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You can take the banana out of the republic, but you can never take the banana republic out of Turkey.

One day after we pointed out that Erdogan was resorting to ruthless authoritarian practices traditionally reserved for such EU nations as Romania, in which the Turkish dictator was preparing to block his top political challenger from competing against him…

first Romania, now Turkey

TURKEY VOIDS ERDOGAN RIVAL’S DEGREE, RISKING PRESIDENCY BID:HT

— zerohedge (@zerohedge) March 18, 2025

… Erdogan has done just and early Wednesday morning, Erdogan stunned markets when he arrested the popular mayor of Istanbul, Ekrem Imamoglu, 54, who is also the top contender for the presidency. 

The detention of Imamoglu came a day after Turkish authorities revoked his university diploma in a move that could bar him from challenging Erdogan in the next presidential election. He beat Erdogan’s handpicked candidate in last year’s Istanbul mayoral race and was set on Sunday to be named the presidential candidate for the Republican People’s Party, the main opposition group known as the CHP.

The arrest ignited a historic selloff in the country’s markets, sparking a market-wide trading halt after the Borsa Istanbul which plunged 8% amid a wholesale liquidation panic, and sent the lira crashing as much as 11% to record lows.

It served as a stark reminder of the risks involved in investing in this particular Banana republic, where Erdogan’s 22-year rule has been punctuated by periods of political turmoil, recurrent market meltdowns and hyperinflation. 

To arrest the collapse, Bloomberg reported that state lenders sold around $8 billion in FX to support the lira after it tumbled to a record low. The nation’s stocks dropped so abruptly they triggered a trading halt while borrowing costs surged as investors dumped the government’s debt.

Turkish assets posted the biggest losses worldwide: The lira weakened as much as 11% to trade past 40 mark against the US dollar before trimming losses to 5.5% at 38.8565 per dollar as of 12:45 p.m. in Istanbul after local central bank spent billions in dollars to halt the plunge. The intervention in the lira market was carried out through multiple lenders, the people familiar with the matter said, asking not to be identified given the sensitivity of the matter. The central bank wasn’t immediately available for comment.

The benchmark Borsa Istanbul 100 Index fell as much as 8% after resuming trading after a marketwide trading halt, and sovereign 10-year bonds tumbled, sending yields 139 basis points higher to 29.58%.

In a desperate attempt to reassure investors that this is the last time the banana republic will be a, well, banana republic
treasury and finance minister Mehmet Simsek stepped in to reassure investors, saying that the government’s economy policy remain unchanged. “The economy program we have been implementing continues in a determined fashion,” he said in a comment on X. Unfortunately nobody believed him.

Piyasaların sağlıklı işleyişi için gereken her şey yapılıyor.

Uygulamakta olduğumuz ekonomi programı kararlılıkla devam ediyor.

— Mehmet Simsek (@memetsimsek) March 19, 2025

“This is a bit of a shock to the system,” said Nick Rees, the head of macro research at Monex Europe Ltd in London. “Markets had become increasingly complacent, and that spell has now been broken, with dramatic results as traders reprice Turkey’s political risk premia.”

Coex Partners’ Henrik Gullberg said the magnitude of the move was “surprising,” but the news of the political crackdown less so. “In practice, I’m not sure this will change things much, in terms of economic market sensitive policies.”

IIF strategist Robin Brooks went as far as cautioning that the lira crash “could be a catalyst for major contagion to the rest of EM.”

The Turkish Lira sell-off could be a catalyst for major contagion to the rest of EM. In 2018, as the US – China tariff fight was escalating, idiosyncratic blow-ups in Argentina and Turkey combined to pull the rest of EM into a nasty sell-off by mid-2018… https://t.co/KGBlcQR7ls

— Robin Brooks (@robin_j_brooks) March 19, 2025

Goldman trader Serdar Caliskan, who was probably long to quite long Turkish assets, sent out a note this morning to clients taken straight out of a Douglas Adams novel: “Please don’t panic!” he said, probably targeting his own state of min: “Obviously I am not allowed to give opinions about politics, but I don’t expect any economic policy will change soon. With the most naive and neutral explanations, everything seems to me simply nothing more than Erdogan-Imamoglu rivalry, so this should be a kind of state level. If anything, what is going on would make Imamoglu stronger politically. In my experience – I have never seen Turkish authorities fail under emergency and Turkish public acted against authorities under emergencies. I am sure CBRT will do their job at their bests. We should respect the investigation, and follow the official announcements. As usual – I will try to give liquidity and keep market in one piece as much as my mandate allows me. Good Luck!”

Unfortunately luck does not pay margin calls, and that’s precisely what all those who were long the Lira, and so many were as it is one of the top EM carry trades. Indeed, as Goldman also noted, positioning wise, “short USDTRY is one of the most-held trades out there right now. There has been some optionalising of positioning recently as Vol dynamics have made it attractive, but still most risk is held in Short USDTRY Fwds.”

Oops: someone, or rather quite a few someones, had a very bad day this morning.

Here are some more comments from Goldman traders:

• Serdar Caliskan: Don’t expect any shifts in the economic policy, and think the CBRT is likely to support the lira limiting the impact from the outflows. Positioning is a concern but medium term expect the situation to normalise, though in the near term we could see further pain.
• Mehmet Pilavci: Spot moving much more aggressively than we expected. Market opened with a 400bps move in rates, 150bp in bonds, 10% depreciation in spot FX. International positioning is 25-30bn which is a big concern. The move in spot of that magnitude could send the wrong signal to the locals. Watching is locals start to dollarize more aggressively as it could extent the moves.
• Alex Von Knieriem: CDS 30bps wider at the open, the moves are looking excessive as there is unlikely to be any economic policy changes. We’re not seeing any fading interest so far.
• Pierre Viandaz: a lot of offshore clients were positioned in USDTRY via high prem downside binaries. Turkey is one of the biggest if not the biggest FX positions at the moment. The TRY-induced portfolio rebalance could have spillover effects into the rest of EM and G10 with crowded positions getting trimmed.
• Christine Tse: The scale of market reaction have exceeded expectations.  Whilst this development is a negative one from sentiment perspective, it does not directly relate to economics policy and investment in the Turkey carry trade. The move was mostly offshore driven for now, and is a good reflection of how heavy positioning is.  We think TCMB has enough ammunition to stabilize the spot move, but will be important to watch whether we see large dollarization driven by this panic.

USDTRY 12m implied fwd

10y TURKGB yield

In a voice message shared by his team, Imamoglu denounced his detention, accusing authorities of weaponizing the police. His party has called the charges baseless and politically motivated.

The moves are part of a broader pressure campaign by the leader of the NATO country against opposition figures, activists, and critical voices. Imamoglu’s detention follows the arrest in January of Umit Ozdag, the leader of a small nationalist party and a vocal critic of Erdogan. Investigations have also ensnared national politicians, journalists, and even a celebrity agent earlier this year. Former Kurdish leader Selahattin Demirtas has been imprisoned for years. 

The next presidential election is officially set for 2028. For a chance at extending more than two decades in power, as prime minister and then president, Erdogan would need to secure enough parliamentary support to change the constitution or call for a snap election.

During Tuesday’s Trump-Putin phone call, which lasted some 90-minutes, the White House said that President Putin committed to a halt of attacks on Ukraine’s energy infrastructure for a period of 30-days. The Kremlin readout also appeared to acknowledge and agree to this.

Less than 24 hours later, Russia has accused Ukraine of already breaking the Trump agreement. Russia’s defense ministry on Wednesday said Ukraine attack an oil transfer facility in Russia’s Krasnodar Region that services an international pipeline operation partially owned by American investors.

The ministry described that the overnight attack saw three kimikaze drones target the site near the village of Kavkazskaya. The site transfers crude to a pipeline operated by the Caspian Pipeline Consortium (CPC), an international firm which has among its partners US giants Chevron and Mobil, Russia’s RT notes.

The drone impact reportedly set fire to an oil reservoir, which has reportedly taken emergency crews a long time to extinguish. Local reports say crews are still battling the blaze.

Moscow is describing the attack as part of an intentional efforts to thwart any advancement of a peace or ceasefire agreement between Russia and the US.

“Clearly, this was a premeditated provocation by the Kiev regime aimed at derailing the US president’s peace initiative,” the Russian military stated soon after.

There indeed doesn’t appear to be any meaning ceasefire on at the moment, but the concession Trump was able to get from Putin marks a first of the war…

Ceasefire, what ceasefire? Russia kept pummeling Ukrainian cities overnight, hitting a hospital in Sumy among other targets. Ukraine struck a key Russian crude oil pipeline facility in northern Caucasus. Photo left — Ukrainian hospital. Video — the Kavkazskaya pumping facility. pic.twitter.com/oZpADfPA48

— Yaroslav Trofimov (@yarotrof) March 19, 2025

The Russian readout of Tuesday’s Trump call included the following: “During the conversation, Trump proposed a mutual agreement between both sides to refrain from striking energy infrastructure for 30 days. Putin welcomed the initiative and immediately instructed the Russian military to comply.”

