus discovery in bats, from the infamous Wuhan lab, with similar properties to Covid-19. And speaking of five years, will the German election be seen as a pivotal moment when we look back on it in 2030? For financial markets the make-up of the Bundestag was probably as important as the overall results and the one line summary is that the centre-right and centre-left should have sufficient seats to form a grand coalition but overall the centrist parties are short of a two-thirds majority. This latter means that any future reforms of the debt break will be challenging and may require compromise and horse trading.

In terms of the details, the provisional results confirm a victory for the centre-right CDU/CSU (28.6%), followed by the far-right AfD (20.8%), centre-left SPD (16.4%) and Greens (11.6%). Of the smaller partis, the leftist Linke (8.8%) comfortably exceeded the 5% threshold, but the far-left BSW (4.97%) and liberal FDP (4.3%) fell short. BSW’s narrow failure to enter the Bundestag, which may take a few days to be definitively confirmed, has the important consequence of leaving the CDU/CSU and SPD combined with a projected 52% of the seats. 

That leaves the grand coalition as the most likely outcome, being the only option to avoid the need for three-party coalition given that mainstream parties have ruled out partnering with the AfD. DB's Germany economists see the prospect of a two-party coalition led by a strong CDU/CSU as a positive for Germany's corporate sector, promising less policy gridlock and uncertainty than under the outgoing government. Earlier in the night, CDU leader Merz said he wanted to form a coalition within the next two months.

While the outcome may reduce the risks of particularly fractious coalition talks, it still confirms an ongoing anti-establishment trend that has been visible both in Germany and Europe as a whole. The result marks the lowest ever vote share for the two major parties, even as the turnout (82.5%) was the highest since at least 1990. And it leaves the centrist parties short of a 2/3rds constitutional majority, with the CDU/CSU, SPD and Greens jointly at just under 66% of seats. That means any debt brake reform, including for defense spending, would require support from one of the fringe parties. This may not be impossible, but it would require significant political compromises.

In terms of other events this week, Nvidia's earnings on Wednesday could be the biggest mover of markets. Interestingly of the 62 analysts who cover the stock on Bloomberg, 56 have a buy rating with only one sell. DB are currently one of only 5 with a hold rating. Outside of that, inflation takes centre stage with US core PCE, German, French and Italian flash CPI, as well as Tokyo CPI all out on Friday with Spain's equivalent coming out on Thursday. In terms of the rest of the main global releases, the German Ifo survey today will be less relevant given the election but later we have the Dallas and Chicago Fed manufacturing surveys. Tomorrow sees the US Conference Board consumer confidence release which will be interesting after Friday's weak UoM equivalent. Wednesday sees US new home sales and Australian inflation. Thursday sees US durable goods and the ECB account of their January meeting and Friday sees US personal income and spending data and the ECB consumer expectations survey. There are also lots of central bank speakers through the week, including at the G20 central bankers and finance minister meeting in Cape Town on Wednesday and Thursday. You can see the main ones detailed in the day-by-day calendar at the end as usual, along with key earnings releases and all the other data.

Digging into the main US data this week now. According to DB economists, Friday's personal income (+0.3% forecast vs +0.4% previously) and consumption (+0.2% vs. +0.7%) will likely be softer due to the LA wildfires and poor weather with the all-important core PCE deflator (+0.27% vs. +0.16%) higher but not as extreme as CPI due to softer subcomponents in the subsequent PPI. This would lower the YoY core PCE two tenths to 2.6%. 

In the US consumer confidence tomorrow, the jobs-plentiful / jobs hard-to-get series is important as a good proxy for the unemployment rate. For claims on Thursday our economists are looking to the DC area in particular given press reports of substantial federal government layoffs. Around 20% of the ~2.3mn federal government employees live in Washington DC, Maryland and Virginia. The German bank estimates that there have been roughly 14k potential federal layoffs since the Trump Administration took office with another 12k pending the resolution of court cases. Clearly this is just within the first month.

Courtesy of DB, here is a day by day summary of the key events:

Monday February 24

  • Data: US January Chicago Fed national activity index, February Dallas Fed manufacturing activity, Japan January PPI services, Germany February Ifo survey
  • Central banks: BoE's Lombardelli, Ramsden and Dhingra speak
  • Earnings: Diamondback Energy, Trip.com, Domino's Pizza, Cleveland-Cliffs
  • Auctions: US 2-yr Notes ($69bn)

Tuesday February 25

  • Data: US February Conference Board consumer confidence index, Richmond Fed manufacturing index, business conditions, Dallas Fed services activity, Philadelphia Fed non-manufacturing activity, December FHFA house price index, Q4 house price purchase index, Germany Q4 GDP detail, EU27 January new car registrations
  • Central banks: Fed's Logan, Barr and Barkin speak, ECB's Schnabel and Nagel speak, BoE's Pill speaks
  • Earnings: Home Depot, Intuit, Workday, Coupang, ASM
  • Auctions: US 5-yr Notes ($70bn)

Wednesday February 26

  • Data: US January new home sales, Germany March GfK consumer confidence, France February consumer confidence, Australia January CPI
  • Central banks: Fed's Barkin and Bostic speak, BoE's Dhingra speaks
  • Earnings: Nvidia, Salesforce, Deutsche Telekom, TJX, AB InBev, Synopsys, CRH, Snowflake, Stellantis, E.ON, Novonesis, TKO, Paramount Global
  • Auctions: US 2-yr FRN (reopening, $28bn), 7-yr Notes ($44bn)

Thursday February 27

  • Data: US January durable goods orders, pending home sales, February Kansas City Fed manufacturing activity, initial jobless claims, Japan February Tokyo CPI, January retail sales, industrial production, France February PPI, Italy February consumer confidence index, manufacturing confidence, economic sentiment, December industrial sales, Eurozone January M3, February economic confidence, Canada Q4 current account balance, Switzerland Q4 GDP
  • Central banks: ECB's account of the January meeting, Fed's Schmid, Barr, Bowman, Hammack, Harker and Barkin speak
  • Earnings: Iberdrola, AXA, Dell, LSEG, Autodesk, Rolls-Royce, Vistra, Monster Beverage, Eni, Haleon, Engie, Warner Bros Discovery, Telefonica, Endeavor

Friday February 28

  • Data: US January PCE, personal income and spending, advance goods trade balance, retail inventories, wholesale inventories, February MNI Chicago PMI, Kansas City Fed services activity, UK February Lloyds Business Barometer, Nationwide house price, Japan January housing starts, Germany February CPI, unemployment claims rate, January retail sales, import price index, France February CPI, January consumer spending, Q4 total payrolls, Italy February CPI, Canada Q4 GDP, Sweden Q4 GDP
  • Central banks: ECB consumer expectations survey, BoE's Ramsden speaks
  • Earnings: Allianz, Holcim, BASF, Amadeus IT, Erste

Finally, Goldman notes that the key event this week is this week is core PCE inflation on Friday. There are several speaking engagements by Fed officials this week.

Monday, February 24

  • There are no major economic data releases scheduled.

Tuesday, February 25

  • 04:20 AM Dallas Fed President Logan (FOMC non-voter) speaks:  Dallas Fed President Lorie Logan will speak at the "2025 BEAR Conference: The Future of the Central Bank Balance Sheet" in London. Speech text and a moderated Q&A are expected. On February 6, Logan said, "I think the possible policy strategies for the FOMC in 2025 boil down to two key alternatives. In some scenarios, it will soon be appropriate to resume reducing the federal funds target range. In other scenarios, we’ll need to hold rates at least at the current level for quite some time." She also said, "What if inflation comes in close to 2 percent in coming months? While that would be good news, it wouldn’t necessarily allow the FOMC to cut rates soon, in my view."
  • 09:00 AM FHFA house price index, December (last +0.3%)
  • 09:00 AM S&P Case-Shiller 20-city home price index, December (GS +0.4%, consensus +0.4%, last +0.4%)
  • 10:00 AM Conference Board consumer confidence, February (GS 102.0, consensus 102.7, last 104.1)
  • 11:45 AM Fed Vice Chair for Supervision Barr speaks: Fed Vice Chair for Supervision Michael Barr will give a speech on financial stability at an event hosted by Yale School of Management. Speech text and Q&A are expected.
  • 01:00 PM Richmond Fed President Barkin (FOMC non-voter) speaks: Richmond Fed President Tom Barkin will give a speech called "Inflation Then and Now" at an event hosted by the Rotary Club of Richmond. Speech text and Q&A are expected. On February 5, Barkin was asked if he still expected the FOMC to cut the fed funds rate this year and responded with "That’s certainly the lean, but we’ll have to see what happens." Barkin also said, "I still think policy is moderately restrictive."

Wednesday, February 26

  • 08:30 AM Richmond Fed President Barkin (FOMC non-voter) speaks: Richmond Fed President Tom Barkin will repeat his speech called "Inflation Then and Now."
  • 10:00 AM New home sales, January (GS flat, consensus -3.3%, last +3.6%)
  • 12:00 PM Atlanta Fed President Bostic (FOMC non-voter) speaks: Atlanta Fed President Raphael Bostic will speak on the economic outlook and housing at the Urban Land Institute’s annual Housing Opportunity Conference in Atlanta. Q&A is expected. On February 3, Bostic said, "My general outlook is that we’re going to get to target and get back to neutral. And I think neutral is lower than where we are now, somewhere in the 3-3.5% range. But how long should it take for us to get there depends on how the economy evolves."

