iftttwall

The shadow fleet of liquefied natural gas carriers transporting blacklisted Russian LNG has encountered a major setback, with at least one ship’s cargo traveling around the world, finding no buyers as the cargo was deemed too risky. 

Bloomberg reports that an LNG carrier called “Pioneer,” carrying a sanctioned shipment of Russian LNG, circumnavigated the world for four months, failing to find a buyer willing to breach US restrictions.

“This vessel (called Pioneer) was spotted on satellite images picking up the first shipment from the Arctic LNG 2 facility in early August — despite camouflaging the move with misleading location information — but then spent well over four months hunting for a customer,” Bloomberg’s Stephen Stapczynski wrote on X. 

This vessel (called Pioneer) was spotted on satellite images picking up the first shipment from the Arctic LNG 2 facility in early August — despite camouflaging the move with misleading location information — but then spent well over four months hunting for a customer pic.twitter.com/qIGcK4v1yr

— Stephen Stapczynski (@SStapczynski) December 26, 2024

According to ship-tracking data, Pioneer arrived at the Koryak floating storage unit in Kamchatka on Thursday after four months on the seas.

“The gas is likely to be held there until a customer can be found,” Bloomberg noted.

Most of Russia’s dark fleet consists of oil tankers. However, the West has increasingly targeted LNG carriers as Washington and Brussels race to sever Russian energy flows to Europe. 

Regarding global LNG trading – buyers, sellers, charterers, financing banks, and insurers must be extra vigilant when running compliance checks to ensure their ships do not engage in Western-sanctioned activities, and this is likely why Pioneer could not find a buyer. 

Authored by Mike Shedlock via MishTalk.com,

An energy policy battle is brewing and I believe Trump will win on day one.

Pulling the Plug on EV Mandates

The Wall Street Journal reports Trump Can Pull the Plug on EV Mandates

Overly stringent emissions targets ignore American consumers’ preferences and block economic growth. They’re also restrictive, costly and unachievable for U.S. manufacturers based on current market trends.

The Environmental Protection Agency’s electric-vehicle mandate also must go. The mandate would effectively require automakers to shift at least 54% of production to EVs and 16% hybrids to meet the 2032 requirements, an unrealistic target.

The Trump administration also should rein in California’s regulatory excesses. The Biden EPA last week greenlighted California’s aggressive electric-vehicle mandate by granting the state a waiver allowing it to set stricter environmental regulations than the federal government’s. The Trump administration should move immediately to revoke this waiver, an action likely to be challenged in court.

This matters for Americans across the U.S. That’s because other states are allowed to adopt California’s climate policies and impose those regulations on residents. New York, Maryland and Virginia are among several states that have adopted California’s zero-emission mandate.

We need a course correction. America doesn’t have access to the volume of critical minerals needed to produce that many EV batteries. It also doesn’t have the necessary electricity generation capacity or charging infrastructure.

America can and should lead the world in automotive innovation, but domestic automakers won’t survive if California-style, zero-emission vehicle mandates become the rules of the road.

The author of the above post is  Andrew Wheeler.

He served as administrator of the Environmental Protection Agency, 2018-21 and is currently a partner and head of federal affairs at Holland & Hart.

Time to “un-California” US Energy Policy Is Now

The Journal says Trump “can” change energy policy. I am confident Trump “will” do so.

And whereas I think Trump will get some things wrong, energy policy isn’t one of them. I can’t think of anything Harris would have gotten right.

Also note, Trump Backs Down From Strong Sweeping Deportation Promise

With that change, Trump is highly likely to get deportation policy right, but Congress will have to approve.

I am so waiting for day one! We can’t get rid of Biden soon enough.

President Joe Biden has been criticized by judicial leaders for vetoing a bill that would have added more judges to the federal bench amid a heavy volume of pending cases.

Biden on Dec. 23 vetoed the Judicial Understaffing Delays Getting Emergencies Solved Act of 2024, or JUDGES Act, which would have added 66 new district court judgeships nationwide.

As Jackson Richman reports for The Epoch Times, Judge Robert Conrad Jr., the director of the Administrative Office of the United States Courts, said Biden’s decision was disappointing.