However, Russia has yet to agree to refrain from other attacks, and is likely to continue hitting Ukraine hard so long as drones keep flying across the border.

Ukraine’s Zelensky says he soon expects to hold a phone call with President Trump. His position has remained that nothing can be agreed to ceasefire-wise without Kiev’s direct participation and input.

Below are more geopolitical developments on Wednesday, via Newsquawk:

* * *

Geopolitics: Middle East

• Israeli army attacked Khan Yunis and conducted heavy shelling in the southern Gaza Strip, according to Al Jazeera.
• Hamas leader said continuation of the Israeli bombardment of Gaza will lead to the death of many Israeli prisoners and the movement is communicating with mediators to force Israel to respect its commitments to the ceasefire.
• US bombed targets in areas east of Hodeidah in Yemen and there were at least 10 US strikes that targeted areas in Yemen, according to Houthi media.

Geopolitics: Ukraine

• Russia’s Medvedev said the Putin-Trump call showed there is only Russia and the US in the ‘dining room’ eating a ‘Kyiv-style cutlet’ as a main course.
• US Special Envoy Witkoff said talks with Russia on the Ukraine war will take place on Sunday in Jeddah.
• Ukrainian President Zelensky said Russia launched over 40 drones targeting civilian infrastructure and it is precisely such night attacks by Russia that destroy Ukraine’s energy and civilian infrastructure. Zelensky added the fact that Tuesday night attacks were no exception shows the need to continue pressure on Russia for the sake of peace, as well as noted that Russian President Putin de facto rejected the proposal for a complete ceasefire and it would be right for the world to reject any attempts by Putin to drag out the war in response.
• UK PM Starmer spoke with Ukrainian President Zelensky on Tuesday evening and discussed progress US President Trump had made towards a ceasefire in talks with Russia, according to Downing Street.
• Regional governor in Russia’s Belgorod region said the situation remains difficult, a day after Russia said its forces had thwarted Ukrainian attempts to push across the border in Belgorod. It was separately reported that a drone attack sparked a fire at an oil depot in Russia’s Krasnodar region, according to regional authorities.
• UK Foreign Secretary said the EU and UK are to accelerate shipments of arms to Ukraine ahead of a potential full ceasefire, according to Bloomberg.
• Russian Defence Ministry says Ukraine attacked Russia’s energy infrastructure overnight, according to IFAX; CPC Kropotkinskaya oil pumping station stopped operating after damage, according to Tass.
• Ukraine State Railways in the Dnipropetrovsk region says Russian forces have attacked its power system on Wednesday morning.
• Finland President Stubb says if Russia refuses to agree, will need to increase its efforts to strengthen Ukraine and ratchet up pressure on Russia to convince it to come to the negotiating table.
• Ukrainian President Zelensky says he hopes a ceasefire will eventually be implemented; says Russian President Putin’s words are at “odds with reality”, in relation to the halt on energy strikes. Will speak to US President Trump on Wednesday.

Geopolitics: Other

• US Secretary of State Rubio warned unless Venezuela’s government accepts a flow of deportation flights, the US will impose new and escalating sanctions, while Venezuela’s government said sanctions are an economic war and responsible for hardships.

US equity futures are higher into Fed day, rebounding from Tuesday’s losses, with both tech and small caps outperforming, while European stocks inch higher having recovered from an earlier drop after Turkey assets and FX imploded following the latest political crackdown in the banana republic. As of 8:00am ET, S&P and Nasdaq futures are 0.3% higher with all Mag7 names higher premarket led by TSLA (+3%) after the electric-vehicle maker received California’s approval to start carrying passengers. NVDA rose +1% after CEO Jensen Huang promised a clearer payoff to customers. The shares had dropped 3.4% Tuesday.  China ETF KWEB is outperforming QQQ pre-mkt on Tencent earnings. Financials are also catching a bid with bond yields flat and the USD is higher for the first time in 4 sessions, boosted in part by the 10% plunge in the Turkey lira, which is spilling over across EMs. Commodities are weaker as 3 complexes are under pressure; WTI is flat reversing an earlier loss on Ukraine energy-based de-escalation. Reuters is reporting that the US is suspending some multi-agency and multi-country efforts to counter Russian sabotage, potentially to help a deal move through. Today’s pre-market rally may gain strength depending on whether the FOMC dots are modestly lowered, whether Powell’s press conference is seen as dovish and any adjustments to QT.

In premarket trading, Tesla is leading gains among the Magnificent Seven stocks after the electric-vehicle maker was granted approval in California to begin carrying passengers in its vehicles in a step toward ride-hailing services (Alphabet +0.3%, Amazon +0.2%, Apple +0.3%, Microsoft +0.2%, Meta +0.1%, Nvidia +1% and Tesla +3%). Black Diamond Therapeutics (BDTX) rises 27% after the company entered into a licensing agreement with Servier, a pharmaceutical group governed by a non-profit foundation. Here are some other notable premarket movers:

• Cargo Therapeutics (CRGX) soars 19% after appointing Anup Radhakrishnan as interim CEO to lead the company through a reverse merger or other business combination.
• General Mills (GIS) slips 3% after the packaged-food company cut its organic net sales forecast for the full year.
• Gilead Sciences (GILD) drops 2% after the Wall Street Journal reported that the US Department of Health and Human Services was weighing plans to cut federal government funding for domestic HIV.
• HealthEquity (HQY) drops 14% as fraud-related costs weighed on results.
• Signet Jewelers (SIG) jumps 14% after the owner of Kay Jewelers said sales are recovering following a disappointing holiday season
• StoneCo (STNE) climbs 10% after the Brazilian fintech posted 4Q adjusted net income that beat.
• Venture Global (VG) gains 6% after Bloomberg reported that the Trump administration is prepared to give the company conditional approval to export natural gas from a planned facility in Louisiana that had stalled under former President Joe Biden.

Today’s main event is the FOMC decision (full preview here), where the Fed is expected to hold interest rates steady, while its latest dot plot should offer clues on the central bank’s thinking on the economy. Powell’s news conference will also be scrutinized for his views on the potential impact of the trade tariffs and how much support could be offered to the economy this year. 

“Investors continue to search for a policy circuit breaker, either from the White House or the Fed,” said Robert Griffiths, an equity strategist at L&G Investment Management. Griffiths noted the Fed’s dovish pivot in late-2019 had come after a 30% drop in the Nasdaq, a far steeper decline than the index has suffered this year. What’s more, the full impact of the tariffs on inflation and the economy remains unclear, implying “the Fed’s ability to act pre-emptively on this occasion is extremely limited,” he added.

Meanwhile, geopolitics remains front and center and adds a fresh layer of worry, as the Gaza truce ended, Russia rejected Trump’s ceasefire proposal in Ukraine and Turkey ignited a selloff in its markets by detaining a key opposition figure. The lira plunged more than 10% to record lows and the main equity index dropped after the detention of Istanbul mayor Ekrem Imamoglu. 

Europe’s Stoxx 600’s three-day winning streak stalled, with Turkey-exposed stocks such as BBVA and ING posting losses; technology and energy shares were the best performing sectors, while mining and personal care stocks are the biggest laggards. The Stoxx 600 is now up 0.1%, led by gains in consumer products, technology and energy names. Here are the biggest movers Wednesday:

• Softcat shares rally as much as 13% to the highest since June, after the UK IT reseller raised guidance for operating profit growth and reported first-half results that beat estimates
• Cargotec gains as much as 7.5%, the most in almost five months, as Danske Bank lifts its rating on the Helsinki-listed cargo-handling equipment maker to buy from hold
• Bridgepoint shares rise as much as 5.6% after being upgraded to buy by analysts at Citi, who argue the risk-reward profile looks attractive following the stock’s recent underperformance
• M&G shares rise as much as 4.5%, hitting their highest level in almost a year, after the investment manager’s results for 2024 came in better than expected, according to Jefferies
• Saab drops as much as 7.2%, slipping from yesterday’s record closing high, as Danske Bank double-downgrades to sell and says valuation is “perhaps not attractive enough” to reflect potential headwinds
• Compass Group shares fall as much as 6.1%, hitting the lowest level since Oct. 15, after BNP Paribas Exane downgraded the stock to underperform from outperform
• Raysearch falls as much as 13%, the most since Aug. 29 2022, after the Swedish medical technology firm’s CEO Johan Lof sold some of his Class B shares in the company at a 10.1% discount vs. Tuesday’s close
• Pan African Resources shares fall as much as 6.8% in London, after Tembo Capital Mining Fund sold its entire stake at a discount to the last close
• Ferrexpo falls as much as 15% in London, the most since Feb. 20, after the miner reported revenue for the 2024 full year that missed the average analyst estimate
• Steyr Motors drop 61% in Frankfurt, paring 1170% rally over previous 12 days, after majority owner Mutares said it plans to sell further shares in the company