Thursday, February 27

  • 08:30 AM GDP, Q4 second release (GS +2.1%, consensus +2.3%, last +2.3%); Personal consumption, Q4 second release (GS +4.1%, consensus +4.1%, last +4.2%): We estimate that Q4 GDP growth was revised down by 0.2pp to +2.1% (quarter-over-quarter annualized), reflecting a downward revision to consumer spending (-0.1pp to +4.1%) due to softer public transportation and personal home care details in the Quarterly Services Survey (QSS), a downward revision to business fixed investment (-0.8pp to -3.3%), but an upward revision to exports.
  • 08:30 AM Durable goods orders, January preliminary (GS +4.0%, consensus +2.0%, last -2.2%); Durable goods orders ex-transportation, January preliminary (GS +0.3%, consensus +0.2%, last +0.3%); Core capital goods orders, January preliminary (GS +0.4%, consensus +0.3%, last +0.4%); Core capital goods shipments, January preliminary (GS +0.4%, consensus +0.3%, last +0.5%): We estimate that durable goods orders increased 4.0% in the preliminary January report (month-over-month, seasonally adjusted), reflecting a rebound in commercial aircraft orders. We forecast 0.4% increases for core capital goods orders and shipments, reflecting further increases in the orders and shipments components of manufacturing surveys in January.
  • 08:30 AM Initial jobless claims, week ended February 22 (GS 225k, consensus 221k, last 219k): Continuing jobless claims, week ended February 15 (consensus 1,872k, last 1,869k)
  • 09:15 AM Kansas City Fed President Schmid (FOMC voter) speaks: Kansas City Fed President Jeff Schmid will give remarks at the USDA Outlook Forum.
  • 10:00 AM Pending home sales, January (GS -5.0%, consensus -0.8%, last -5.5%)
  • 10:00 AM Fed Vice Chair for Supervision Barr speaks: Fed Vice Chair for Supervision Michael Barr will speak on novel activity supervision at an event in Washington. Speech text and Q&A are expected.
  • 11:45 AM Fed Governor Bowman speaks: Fed Governor Michelle Bowman will speak on community banking at an event in Kansas. Speech text and Q&A are expected. On February 18, Bowman said, "I continue to see greater risks to price stability, especially while the labor market remains strong," and later added, "I would like to gain greater confidence that progress in lowering inflation will continue as we consider making further adjustments to the target range."
  • 01:15 PM Cleveland Fed President Hammack (FOMC non-voter) speaks: Cleveland Fed President Beth Hammack will give the keynote address on financial stability at the Research Conference on Bank Regulation in New York. Speech text and Q&A are expected. On February 11, Hammack said, "Given current economic conditions, it will likely be appropriate to hold the funds rate steady for some time... We are well positioned to respond to changes in the outlook to achieve our maximum employment and price stability objectives."
  • 03:15 PM Philadelphia Fed President Harker (FOMC non-voter) speaks:  Philadelphia Fed President Patrick Harker will give a speech on the economic outlook at an event in Newark, Delaware. Speech text and Q&A are expected. On February 11, Harker said, "Inflation has remained elevated and somewhat sticky over the past several months, both in the overall and core figures. But that notwithstanding, I do believe that our current positioning will bring inflation back to target, in the next two years if conditions broadly evolve as I expect."

Friday, February 28

  • 08:30 AM Personal income, January (GS +0.4%, consensus +0.4%, last +0.4%); Personal spending, January (GS flat, consensus +0.2%, last +0.7%); Core PCE price index, January (GS +0.25%, consensus +0.3%, last +0.2%); Core PCE price index (YoY), January (GS +2.54%, consensus +2.6%, last +2.8%); PCE price index, January (GS +0.30%, consensus +0.3%, last +0.3%); PCE price index (YoY), January (GS +2.43%, consensus +2.5%, last +2.6%): We estimate that personal income increased by 0.4% in January, while personal spending remained unchanged. We estimate that the core PCE price index rose by 0.25% in January, corresponding to a year-over-year rate of 2.54%. Additionally, we expect that the headline PCE price index increased by 0.3% from the prior month, corresponding to a year-over-year rate of 2.43%. Our forecast is consistent with a 0.16% increase in our trimmed core PCE measure.
  • 08:30 AM Advance goods trade balance, January (GS -$118.0bn, consensus -$115.0bn, last -$122.0bn)
  • 08:30 AM Wholesale inventories, January preliminary (consensus +0.1%, last -0.5%)
  • 09:45 AM Chicago PMI, February (consensus 40.3, last 39.5)
  • 10:15 PM Chicago Fed President Goolsbee (FOMC voter) speaks: Chicago Fed President Austan Goolsbee will speak at the 2025 Stanford Institute for Economic Policy Research (SIEPR) Economic Summit. Q&A is expected. On February 20, Goolsbee said, "My view is, before we got to the uncertainties from policy and from geopolitics and from some others, the overall [picture of inflation] looked pretty good to me."

Source: DB, Goldman, BofA

Tyler Durden Mon, 02/24/2025 - 11:10

USAID Endgame: Trump Firing 2,000 Employees, Putting Most Others On Leave

USAID Endgame: Trump Firing 2,000 Employees, Putting Most Others On Leave

Given a green light by a federal judge to plunge ahead with a sweeping federal layoff campaign, the Trump administration on Sunday announced it was cutting 2,000 positions at the U.S. Agency for International Development and putting nearly every other USAID employee on paid administrative leave. There's no indication of how long those leaves will last -- or the ultimate fate of people in that category.  

The leaves took effect at 11:59 EST on Sunday night. The relatively few who will remaining at work -- at least for now -- are "core leadership" and those involved in "mission-critical" or "specially designated" programs, according to a document reviewed by the New York Times. USAID employees were told that, if they fell into those exceptions, they'd find out by 5pm Sunday. Earlier reporting suggested that 600 people would be deemed essential.

Counting employees, contractors and local staff overseas, USAID had more than 13,000 employees as of September. In late January, thousands of contractors were let go. To eliminate the 2,000 employees now, the administration is using a mechanism called a "reduction in force." 

USAID said it "intends" to furnish employees posted abroad with "a voluntary Agency-funded return travel program and other benefits." Asserting a commitment to their safe return, the agency said those employees will retain access to USAID systems until they make it home. 

The first axe to fall over the weekend hit hundreds of contractors who received form letters notifying them that their services were no longer needed. According to AP, the generic notices didn't include the names of the recipients, raising fears that they'd face a struggle applying for unemployment benefits. 

A worker removes USAID signage from the agency's Washington DC office (USA Today)

Here are just handful of examples of USAID projects that have sensible people cheering on the agency's destruction:

  • $1.5 million to push diversity, equity and inclusion (DEI) in Serbian workplaces
  • $70,000 for a DEI musical in Ireland 
  • $25,000 for a transgender opera in Colombia
  • $32,000 for a transgender comic book in Peru
  • $2 million for gender transitions and LGBT activism in Guatemala
  • $2.5 million for electric vehicles in Vietnam
  • $6 million to foster tourism in Egypt 

On Saturday, the New York Post published an expose revealing that just 2% of the billions of dollars designated for relief projects in Haiti since a 2010 earthquake went to Haitian organizations or businesses, while 56% landed at entities in and around Washington DC. While some of that money eventually found its way to Haiti, it's fair to say it was substantially eroded by the middlemen roosting around the capital. "Little wonder USAID is so threatened by the sudden scrutiny," wrote Paul Vallas.  

A sign and flowers on the threshold of the USAID office in Washington (AFP via BBC)

Upon taking office in January, Trump declared a 90-day freeze on almost all foreign aid. Earlier this month, federal Judge Amir Ali issued a temporary restraining order blocking the freeze, saying it would likely cause irreparable harm to aid organizations. Last week, Ali said the administration was flouting the restraining order, and directed it to at least temporarily re-open the spigots.  

There are some foreign fans of Trump's ongoing demolition of USAID and freezing of foreign aid programs, including Hungarian Prime Minister Viktor Orban:

Tyler Durden Mon, 02/24/2025 - 10:50

"Three Years And Five-To-Ten Years On" - Markets Still Don't Grasp How Much The World Has Changed

"Three Years And Five-To-Ten Years On" - Markets Still Don't Grasp How Much The World Has Changed

By Michael Every of Rabobank

Three Years And Five-To-Ten Years On

Three years ago today, Russia invaded Ukraine. As we now stagger towards a possible negotiated end to the conflict --or at least a pause to rearm-- the world around us is vastly changed even if some politicians and many in markets still don’t fully grasp just how much.

Inflation was supposed to be over after the initial Ukraine energy shock, or so we keep being told by central banks. However, Friday’s US Michigan consumer survey’s 5- to 10-year inflation expectations rose to 3.5%, the highest in 30 years. For younger/“I don’t do geopolitics” readers, that was the early post-Cold War era of US hyperpower globalization now ending; and it shows Main Street gets something Wall Street is struggling to accept.

Meanwhile, another flurry of Friday White House economic statecraft executive orders threatened to further upend the global trading and financial system and take us back not to the 1990s, nor the 1980s, but perhaps the 1880s.

‘America First Investment Policy’ argues: “Economic security is national security,” and “Investment at all costs is not always in the national interest.” The US FDI screening agency will now block Chinese investments in US tech, food supplies, farmland, minerals, natural resources, ports, and shipping terminals. The US will “fast-track” friendly tech FDI, provided it can prove it has distanced itself from China. It will also use all necessary legal instruments to deter investment into China’s military-industrial sector, which given the latter’s civil-military fusion policy covers a lot - and this is just as Wall Street started to get bullish on Chinese tech stocks.

The US Trade Representative proposed charging Chinese ocean carriers, and those who use Chinese-built ships, for entering US ports. $1,000 per net tonne, up to $1m max ($1.5m for Chinese built and operated ships) is the fee, on a sliding scale even if fleet reshuffling meant they did not come to the US. That could force fleet bifurcation, as with the global ‘shadow fleet’ carrying Russian oil. So will quotas for US cargo exports to be carried on American ships. At first, 1% of all US container, dry bulk, and tanker exports on US-flagged and operated vessels; after two years, 3%; after three years, 5%, with 3% on US-built vessels; and after year seven years, 15%, with 5% US-built. This means a lot of ships must be reflagged; a lot of crews trained (“Learn to sail”); and a lot of shipyards and shipbuilding required. The economic impact is enormous: industry experts suggest it would push up freight rates 15-20%. This all echoes US mercantilist merchant marine history I flagged as something we could logically see reoccur in 2021’s ‘In Deep Ship’.

(On which, Australia and New Zealand were both just shocked by a Chinese warship popping up in the Tasman Sea test-firing its guns and disrupting flights into Sydney airport: and those in the Antipodes who thought geopolitics only happens far from their shores, and they don’t really need defence spending.)

That Trump ‘Grand Macro Strategy’ looks like “US + allies vs. China” than “US alone” but would force hard choices on those trying to play both sides. Indeed, the official list of US “foreign adversaries” in the executive order now includes Hong Kong. What does that say about the outlook for markets there?!

The same is evident in the US asking Mexico to raise its external tariffs on China (and enforce them) as a quid pro quo for the US not imposing tariffs on it. Canada next? If so, is it join a North American bloc (with reshuffled key industries) and a common external tariff against China and third parties who could transship Chinese goods, or do without the US market? This was argued as the likely economic statecraft angle when tariffs on Mexico and Canada were first announced, and while less disruptive than a global all vs. all, it would still be a huge blow.

As that Great Game is played, we also see:

  • Ukraine’s President Zelenskyy has offered to step down if it brings peace and allows Ukraine NATO entry, though it remains to be seen if those are compatible goals, or if NATO still means anything.
  • Polish President Duda, set to spend 6% of GDP on defense, flew to the US for a meeting with President Trump and was snubbed: he was kept waiting 90 minutes, then only got a 10-minute slot not the promised hour, with zero US commitments. If this is what Poland gets, what about everyone else in Europe? It’s UK PM Starmer’s turn to go to the US this week, and he seems to think that a promise to boost defence spending from 2.3% to 2.5% of GDP going forwards is going to win him US praise.
  • The German election results mean a likely CDU-SDP coalition government after the far-left BSW party, like the liberal FDP, seemingly just fell under the 5% threshold to enter the Bundestag. It’s far from clear if this will be a government capable of acting rapidly and radically enough to address the vast challenges it faces. If not, some commentators are warning that the AfD is waiting in the wings.