“Providing additional judgeships is essential to improving access to the courts and necessary for the efficient and effective administration of justice,” he said in a Dec. 24 statement.

Biden cited numerous reasons for declining to sign the bill into law, which passed the Senate in August and the House this month.

Biden said in a statement that the legislation “seeks to hastily add judgeships with just a few weeks left” in the current 119th Congress. The White House had previously warned that Biden would veto the bill before President-elect Donald Trump takes office.

Trump would have had the power to nominate judges to the federal judiciary. The GOP will control the Senate, which confirms nominees.

According to the president, the bill also “fails to resolve key questions in the legislation, especially regarding how the new judgeships are allocated, and neither the House of Representatives nor the Senate explored fully how the work of senior status judges and magistrate judges affects the need for new judgeships.”

The bill “would create new judgeships in States where Senators have sought to hold open existing judicial vacancies,” Biden said.

“Those efforts to hold open vacancies suggest that concerns about [the] judicial economy and caseload are not the true motivating force behind passage of this bill now.”

In a Dec. 16 letter to Biden, Conrad explained the need for expanding the number of federal district judges.

Contrary to Biden’s assertion, the bill was years in the making through “study, analysis, and congressional review” and “would address the need for additional district court judgeships, spreading them out over the next three presidential administrations.”

The number of cases before the district bench has spiked 30 percent since 1990, according to Conrad. This, in turn, has led to longer wait times over litigating criminal and civil cases, he said.

Gabe Roth, the executive director of Fix the Court, which calls for reforms to the federal bench, called the veto “an embarrassing end to what has otherwise been, from many court-watchers’ point of a view, a productive four years of reshaping of the judiciary.”

Alliance for Justice, a left-wing judicial advocacy group, expressed support for Biden’s veto.

“Every chance to protect our courts over the next four years must be taken,” the group’s interim president, Keith Thirion, said in a Dec. 10 statement in response to the White House saying Biden would veto the bill. “It’s true our courts are overdue for expansion, but it is a disservice to the public servants committed to equal justice to so blatantly weaponize this process.”

The bill would have allowed Trump to fill some of those vacancies, though the timeline to fill them would have stretched into 2035 as the new judgeships would have been created in two-year waves during that period.

As of Dec. 25, there are 32 vacancies at the district level.

Jonathan Turley goes further, calling the move by Biden , ‘a disgrace’.

Our courts are overwhelmed by dockets that leave parties without any resolution for years. In 2004, the number of cases in district court pending for more than three years was 18,280. This year, there are 81,617.

If justice delayed is justice denied, our court system is becoming a tar pit of injustice, with litigants left without verdicts or relief for years.

Every responsible and independent group in the area supported this bill as essential to supporting and maintaining our legal system. The White House did not oppose the bill until Democrats lost the election. (Some Republicans also withheld their support until after the election).

Before the election, both Democrats and Republicans supported the bill in an all-too-rare moment of bipartisanship. Biden then vetoed it because he did not want a Republican to appoint new judges (even though the new judgeships would be added over a ten-year period).

In vetoing the act, Biden once again shredded any claim to being a president who could put the public interest ahead of petty political interests. It ends his presidency on a cynical, obstructionist note.

Nevertheless, Ryan and others on the far left are applauding the act as just what they want to see in a president.

It is one thing to discard any sense of integrity or responsibility, but do us a favor: leave the Founders out of it.

Via Off-Guardian,

Welcome to our third Christmas edition of This Week, where we pull out just the most seasonal, tinseliest headlines we can find, take a step back, and laugh at just what a clown world we’re all suddenly living in.

1. Wood Burning Stoves Cause Cancer

Anyone following British news or social media for the last two weeks has probably already seen this story – we mentioned it in our story on the Great Reset:

Terrifying cancer risk of trendy wood burning stoves – as experts warn they are UK’s biggest source of dangerous air pollution

Wood-burning stoves are “more polluting than cars” now, they cause cancer. And birth deformities. And asthma. And make “long covid” worse.