Earlier in the session, Asian stocks were mixed as traders await more clues on the economic outlook from the Federal Reserve’s policy decision  later Wednesday. Indonesian stocks bounced back from Tuesday’s steep selloff. The MSCI Asia Pacific Index erased earlier gains of as much as 0.4% to trade little changed. While the US central bank is expected to hold interest rates steady, officials may offer more clarity amid President Donald Trump’s tariff threats and fears of a US recession. Chinese benchmarks were mixed as uncertainties lingered over Beijing’s policy-direction in boosting consumer spending and stoking local demand. In a note Monday, Bank of America strategists warned of a “meaningful correction” for China’s stock rally, given its similarities with the 2015 boom-and-bust cycle. Meanwhile, Japanese shares gained after the central bank held rates steady as expected. South Korea’s stock benchmark also climbed, ahead of an imminent verdict in the impeachment of Yoon Suk-Yeol.

In FX, the Bloomberg Dollar Spot Index climbs 0.3%. The Swedish krona is the weakest of the G-10 currencies, falling 0.7% against the greenback. The euro retreated from five-month highs, after gains sparked by Germany’s plan for hundreds of billions of euros in debt financing. Lawmakers green-lit the package in Berlin on Tuesday. The yen is down 0.3% after the Bank of Japan kept its benchmark rate unchanged and cited worries over the potential impact from US tariff policies. The Turkish lira fell by more than 12% to a fresh record low after the detention of President Recep Tayyip Erdogan’s most prominent rival stoked concern that recent investor-friendly economic policies may be rolled back. It has since trimmed some losses.

In rates, treasuries dip, pushing the 10 Year Treasury yield 1bp higher to 4.29%, marginally cheaper on the day, trailing German counterparts by 3bp; US curve spreads are likewise little changed in muted trading conditions ahead of Fed decision. Bunds pared an earlier rally, although German 10-year borrowing costs are still down 3 bps at 2.78%. Traders have been piling into hawkish hedges that anticipate the central bank remaining on hold through June; Fed-dated OIS contracts currently price in around 58bp of easing by year-end with the first move fully priced by the July policy meeting

In commodities, oil prices are unchanged, reversing an earlier loss after Russian President Vladimir Putin declined Donald Trump’s bid for a 30-day ceasefire in Ukraine, agreeing instead to limit attacks on the country’s energy infrastructure. WTI is flat at $66.75 a barrel. Spot gold is steady around $3,036/oz having hit another record high earlier today. Bitcoin rises 2% to around $83,700.

On today’s calendar, besides the all important FOMC decision, it’s quiet: we get MBA mortgage applications (which dropped 6.2% after jumping 11.2% last week) and the January TIC flows at 4pm.

Market snapshot

• S&P 500 futures up 0.3% to 5,627.50
• STOXX Europe 600 down 0.1% to 553.60
• MXAP little changed at 189.77
• MXAPJ down 0.2% to 594.00
• Nikkei down 0.2% to 37,751.88
• Topix up 0.4% to 2,795.96
• Hang Seng Index up 0.1% to 24,771.14
• Shanghai Composite little changed at 3,426.43
• Sensex up 0.3% to 75,491.07
• Australia S&P/ASX 200 down 0.4% to 7,828.25
• Kospi up 0.6% to 2,628.62
• German 10Y yield little changed at 2.78%
• Euro down 0.3% to $1.0908
• Brent Futures down 0.7% to $70.10/bbl
• Gold spot down 0.1% to $3,032.05
• US Dollar Index up 0.28% to 103.53

Top Overnight News

• The Fed’s quarterly dot plot due today may look hawkish, with Bloomberg Intelligence calling it a coin flip whether the median will show one or two 25-bp cuts this year. Traders are pricing in at least three. The central bank is expected to keep the key rate unchanged. BBG
• WSJ’s Timiraos wrote central banks can lower rates because of good or bad news and the window for ‘good’ cuts is closing due to new inflation risks, while he noted that most officials are expected to pencil in one or two rate cuts this year but projections are likely to obscure how the Fed’s wait-and-see holding pattern has undergone an important reset because of the threat of an expansive trade war that sends up prices.
• Tesla (TSLA  +3.6% in premarket)  receives the first approvals in California needed to run a fleet of robotaxis in the state. RTRS
• A federal judge ruled that Elon Musk probably exercised unconstitutional power in orchestrating DOGE’s efforts to shutter USAID. The White House said it will appeal. BBG
• US crude inventories rose by 4.59 million barrels last week, API data is said to show. That would take total holdings to the highest since July if confirmed by the EIA. Trump will meet with oil industry execs later today. BBG
• Volodymyr Zelenskiy will have a phone call with Donald Trump today, he said. Earlier, US officials told European counterparts they’ll need to be involved in negotiations given its sanctions on Russia, people familiar said. BBG
• The lira sank after Istanbul’s mayor was detained at his home this morning. Ekrem Imamoglu is widely seen as Recep Tayyip Erdogan’s main rival and a top contender for the presidency. Turkish lenders were said to have sold about $8 billion to support the currency. BBG
• Chinese banks are slashing rates on consumer loans to record lows as policymakers ramp up stimulus to stabilize growth and counter US President Donald Trump’s tariffs. Lenders across the wealthier areas of Shanghai, the nation’s financial capital, and Hangzhou, a key tech hub, are engaged in a price war, offering annual interest rates as low as 2.58% on loans to fuel restaurant visits and shopping, according to online ads. That compares to rates as high as 10% about two years ago. BBG
• Euro-area inflation was revised down in February, strengthening calls for the ECB to continue cutting rates. CPI rose 2.3%, less than the 2.4% Eurostat first flagged. BBG
• Indonesia’s securities regulator eased share buyback rules after this week’s stock rout. The benchmark equity index closed higher for the first time in five sessions. The central bank held its key rate at 5.75%, as expected, and said it sees one cut this year. BBG
• The Bank of Japan kept interest rates steady on Wednesday and warned of heightening global economic uncertainty, suggesting the timing of further rate hikes will depend largely on the fallout from potentially higher U.S. tariffs. But Governor Kazuo Ueda also said rising food costs and stronger-than-expected wage growth could push up underlying inflation, highlighting the central bank’s attention to mounting domestic price pressures. RTRS

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded mixed as the region lacked firm conviction following the negative handover from Wall St and as participants braced for central bank announcements including the BoJ decision which lacked any major fireworks. ASX 200 was subdued for most of the session and finished lower in the absence of any fresh bullish catalysts. Nikkei 225 initially benefitted from recent currency weakness which helped the index shrug off disappointing machinery  orders and weaker-than-expected trade data to briefly reclaim the 38,000 level. However, the index then gradually pared its gains following the lack of surprises from the BoJ’s unsurprising decision to maintain rates at 0.50%, Hang Seng and Shanghai Comp were choppy with participants cautious as they digested recent earnings releases and with tech stocks contained heading into Tencent’s results due later today.

BOJ

• Policy Announcement: maintained its short-term interest rate target at 0.5%, as expected with the decision made by unanimous vote. BoJ said Japan’s economy is recovering moderately, albeit with some weak signs, while consumption is increasing moderately as a trend and inflation expectations are also heightening moderately. BoJ stated they must be vigilant to the impact of financial and FX market moves on Japan’s economy but added that Japan’s economy is likely to continue growing above potential. Furthermore, it expects underlying inflation to converge towards a level consistent with the price target in the latter half of the three-year period projected under the Outlook Report but noted uncertainty surrounding Japan’s economy and prices remains high.
• Ueda: will adjust the degree of easing if its economic and price outlook is realised; not pessimistic about Q1 GDP growth compared to its recent forecast. Still the BoJ’s view that the neutral rate has a wide range, BoJ has still not narrowed-down what the neutral rate is. The BoJ will respond ‘nimbly’ if there are abnormal long-term yield moves; adds that we are not in such a situation now. This Shunto result is largely in line with its view from January, wage trends are ‘on track’, or slightly stronger. There was a view at today’s meeting that there was upward pressure on inflation. Will not raise interest rates when the economy is in bad shape.