Next Chancellor Merz, despite being congratulated by President Trump, has already stated: 

  1. NATO “may soon be dead”; 
  2. Europe needs “strategic autonomy”; and 
  3. Germany needs “independence from the US”

Does that include removing the 50,000 US troops stationed in Germany? It apparently means Berlin requesting France and the UK extend their nuclear umbrellas to it. Yet Germany is going to have to give to get, and giving is expensive.

We are talking about a *vast* German, and European spending bill ahead – or Draghi’s “slow agony” greatly speeded up. We had already estimated that pursuing ‘strategic autonomy’ would cost up 4-5% of EU GDP annually, which the Draghi report assumed would come from the private sector, and we didn’t. That was before President Trump shook everything up. Indeed, it would take 3% of GDP extra on defence alone for Europe to get serious, and that doesn’t include any of the costs of dealing with supply chains, energy, commodity stockpiles, subsidies, industrial policy, tech investment, and social cohesion. It was also before Friday’s latest White House executive orders made a “with us or against us” global trade, technology, capital flows, and maritime supply chain bifurcation even more likely.   

The market is so far reacting to the German election with a stronger Euro. When one thinks about the clashing grand macro strategies here, and who can press their claims hardest, that reaction does not appear logical: then again, markets are still full of people who think we are still in the now-defunct world of macrostrategy.

Underlining that we aren’t, Hungary has announced a lifetime income tax exemption for mothers who have two or three children, as part of its ‘Year of the Breakthrough’ to address demographic decline.

So, in three years we have moved to a US consumer 5- to 10-year inflation expectation of 3.5% and worries over the future of Ukraine; and the EU; and NATO; and liberal democracy; and the re-emergence of not just 1990’s but 1980’s and 1880’s economic statecraft and mercantilism, and neo-imperialism and ‘spheres of influence’. Where do you think all the above will be in another three years, or in five to ten? So, where do you think markets should be trading?

Tyler Durden Mon, 02/24/2025 - 10:30

New York's "Congestion Toll" Is A Beta Test For Carbon Taxation And 15 Minute Cities

New York's "Congestion Toll" Is A Beta Test For Carbon Taxation And 15 Minute Cities

Trump's recent announcement that he will be rescinding federal government approval of the NYC congestion toll program has Democrats up in arms.  NY Governor Kathy Hochul has vowed to go to war with Trump in the courts in order to keep the program in place.  She claims that federal law prevents the White House from unilaterally halting the program and that the toll is necessary to maintain infrastructure in Manhattan while making residents safer.

Congestion pricing was enacted in January and charges drivers $9 each time they enter the Central Business District below 60th Street in Manhattan. It has three stated goals: to reduce traffic, lower carbon emissions and raise revenue for mass transit.

However, congestion pricing is actually rooted in an issue which Governor Hochul tends to gloss over:  Carbon taxation.  Road pricing is a key element of the notorious 15 Minute City concept often put forward by the World Economic Forum (of which Kathy Hochul is an adherent), and it is specifically justified by proponents as a method for reducing carbon emissions.  In other words, road pricing or the "congestion toll" is a way to apply direct carbon taxation on the general public.

The 15 Minute City concept is built around the fallacy that travel reduction is necessary to "save the planet" from global warming.  The idea is relatively simple - Create artificial obstacles through law to reduce or remove individual travel.  The WEF refers to this as "sustainable and inclusive mobility".  The Davos crowd presents sustainable mobility as a quest for "convenience" to encourage people to stop using private transportation, but nothing is as convenient as having your own vehicle.

The globalists know this, so, in order to create convenience for the public they have to make private transport very inconvenient.  Hence, charging multiple tolls per day for accessing certain roads, or all roads, with your own car.  The more carbon taxes you pay for simply driving the less you will want to drive and the more convenient "green transportation" options will seem. 

Congestion tolls are a negative incentive to keep lower and middle class people from using personal transportation, keeping them trapped within small areas where they can walk (in 15 minutes) or take public transport, but rarely leave. 

The ultimate purpose of 15 Minute Cities is to centralize populations into tiny areas, completely eliminate private transportation and control all citizen mobility.  The idea received increased attention from the WEF and the establishment media during the covid lockdowns, when it was suggested that covid travel mandates should be kept in place in order to mitigate climate change.

As many critics have noted in the past, there is zero scientific evidence of causation between carbon emissions and higher temperatures.  The Earth has had numerous warming periods over its long history, most of them occurring long before human industry existed. 

Not only that, but historic carbon trends show no match between rising carbon levels and higher temperatures.  That is to say, the entire climate science industry is built on a hoax that falsely connects human activity to climate change. 

Road pricing appears to be an attempt to enforce carbon taxation by another name, and initiate the beginning stages of 15 Minute Cities though "sustainable mobility".  

Beyond the hysteria and fraud surrounding climate change, another factor that must be considered is mass surveillance.  The spread of thousands of traffic cameras using AI to identify and track drivers in real time is not just a problem in terms of squeezing taxpayers for more money on roads they already paid for.  There's also the question of whether or not these cameras will only be used for collecting license plate numbers.

The cameras are also used to identify expired licenses, expired tags, lack of insurance, etc., and fines can be collated and sent to the driver by mail without them ever encountering police.  While some people might argue that if you're "not breaking the law then you have nothing to worry about", there is the danger of false positives as well as the normalization of AI automated law enforcement.  A society that is constantly watched by government and AI is not a free society.  

The Trump Administration's opposition to New York's congestion program is correct on numerous levels.

Tyler Durden Mon, 02/24/2025 - 10:10

'Terrorist Attack' Rocks Russian Consulate In France On 3-Year Ukraine War Mark

'Terrorist Attack' Rocks Russian Consulate In France On 3-Year Ukraine War Mark

A suspected terror attack has taken place against the Russian consulate in the French city of Marseille on Monday, Foreign Ministry spokeswoman Maria Zakharova has confirmed, after explosions erupted inside the consulate's walls. Three explosive devices were thrown onto the grounds of the consulate which detonated, resulting in damage but no casualties. The diplomatic compound has subsequently been sealed off by police pending an investigation.

The attack corresponded to the three-year anniversary of Russia's full-scale invasion of Ukraine. The Russian Army poured across the borders from Russia and staging grounds in Belarus on February 24, 2022.

There are reports that one of the devices failed to detonate, and the building in the southern port city is swarming with police and firefighters, as "around thirty units" were dispatched to the scene, AFP describes. The device that did not explode was later detonated by a police-operated robot.

"The explosions on the territory of the Russian Consulate General in Marseille have all the signs of a terrorist attack," foreign ministry spokesperson Maria Zakharova told a press briefing.

"We demand that the host country undertake exhaustive and speedy investigative measures, as well as steps to strengthen the security of Russia's foreign missions," she said. This isn't the first time explosives have been 'randomly' hurled at Russian diplomatic compounds in Europe, but this one clearly planned and timed to mark the day of Feb.24.

The Associated Press has some further details as follows:

A second device, which was also thrown against the consulate's outer wall, did not explode and fell to the sidewalk. A bomb disposal expert was called to the scene.

The suspect fled and an investigation has been launched, an official said on condition of anonymity because they were not authorized to be publicly named by national police policy. Authorities did not provide details on the suspect or a motive.

For its part the French government has "condemned any attack on the security of diplomatic compounds. The inviolability, protection and integrity of diplomatic and consular premises, as well as their personnel, are fundamental principles of international law" in a statement.

Russian embassies and consulates are on high alert worldwide, given the potential for more attacks marking three years since the invasion.

Russian Foreign Ministry Ambassador at Large Rodion Miroshnik has highlighted that the constant anti-Russia rhetoric coming out of European and French leadership helped set the stage for Monday's consulate bombing.

After repeating that it has "all the signs of a terrorist act" - Miroshnik leveled the charge: "It seems that the hostile rhetoric of the French leadership is not just hot air, but also contributes to terrorist acts on French territory," he wrote on Telegram.

Tyler Durden Mon, 02/24/2025 - 09:30

Apple Goes MAGA: $500 Billion Investment Plan In America, 20,000 New Jobs

Apple Goes MAGA: $500 Billion Investment Plan In America, 20,000 New Jobs

The latest onshoring trend, spurred by President Donald Trump's tariffs on Chinese imports, has led to a major announcement from Apple. The company has embraced "Make America Great Again" with plans to hire 20,000 US workers to manufacture high-tech AI servers in the Heartland and invest hundreds of billions of dollars in new factories. 

Bloomberg reports Apple plans to unleash a tsunami of investments in the US, upwards of $500 billion over the next four years, including a new AI server manufacturing plant in Houston, Texas, and a supplier academy in Michigan. 

This disclosure comes just days after President Trump announced that Apple CEO Tim Cook plans to relocate manufacturing operations from Mexico to the US. 

"He's investing hundreds of billions of dollars," Trump said after his meeting with Cook at the end of last week, adding that the executive is ramping up US investments because he wants to avoid tariffs. 

Earlier this month, Trump imposed a 10% US levy on Chinese imports, where Apple manufactures most of its iPhones, iPads, Macs, and other products. In a tit-for-tat effort, Beijing announced retaliatory tariffs on US goods shortly after. 

Apple's $500 billion investment and promise to add 20,000 new US jobs over Trump's second term is more evidence that corporate America is more willing to participate in onshoring efforts this time. 

Trump responded on Truth Social to the good news: 

APPLE HAS JUST ANNOUNCED A RECORD 500 BILLION DOLLAR INVESTMENT IN THE UNITED STATES OF AMERICA. THE REASON, FAITH IN WHAT WE ARE DOING, WITHOUT WITCH, THEY WOULD'NT BE INVESTING TEN CENTS. THANK YOU TIM COOK AND APPLE!!! 

CEO Cook released a statement: 

"We are bullish on the future of American innovation, and we're proud to build on our long-standing US investments with this $500 billion commitment to our country's future. We'll keep working with people and companies across this country to help write an extraordinary new chapter in the history of American innovation."

Apple has already increased its reliance on domestic production by partnering with Taiwan Semiconductor Manufacturing. The chipmaker is building factories in Arizona to produce semiconductors, including ones for the iPad and iWatch. 

For context, Cook met with the president at the Mar-a-Lago Club in Palm Beach, Florida, shortly after the November election and attended his inauguration in Washington last month. 

Notably, Trump's initial trade war, which started during his first term, sparked discussions among corporate America about "onshoring" trends during earnings calls.