We need rules. And bans. And more rules. And more bans. Yes, OK, we already have regulations on wood burning, but they don’t enforce them enough, and “these people will only stop when they are made to”:

What kind of people burn wood when the Royal College of Paediatricians have asked them not to, for the sake of children’s health? Your middle class London neighbours, that’s who. They won’t stop until they’re made to. Story by ⁦@horton_official⁩ https://t.co/d7UNMgiYgP

— Fiona Harvey (@fionaharvey) December 19, 2024

I just can’t believe we’ve lived to see a time where “these people” is being used to venomously describe people who…*checks notes*…burn wood to keep warm.

This is all about clean air, you understand, and not even slightly about the fact wood burning stoves offer energy and fuel independence. That’s just paranoia.

2. …and so do scented candles

Now, maybe you’re thinking, “OK, so maybe my woodburner is illegal now, at least my cinnamon candles make it feel like Christmas”. No such luck, because here comes the Conversation with their mood-killing candle-snuffer:

Scented candles and holiday fragrances may actually harm your home’s air quality

The research is one of those pieces of research which abandons logic in pursuit of some higher truth, and includes this gem of a sentence:

If equal weights of cigarette and incense sticks are burned, the incense sticks produce around four times as much particulate matter as the cigarettes

Wonderful exemplar of the madness of “The Science”, the juxtaposition of technical truth with complete abandonment of reason. Totally disregarding a) that equal weights of incense and cigarettes are not burned, b) the differing nature and composition of their “particulate” or c) the fact people don’t put incense sticks in their mouths.

Anyway, don’t even think about staying warm or smelling nice. You’ll get cancer. And die.

Look out for “improving our air quality” to be a major talking point in 2025. More bans coming.

3. Merry Surveillance and a Happy New World

In the spirit of giving this Holiday Season, the British government has decided to gift us all the long-term comfort of security by promoting their digital ID platform!

From their press release:

Christmas celebrations are set to get a digital upgrade next year, as the UK government plans to roll out a new law allowing pub and bar-goers, as well as shoppers, to use their phones to prove their age when buying alcohol, should they wish to do so. People can continue to use physical forms of ID if they prefer.

See how it’s going to work?

It’s just like the smoking ban, where each year the minimum age to buy cigarettes increases, except in reverse.

If digital ID is the easiest way for young people to prove their age and get drunk, they’ll never need to make it mandatory. Each year the next crop of 18-year-olds will volunteer to be cattle tagged so they can go out drinking with their friends.

Meanwhile, the physical ID that “people can continue to use if they prefer” will be increasingly expensive, subject to longer and longer waiting times to acquire, and probably expire more quickly. Not to mention how bad for the environment the Guardian will tell everyone it is.

4. A Very Climate Christmas

Speaking of the Guardian, did you know “average Briton produces 23 times more CO2 on Christmas Day”?

Of course you didn’t. That’s because the Guardian just paid some people to make it up. Sorry, they “commissioned researchers to write a report” which is totally different.

However it happened, the math exists and is vaguely described. It doesn’t really make any sense if you think about it for five minutes, but we don’t have five minutes. The author quickly rushes us past the numbers and into the opinions.

The Graun has rounded up a few people to talk about how bad Christmas is for the planet. That includes the appropriately named Melanie Nazareth, who warns that people are conditioned into mass consumerism at Christmas time:

“We have been deliberately sold a vision of Christmas that is based on material consumption. We are constantly bombarded by advertising and media that tells us that if we aren’t spending money on things, we are not doing Christmas properly…

Which, to be fair, is a more than reasonable point, if only she didn’t add:

…This is destroying the whole meaning of Christmas as well as destroying the planet.”

I just can’t shake the image of Klaus Schwab, the Ghost of Resets Past, hanging in the air, rattling his chains and wailing “yooouuuu will ooooown nothing and beeee happyyyyy!”

Makes it an uncomfortable read.

BONUS: Scary Turkey Germs

Just when you thought, maybe, you could have a meal or even an entire day without having to be frightened – here comes the Daily Mail to scream:

How your Christmas turkey leaves the kitchen smeared with food poisoning bugs: Grim photos reveal exactly where bacteria spreads – and will make you think twice about scoffing mince pies

The article itself is a joke. They smear blue stuff on someone’s hands, have them use the kitchen, then show the pictures of blue stuff everywhere and say “Imagine this was bacteria! It got everywhere!” like that means something.