Top Asian News

• Tencent Holdings (TCEHY) (CNY) Q4 adj. net of 55.3bln (exp. 53.3bln), revenue 172.5bln (exp. 168.7bln); to raise dividend and buyback

European bourses kicked off the session on the backfoot amid a bout of general risk pressure following the European cash open with a few factors potentially influencing though there was not one clear driver; Stoxx 600 -0.1%. Sectors are mostly negative with Basic Resources lagging on pressure in Rio Tinto (-0.9%) after it pushed back on calls for a unified listing in Australia. Stateside, futures are firmer across the board but only modestly so; ES +0.3%, NQ +0.3%. Early doors, the benchmarks were knocked as part of a broader risk move with numerous factors potentially exerting influence; namely, Putin-Trump digestion and potential breach of the energy ceasefire, Ueda’s hawkish language, Turkish turmoil and ongoing tariff uncertainty. More broadly, focus remains on the Fed. NVIDIA’s (+1%) GTC saw a flurry of partnership announcements, Apple’s (+0.2%) Siri AI may miss Spring launch target, Oracle (+0.4%) mulls a stake in TikTok US, JPMorgan (+0.2%) hikes its dividend, Morgan Stanley (-0.1%) to cut jobs, Citi (+0.4%) lowers bonuses.

Top European News

• UK Chancellor Reeves is planning a new multi-billion pound public spending squeeze in next week’s Spring Statement, following an announcement on Tuesday of GBP 5bln in welfare cuts, according to FT.
• Irish Central Bank warned of significant impact from higher tariffs and cannot rule out a recession, while it lowered its GDP growth forecast for 2025 to 4.0% from 4.2% and 2026 forecast to 4.0% from 4.5%.
• TRY and Turkish equities pressured after the detention of Imamoglue. Borsa Istanbul temporarily halted trading.
• Head of France’s BNIC Cognac lobby says French Foreign Minister plans to visit China at the end of March.

FX

• USD is firmer vs. peers as we count down to the FOMC. Focus for the meeting is on the dot plot, Powell/statement commentary on tariffs and the US economy in addition to anything on QT. DXY at the upper-end of a 103.25-103.71 band.
• EUR/USD lower early doors, hit by EUR/JPY action during the Ueda presser. Down to a 1.0874 base at worst. Specifics for the bloc a little light after the Bundestag vote and ahead of the Bundesrat on Friday.
• JPY choppy but ultimately softer in wake of the BoJ where rates were kept on hold, as expected. The subsequent presser sparked some JPY strength as Ueda turned slightly more hawkish throughout it and as the risk tone deteriorated. USD/JPY currently firmer but off best in a 149.15-150.15 band.
• Sterling on the backfoot given JPY action with general USD strength also factoring. Pressure which comes despite favourable EUR/GBP movement. For the UK, specifics are light as we count down to the BoE on Thursday. Cable finds itself at the lower-end of a 1.2958-1.3004 band and pulling back from Tuesday’s 1.3010 YTD peak.
• TRY hit by the arrest of the likely main opposition candidate to Erdogan, with USD/TRY hitting a record 41.0132 peak after this.
• Antipodeans are both extending on the downside seen yesterday with the latest leg lower coinciding with selling in European equity futures ahead of the cash open. From a fundamental perspective, little reaction was seen from the relatively stable Australian Leading Index and softer-than-expected New Zealand Current Account data.

Fixed Income

• Benchmarks bid early doors as the risk tone deteriorated with, as discussed elsewhere, no one factor behind this. Since, as sentiment recovers, benchmarks are off best with USTs just into the red, Gilts near-unchanged and Bunds around 30 ticks off best.
• JGBs came under pressure into and after the BoJ itself. Thereafter, Ueda’s press conference began with him sitting on the fence and as such JGBs got back to their 138.25 peak before pulling back sharply to a 138.07 base, where it remains, as Ueda turned slightly more hawkish.
• USTs hit a 110-27 peak on the deterioration in the risk tone, stalling just before the proceeding sessions’ 110-29 and 110-30 respective highs. Specifics a touch light this morning as we digest the readout from Putin-Trump and count down to the FOMC; USTs back toward 110-20+ lows most recently.
• Bunds are firmer but also off best as the general fixed income rally seen in the European morning takes a slight breather and with Bunds specifically also acknowledging dual tranche supply.
• Gilts find themselves back to trading between USTs and Bunds after leading the action for a change on Tuesday. Focus for today, aside from the above macro points, is on PMQs where details will be sought on the disability reform Labour announced and whether the cost savings from this go far enough to restore headroom.

Commodities

• Crude futures remain under pressure after Tuesday’s constructive geopolitical developments, with both WTI and Brent trading at weekly lows of USD 66.21/bbl and USD 69.90/bbl respectively.
• Trump-Putin talks were described as productive, with the leaders agreeing on a temporary halt to energy infrastructure strikes and immediate talks on a complete ceasefire. However, it does appear that this agreement may have already been breached by Russia, with attacks reported on power supplies in the Dnipropetrovsk region this morning. Most recently, IFX citing Russia’s Defence Ministry reports that Ukraine attacked Russian infrastructure overnight.
• Dutch TTF is firmer, supported by the lack of a full ceasefire in Ukraine, along with reports of Russian and Ukrainian breaches of this energy agreement, as mentioned in the crude section.
• Spot gold has given back some of the gains from Tuesday, with the yellow metal still comfortably clear of the USD 3k/oz mark, but shy of the USD 3045/oz ATH which printed after the Putin-Trump call.
• Base metals are, broadly speaking, little changed with the risk tone tentative as we count down to the FOMC and updates on the multiple other in-focus macro drivers.
• US Private Inventory Data (bbls): Crude +4.6mln (exp. +0.9mln), Distillate -2.1mln (exp. -0.3mln), Gasoline -1.7mln (exp. -2.4mln), Cushing -1.1mln.

Geopolitics: Middle East

• Israeli army attacked Khan Yunis and conducted heavy shelling in the southern Gaza Strip, according to Al Jazeera.
• Hamas leader said continuation of the Israeli bombardment of Gaza will lead to the death of many Israeli prisoners and the movement is communicating with mediators to force Israel to respect its commitments to the ceasefire.
• US bombed targets in areas east of Hodeidah in Yemen and there were at least 10 US strikes that targeted areas in Yemen, according to Houthi media.

Geopolitics: Ukraine

• Russia’s Medvedev said the Putin-Trump call showed there is only Russia and the US in the ‘dining room’ eating a ‘Kyiv-style cutlet’ as a main course.
• US Special Envoy Witkoff said talks with Russia on the Ukraine war will take place on Sunday in Jeddah.
• Ukrainian President Zelensky said Russia launched over 40 drones targeting civilian infrastructure and it is precisely such night attacks by Russia that destroy Ukraine’s energy and civilian infrastructure. Zelensky added the fact that Tuesday night attacks were no exception shows the need to continue pressure on Russia for the sake of peace, as well as noted that Russian President Putin de facto rejected the proposal for a complete ceasefire and it would be right for the world to reject any attempts by Putin to drag out the war in response.
• UK PM Starmer spoke with Ukrainian President Zelensky on Tuesday evening and discussed progress US President Trump had made towards a ceasefire in talks with Russia, according to Downing Street.
• Regional governor in Russia’s Belgorod region said the situation remains difficult, a day after Russia said its forces had thwarted Ukrainian attempts to push across the border in Belgorod. It was separately reported that a drone attack sparked a fire at an oil depot in Russia’s Krasnodar region, according to regional authorities.
• UK Foreign Secretary said the EU and UK are to accelerate shipments of arms to Ukraine ahead of a potential full ceasefire, according to Bloomberg.
• Russian Defence Ministry says Ukraine attacked Russia’s energy infrastructure overnight, according to IFAX; CPC Kropotkinskaya oil pumping station stopped operating after damage, according to Tass.
• Ukraine State Railways in the Dnipropetrovsk region says Russian forces have attacked its power system on Wednesday morning.
• Finland President Stubb says if Russia refuses to agree, will need to increase its efforts to strengthen Ukraine and ratchet up pressure on Russia to convince it to come to the negotiating table.
• Ukrainian President Zelensky says he hopes a ceasefire will eventually be implemented; says Russian President Putin’s words are at “odds with reality”, in relation to the halt on energy strikes. Will speak to US President Trump on Wednesday.

Geopolitics: Other

• US Secretary of State Rubio warned unless Venezuela’s government accepts a flow of deportation flights, the US will impose new and escalating sanctions, while Venezuela’s government said sanctions are an economic war and responsible for hardships.