Trump's tariff war—now driving a revival of domestic manufacturing after more than half a century of deindustrialization—could very well be the inflection point that shifts the nation out of decades of crises and into a new so-called "turning" of success, lifting the middle class into an era of sustained prosperity.

Tyler Durden Mon, 02/24/2025 - 08:50

When Markets Misbehave

When Markets Misbehave

Authored by Charles Hugh Smith via OfTwoMinds blog,

When Benoit Mandelbrot's book The (Mis)behavior of Markets was published in 2004, it was a revelation for many of us. I remember sitting in my car in a parking lot, unwilling to tear myself away from reading it.

Here's the super-short summary: from time to time markets crash for no visible reason. The internal dynamics of market structures are fractal, and one feature of this structure is that markets break down unpredictably. After the fact, we seek an external trigger--a Federal Reserve "policy error," inflation fears, etc.--but these post-mortem explanations gloss over the cause, which is the inherent instability of market structures.

Markets can trundle along for years appearing to be stable and controllable. Any spot of bother can be corrected with a reduction in interest rates or quantitative easing. Everything is known and controllable.

But this control is illusory. Out of the blue, markets stop behaving. They misbehave, and possibly quite badly.

Nature offers many examples. The seas are relatively calm, and suddenly an enormous rogue wave appears.

At that point, the condition of the ship matters. A sound craft will survive the rogue wave, the leaky, rotten hulk won't.

Human hubris also matters. If the passengers and crew of the hulk have been persuaded by each other's happy talk that the ship is rock-solid, then its breaking apart will come as a nasty shock.

In the current zeitgeist, the consensus is the mighty ship of the stock market is a superliner. No matter how big the rogue wave, the ship will handle it easily.

But what if the consensus is wrong, and we're all passengers on a rotting hulk gussied up with new paint? What if the consensus isn't based on the soundness of the hull, but on the self-reinforcing happy-talk around the dessert cart and bar?

The consensus is convinced the ship is unsinkable, and so the guaranteed path to profit is to "buy the dip" after the rogue wave has passed. This guarantee is not actually causal; it's recency bias, as "buy the dip" has worked like magic for 15 years.

Nobody's interested in leaving the first class casino to get in a lifeboat when guaranteed profits beckon. The question is: how sound is the hull? Who's actually checking, and who's just parroting happy-talk? Can we even tell the difference?

In a euphoric speculative bubble, the answer is "no." In a speculative bubble, "buy the dip" is all you need to know to win big, and continue winning big. So who cares about rogue waves and rotten hulls?

I often refer to this chart of the dot-com bubble because this happened not in some pre-technology era but in the technology-obsessed present. I attended Comdex in Las Vegas in the peak euphoria, and attendees were busy trading stocks online amidst the crowd. Every bubble is forever until it is no more.

Notice the numerous sharp spikes higher as the crowd "bought the dip." The initial crash was bought with all four feet, which was followed by a secondary crash to a new low, which was immediately bought, generating a euphoric spike that signaled "all clear, buy buy buy!" until it too rolled over. This was followed by one last manic "buy the dip" which resulted in a double-top. Once that petered out, a multi-year stair-step down began. The index eventually bottomed after losing about 80% of its peak valuation.

Markets misbehave, sometimes when we least expect it. How badly they misbehave depends on the soundness of the hull and the level of self-reinforcing hubris.

Tyler Durden Mon, 02/24/2025 - 08:30

Musk Warns Fed Workers - Return To Office Or Be Placed On Leave

Musk Warns Fed Workers - Return To Office Or Be Placed On Leave

The Department of Government Efficiency's Elon Musk wrote on X early Monday that starting this week, federal workers who fail to return to the office will be placed on administrative leave. 

"Those who ignored President Trump's executive order to return to work have now received over a month's warning," Musk wrote, adding, "Starting this week, those who still fail to return to office will be placed on administrative leave." 

Musk is referring to the "Return To In-Person Work" executive order Trump signed on day one of his second term, which states: 

"Heads of all departments and agencies in the executive branch of Government shall, as soon as practicable, take all necessary steps to terminate remote work arrangements and require employees to return to work in-person at their respective duty stations on a full-time basis, provided that the department and agency heads shall make exemptions they deem necessary." 

Musk quoted a post by Ralph Norman, US Representative for South Carolina's 5th Congressional District, who posted a video of his latest interview on Fox News, describing the direct insubordination of some federal workers still refusing to return to the office

On Saturday, Musk wrote on X that federal workers received an email "requesting to understand what they got done last week," adding, "Failure to respond will be taken as a resignation." The deadline is Monday. 

By late Sunday, there was pushback on the 'accomplishments' email from several federal agencies, including the Pentagon, FBI, State Department, and various parts of the Intelligence Community... 

An insider at the Social Security Administration's headquarters in Woodlawn, Maryland, said Monday will be chaotic as employees rush into the office, given the limited availability of parking spaces.

The Department of Government Efficiency's latest move appears to create harsh working conditions that will make federal workers more inclined to quit voluntarily. As the old saying goes: "Welcome to Serbia."

Tyler Durden Mon, 02/24/2025 - 08:10

Futures Rebound From Biggest Drop Of 2025

Futures Rebound From Biggest Drop Of 2025

US equity futures are higher, European bourses are mixed and Asian market are red following the worst session of the year for US stocks, as the S&P tumbled 1.7% leaving it about 2% below its ATHs. As of 7:30am, S&P futures are up 0.5% and Nasdaq futures rise 0.4%, with Mag7 names mixed as Nvidia rises in early trading; the Russell outperforms while Fins/Banks are bid this morning pointing to a rebound in Value/Cyclicals. Bond yields are 1-2bps higher with a flat USD. Commodities are mostly lower with WTI still above $70/bbl and precious metals with a slight bid sending gold to a new all time high. Weekend trade news was muted with the German election and the war in Ukraine in focus. Today’s macro data focus is on regional activity indicators.

In premarket trading, Berkshire Hathaway shares were up in the premarket on solid results boosted by a strong jump in insurance underwriting. Apple shares slid after it said it plans to spend $500 billion domestically over the next four years to hire workers and build out AI capacity. Nvidia and Amazon are leading premarket gains among the Magnificent Seven stocks on Monday; NVDA is up as much as 1.5% in early trading, days before its earnings release. Here are some other notable premarket movers:

  • Hawaiian Electric which has signed settlement agreements tied to the wildfires in Maui, slips 4.6% after posting a net loss in its fourth-quarter report.
  • Nike shares advance 2.5% after Jefferies upgraded the stock to buy from hold, seeing the sportswear company being positioned for a strong recovery over the next two years.
  • Twilio shares rise 3.6% as Morgan Stanley upgrades to overweight from equal-weight, saying the software firm’s execution should help with growth and margin re-acceleration.

US stocks looked set to claw back ground after Friday’s sharp selloff, with Nvidia Corp. rising in early trading. German stocks gained after conservatives led by Friedrich Merz emerged as the winners in a weekend vote.

All eyes now turn to what may be the most important earnings release of the quarter when NVDA reports earnings on Wednesday: the result will be a key test of demand for US megacap stocks and the artificial intelligence frenzy that’s powered them. With recent advances in AI by China’s DeepSeek, Nvidia is under pressure to deliver blockbuster results to reassert its leadership. 

“Markets are in wait-and-see mode until we see those bellwether AI earnings as that could be a key turning point,” Laura Cooper, head of global investment strategy at Nuveen, said in an interview.

Meanwhile, doubts are starting to creep again that the exponential capex hockeystick forecast will fall well short. Last night we first reported that according to TD Cown, Microsoft has begun canceling leases for a substantial amount of datacenter capacity in the US, a move that may indicated the Mag7 giant is building more AI computing than it will need over the long term (see full report her). OpenAI’s biggest backer has voided leases totaling “a couple of hundred megawatts” of capacity, the US brokerage wrote Friday, citing channel checks or inquiries with supply chain providers. Microsoft has also stopped converting so-called statement of qualifications, which are agreements that usually lead to formal leases, TD Cowen said. That was a tactic rivals such as Meta Platforms employed previously, when it decided to cut back on capital spending, the brokerage wrote. 

A potential pullback by Microsoft on spending and datacenter construction raises questions about whether the company — one of the frontrunners among Big Tech in AI — is growing cautious about the outlook for demand. If so, then much of the AI thesis - which is based on the chart below - will go down in flames.

But even without a Mag 7 wipeout, the S&P 500 Index is trailing international peers in 2025 after years of outperformance, as investors are put off by uncertainty from President Trump’s policies on tariffs and their potential to rekindle inflation. Friday’s tumble left the S&P 500 1.7% lower on the week. That said, top Wall Street strategists say the underperformance is unlikely to last long given the robust outlook for US economic growth. 

“We’ve seen a lot of inflation fears, but now markets are shifting focus back to the potential growth effects of these US policies,” Nuveen’s Cooper said.

Europe's Stoxx 600 Index, and the euro, fluctuated as initial enthusiasm about Germany’s election gave way to concern the new government may lack a consensus to push through much-needed economic reforms, preventing bond yields from rising and keeping the bid in stocks in place. The DAX rises 0.9% after German conservative opposition leader Friedrich Merz said he’ll move quickly to form a new government after he won Sunday’s federal election. Mid-cap stocks outperform, with the MDAX up 2.8%. Merz emerged as the winner in Sunday’s election, but the results gave his Christian Democrat-led bloc just one clear path to power and they face intense pressure to move quickly to form a government and rally support for measures including potentially looser borrowing rules. “Centrist parties failed to retain a constitutional majority, complicating the prospects of decisive fiscal regime change,” said Apolline Menut, an economist at Carmignac. “Tricky political compromises would be required, as well as fiscal creativity.” Electrification stocks, including Siemens Energy AG, ABB Ltd and Schneider Electric SE, fell as concerns grew around data centers spending after the abovementioned report that Microsoft has begun canceling leases for a substantial amount of datacenter capacity. Here are some other notable movers: 