*  *  *

All told a pretty hectic Holiday Season for our New Normal World, and we didn’t even mention the Christmas tree being burned in newly liberated Syria or racist dangers of confederate Christmas decorations.

Merry Christmas Everyone.

Azerbaijani government sources told Euronews on Thursday that a Russian surface-to-air missile hit Azerbaijan Airlines Flight J28243, ultimately causing the plane to crash during an emergency landing attempt in the Kazakhstani city of Aktau shortly thereafter.

Another video showing the crash of Azerbaijan Airlines Flight 8243 pic.twitter.com/Ze5pQ7Grv9

— BNO News Live (@BNODesk) December 25, 2024

A Russian SAM was fired at the Embraer ERJ-190 during a drone swarm above Grozny, the capital city of Chechnya, Russia. The SAM detonated near the commercial jet and unleashed a spray formation of shrapnel that damaged the plane’s rear fuselage and flight controls. 

BREAKING: Approximate location where Azerbaijan Airlines flight AXY8243 (J28243) was hit by a Russian anti air missile. This happened at 08:15 local time at an altitude of about 1000m. The flight would crash 1h 13m later in Aktau, Kazakhstan. pic.twitter.com/34n0G7Ag40

— planatoli (@planatoli) December 26, 2024

Here’s more from the media outlet:

Government sources have told Euronews that the damaged aircraft was not allowed to land at any Russian airports despite the pilots’ requests for an emergency landing, and it was ordered to fly across the Caspian Sea towards Aktau in Kazakhstan.

According to data, the plane’s GPS navigation systems were jammed throughout the flight path above the sea.

Shortly after the Embraer ERJ-190 crashed in Aktau on Christmas Day, footage of the wreckage emerged on X, and that’s when internet sleuths began to notice “traces of shrapnel on the rear fuselage section of the aircraft.” 

!! There is no official statement that Azerbaijan Airlines flight J28243 was shot down, or shots fired at it, following a video shared on social media showing traces of shrapnel on the rear fuselage section of the aircraft. https://t.co/dWMPUUBynJ pic.twitter.com/6G1E2Kluqr

— Breaking Aviation News & Videos (@aviationbrk) December 25, 2024

The flight-tracking website Flightradar24 posted altitude and vertical speed data indicating the plane “struggled to maintain altitude for more than an hour.“

Here is a graph with altitude and vertical speed data for flight #J28243

The aircraft was struggling to maintain altitude for more than 1 hour (05:14 UTC to 06:28 UTC) pic.twitter.com/mLItiOkzS1

— Flightradar24 (@flightradar24) December 25, 2024

It is suspected that the SAM’s shrapnel spray pattern damaged the Embraer ERJ-190’s vertical stabilizer, horizontal stabilizer, and elevators—possibly explaining why the normal landing configuration might not have been achieved.

This resulted in an aggressive landing approach, contributing to a steep glide slope that led to the hard landing and eventual crash.

Initial jobless claims for the week ending 12/21 were flat on the prior week at 219k, holding near 8 month lows…

Source: Bloomberg

But, continuing job less claims keep rising, this week topping 1.9mm once again at the highest since Nov 2021…

Source: Bloomberg

So once again America – is the labor market naughty or nice?

Update (0828ET): 

Bloomberg reports that Finnish authorities boarded the crude oil tanker named Eagle S. after a 658-megawatt Estlink 2 power interconnector and several data cables were disrupted. 

*   *   * 

The Estlink 2 electricity cable connecting Finland and Estonia was disrupted on Christmas Day, sparking concerns of another potential undersea cable sabotage incident in the Baltic region.

The Financial Times reports that Finnish authorities are investigating a crude oil tanker named Eagle S. The tanker flies the Cook Islands flag and is reportedly part of Russia’s so-called “dark fleet.” 

Data from the ship-tracking website MarineTraffic shows the vessel slowed down at the time the 658 megawatt (MW) Estlink 2 power interconnector was disrupted. The tanker was transiting the Baltics on its way from St. Petersburg to Egypt. 

The sources also indicated that Eagle S is under investigation for its possible role in severing three communications cables in the Gulf of Finland.