US Event Calendar

• 07:00: March MBA Mortgage Applications, prior 11.2%
• 14:00: March FOMC Decision
• 16:00: Jan. Total Net TIC Flows

DB’s Jim Reid concludes the overnight wrap

Welcome to FOMC decision day which we’ll preview later. Ahead of that, the air continues to deflate from the tech balloon (or bubble depending on your view) with the interesting question being whether this would have happened without the tumultuous trade headlines of the last month. The market is understandably fixated with how negative the trade headlines have been for US equities but the reality is that in February when the S&P 500 was only down -1.42%, the Mag-7 were down -8.77%. So don’t underestimate the tech sell-off as being the primary reason for US equity weakness of late.

This sell-off continued yesterday with the Mag-7 down -2.47% to the lowest levels since September, dragging the S&P down -1.07%. Tesla (-5.34%) and Nvidia (-3.43%) again lagged, while Meta (-3.73%) became the last of the Mag-7 to fall into the negative territory YTD. The rest of the Mag-7 are down by between -9% and -44% YTD. Overall the Mag-7 is down -16.19% so far this year, with the S&P 500 -4.54%. Interestingly the equal weight S&P 500 (-1.00% YTD) is only slightly lower, so outside of the Mag-7 it’s just a small sell-off so far. So when we think about the US market falls this year I would say sentiment changes towards the Mag-7 are a bigger impact domestically than the trade headlines even if both matter.

Over the other side of the pond your crystal ball would probably have been launched in the bin had you predicted that the DAX (+17.44% YTD) would be up as much at this stage of the year in absolute terms and especially versus the Mag-7 and the overall US market. However the news out of Germany continues to be positive with the CDU/SPD/Greens yesterday achieving the two-thirds majority needed for the debt brake reform containing the huge potential defence spending boost, and the €500bn infrastructure fund. So it was another day of European out-performance with the DAX (+0.98%) and the STOXX 600 (+0.61%) strong but with the IBEX (+1.58%) and FTSE-MIB (+1.31%) even stronger showing the halo impact of German spending. European bond yields largely held steady, with 10yr bund yields -0.8bps lower, but with the Euro (+0.21%) edging higher and to a fresh five-month high of 1.0945.

Incoming German Chancellor Friedrich Merz’s next test will be Friday’s vote in the Bundesrat – the second chamber comprising the 16 state governments – at 8:30AM GMT. As we said on Monday, the hurdle for the constitutional amendments to pass the Bundesrat is lower than it was in the Bundestag, especially as Bavaria has confirmed that it will support the package. So the execution risk is declining still further from already low levels.

Back to the US, and today brings the Federal Reserve’s second policy decision of 2025 and their latest Summary of Economic Projections. For the headline decision, we expect the Fed to hold rates steady and, given heightened uncertainty, provide limited guidance about the policy path ahead. And in a closer call, our US economists expect the Fed to announce a pause in QT beginning in April, coupled with forward guidance indicating that QT should resume once the debt ceiling is resolved. For details, see their Fed preview here. Although this is unlikely to be an exciting meeting, plenty has happened since the last meeting so the press conference could see a whole host of challenging questions for Powell. We suspect they will mostly be answered with a straight, non-commital bat, but will make for interesting viewing.

Ahead of that, the latest slew of US data yesterday leaned a little hawkish. Industrial production accelerated to +0.7%m/m (+0.2% expected) from +0.3%m/m in January, and manufacturing production rose +0.9%m/m (+0.3% expected). US housing starts increased +11% to a seasonally adjusted rate of 1.50mn units in February (+1.4% expected), though building permits were more in-line and tend to be more indicative of the underlying trends with starts often weather influenced. Meanwhile, monthly import prices came hotter at +0.4% m/m (vs. 0.0% expected), which included a sizeable jump in imported international airfares (+0.9%) that should add a little upside to next week’s core PCE print.

With all that data, market expectations of Fed rate cuts edged lower, with the amount of easing priced in by the December meeting (-1.2bps to 59bps) falling to its lowest level in three weeks. At the longer end of the rates curve, 10yr Treasury yields swung around but ultimately fell amid the risk off tone with 10yr yields down -1.5bps to 4.29%. The modest rally in Treasuries was also helped by a solid 20yr auction that saw $13bn of bonds issued at 4.63%, -1.4bps below the pre-sale yield. This morning in Asia 10yr USTs have edged back up a basis point.

In geopolitical news, the anticipated Trump-Putin call delivered only one element of definitive progress, with Moscow agreeing “to mutually refrain from attacks on energy infrastructure facilities for 30 days”. While both US and Russian readouts struck a constructive tone, Putin declined the US proposal for an unconditional ceasefire that Ukraine had agreed to, with the Kremlin emphasising that a “key condition” for working towards resolution of the conflict was “the complete cessation of foreign military aid and the provision of intelligence information to Kyiv”. Later in the day, Ukraine’s President Zelenskiy said that the Trump-Putin call showed Russia wasn’t ready for a truce.

The signal of a pause in strikes against energy targets did help Brent crude close -0.72% lower on the day at $70.56/bbl. It had earlier been +1.5% higher intra-day after Israel said it would continue to strike Hamas targets across Gaza but had already reversed this gain by the time headlines from the Trump-Putin call came through. Lastly, Gold continued to set new record highs, rising +1.14% to $3,035/oz amidst Middle East tensions escalating once more.

Asian equity markets are fairly quiet this morning with the KOSPI (+0.70%) leading with the Nikkei (+0.06%) fairly flat after the BoJ left policy unchanged at their meeting. The press conference will start just around the time this hits your inboxes. Chinese markets are all broadly flat but S&P 500 (+0.19%) and NASDAQ 100 (+0.29%) futures are edging back up.
In the statement accompanying the BoJ decision, they cited concerns about the impact of US trade policies on Japan’s economic recovery, noting continued uncertainty around economic activity and prices. The Yen and JGBs are relatively unmoved so far.

In terms of data, Japanese exports climbed +11.4% y/y in February (v/s +12.6% expected) up for a fifth straight month driven by strong demand from both the US and China. It followed a revised increase of +7.3% in January. Imports fell -0.7% y/y in February, marking its first drop in three months and compared with the Bloomberg estimate of a +0.8% gain. As such, Japan’s trade balance switched back into the black, with a surplus of ¥584.5 billion (v/s ¥688.3 billion expected).

To the day ahead, aside from the Fed decision, the EU commission will be presenting its White Paper on defense today, with EU leaders expected to discuss their ReArm EU plan on Thursday and Friday. We’ll also get data on Eurozone Q4 labour costs. For earnings releases, expect Tencent, Vonovia, Ping An Insurance and General Mills.

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

President Donald Trump’s administration has been weighing a travel ban on citizens from dozens of countries, according to an internal memorandum.

The memo, which was viewed by Reuters, lists 41 countries, divided into three groups.

One group, which includes Afghanistan, Iran, Syria, Cuba, and North Korea, would be set for a full visa suspension.

The five countries in the second group—Eritrea, Haiti, Laos, Myanmar, and South Sudan—would face partial suspensions that would impact tourist and student visas as well as other immigrant visas, with some exceptions.

The third group of 26 countries, including Belarus and Pakistan, would be considered for a partial suspension of U.S. visa issuance if their governments “do not make efforts to address deficiencies within 60 days,” the memo said.

A White House official did not deny that the new travel restrictions are being considered. The official told The Epoch Times in an email that no decision has been made yet.

The State Department did not respond to a request for comment by publication time.

Under the Immigration and Nationality Act, a president can “suspend the entry of all aliens or any class of aliens” whenever he “finds that the entry of any aliens or of any class of aliens into the United States would be detrimental to the interests of the United States.”

Hawaii officials sued over the restrictions, arguing they went beyond those allowed by the act.

“By its plain language, [the act] grants the President broad discretion to suspend the entry of aliens into the United States,” Justice John Roberts wrote at the time. “The President lawfully exercised that discretion based on his findings—following a worldwide, multi-agency review—that entry of the covered aliens would be detrimental to the national interest.”

After being sworn in on Jan. 20, Trump directed the attorney general and other top officials to identify countries around the world “for which vetting and screening information is so deficient as to warrant a partial or full suspension on the admission of nationals from those countries” pursuant to the act.

While campaigning for the 2024 election, Trump floated a travel ban on citizens from several countries, including Libya and Somalia, as well as “anywhere else that threatens our security.”

Vice President JD Vance spoke earlier to companies working “in the national interest” at the American Dynamism Summit, sponsored by venture capital firm Andreessen Horowitz. In his address, he highlighted the significant progress achieved in just two months under a competent administration in securing the southern border and strengthening national security—following the previous administration’s globalist policies that sparked an illegal alien invasion crisis.

“Last month, migrant crossings were down 94%, to their lowest number all time, and that happened just in two months of serious border enforcement… Last month, for the first time in over a year, the majority of job gains went to American citizens born on US soil,” VP Vance told the crowd at the summit in Washington, DC, earlier this morning. 