  • European food-delivery stocks rise strongly after Prosus agreed to buy Just Eat Takeaway.com for €4.1 billion. Analysts at Bryan Garnier note this will raise speculation about bids for other firms in the sector
  • Subsea 7 rises after announcing it agreed in principle to create a combined oil services company with Saipem, with an order backlog of €43 billion and expected revenue of about €20 billion. Analysts are positive
  • Shares in German companies most exposed to hopes of higher government spending gain on Monday after conservative leader Friedrich Merz said he’ll move quickly to form a new government after he won Sunday’s election
  • Almirall shares advance as much as 8.1%, the best performer on the Madrid Stock Exchange General Index, after the Spanish pharmaceutical company forecast Ebitda for 2025 of €220 million to €240 million
  • Bank of Ireland shares rise as much as 3.7% to the highest since March 2023 after analysts at Barclays said the firm’s “strong” new guidance should lift earnings estimates. Analysts noted 2H profits were better than anticipated
  • Shares of gym group Basic-Fit and food services stocks Elior and Sodexo all rise as Citi resumes coverage with buy ratings on each; Elior’s stock “does not look expensive” according to the broker
  • Centrica shares rise as much as 3.6% after Jefferies raised its price target on the UK energy company’s shares, highlighting the strength of its balance sheet and possible increases to consensus earnings estimates
  • National Grid shares rise as much as 1.5% after agreeing to sell its US onshore renewables unit to Brookfield Asset Management for $1.7 billion. Morgan Stanley analysts say that the deal will allow the UK electricity supplier to reinvest
  • Naspers is the biggest drag by index points on South Africa’s benchmark on Monday, falling as much as much as 7.8%, the most since Jan. 7, after Prosus agreed to buy Just Eat Takeaway.com for €4.1 billion ($4.3 billion)
  • B&M European shares fall as much as 6.8% after the retailer cut its earnings guidance and said CEO Alex Russo is retiring. Analysts said the weaker guidance and last year’s trading performance are disappointing

Earlier in the session, Asian equities fell, weighed by Chinese technology shares after Trump stepped up curbs on the world’s second largest economy. The MSCI Asia Pacific ex-Japan Index slipped as much as 0.7%, with TSMC, Tencent and Alibaba among the biggest drags. Japanese markets were closed for a holiday. Sentiment was cautious after US stocks had their worst session so far in 2025 following weaker-than-expected economic data and a surge in consumers’ long-run inflation views. Sino-American tensions flared up again, as Trump moved to restrict Chinese investment in some strategic US industries, while also considering further restrictions on outbound investment to Beijing in sectors including semiconductors and artificial intelligence.  A selloff in India continued on Monday even as Citigroup Inc. upgraded the country’s stocks to overweight from neutral, citing a “meaningful upside” amid less demanding valuations. In South Korea, the top financial regulator said the nation is on track to lift its ban on short selling across all stocks starting March 31. A complete resumption of short selling is necessary and any market impact is expected to be short-lived, a top official said at a regular briefing.

China’s top leaders are expected to convene next week at the annual legislative meeting to lay out the economic blueprint for this year. Investors are closely watching for any new stimulus measures. Equities in Hong Kong and mainland China slipped after fluctuating in early trading.

In FX, the EUR/USD rallied by as much as 0.7% to 1.0528, only to pare the advance and trade around 1.0470; the currency was supported after the Asia open on relief that Germany’s far right party didn’t show up much stronger than expected.  The Bloomberg Dollar Spot Index falls as much as 0.4% to the lowest since December, before erasing losses. USD/JPY reverses losses to rise 0.3% to 149.66; it earlier fell to 148.85, lowest since Dec. 3

In rates, US Treasury curve bull-steepens modestly; Treasuries trade cheaper across the curve, unwinding a portion of Friday’s steep flight-to-quality gains. Front end leads losses with yields ~2bp higher on the day, ahead of $29b 2-year note auction at 1pm New York time. 10-year yield rises 1bp to 4.44% while two-year yield is 2bps higher at 4.22%; German counterpart more than 2bp higher; Treasury 2s10s curve is ~1bp flatter on the day. Longer-dated German yields are higher after conservative opposition leader Friedrich Merz said he’ll move quickly to form a new government after winning Sunday’s federal election. This week’s Treasury auction cycle begins with 2-year notes and includes $70b 5-year and $44b 7-year note sales Tuesday and Wednesday. WI 2-year yield near 4.21% is close to January’s 4.211% result, 0.1bp higher than its WI at the bidding deadline.

In commodities, oil prices advance, with WTI rising 0.1% to $70.50 a barrel. Spot gold climbs $7 to around $2,943/oz. Bitcoin is flat near $95,700.

Looking at today's calendar, we get the January Chicago Fed national activity index (8:30am) and February Dallas Fed manufacturing activity (10:30am). Fed speaker slate empty for Monday. Logan, Barr, Barkin, Bostic, Schmid, Bowman, Hammack, Harker and Goolsbee are scheduled to appear later this week.

Market Snapshot

  • S&P 500 futures up 0.6% to 6,067.25
  • STOXX Europe 600 up 0.2% to 554.98
  • MXAP down 0.4% to 189.89
  • MXAPJ down 0.5% to 598.74
  • Nikkei up 0.3% to 38,776.94
  • Topix little changed at 2,736.53
  • Hang Seng Index down 0.6% to 23,341.61
  • Shanghai Composite down 0.2% to 3,373.03
  • Sensex down 1.1% to 74,501.68
  • Australia S&P/ASX 200 up 0.1% to 8,308.24
  • Kospi down 0.4% to 2,645.27
  • German 10Y yield little changed at 2.47%
  • Euro up 0.1% to $1.0473
  • Brent Futures little changed at $74.48/bbl
  • Gold spot up 0.3% to $2,945.02
  • US Dollar Index little changed at 106.57

Top Overnight News

  • Microsoft is canceling leases for AI data centers in the US, potentially reflecting concerns about overcapacity. ZH
  • President Trump said Elon Musk is doing a good job but he would like to see him get more aggressive. It was separately reported that Elon Musk said consistent with President Trump’s instructions, all federal employees will receive an email requesting to understand what they got done last week and a failure to respond will be taken as a resignation, although some agencies told workers not to reply to Musk’s email.
  • Trump nominated Air Force Lt General Dan Caine as the next Chairman of the Joint Chief of Staff to replace General Brown, while several other top officials were also pushed out.
  • Trump reportedly told CEOs of pharmaceutical companies during a meeting to move their production to the US.
  • American Airlines (AAL) flight was diverted to Rome over ‘possible security issue." However, the airline later stated that the flight landed safely in Rome and after inspection by law enforcement was cleared to re-depart with the issue determined to be non-credible: ABC
  • America’s economy is more dependent on the wealthy than ever before (the top 10% of earners, or households earning $250K+ per year, now account for nearly 50% of all spending, the highest percent ever. WSJ
  • US Republican email systems were reportedly breached by Chinese hackers in summer 2024; hackers reportedly had access "for months" - WSJ
  • US Senator Warren has reportedly sent a letter to the White House requesting that Trump's nominee to Chair the Council of Economic Advisers commits to Fed independence, via FT
  • Apple plans to invest $500 billion in the US over the next four years, hiring 20,000 workers and producing AI servers as it seeks relief from Donald Trump’s tariffs on goods imported from China. AAPL -1% in pre. BBG
  • ECB official Pierre Wunsch warns that the Eurozone risks “sleepwalking” into making too many interest rate cuts and needs to stand ready to stop lowering bowering costs soon. FT
  • Europe envisions sending ~30K of its troops into Ukraine to help preserve any peace deal struck with Russia, with the US providing technical, logistics, and weapons support (but no American troops would be involved). ABC
  • Germany’s conservative leader Friedrich Merz said he’ll move to form a coalition government within two months after winning yesterday’s election. He pledged to strengthen Europe to achieve “real independence” from the US. The DAX rose and the euro strengthened. BBG
  • China’s local governments are set to issue an unprecedented $233 billion of bonds in the first two months of the year, exacerbating a cash squeeze in the financial system. BBG
  • Alibaba said on Monday it plans to invest at least 380 billion yuan ($52.44 bn) in its cloud computing and artificial intelligence infrastructure over the next three years. RTRS
  • Australian Treasurer Jim Chalmers will meet Scott Bessent in Washington as he seeks tariff exemptions. South Korea’s industry minister will visit the US as soon as this week for trade talks. BBG

German Election

  • Prelim. Final Results: CDU/CSU 28.6%, AFD 20.8%, SPD 16.4%, Greens 11.6%, Die Linke 8.8%, FDP 4.3% & BSW 4.9%. This means that FDP and BSW are below the 5% threshold and as such will not be entering the Bundestag. However, given their proximity to the 5% threshold BSW will almost certainly call for a recount.
  • Seat Distribution: CDU/CSU 208, AfD 152, SPD 120, Greens 85, Die Linke 64, SSW 1. (316 needed for a majority government)
  • CDU/CSU leader Merz will become the next Chancellor. However, he will need to form a coalition to govern. Mathematically, the options are a Grand coalition (CDU/CSU + SPD), Kenya (CDU/CSU + SPD + Greens) or a Midnight coalition (CDU/CSU + AfD). AfD’s Weidel has said that she is open to being in the coalition but expected-Chancellor Merz has made clear this is not an option.
  • The most likely outcome is a Grand coalition, though the SPD has made clear that the onus is on Merz to begin talks and find compromises for the government to work.
  • Pertinently, the results mean that AfD and Die Linke command a blocking minority with over 1/3 of the Bundestag's seats. This means that the prospects of debt brake reform are reduced, though Merz may be able to come to a deal with Die Linke for non-defense spending related reform.
  • Merz has said he ideally wants a functioning government by Easter. However, this is somewhat unlikely given the tense election campaign and political differences between the groups.

Tariffs/Trade

  • US President Trump’s team is reportedly pushing Mexico towards tariffs on Chinese imports, according to Bloomberg.
  • US President Trump said on Friday that the US will establish new rules to stop US firms from investing in industries that advance China’s national military-civil fusion strategy and will establish rules to stop China-affiliated people from buying critical US businesses and assets.
  • US House Chair Jordan criticised EU tech fines and European taxes on US companies and wants the European Commission to brief the judiciary committee by March 10th and called for EU antitrust chief Ribera to clarify rules reining in big tech.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks began the week mixed after last Friday's sell-off on Wall St and amid holiday-quietened trade with Japanese markets closed for the Emperor's Birthday, while participants also reflected on the results from Sunday's German election. ASX 200 traded little changed as gains in financials and the defensives were counterbalanced by losses in tech and the commodity-related sectors, while there was also another deluge of earnings updates. KOSPI underperformed amid ongoing economic concerns and ahead of tomorrow's BoK rate decision. Hang Seng and Shanghai Comp were choppy but were ultimately pressured amid ongoing trade-related frictions, with the US said to be pushing Mexico towards tariffs on Chinese imports. Nonetheless, there were some encouraging reports with Chinese state-backed developers beginning to buy land at a premium again, while agricultural stocks were supported after China pledged to deepen rural reforms as part of efforts to revitalise the agricultural sector and bolster food security in the State Council's annual rural policy blueprint.