The vessel movement of Eagle S is very irregular and corresponds with the location and time of the damage to the Estlink 2 cables. pic.twitter.com/IpEUq13n3k

— Kamsarmax (@cashsarmax) December 25, 2024

MarineTraffic data also shows the Finnish Border Guard’s patrol vessel Turva escorted the tanker to waters off Porkkalaniemi, a peninsula on the Gulf of Finland, on Wednesday night. 

Finnish Prime Minister Petteri Orpo wrote on X that authorities were investigating the incident.

Orpo noted, “The interruption of the transmission connection will not affect the electricity supply of Finns.” 

Estonian public broadcaster ERR noted no power losses to citizens in either Estonia or Finland. The outlet cited local power officials who said enough spare capacity was on the grid to meet demand and avoid blackouts. 

The Baltic Sea area has been on high alert for potential sabotage. Last month, a Chinese vessel was suspected of sabotaging the C-Lion 1 submarine cable connecting Helsinki and the German port of Rostock. 

Other headlines…

On Wednseday, Russian news agency RIA said the owners of the Russian cargo ship that sank in the Mediterranean Sea said the explosions in the vessel’s engine room were an “act of terrorism.” 

Also, Azerbaijan Airlines flight J28243 crashed in the Kazakhstani city of Aktau on Christmas Day. There’s speculation the Embraer ERJ-190’s vertical stabilizer, horizontal stabilizer, and elevators were possibly damaged by “shrapnel” before the crash. 

US stock futures and Treasuries dropped as muted trading resumed after the Christmas holiday, with investors looking to initial jobless claims data and a government bond auction later on Thursday. At 8:00am, S&P futures fell 0.3%; the index closed 1.1% higher on Tuesday, extending this year’s advance to 27%, and on pace for the best full-year return this century. Nasdaq futures slipped 0.4% after adding 1.4% on Tuesday, as a bout of selling started after the Europe open. Most major markets in Europe are still shut for holidays. Treasuries extended their selloff, pushing 10Y yields to a fresh 6 month high of 4.63%, a level which will start denting the Christmas rally meltup. The dollar also gained as the Bloomberg Dollar Index hit a new two year high. The only even on today’s calendar is jobless claims at 8:30am.

In premarket trading, cryptocurrency-tied stocks like MicroStrategy Inc. and Riot Platforms Inc. declined, tracking a drop in Bitcoin. Here are some other notable premarket movers:

• Alibaba Group Holding agreed to merge its South Korean operations with E-Mart Inc.’s e-commerce platform to better compete in the country’s fast-paced online retail sector.
• Rapt Therapeutics shares are up 0.6% in premarket trading, after HC Wainwright & Co. LLC upgraded the biotech company to buy from neutral.
• Apple’s price target is being raised to a Street-high of $325 from $300 at Wedbush, which writes that the company is “heading into a multi-year AI-driven iPhone upgrade cycle.”
• Progressive is upgraded to outperform from market perform at Raymond James, which writes that the company’s “long-term record of growth and value creation makes it a core holding for large cap growth investors.”

With US stocks on pace for another blowout year, bulls are pinning their hopes on the “Santa Claus rally” in which stocks rise during the final five trading sessions of a year and the first two of the new one. Separately, with Trump’s inauguration slated for Jan. 20, investors are awaiting insights on his proposed policies, including tax cuts and tariffs which is set to keep the rally going. Driven by optimism about the strength of the US economy and developments in artificial intelligence, the S&P 500 is set for its largest jump relative to the rest of the world since 1997.

European markets were mostly closed while in Asia, the MSCI Asia Pacific Index climbed for a fourth day, the longest winning streak since September, led by Japan and Taiwan. Japanese shares also rose after central bank governor Kazuo Ueda on Wednesday avoided giving any clues about a possible interest-rate hike. Japanese retail shares also gained after the country agreed with China to introduce more measures to promote tourist visits. The two nations also agreed that Beijing’s top diplomat should visit Japan in 2025, adding to signs the two nations are repairing ties that have been strained in recent years.  Shares of Chinese computing-equipment makers advanced after the nation said it planned to include the sector into the investment scope of local government special bonds. Kingsignal Technology surged as much as 20% as did Broadex Technologies.