.@VP: “Last month, migrant crossings were down 94%, to their lowest number all time, and that happened just in two months of serious border enforcement… Last month, for the first time in over a year, the majority of job gains went to American citizens born on U.S. soil.” pic.twitter.com/syjhDBXeVi

— Rapid Response 47 (@RapidResponse47) March 18, 2025

Providing more context on VP Vance’s immigration figures, analysts from Goldman, including Jan Hatzius, Alec Phillips, and others, stated that US immigration policy has tightened significantly over the past two months, reducing the annualized inflow of humanitarian and other non-visa immigrants from 1.4 million to 200k. They noted that while deportation levels remained stable, total net immigration fell from 1.7 million in December to 700k in February.

Given the faster-than-expected decline in immigration, the analyst expects net inflows to reach 500k by the end of the year, down from a previous estimate of 750k. The contribution of immigration to labor force growth is also expected to slide and provide more job opportunities for Americans. 

Further color from analysts… 

How Much Has Immigration Fallen Since the Inauguration?

Immigration policy in the US tightened considerably in the first two months of 2025. We estimate that this resulted in a decline in annualized inflows of humanitarian and other immigrants (asylum seekers, parolees, people receiving temporary protected status, and illegal entrants; this includes all immigrants other than visa and green card recipients) to an annualized 0.2mn in February, down from 1.4mn in December 2024 (left, Exhibit 1).

While official statistics from Immigration and Customs Enforcement (ICE) show a moderate increase in arrests of unauthorized immigrants since early January, the increase has not led to a notable change in the number of deportations. The right side of Exhibit 1 shows that total immigrant outflows due to deportations remained in line with past trends. The number of outflows due to voluntary and other enforcement returns—which tend to be proportional to immigration inflows—declined over the past two months as inflows moderated.

Even though the number of deportations did not increase meaningfully, the sharp decline in immigration inflows still brought net immigration into the US down to an annualized pace of 0.7mn in February, from 1.7mn in December 2024 (Exhibit 2).

In our prior report, we highlighted the risk that the immigration crackdown might not only reduce inflows of new immigrants but might also make unauthorized immigrants already in the US afraid to go to work or make their employers afraid to employ them. So far, the labor market data that we use to monitor this risk have shown mixed evidence.

The individual-level micro data behind the household survey of the employment report indicate that recent immigrants’ labor force participation rates remained roughly unchanged (left, Exhibit 3) and their unemployment rates declined slightly (right, Exhibit 3), and that the job-finding rates of all immigrants rebounded on a 3-month basis (Exhibit 4). Taken at face value, this suggests that the immigration crackdown has not yet adversely affected labor market conditions for recent immigrants.

However, the household survey data might miss some of the negative labor market consequences of the immigration crackdown because immigrants who are most likely to have been negatively affected might also have been afraid to respond to the survey.

Indeed, we find that the number of immigrant respondents to the household survey—particularly those who arrived over the past three years—declined moderately over the last two months (Exhibit 5).

Given these changes, we are lowering our immigration forecast for the end of 2025 to 500k from our previous baseline of 750k (dashed line in Exhibit 2), though we see considerable uncertainty around the estimate, as the number of deportations depends not only on the policy in place but also on the actual enforcement intensity.

Seperatly, jobs data showed President Trump’s ‘America First’ agenda was beginning to take shape:

Native-Born workers increased by 284K to 130.1 million
Foreign-born workers dropped by 84K to 31.7 million pic.twitter.com/EQB042u8NT

— zerohedge (@zerohedge) March 7, 2025

This is good news for American workers, circling back to the Goldman note: 

Trump is opening up the spigot of jobs for the American workers as the migration inbound trends slow and outbound trends persist… This is America First. 

Authored by Tsvetana Paraskova via OilPrice.com,

• Harold Hamm: would need an oil price of around $80 per barrel to cover the cost of drilling wells.’

• U.S. Energy Secretary Wright: the administration isn’t targeting a specific price of oil, but it works to bring back common sense and pro-energy policies in America.

• Scott Sheffield: The cash breakeven price, including dividends, is $50-$55 for U.S. oil companies, and “that $50 oil is not going to work.

U.S. shale needs much higher oil prices than $50 per barrel, and even higher than the current WTI Crude price in the high $60s, for a “drill, baby, drill” boom, oil tycoon and Trump campaign donor Harold Hamm says.

American producers, especially those pumping crude outside the Tier 1 inventory in the best Permian locations, would need an oil price of around $80 per barrel to cover the cost of drilling wells.

“There are a lot of fields that are getting to the point that’s real tough to keep that cost of supply down,” Hamm told Bloomberg Television in an interview on the sidelines of the CERAWeek conference in Houston.

“When you get down to that $50 oil that you talked about, then you’re below the point where you’re going to ‘drill, baby, drill,’” the shale pioneer added.

Over the past few days, there has been a lot of talk of $50 oil and the shale industry.

The Trump Administration appeared to be pointing to $50 as a price that would be low enough for American energy prices to drop but still good enough for U.S. shale to prosper.

However, the industry and Wall Street banks beg to differ. 

They say that $50 oil is so low that it would see production curtailments as the average cash breakeven price, including dividends, is estimated at $50-$55 per barrel of oil.

And the industry is definitely not prepared to cut dividends after diligently working for a few years to boost shareholder returns and make U.S. oil stocks attractive again.

U.S. Secretary of Energy Chris Wright told the Financial Times last week that shale producers could increase production even if oil prices fell to $50 per barrel as the sector continues to innovate and boost efficiency gains.

“New supply is going to drive prices down. Companies are going to innovate, drive their prices down and consumers and suppliers will bounce back and forth,” Wright, a former boss at fracking firm Liberty Energy, told FT.

At CERAWeek by S&P Global, Secretary Wright said the administration isn’t targeting a specific price of oil, but it works to bring back common sense and pro-energy policies in America.

The Trump Administration believes that eased permitting and lighter regulatory burdens on U.S. oil and gas producers would lead to more production even at lower oil prices.

But industry veterans, from Harold Hamm to Scott Sheffield, the founder of Pioneer Natural Resources which was sold to Exxon last year, don’t think prices lower than $60 would work.

Oil executives cheered the pro-energy agenda of the Trump Administration, welcoming the lifting of the Biden LNG permit freeze and the start of the process to repeal the so-called methane fee.

However, they are quietly concerned that oil prices at current levels are already on the verge of making money much more difficult.   

Pioneer’s founder and industry veteran Sheffield has some advice for the U.S. oil firms.

“You’ve really got to hunker down,” Sheffield told a Bloomberg Television interview on last week.

Oil prices are likely to fall into the range of $50 to $60 per barrel, Sheffield says, noting that American producers will struggle at these prices.

The cash breakeven price, including dividends, is $50-$55 for U.S. oil companies, and “that $50 oil is not going to work,” Sheffield told CNBC.

Other industry executives, as well as investment banks, also believe that $65 oil and below would present challenges to U.S. shale to keep production steady, let alone “drill, baby, drill.”

Saad Rahim, chief economist at commodity trader Trafigura, told Bloomberg that “$60 feels too low for much of the industry to work.”

With WTI Crude at around $65, the U.S. shale industry would likely hold production flat and shut down 25 rigs, Citigroup analysts Scott Gruber wrote in a note last week carried by Bloomberg.

“A drop into the upper $50s likely results in a bigger psychological impact with the rig count potentially falling ~75 and production down” by more than 300,000 barrels a day (bpd), according to Gruber.

Shale costs will also go up with the U.S. import tariffs on steel and aluminum, executives including Hamm say.

The U.S. has steelmakers “but they can’t supply it all,” Hamm told Bloomberg, referring to the steel pipes the industry uses to drill wells.

First, it was no stoves. Next it could be no cooking at all. All for the climate. At least that’s what it appears if you follow the logic of California…which we can’t recommend. 

That’s because cooking releases volatile organic compounds that contribute to ozone pollution, according to NOAA researchers, UPI.com reports.

They found that “potent and often pungent volatile organic compounds given off from cooking food are now responsible for over a quarter of the ozone production from VOCs generated by human activity” in the Los Angeles basin.

The UPI report says cooking in Los Angeles generates as much ozone as volatile organic compounds (VOCs) from fueled vehicles, the study found.

“We knew from our research that chemical compounds from cooking can make up an important fraction of VOCs present in urban air, but they were not well-represented in inventories or included in air quality models,” said NOAA research chemist Chelsea Stockwell. She noted that excluding them “may be a blind spot when it comes to urban ozone production.”

Ozone forms when VOCs and nitrogen oxides—primarily from vehicle emissions—undergo photochemical reactions.