Top Asian News

  • China is to further deepen rural reforms and advance rural revitalisation, while it will monitor and regulate pig production capacity to promote steady growth and will consolidate the results of soybean expansion, and expand rapeseed and peanut production. China is to improve the reward and subsidy systems for major grain-producing and increase support for large grain-producing counties. Furthermore, China will support the development of smart agriculture and expand application scenarios of technologies, while it will use monetary tools to encourage financial institutions to increase funding for rural revitalisation and will encourage local governments to pilot special loan interest subsidies for grain and oil crop cultivation, according to Xinhua.
  • Chinese state-backed developers are beginning to buy land at a premium again after the government eased limits on home prices as the number of land parcels that sold for at least 20% above the asking price accounted for 37% of deals this year vs 14% for last year, according to a Bloomberg analysis of transactions worth at least CNY 1bln.
  • Shein’s profit slumped in a fresh challenge to long-planned London IPO with its 2024 net profit down almost 40% to USD 1bln although FY sales rose 19% Y/Y to USD 38bln, according to FT.
  • A report on Friday stated that a new coronavirus with pandemic potential was discovered in China, according to Daily Mail.
  • UK and India relaunch trade talks in bid to boost investment opportunities, according to FT.
  • China’s economic growth target is expected to be set at about 5% for 2025, while CPI will probably be lowered to 2% from 3% for previous years, according to a report in Securities Times on Monday, citing economists.

European bourses (STOXX 600 +0.2%) opened modestly, and on either side of the unchanged mark (though the DAX 40 outperformed after the German election). At the cash open, some pressure was seen, which then exacerbated in the hour following. Thereafter, a considerable bounce was seen across the complex; as it stands, indices are mostly firmer. European sectors are mixed; initially opened with a narrow breadth, but performance is now varied. Utilities takes the top spot, lifted by renewable names after the German Election; Merz has previously favoured their use. Strength in German auto names have lifted the Autos sector. Basic Resources is the laggard thus far, with downside attributed to mostly lower metals prices.

Top European News

  • ECB's Escriva said monetary policy must be approached with caution given the current extraordinary uncertainty.
  • ECB’s Villeroy reaffirmed that the ECB’s Deposit rate should be at 2% by this coming summer and said that European banking sector consolidation is generally speaking, necessary to have European banks that can compete at a global level.
  • ECB's Wunsch said the ECB faces the risk of ‘sleepwalking’ into too many rate cuts, while he feels “relatively comfortable” with market expectation of 2% rates by year-end “give or take 50 basis points”, according to FT.
  • Hungary's PM Orban said they are to exempt mothers of two or three children from income tax and said this will be a huge expense but the budget deficit and debt will decline, while he added the government is ready to impose food price caps unless talks with retailers on keeping prices under control succeed.
  • Austria's biggest centrist parties in parliament hinted they were on the verge of agreeing to form a coalition government which would bring together Austria's conservatives, socialists and liberals, while it would sideline the far-right Freedom Party which won the election in September, according to euro news.
  • EU Foreign Representative Kallas to meet with the US Foreign Secretary Rubio on Tuesday within the US.

FX

  • DXY is a touch lower and showing a diverging performance vs. peers (softer vs. cyclicals, firmer vs. havens) following a shaky performance last week as soft US data points acted as a drag on the USD. In terms of US newsflow, tariff actions remain in focus with President Trump's team reportedly pushing Mexico towards tariffs on Chinese imports. However, markets place greater weight on the April 1st tariff report deadline. Geopolitical headlines remain aplenty with Ukrainian President Zelensky stating he is willing to quit the presidency if it means peace in Ukraine which he said could be exchanged for NATO membership. DXY printed a fresh YTD low overnight at 106.12 but has since returned within Friday's 106.38-106.74 range.
  • EUR is one of the better performers across the majors in the wake of the German election which will likely deliver a Grand Coalition (CDU/CSU + SPD). However, such an outcome would deliver a slim majority of 328/630 seats (316 required) and fall short of the Bundestag's two-thirds majority which is required for constitutional reform (i.e. the debt brake). EUR/USD ventured as high as 1.0528 but stopped shy of the 1.0532 YTD peak and eventually returned to a 1.04 handle.
  • USD/JPY printed a fresh YTD low overnight at 148.85 but has since struggled for direction amid the mixed risk appetite in Asia and the absence of Japanese participants for a holiday. To the upside, focus is on a potential reclaim of 150 to the upside.
  • GBP is a little firmer vs. the USD but softer vs. the EUR. UK-specific newsflow has been light over the weekend and this week's UK data calendar is a particularly slim one. However, today sees a busy speaker slate with BoE’s Lombardelli, Pill, Ramsden and Dhingra all due on the docket and speaking at the Bank of England’s 2025 BEAR Conference. Cable printed a fresh YTD peak overnight at 1.2690 before fading upside.
  • Antipodeans are both a touch higher with not much in the way of fresh newsflow for either of the antipode nations. That being said, some positivity surrounding the Chinese property market overnight (Chinese state-backed developers beginning to buy land at a premium again) is helping to underpin sentiment.
  • PBoC set USD/CNY mid-point at 7.1717 vs exp. 7.2495 (prev. 7.1696).
  • Barclays FX Month-End rebalancing: Weak USD buying vs. most peers, with moderate signal against the EUR and JPY, via Barclays.

Fixed Income

  • Bunds opened lower by a handful of ticks after the initial election results, (details on the German Election above) before falling further to a 132.02 low on confirmation that CDU/CSU is the largest party and that both FDP and BSW will not meet the 5% threshold to enter the Bundestag. However, as the full results were released (though likely subject to a recount given BSW coming in just below the 5% threshold) a bounce was seen in Bunds, taking them from the above low to a 132.50 peak and briefly back into the green on the session. A bullish move likely driven by the presence of a blocking minority in the Bundestag, with CSU's stance against Greens being involved in the coalition also a factor.
  • USTs were slightly quieter overnight owing to the absence of cash trade as Japan was on holiday. Broadly speaking, USTs have been following their German counterpart but with magnitudes more contained and the early-morning bounce not occurring to quite the same degree with USTs remaining just in the red at all times. The docket ahead is headlined by USD 69bln of 2yr supply, potential remarks from Fed’s Barr (voter) and the January National Activity Index. Currently, USTs are in the red in a narrow 109-16 to 109-21 band.
  • Gilts are directionally in-fitting with Bunds though, as with USTs, magnitudes are a little more contained but with Gilts managing to hold in the green for much of the morning. Gapped higher by 18 ticks from Friday’s 92.41 close, as the mentioned bounce in Bunds had already occurred by the time Gilts commenced trade, and then extended to a 92.66 peak. Since, the benchmark has reverted back towards opening levels as we await commentary from the numerous BoE speakers at today’s conference on “The Future of the Central Bank Balance Sheet”. Pill, Ramsden, Lombardelli and Dhingra all scheduled at different points today.
  • EU sells EUR 2.392bln vs exp. EUR 2.5bln 2.875% 2027 and EUR 2.277bln vs exp. EUR 2.5bln 3.375% 2039

Commodities

  • Crude is a little firmer after initially trading sideways for most of the morning; traders are awaiting further updates on geopolitics and OPEC+ amid growing noise surrounding a potential delay to the unwind of voluntary cuts. In recent trade, a slight bounce has been seen in the complex, taking Brent May to a session high of USD 74.35/bbl.
  • Mixed trade across precious metals with little in terms of fresh fundamentals driving price action, although spot palladium could be lagging after US President Trump reiterated the auto tariff set to kick in on April 2nd. Spot gold resides in a USD 2,921.47-2,948.88/oz range thus far.
  • Subdued trade across base metals as the Dollar recovered and sentiment waned in early European trade, with tariff woes still in the background amid Trump's reiterations. Prices were unfazed by the encouraging reports overnight suggesting Chinese state-backed developers beginning to buy land at a premium again. 3M LME copper trades on either side of USD 9,500/t in a current USD 9,485.00-9,558.55/t range.
  • Iraq’s Oil Minister said all procedures for exporting oil through the Turkey pipeline have been completed. It was separately reported that Kurdistan authorities agreed with the federal oil ministry to restart Kurdish crude exports based on available volumes, while Iraq denied reports that it would face US sanctions if oil exports from Kurdistan were not resumed. Furthermore, Iraq is to receive 185k BPD from the Kurdistan region in the first phase after the resumption of oil exports.
  • Iraqi oil minister said exports from the Kurdish region will resume in a week. Iraq Oil Minister said they are waiting for Turkey's approval to restart oil flow, Kurdish oil exports will "hopefully be ready" in two days. Iraqi Oil Minister, when questioned if resumption of Kurdish oil exports will affect Iraq's OPEC compliance, said Iraq is committed to OPEC+ decision and exported volumes under control of ministry.
  • BofA forecasts Brent crude at USD 75/bbl in 2025 and USD 73/bbl in 2026 with oil markets set to remain in a modest surplus in the near term. BofA said over the medium term, Brent should average between USD 60-80/bbl to keep the global oil market in balance.

Geopolitics: Middle East

  • Israel sent tanks into the West Bank and told troops to prepare for an extended stay, according to Reuters.
  • Israeli PM Netanyahu’s office said the release of Palestinian prisoners planned for Saturday was delayed until the release of the next hostages is secured with the delay due to Hamas’s repeated violations.
  • Hamas strongly condemned Israel’s decision to postpone the release of Palestinian prisoners and said Israel’s claim that a handover ceremony is humiliating is false and a pretext to evade its obligations.