The dollar was broadly steady against its Group-of-10 peers, while the yen extended its losses after BOJ head Ueda refused to offer any hawkish hints about an imminent rate hike. “Weakness in the yen on the back of recent Fed-BOJ policy divergence has offered some support for Japanese equities in today’s session, coupled with the year-end positive seasonality around the Santa Claus rally,” said Jun Rong Yeap, a market strategist at IG Asia Pte in Singapore.

In rates, treasuries are under pressure as US trading gets under way following Wednesday’s US holiday. 10-year yields climbed four basis points to 4.63% before the US auctions $44 billion of seven-year notes on Thursday.  The year’s final coupon auction at 1pm New York time, a $44 billion 7-year note sale.  Demand was firm for 2- and 5-year note auctions Monday and during Tuesday’s holiday-shortened session, halting a selloff in which 5- to 30-year yields reached highest levels in months.

In commodities, oil held gains after an advance before the Christmas break, with China’s stimulus measures and the outlook for US stockpiles in focus.

Looking at today’s calendar, US economic data calendar includes only weekly jobless claims at 8:30am. The Fed speaker slate is blank for the rest of the week.

Market Snapshot

• S&P 500 futures down 0.2% to 6,083.50
• MXAP up 0.3% to 182.31
• MXAPJ down 0.1% to 574.63
• Nikkei up 1.1% to 39,568.06
• Topix up 1.2% to 2,766.78
• Hang Seng Index up 1.1% to 20,098.29
• Shanghai Composite up 0.1% to 3,398.08
• Sensex little changed at 78,460.42
• Australia S&P/ASX 200 up 0.2% to 8,220.86
• Kospi down 0.4% to 2,429.67
• Brent Futures up 0.5% to $73.96/bbl
• Gold spot up 0.4% to $2,626.75
• US Dollar Index little changed at 108.20

Top Overnight News

• China is allowing local officials to invest in more areas with a key government bond while also simplifying its approval process in a bid to make better use of an important source of public funding to drive the economy
• Japan’s auction of two-year government notes Thursday showed solid demand as expectations recede for an interest-rate hike by the BOJ soon. The bid-to-cover ratio rose to 3.95 from 3.63 at last month’s sale
• Bitcoin rose on Thursday after the digital asset’s stockpiler MicroStrategy announced a plan to issue more shares, a move that would allow it to buy even more tokens.
• China abruptly ousted two military lawmakers from its national parliament without explanation, as a purge of key personnel in the upper echelons of the nation’s defense establishment shows no sign of easing
• Market players widely expect Japan’s benchmark 10-year government bond yield to continue to gradually rise next year, but the extent of the increase will depend on whether the central bank is able to lift interest rates smoothly
• Japanese Prime Minister Shigeru Ishiba’s cabinet is expected to approve a record initial budget Friday for the next fiscal year that will ramp up spending on defense and support for local economies

Via SchiffGold.com,

Powell is admitting that inflation is still too high, but the Fed still plans to cut interest rates by .25%. So why are mortgage rates going up?

The Fed has turned hawkish relative to its recent rhetoric, resisting to slash interest rates as low as it had envisioned. Although it’s continuing to cut, the Fed’s actions primarily influence short-term interest rates, such as the federal funds rate. This is the rate at which banks lend to one another overnight. These short-term rates affect a wide range of borrowing costs including those on credit cards, car loans, and adjustable-rate mortgages. 

However, most mortgage rates, particularly those for fixed-rate loans, are more closely tied to long-term bond yields such as the yield on 10-year U.S. Treasury bonds. And right now, 10-year Treasury yields are soaring.

While both short-term rates and long-term bond yields are influenced by the broader economic climate, they don’t move in lockstep. When the Fed cuts interest rates, it doesn’t directly control long-term bond yields, so mortgage rates can behave differently from the federal funds rate. This disconnect can lead to situations where mortgage rates rise, even though the Fed is trying to lower borrowing costs for the broader economy.