While natural sources like trees contribute about half of all VOCs, human activities, including cooking, paints, pesticides, and adhesives, account for the rest. High ozone levels can be toxic to humans, animals, and plants.

But what’s the point of preserving the ozone when we can’t even cook a meal?

Via Middle East Eye

The UAE is lobbying the Trump administration to torpedo a post-war plan for the Gaza Strip that Egypt drafted and which has been endorsed by the Arab League, US and Egyptian officials told Middle East Eye.

The split is becoming increasingly bitter, with US diplomats concerned that it is harming US interests in the region. It reflects growing Arab competition over who calls the shots in the Gaza Strip’s future governance and reconstruction, as well as different opinions over how much influence Hamas should retain there. 

The Emirati pressure poses a dilemma for Cairo because both the UAE and Egypt broadly back the same Palestinian powerbroker for Gaza, Mohammed Dahlan, an exiled former Fatah official. “The UAE could not be the lone state opposing the Arab League plan when it was agreed, but they are trashing it with the Trump administration,” the US official told MEE.

The UAE is flexing its unparalleled access to the White House to criticize the plan as unworkable and accuse Cairo of giving too much influence to Hamas.

The UAE’s powerful ambassador to the US, Yousef al-Otaiba, has been lobbying US President Donald Trump’s inner circle and US lawmakers to put pressure on Egypt to accept forcibly displaced Palestinians, one US official and one Egyptian briefed on the matter told MEE.

Otaiba was previously on record saying that he did not see “an alternative” to Trump’s call earlier this year for Palestinians to be forcibly displaced outside of the Gaza Strip. MEE contacted the UAE embassy in Washington, DC for comment but did not receive a reply. 

Hamas is an offshoot of the Egypt-founded Muslim Brotherhood, which the UAE has tried to stamp out across the Middle East. Egypt’s military-led government has also crushed the Muslim Brotherhood, but it allows Hamas officials some freedom of movement. Egyptian spymasters have long-standing relations with Hamas members, including the Qassam brigades, which Egypt has used to mediate the ceasefires in Gaza.

UAE angered by US-Hamas talks

Egypt’s Gaza plan has been criticized by the UAE for not spelling out specifically how to disarm and remove Hamas from the Gaza Strip.

Egyptian officials say the plan is clear that governance will be handled by the Palestinian Authority. The plan calls for a security force in Gaza trained by Jordan and Egypt and leaves open the possibility for UN peacekeepers to be deployed in Gaza and the occupied West Bank. Hamas said it accepts the plan, but Israel is against internationalising the conflict in such a way, regional diplomats say.

The US brokered a ceasefire to the war in Gaza in January, but it has effectively collapsed, with the besieged enclave on the verge of a return to war. Israel has cut off electricity to the enclave. Over the weekend, it launched deadly strikes that killed at least 15 people, Palestinian health officials said.

The US has floated a plan for Hamas to release the 27 living captives left in the Gaza Strip in exchange for an extension of a temporary truce. Hamas has insisted on a permanent end to the war, as stipulated in the January ceasefire agreement.

The Trump administration has said it backs Israel returning to war in the Gaza Strip. American diplomacy was jolted after Trump’s former nominee for hostage affairs, Adam Boehler, met directly with Hamas recently in Doha, Qatar. 

The White House said Boehler met with Hamas to negotiate the release of one remaining American captive, but the envoy said publicly he discussed a five-year to ten-year truce with Hamas that would have seen the group disavow politics, and the US and its Arab allies ensure the demilitarisation of Gaza.

Those remarks, and Boehler’s statement to CNN that he would not rule out further meetings with Hamas, sparked backlash from the Israeli government and pro-Israel US lawmakers. On Friday, Boehler was withdrawn as the nominee for hostage affairs.The meeting also riled the UAE, the Egyptian and US officials told MEE.

Trump’s top advisors have been ambivalent about the Arab League’s post-war Gaza plan. While travelling in the region in March, Trump’s envoy to the Middle East, Steve Witkoff, did not endorse the plan but called it the “basis for the reconstruction efforts”.

US reassessing military aid to Egypt

Some US and Egyptian officials believe the Emirati campaign has already impacted US-Egyptian bilateral relations, with the US warning Egypt that it will cut military aid in 2026, an Egyptian official and one US official told MEE.

The American warnings that the White House planned to cut military assistance to Egypt were first reported by London-based news outlet Al-Araby Al-Jadeed last week. The US official told MEE that Egypt has been informed that the US is reassessing its military aid but has not been directly told that a future reduction is a quid pro quo in exchange for Egypt accepting a forced displacement of Palestinians. 

The Trump administration has been cutting foreign aid worldwide. Egypt and Israel both obtained waivers from the 90-day freeze on foreign American assistance. Other Arab countries, like Lebanon, have also received carve-outs in recent weeks.

The Trump administration followed through in March on the former Biden administration’s plan to divert $95m in aid earmarked for Egypt’s military to the Lebanese Armed Forces. 

A delegation of former senior Egyptian officials visited Washington last month to meet policymakers and think tanks in a bid to shore up Egypt’s position with the Trump administration. In their public discussions, they did not acknowledge the US warnings, an Egyptian briefed on the matter told MEE.

Egyptian officials have told their US counterparts that it is in Israel’s and Egypt’s interest to maintain US aid, the US and Egyptian officials told MEE. Egyptian officials have told the US that the aid is a cornerstone of the Camp David Accords, which led to a 1979 peace treaty between the two neighbours. But suspicion is deepening among Egypt’s elite.

The military establishment is already seething with resentment at the US for accusing it of failing to police the Rafah border crossing with Gaza. Republican Senator Jim Risch, the chairman of the Senate Foreign Relations Committee, accused Egypt of “blunting” Israel’s fight with Hamas in a previous interview with MEE.

Egypt receives $1.3bn in military aid each year. The US already conditions $300m in aid to human rights matters. The US’s leverage over Egypt has diminished since the Israel peace treaty. In 1978, US aid stood at six percent of Egypt’s GDP. Today, that number is less than half a percent, and it is not clear that the Trump administration views aid as an asset worth preserving.

US officials have told the White House that reducing aid would prompt Egypt to turn to Russia or China for military equipment, but Trump is re-ordering US ties to Russia. 

“Israeli media reported that the decision to resume heavy strikes against Gaza was made a week ago and was not in response to any imminent threat posed by Hamas.” https://t.co/WGvbRhh0o1

— WikiLeaks (@wikileaks) March 18, 2025

Egypt receives aid through foreign military financing, which means the US purchases military equipment for Egypt from American defence contractors, whereas oil-rich Gulf states mainly buy American weaponry with their sovereign funds through foreign military sales.

Frenemies: UAE and Egypt

One of the complicating factors in the dispute is that both Egypt and the UAE look to Dahlan as a power broker in post-war Gaza.  When the Egyptian-drafted plan was endorsed by the Arab League, Palestinian President Mahmoud Abbas pardoned exiled former Fatah officials.

That was widely seen as a nod to Dahlan, who was Fatah’s enforcer in Gaza before Hamas won Palestinian legislative elections in 2006. Dahlan relocated to the UAE after falling out with Abbas in the occupied West Bank.

MEE reported that the UAE is pushing for Dahlan to oversee a committee governing Gaza and later replace octogenarian Abbas as president. MEE contacted Dahlan for comment on this article. 

Sisi enjoys close ties to Dahlan. The UAE is a key backer of Sisi’s cash-strapped government. In 2024, it agreed to a $35bn investment in Egypt’s Mediterranean coast. But the UAE and Egypt are backing opposing sides in a brutal civil war in Sudan.

Further complicating matters, The Financial Times reported that the Trump administration is continuing to push for Sudan and the unrecognized government of Somaliland to accept forcibly displaced Palestinians.

The Trump administration’s expected nominee for Africa Affairs at the State Department, Peter Pham, is a vocal supporter of the UAE and Somaliland’s independence. The UAE is the main powerbroker in Somaliland, where it trains security forces and controls the main port through its state-owned company, DP World.

The Trump administration’s cold shoulder to Egypt’s Gaza plan has riled career officials in the US State Department, who have watched France, Germany, Italy, and Britain all endorse the framework.

American diplomats said the White House was brushing aside career officials’ warnings not to pressure Egypt to accept forcibly displaced Palestinians, MEE reported previously. Trump publicly walked back that demand after being dissuaded not by US officials but in a private discussion with Jordan’s King Abdullah II at the White House in February. The next month, Trump told reporters, “Nobody is expelling any Palestinians.”

The first major poll of Romanians’ preferences in the upcoming “do-over” presidential election points to a nationalist candidate coming out ahead in the first round, but a centrist winning the run-off that’s likely if no candidate tops 50% in the initial balloting. As Romania’s courts and election commissions gun for NATO and EU foes, one of the nationalist candidates is tempering his rhetoric — even calling Russia a “threat.” 