Geopolitics: Ukraine

  • Ukraine Deputy PM said Ukrainian and US teams are in the finally stages of negotiations on the minerals deal; Kyiv is committed to complete the deal "as swiftly as possible".
  • Russia's Kremlin said "we welcome and support new US approach to dialogue with Russia". Russian President Putin is to make an international phone call this morning as part of informing partners about talks with the US. Further talks with US this week will focus on eliminating irritants in ties and on work of foreign missions. "Don't see any possibility to renew dialogue with Europe at the moment; European approach contrasts with the effort we are making with the US"
  • Ukrainian President Zelensky said the issue of elections is a step to apply pressure on Ukraine and he is willing to quit the presidency if it means peace in Ukraine which he said could be exchanged for NATO membership, but also commented that false statements about his ratings and the amount of US aid are dangerous steps to weaken Ukraine. Zelensky said he sees Turkey as an important security guarantor for Ukraine and that Ukraine is working on Patriot system alternatives, as well as noted if the US strikes a deal with Russia to end the war, it won’t be successful if Ukraine does not agree to its conditions.
  • Ukrainian President Zelensky commented that Ukraine-US talks on a minerals deal are moving forward and all is okay, while he stated that the minerals deal draft said Ukraine should return two dollars for each dollar of aid supplied by the US. Zelensky also said the USD 500bln figure is not being considered in the minerals deal anymore and a top aide said he had a constructive new round of talks with the US on the minerals deal. It was also reported that the US could cut Ukraine’s access to Starlink internet services over minerals, according to sources cited by Reuters.
  • US President Trump said he thinks the US is pretty close to a minerals deal with Ukraine and that they are asking for rare earth, oil and anything they can get from Ukraine to recoup the money the US put into Ukraine.
  • US Secretary of State Rubio told Ukraine’s Foreign Minister that US President Trump remains committed to ending the conflict in Ukraine.
  • US Treasury Secretary Bessent said an economic partnership will protect the Ukrainian people and the US taxpayer, while he added that Ukraine’s economic future in peace can be more prosperous than at any other point and a partnership with the US will ensure this prosperity. Furthermore, Bessent said the US-Ukraine partnership proposal is for revenue received by Ukraine from natural resources, infrastructure and assets to be allocated to a fund focused on reconstruction which the US will have the rights over investments, according to FT. It was separately reported that Bessent said he is quite hopeful when asked if he expected a minerals deal with Ukraine this week.
  • US President Trump’s envoy Witkoff said there be an expectation that US companies may do business in Russia if a peace deal is reached in the Russia-Ukraine war, according to CBS News.
  • Russian President Putin convened a meeting of his security council and discussed relations with post-Soviet states at the meeting, while he received reports from Foreign Minister Lavrov’s recent trips and asked him to share them with the security council, according to TASS. It was also reported that Putin said boosting Russia’s armed forces and meeting the needs of troops fighting in Ukraine are key strategic priorities.
  • Russian sovereign wealth fund chief Dmitriev was appointed Special Envoy on International Economic Cooperation and his new mandate will include ties with the US.
  • Russian Deputy Foreign Minister Ryabkov said a second meeting between representatives of Russia and the US is planned for the next two weeks and said that Russia will hold talks with the US to address irritants in bilateral relations, according to TASS. It was separately reported that Ryabkov said the US wants to achieve a quick ceasefire in Ukraine without long-term settlement and he explained to the US that a sole ceasefire in Ukraine is unacceptable, according to RIA.
  • Russian Foreign Minister Lavrov is to visit Turkey on Monday and will discuss a range of topics including recent US talks on the Ukraine war and how Turkey can contribute.
  • Russian Defence Ministry said Russian forces captured the villages of Ulakly and Novoandriivka in eastern Ukraine’s Donetsk region.
  • Greek PM Mitsotakis told Ukrainian President Zelensky that it is up to Ukraine to decide on the peace framework acceptable to it and nothing can be decided without Ukraine.
  • Poland’s President Duda told US President Trump that US presence in Poland and central Europe should be boosted.
  • Hungary's PM Orban said Ukraine will never be a member of the EU against Hungary’s interests.
  • EU Council President Costa said they decided to convene a Special European Council regarding Ukraine and EU defence on March 6th.
  • Canadian PM Trudeau and US President Trump spoke on Saturday in which they discussed the war in Ukraine and combating fentanyl.
  • Two EU Diplomats say EU Foreign Ministers approve 16th sanctions package against Russia.

Geopolitics: Other

  • China defended its recent naval drills in the Tasman Sea and accused Australia of ‘deliberately hyping’ military exercises.

US Event Calendar

  • 08:30: Jan. Chicago Fed Nat Activity Index, est. -0.05, prior 0.15
  • 10:30: Feb. Dallas Fed Manf. Activity, est. 6.4, prior 14.1

DB's Jim Reid concludes the overnight wrap

Five years ago today, global markets first began to panic after a weekend that saw 11 Italian towns emerge from it in Covid lockdown. Five years later we had a mini panic on Friday as attention focused on a report earlier in the week about a new coronavirus discovery in bats, from the infamous Wuhan lab, with similar properties to Covid-19. Note there has been no reported transmission to humans as yet and as far as we know it's just been found in a lab. We're all probably paranoid and it's difficult to know what to do with that information but ahead of a weekend, and with memories of that fateful weekend five years ago, it was no surprise people wanted to lighten up with the S&P 500 (-1.71%) seeing its worst day of the year so far, extending declines after earlier stagflationary data that we'll discuss at the end. In overnight trading, US stock futures are back up with those on the S&P 500 (+0.49%) and NASDAQ 100 (+0.48%) higher.

Talking of five years, will the German election be seen as a pivotal moment when we look back on it in 2030? For financial markets the make-up of the Bundestag was probably as important as the overall results and the one line summary is that the centre-right and centre-left should have sufficient seats to form a grand coalition but overall the centrist parties are short of a two-thirds majority. This latter means that any future reforms of the debt break will be challenging and may require compromise and horse trading.

In terms of the details, the provisional results confirm a victory for the centre-right CDU/CSU (28.6%), followed by the far-right AfD (20.8%), centre-left SPD (16.4%) and Greens (11.6%). Of the smaller partis, the leftist Linke (8.8%) comfortably exceeded the 5% threshold, but the far-left BSW (4.97%) and liberal FDP (4.3%) fell short. BSW’s narrow failure to enter the Bundestag, which may take a few days to be definitively confirmed, has the important consequence of leaving the CDU/CSU and SPD combined with a projected 52% of the seats. That leaves the grand coalition as the most likely outcome, being the only option to avoid the need for three-party coalition given that mainstream parties have ruled out partnering with the AfD. Our Germany economists see the prospect of a two-party coalition led by a strong CDU/CSU as a positive for Germany's corporate sector, promising less policy gridlock and uncertainty than under the outgoing government. See their reaction here for more. Earlier in the night, CDU leader Merz said he wanted to form a coalition within the next two months.

While the outcome may reduce the risks of particularly fractious coalition talks, it still confirms an ongoing anti-establishment trend that has been visible both in Germany and Europe as a whole. The result marks the lowest ever vote share for the two major parties, even as the turnout (82.5%) was the highest since at least 1990. And it leaves the centrist parties short of a 2/3rds constitutional majority, with the CDU/CSU, SPD and Greens jointly at just under 66% of seats. That means any debt brake reform, including for defence spending, would require support from one of the fringe parties. This may not be impossible, but it would require significant political compromises.

After a nervy night, European assets gained traction as the likelihood of simple ‘grand coalition’ majority emerged. The euro is trading +0.58% higher this morning, touching a one-month high against the dollar, while DAX futures are up just over a percent and Euro Stoxx 50 futures are +0.46% higher. Meanwhile Bund futures are slightly down as I check my screens.

In terms of other events this week, Nvidia's earnings on Wednesday could be the biggest mover of markets. Interestingly of the 62 analysts who cover the stock on Bloomberg, 56 have a buy rating with only one sell. DB are currently one of only 5 with a hold rating. Outside of that inflation takes centre stage with US core PCE, German, French and Italian flash CPI, as well as Tokyo CPI all out on Friday with Spain's equivalent coming out on Thursday. In terms of the rest of the main global releases, the German Ifo survey today will be less relevant given the election but later we have the Dallas and Chicago Fed manufacturing surveys. Tomorrow sees the US Conference Board consumer confidence release which will be interesting after Friday's weak UoM equivalent. Wednesday sees US new home sales and Australian inflation. Thursday sees US durable goods and the ECB account of their January meeting and Friday sees US personal income and spending data and the ECB consumer expectations survey. There are also lots of central bank speakers through the week, including at the G20 central bankers and finance minister meeting in Cape Town on Wednesday and Thursday. You can see the main ones detailed in the day-by-day calendar at the end as usual, along with key earnings releases and all the other data.

Digging into the main US data this week now. According to our economists, Friday's personal income (+0.3% forecast vs +0.4% previously) and consumption (+0.2% vs. +0.7%) will likely be softer due to the LA wildfires and poor weather with the all-important core PCE deflator (+0.27% vs. +0.16%) higher but not as extreme as CPI due to softer subcomponents in the subsequent PPI. This would lower the YoY core PCE two tenths to 2.6%. In the US consumer confidence tomorrow, the jobs-plentiful / jobs hard-to-get series is important as a good proxy for the unemployment rate. For claims on Thursday our economists are looking to the DC area in particular given press reports of substantial federal government layoffs. Around 20% of the ~2.3mn federal government employees live in Washington DC, Maryland and Virginia. Our estimates are that there have been roughly 14k potential federal layoffs since the Trump Administration took office with another 12k pending the resolution of court cases. Clearly this is just within the first month.

Asian equity markets are mostly drifting lower at the start of the week following Friday’s significant losses on Wall Street. Across the region, the Hang Seng (-0.64%) with the Shanghai Composite (-0.26%) is also down. The KOSPI is -0.42% lower. Japanese markets are closed for a public holiday but Nikkei futures are around a percent lower. With this holiday there is no cash Treasuries trading in Asia.

Now recapping last week, which ended with a big risk-off move on Friday following more stagflationary US data alongside some scares around the reporting of the new coronavirus discovered by researchers at the Wuhan Institute of Virology. On the fifth anniversary of the first proper slump in markets associated with Covid that's the last thing the world wanted to hear. According to the journal that reported the story as long ago as last Friday the virus hasn't been detected in humans yet but this virus apparently enters cells using the same gateway as the Covid-19 virus. So that scared markets a bit and led to a spike in vaccine stocks like Moderna (+5.34% on Friday) just around the time Europe closed for the day.

However, the earlier data started the softness. First were the February flash PMIs, which saw the headline services reading (49.7 vs 53.0 expected) slump into contractionary territory for the first time in 13 months. At the same time, the PMI manufacturing input prices soared to their highest since October 2022 (+6.1pts to 63.5). Then 15 minutes later, the final University of Michigan consumer survey showed 5-10 year median inflation expectations spiking to a post-1995 high of 3.5% (up from 3.3% in the flash release), even as headline consumer sentiment slumped to a 15-month low. So that added to concerns over the US consumer that had emerged with a weak January retail sales print the previous Friday and Walmart’s disappointing results on Thursday morning. As ever we note that for long-term inflation expectations, the results are extreme along party lines with Democrat supporters expect 4.2% and Republicans 1.5%.

Nevertheless the overall backdrop weighed on risk assets, with the S&P 500 (-1.71%) posting its worst day of 2025 so far, leaving it -1.66% lower on the week. Most affected were small caps, with the Russell 2000 slumping -2.94% on Friday (-3.71% on the week), as well as tech stocks, with the Mag-7 down -2.51% (-3.52% on the week). Both indices fell into negative territory YTD. By contrast, in Europe equity markets closed before the worst of the US slump with the Stoxx 600 (+0.52% Friday) just about posting a ninth consecutive weekly gain (+0.26%).

Other risk assets also suffered on Friday, with US high yield credit spreads seeing their biggest daily spike YTD (+10bps to 271bps). And in the commodity space, Brent crude saw its largest decline since October (-2.97%), leaving it -0.71% down on the week to $74.21/bbl. However, gold advanced +1.86% on week to $2,936/oz despite a marginal retreat on Friday (-0.10%) from Thursday’s all-time high.