Mortgage rates are sensitive to inflation expectations. If investors believe that the Fed’s rate cut signals future inflationary pressure, they may demand higher yields on long-term bonds to compensate for the eroding value of money over time. When inflation expectations rise, long-term bond yields go up, which can push mortgage rates higher along with them. 

And now the Fed itself has admitted that it hasn’t been able to control inflation. But even as Powell admits defeat and says it could be two years before inflation is back down to Fed targets, he still paints a picture much rosier than the reality.

As Peter Schiff said recently on Fox Business:

“Inflation won’t be anywhere near 2% in two years, it’s going to be higher than it is right now. Powell is still wrong about inflation and the economy…I think it’s stagflation that we have, and I think it’s going to get worse.”

If bond investors see the rate cut as a sign of weakening economic conditions, they might sell off bonds, driving yields higher. As bond yields rise, mortgage rates tend to follow suit, even if the Fed’s action aims to make borrowing cheaper. If investors believe that economic conditions are deteriorating, they might demand higher premiums for taking on long-term risk. This can lead to rising mortgage rates as lenders pass that risk onto borrowers. Anticipating higher inflation, they’ll demand higher and higher yields.

People hoping to buy homes are delaying their plans as mortgages become more expensive, along with home insurance premiums, materials for home improvement projects, and plenty of other costs that are part of the collective burden of home ownership. Commercial real estate is on the brink as well. With borrowing costs for properties continuing to creep upward, and other costs moving up as well, the Fed is trapped by its simultaneous need to lower borrowing costs and ease inflationary pressures at the same time.

It can’t do both. With a stagnant economy and high inflation, expect mortgage rates to rise further as the 10-year yield keeps surging closer back toward 5%. At that point, the Fed would be forced to take drastic action to push borrowing costs lower and prevent an all-out meltdown, possibly being forced into a round of QE which will ultimately solve nothing, ripping the inflation wound open even wider.

10-Year Bond Yields

The Fed may have no choice. Just as 2024 was a fitting demonstration of their hubris, declaring victory over inflation only to later admit defeat, 2025 may be the year that some of those chickens come home to roost. While the Fed and the government have an extraordinary ability to keep pumping bubbles bigger and kicking cans down the road, all bubbles are bound to pop eventually. 

And the Fed is trapped in a prison of a deteriorating economy, high deficits, soaring debt, and high inflation that it has no way to escape.

Big tech companies are aggressively investing billions of dollars in AI data centers to meet the escalating demand for computational power and infrastructure necessary for advanced AI workloads.

This graphic, via Visual Capitalist’s Kayla Zhu, visualizes the total AI capital expenditures and data center operating costs for Microsoft, Google, Meta, and Amazon from January to August 2024.

AI capital expenditures are one-time or infrequent investments in long-term AI assets and infrastructure.

Data center operating costs are ongoing expenses for running and maintaining AI data centers on a day-to-day basis

The data comes from New Street Research via JP Morgan and is updated as of August 2024. Figures are in billions. Operating costs include cash operating expenses, software, depreciation, and electricity.

Training AI Models Is Eating Up Costs

Below, we show the total AI capital expenditures and data center operating costs for Microsoft, Google, Meta, and Amazon.

Microsoft currently leads the pack in total AI data center costs, spending a total of $46 billion on capital expenditures and operating costs as of August 2024.

Microsoft also currently has the highest number of data centers at 300, followed by Amazon at about 215. However, variations in size and capacity mean the number of facilities doesn’t always reflect total computing power.

In September, Microsoft and BlackRock unveiled a $100 billion plan through the Global Artificial Intelligence Infrastructure Investment Partnership (GAIIP) to develop AI-focused data centers and the energy infrastructure to support them.

Notably, both Google and Amazon currently spend more than twice as much training their models as they do running them for their end-use customers (inference).

The training cost for a major AI model is getting increasingly expensive, as it requires large data sets, complex calculations, and substantial computational resources, often involving powerful GPUs and significant energy consumption.

However, as the frequency and scale of AI model deployments continue to grow, the cumulative cost of inference is likely to surpass these initial training costs, which is already the case for OpenAI’s ChatGPT.

To learn more about data center distribution in the U.S., check out this graphic that shows the percentage of U.S. states’ electricity that data centers consumed.