Before looking at the poll results, it’s important to note that polls in the run-up to the November 2024 election wildly understated support for now-banned nationalist Calin Georgescu. An October poll showed him with only 0.4% support, and a November survey had him racking up just 5.4%. He proceeded to snag 23% of the votes, placing him first among 13 candidates. In a shocking move, Romania’s Constitutional Court threw annulled the election and ordered that it start all over again, amid questionable allegations that Georgescu — who opposes Romanian membership in the European Union and NATO — owed his upset victory to “Russian interference.” 

Now, a new AtlasIntel survey finds a different nationalist is poised to win the first round of balloting that will be held on May 4, taking a 30% share. We say “a nationalist” because two prominent right-wingers have received approval from the election commission, but the two previously agreed that one of them would drop out to let a single standard-bearer enjoy the benefit of concentrated support at the polls.  

Those two nationalist candidates are 38-year-old George Simion of the Alliance for Uniting Romanians (AUR) — Romania’s second-largest party — and 41-year-old Anamaria Gavrila of the Young People Party (POT). In scenarios where only one them is on the ballot, the AtlasIntel poll has them performing almost identically — 30.4% for Simion and 30.2% for Gavrila. 

However, the same poll suggests that the first-round nationalist victor will go on to lose a May 18 runoff, with centrist independent Bucharest Mayor Nicusor Dan taking the prize as the non-nationalist vote rallies to him. In those scenarios, Simion performed better, coming in 6.8 points behind Dan, while Gavrila lagged Dan by 8.4. Though approved to run, Simion’s candidacy may still be in some peril, as he’s under investigation for inciting violence, owing to saying those who banned Georgescu should be “skinned in a public square.” He later said he was merely using a figure of speech amid a “tense” situation, but acknowledged that such fiery rhetoric was “not wanted in a democracy.” 

Perhaps trying to appeal to moderates or to avoid being kicked off the ballot, Simion’s recent pronouncements are a far cry from what one expects from a Romanian nationalist, as he’s discounting the idea of Romania exiting NATO or the EU, sounding alarms over the supposed Russian menace, advocating continued sanctions against Moscow, and embracing increased European military spending.  Consider these Simion quotes from a new interview with the Financial Times: 

• “Our stance cannot be changed. Eighty percent of the Romanians want NATO and want the European Union. This is not something we can negotiate.”
• “Putin’s Russia was and is one of the biggest threats for the European states, especially for us, for the Baltic states and for Poland.”
• “Without a common geopolitical bloc, like . . . NATO, led by the US, we are in a big danger.”

It’s a dangerous time to promote sovereignty in Romania. Last month, Georgescu was arrested and questioned as he faced Orwellian allegations of disseminating “false information” and “incitement to actions against the constitutional order.” Upon his release, he was forbidden from appearing on mass media or creating social media accounts. 

Campaigning last fall, Georgescu pledged to restore Romanian sovereignty and put an end to what he characterizes as subservience to NATO and the EU. He took a hard line against the presence of NATO’s missile defense system that’s based in Deveselu, southern Romania, calling it a “shame of diplomacy” that is more confrontational than peace-promoting. He has also pushed for Romania to pursue a non-interventionist policy in the Ukraine war, and said US arms-makers were manipulating the conflict.

Georgescu isn’t the only presidential hopeful to be banned over his political views. On Saturday, Romania’s electoral commission announced that nationalist Diana Sosoaca would be barred from the May election, saying her opposition to NATO and the EU disqualified her.  

The EU…. Preserving democracy for Klaus and George. https://t.co/dZv9Q48Hdq

— Truth Seeker (@TruthSe49517863) March 17, 2025

Authored by Emel Akan and Jan Jekielek via The Epoch Times (emphasis ours),

The Trump administration is committed to taking decisive action against one of the nation’s most pressing yet overlooked crises: human trafficking.

In an exclusive interview with The Epoch Times, Alina Habba, senior advisor to President Donald Trump, shared the administration’s plan and her role in addressing this critical issue. But as Habba sees it, this isn’t just about human trafficking—it’s about “human extortion,” a more encompassing term that includes everything from sex trafficking to cyber activity and forced labor.

“I’m focused on human extortion, which includes child trafficking,” she said in an interview with Jan Jekielek, senior editor at The Epoch Times and host of “American Thought Leaders.”

Habba emphasized that her efforts focus not only on children who are victims of trafficking but also on any individual, regardless of age, who falls victim to sex trafficking, financial extortion through cyber means, or modern slavery.

Habba, 40, who served as Trump’s defense attorney in recent years, now works as a counselor to the president, collaborating closely with government agencies such as the Department of Homeland Security (DHS), the Department of Justice (DOJ), and the Department of Health and Human Services (HHS). She is currently drafting a series of executive orders aimed at strengthening regulations and protecting the victims of human extortion.

In her view, the crisis reflects the widespread abuse of vulnerable individuals who are coerced and exploited, often in ways that the public is barely aware of. Habba pointed to examples like cyber-interactive pornography that encourages people to hurt children, calling it a “sick” and disturbing reality of today’s world.

She also noted that the issue worsened during the border crisis under the Biden administration.

Many children were, misleadingly, trafficked over the border, she said.

“They were displaced from their families and then found themselves in vulnerable positions where they were sex trafficked and labor trafficked.”

Since Trump took office, Habba said she has spent nearly two months fully understanding the scale of the problem. The administration is now focused on bringing these children home, providing them with necessary care, capturing their traffickers, and prosecuting those responsible—particularly pedophiles.

A DHS report from August 2024 revealed that Immigration and Customs Enforcement (ICE) transferred over 448,000 unaccompanied migrant children to the HHS between fiscal years 2019 and 2023. The Office of Refugee Resettlement, a division within HHS, is responsible for placing these unaccompanied children with sponsor homes in the United States. However, the report indicated that ICE was unable to track the location and status of all the children who had been released from HHS custody.

While Habba declined to provide exact numbers, she stated that the absence of familial DNA testing had led to a surge in child trafficking.

In 2023, the Biden administration revoked a Trump-era program that required rapid DNA testing for illegal immigrants crossing the border. Without this measure, she said, individuals were entering the country with alleged relatives—such as parents, aunts, or uncles—without any verification. As a result, it was impossible to determine whether those accompanying the children were associated with cartels or engaged in human trafficking.

The Biden administration reportedly did not provide specific reasons for ending the program, only stating that it was not renewing the contract with the private company doing the tests.

Since Trump’s return to office in January, the DNA testing program has been reinstated. However, Habba said there are still other critical issues to address.

She mentioned that some migrant children were placed in “fake sponsor homes” by HHS. When officials visited these homes for safety checks, they found that the children were no longer there.

“So, effectively, they were being re-trafficked,” Habba said.

The administration is now working closely with public and private sector individuals to ensure these children are kept safe, provided with necessary rehabilitation, including therapy and medical care, and placed in secure homes.

Tate Brothers and Epstein Files

Habba addressed the recent controversy surrounding the influencer Tate brothers, who are facing human trafficking and rape allegations. She faced criticism after expressing in a January interview that she was a big fan of Andrew Tate.

Habba told Jekielek that her comments had been manipulated and taken out of context. She clarified that her support for Tate was based on his political views and should be viewed separately from the accusations being made against him.

“The accusations against the Tate brothers are stomach-churning. They are disturbing,” she said. “There is no part of me that condones at all that behavior,” she said of the reports. The Tate brothers are contesting the allegations being made against them.

Habba also provided an update on the long-awaited Epstein files.

She said that Attorney General Pam Bondi and FBI Director Kash Patel are leading the investigation to review the files and thoroughly vet the accusations.

“We are committed to transparency,” Habba said, urging Americans to be patient during the process.

“We’re not going to be off the cuff. We’re not going to shoot from the hip. We’re going to look at things methodically and take them very seriously. And unfortunately, that takes time.”

Habba also discussed her upbringing and family, identifying herself as a Middle Eastern Catholic woman. Her parents, both Chaldean Catholics, emigrated from Iraq to the United States in the early 1980s to escape persecution in their home country.

“My family is religious. They are very involved in the church, and I’m proud of that,” she said.

Trump praised Habba when announcing her appointment as counselor to the president, highlighting her dedication and loyalty.

“She has been unwavering in her loyalty, and unmatched in her resolve—standing with me through numerous ‘trials,’ battles, and countless days in Court,” Trump wrote on Truth Social on Dec. 8, 2024.

“As a first generation American of Middle Eastern Heritage, she has become a role model for women in Law and Politics, most recently being named Chaldean Woman of the Year.”