Bonds rallied amid Friday’s risk-off environment, with 10yr Treasury yields falling -7.4bps to 4.43% and posting a sixth consecutive weekly decline (-4.5bps). Over in Europe, 10yr bund yields also fell -6.4bps on Friday, but were still +3.7bs higher on the week to 2.47% after an earlier rise amid increased expectations of higher European defence spending.

Tyler Durden Mon, 02/24/2025 - 07:59

Illegal Aliens Loot US Trains In Mojave Desert For High-Value Nike Sneakers

Illegal Aliens Loot US Trains In Mojave Desert For High-Value Nike Sneakers

Organized criminal gangs have carried out a series of sophisticated train heists targeting BNSF freight trains in the Mojave Desert along the California-Arizona corridor. The thieves have targeted double-stack container cars, specifically containers carrying high-value Nike sneakers.

Los Angeles Times reported thieves stealthily boarded eastbound freight trains in the lonely stretches of the Mojave Desert at least ten times and stole millions of dollars in sneakers and other goods since last March. Nike sneaker thefts have topped $2 million. 

Here's more from the report:

New sneaker releases may have touched off at least some of the recent incidents. In Perrin, Ariz., thieves allegedly cut an air brake hose on a BNSF freight train on Jan. 13 and unloaded 1,985 pairs of unreleased Nikes worth more than $440,000, according to a criminal complaint filed in US District Court in Phoenix. Many were Nigel Sylvester x Air Jordan 4s, which won't be available to the public until March 14 and are expected to retail at $225 per pair, the complaint states.

Keith Lewis, vice president of operations at Verisk's CargoNet and a deputy sheriff in Arizona, explained to the newspaper how the whole theft operation works:

Theft crews typically scout high-value merchandise on rail lines that parallel Interstate 40 by boarding slow-moving trains, such as when they are changing tracks and opening containers. 

Lewis said the thieves are sometimes tipped off to valuable shipments by confederates working at warehouses or trucking companies. Other times they simply look for containers with high-security locks, which they cut with reciprocating saws or bolt cutters, a Homeland Security Investigations special agent said in affidavits filed in federal court.

Once the desired loot is found, the thieves alert "follow vehicles," which track the train. The stolen goods are tossed off the train after it comes to a halt — either for a scheduled stop or because an air hose has been cut or control wires inside signal boxes have been sabotaged, said the federal agent, Brynna Cooke.

The cargo is then loaded into box trucks, or hidden in nearby brush until they arrive — provided the surveillance crews that are following the train don't detect law enforcement, Cooke said. These tactics are often employed by transnational criminal groups that consist primarily of Mexican citizens from Sinaloa, she said.

The latest figures from the Association of American Railroads show that railroad thefts surged to 65,000 in 2024, a 40% increase from the previous year, costing major railroads $100 million.

According to a recent release from the US Attorney's Office, District of Arizona, illegal aliens from Mexico have been responsible for some of these train thefts: 

Criminal organizations that specialize in stealing from trains, which consist primarily of Mexican citizens with connections to the Mexican State of Sinaloa... 

In other words, cartels... 

President Trump and Border Czar Tom Homan have made it clear that they will not tolerate cartels that jeopardize national security. Deploying US military forces to secure the border is the first line of defense in restoring law and order. 

Tyler Durden Mon, 02/24/2025 - 07:45

DC Mayor Bowser Rejects Trump's Suggestion That Federal Government Take Over The City

DC Mayor Bowser Rejects Trump's Suggestion That Federal Government Take Over The City

Authored by Stacy Robinson via The Epoch Times (emphasis ours),

Washington Mayor Muriel Bowser spoke out on Feb. 20 against President Donald Trump’s suggestion that the federal government should assume control of the city she governs.

Washington, D.C. Mayor Muriel Bowser speaks during a press conference as emergency response units continue to search the crash site of the American Airlines plane on the Potomac River in Arlington, Va., on Jan. 30, 2025. Kayla Bartkowski/Getty Images

“Of course, it’s frustrating, and we think it’s also wrong,” Bowser said at a press conference.

Bowser’s response comes one day after Trump’s comments, made amid criticisms of the high rate of crime, graffiti, and homelessness in the United States’ capital city.

“I think we should take over Washington, D.C. … I think that we should run it strong, run it with law and order, make it flawlessly beautiful,” he told reporters on Air Force One on Feb. 19.

The District of Columbia is currently governed by the mayor and its City Council, whose legislative and budget decisions are subject to the oversight of Congress. This form of government was established by the Home Rule Act, passed in 1973.

To wrest control of the city from the mayor would take another act of Congress. On Feb. 6, Sen. Mike Lee (R-Utah) and Rep. Andy Ogles (R-Tenn.) introduced legislation to do just that.

The Bringing Oversight to Washington and Safety to Every Resident (BOWSER) Act would end Home Rule in the District, one year after its passage.

“Washington is now known for its homicides, rapes, drug overdoses, violence, theft, and homelessness,” Ogles said in a statement criticizing the city’s leadership.

Bowser said she is not sure if the legislation would make it through both chambers of Congress, despite Republican majorities.

“Look, most of the people in the Congress know this: that we are a well-run city. We balance our budgets. We have triple-A bond rating. We have the No. 1 park system. We have the fastest-improving urban school district.”

While she wouldn’t go into specifics about her conversations with Trump, Bowser said she had previously expressed to him that she believed the current system of governance was best, and that she walked away from those meetings with the impression that his main concerns were “infrastructure and homelessness and—to a lesser degree—public safety.”

“There is really not a lot of space between us on focusing on holding violent offenders accountable in the District of Columbia,” she said.

She also noted that when Trump departed the district in 2020, the city was still dealing with the ravages of the COVID-19 pandemic.

“I think he still has a picture of COVID-era D.C., and he returns to a D.C. that is … very much a post-COVID environment where the issues with homeless encampments is much diminished—not completely solved—but much diminished from the D.C. that he left,” she said.

She said the city has cut the number of homeless encampments in half since last year.

Trump and Bowser’s comments highlight an ongoing tug-of-war between those who share the president’s view, and those who—like Bowser—want the district to become the 51st state, with full autonomy.

“The only way we’re not in this position is when we become a state,” she said.

“As long as we have limited Home Rule in this city—yes you have elected officials—but as long as we have limited Home Rule, we’re always vulnerable to the whims of the Congress or a president.”

Tyler Durden Mon, 02/24/2025 - 07:20

Xi & Putin Hold Call On Ukraine War Anniversary Amid Signs Of Peace Talks

Xi & Putin Hold Call On Ukraine War Anniversary Amid Signs Of Peace Talks

Chinese President Xi Jinping spoke with Russian President Vladimir Putin by phone on Monday, according to Chinese state media, as the third anniversary of Russia's invasion of Ukraine is today. The conversation occurred just a day after Ukrainian President Volodymyr Zelensky reached out to President Donald Trump, requesting a meeting to secure a mineral deal amid increasing prospects for a peace deal.

Bloomberg cited state broadcaster China Central Television, which said that Xi and Putin spoke via telephone on Monday afternoon "at the request of the latter." 

CCTV quoted Xi as saying that China and Russia share a "unique strategic value" that is "not aimed at any third party or influenced by any third party."

Recall that China and Russia formed a "no limits" partnership in the days before Putin invaded Ukraine in February 2022. Xi considers Putin an "ally," and the two have met dozens of times over the past decade. 

The call comes one day after Zelensky spoke at a forum in Kyiv about Ukraine's future. He called for Trump to solidify a mineral deal with his country. The Ukrainian president would step down if a peace deal materializes or his country is accepted into NATO. 

Zelensky also demanded that Trump visit Kyiv first before meeting with Putin. If Trump were to meet with Putin first, Zelensky cautioned, "there would be disbelief in the United States… It would be bad for US society."

With preparations underway for a face-to-face meeting between Trump and Putin, this would mark a massive shift from warmongering Western officials who have attempted to isolate Moscow from the world's global economy over its invasion of Ukraine. And these officials were hellbent on sparking World War III.

"The question is about starting to move toward normalizing relations between our countries, finding ways to resolve the most acute and potentially very, very dangerous situations, of which there are many, Ukraine among them," Russia's deputy foreign minister Sergei Ryabkov told reporters on Saturday. 

Bloomberg noted, "The readout of Monday's call said Beijing was happy to see the efforts made by Moscow to resolve the war in Ukraine." 

Chinese Foreign Minister Wang Yi told reporters over the weekend that Beijing would welcome direct communications between Putin and Trump and that the "window for peace is opening up." 

The "no limits" partnership between China and Russia remains a significant concern for the West, as the Biden-Harris regime's weak foreign policy only pushed the two great powers closer, economically and militarily.

 

 

Tyler Durden Mon, 02/24/2025 - 06:55

Store Closures Outpace Openings Amid "Historic Shift" To Service-Based Tenants

Store Closures Outpace Openings Amid "Historic Shift" To Service-Based Tenants

By Nate Selesline of RetailDive

As closures accelerate, service-based tenants are expected to lease more retail space in the coming year than goods-based tenants, a trend that JLL called “a historic shift in the retail property sector.”

Coresight Research also forecast that store closings may reach 15,000 this year, while openings will hold steady at about 5,800.

JLL said this shift has been underway for a decade, but is now accelerating. 

Service-based tenants interested in retail spaces include quick-service and fast-casual restaurants, fitness clubs, and healthcare, financial and personal care services.

“While the momentum of this growth was short-circuited by COVID, the last three years have seen a recalibration of this trend,” JLL said.

On the retail side, grocery stores, discount and dollar stores are seeing positive opening trends. The closing retailers are typically big-box or junior anchors. JLL cited Party City, Walgreens and Rite Aid as examples. These stores typically occupy 10,000- to 20,000-square-foot spaces. Nearly 2,700 stores in this category are closing or will close.

About 1,528 big-box stores, with 20,000 to 50,000 square feet of space, will close. These locations are favored by retailers like now-shuttered 99 Cents Only Stores and Big Lots, which filed for Chapter 11 bankruptcy in September. 

However, JLL said there’s an upside to the industry’s real estate crunch, as the movement may free up nearly 140 million square feet of retail space. Space availability is currently at 4.7%, which makes finding desirable locations challenging. In addition, nearly 30% of available space is located in Class C retail properties and less than 25% was built this century, which leaves fewer options for expanding retailers. At the same time, construction activity remains minimal and annual construction starts are the lowest in 15 years.

Macy’s ongoing plans to drastically shrink its footprint may also present a quandary for malls. The company said it plans to close 66 of its namesake department stores this year, which would equate to about 12 million square feet of anchor space opening up in malls. 

In response to this move, mall owners “will have to decide between redeveloping the space and possibly adding a mixed-use component or backfilling the anchor with one or more retailers.” JLL said entertainment businesses, fitness centers, grocery stores, home improvement, furniture and other department store chains are filling these vacant spaces.

Tyler Durden Mon, 02/24/2025 - 06:30

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