The newly formed Department of Government Efficiency has shared some examples of the kind of obscene government waste that it will abolish.
The X account of the department shared a video of Senator Rand Paul highlighting absolutely mental programs and studies that the US government has funded recently.
One example was pumping a hundred grand into an experiment to determine whether gin or tequila makes a sunfish more aggressive.
Another involved almost one million dollars towards a study to discover whether cocaine makes Japanese quail more “sexually promiscuous.”
The video also highlights how the government spent $750,000 to determine if Neil Armstrong said “One small step for man” or “one small step for ‘a’ man,” with the outcome determined to be “inconclusive.”
Paul also discovered that $2 million went toward the “construction of a kelp and shellfish nursery in Maine.”
Items your tax dollars are being spent on:
-$100,000 to study if tequila or gin makes sunfish more aggressive
-Nearly $1M to study if cocaine makes Japanese quail more sexually promiscuous
-$750,000 to study if the moon landing line was “One small step for Man” or “One small… pic.twitter.com/kXl4IXV8FE
Paul has been doing this for years with his ‘Festivus’ report.
Happy #Festivus! This year, Ranking Member @SenRandPaul’s annual Festivus Report identifies ~$900,000,000,000 worth of federal waste! Below are some of the most outrageous examples of federal spending. You can read the full report here: https://t.co/kvHsZwc9IL
DOGE also highlighted the monumental amounts of money that are unaccounted for in government.
– Pentagon can’t fully account for $824 Billion
– $236 Billion in improper payments in federal programs in 2023
– $200 Billion in pandemic relief went to fraud/abuse
– The U.S. failed to track $1 Billion in Ukraine Aid
As we previously highlighted, Vivek Ramaswarmy, who is heading up DOGE with Elon Musk, recently announced that DOGE will shut down entire government agencies as part of its effort to abolish waste.
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Bracing For Retaliation, US Shuts Embassy In Kiev Over Air Attack Risk
Washington appears fully aware it has poked the Russian bear, after President Biden greenlighted Ukraine striking Russian territory with long-range missiles.
US officials have warned Wednesday that “potential significant air attack” on Kiev is likely coming, and have announced the closure of the US Embassy in the capital “out of an abundance of caution”. This follows immediately on the heels of Ukrainian forces having struck an arms depot inside Russia with U.S.-supplied weapons, specifically the Army Tactical Missile System (ATACMS), on Tuesday.
“Embassy employees are being instructed to shelter in place,” a new alert on the embassy website said. “The U.S. Embassy recommends U.S. citizens be prepared to immediately shelter in the event an air alert is announced.”
Embassy diplomats and all staff are being asked to observe the following precautions:
Monitor local media for updates
Identify shelter locations in advance of any air alert
Immediately take shelter if an air alert is announced
Follow the directions of Ukrainian officials and first responders in the event of an emergency
The embassy closure is also happening the day after Putin signed a decree which updates and expands Russia’s nuclear doctrine, which effectively lowers the threshold for nuclear weapons use. “As we said earlier this month, we were not surprised by Russia’s announcement that it would update its nuclear doctrine; Russia had been signaling its intent to update its doctrine for several weeks,” the White House National Security Council responded in a statement.
Other Western embassies have also shuttered their operations amid air raid warnings in Kiev and other regions, including Italy, Spain, and Greece.
Al Jazeera notes that “Germany’s embassy in Kyiv remains open in a limited capacity and can still be contacted by German nationals who are in the country, a German Foreign Ministry official has said.”
“We are in constant contact with our colleagues on the ground so that we can take appropriate measures if the situation changes,” the official said.
Ukraine’s military has since said that warnings of a large-scale missile attack from Moscow forces are likely a “psychological operation” carried out by Russia, precisely in order to instill fear and cause further embassy closures. According to the military statement:
It said Russia is conducting a “psychological attack against Ukraine”, warning of fake messages circulating on social media on alleged increased missile threats that it said were part of a “psychological operation”.
It appears Russia may bomb the US embassy in Kyiv today. The state dept response will be to provide additional arms, funding and longer range missile strikes inside of Russia. This is the escalatory trap we’ve all been warning about. Congress needs to hear from us: No more funds. https://t.co/Z6foXbc6EW
With merely two months to go until Trump is sworn into office, many Republicans have blasted the Biden administration and his national security officials for risking World War 3, and at least assuring major escalation, by at the last minute greenlighting long-range strikes on Russia–even knowing full well the Trump administration plans to pursue peace negotiations.
Mark Cuban Says Trump’s Tariff Proposals Will Ramp Up Prices- Business Insider
Fed’s Kashkari Says Trump Tariffs Could Reheat Inflation If They Provoke Global Trade War- CNBC
Blanket Tariffs Would Be Incredibly Inflationary, Says Strategist- CNBC
Treasury Secretary Janet Yellen Warns “Sweeping Untargeted Tariffs” Would Reaccelerate Inflation- CBS News
Trump Tariffs Expected To Spike Inflation, Interest Rates- Business Insider
The headlines regarding Trump’s proposed tariffs and their inflationary consequences are undoubtedly worrying, but will they prove correct?
Instead of taking the “experts” word, let’s consider how tariffs may affect the prices of all goods and services, not just the items subject to tariffs. Furthermore, it’s worth discussing how tariffs could impact the economy, as economic activity greatly influences inflation. Lastly, we lean on historical precedence, capitalism, and the dollar to further evaluate how tariffs might impact inflation and economic growth.
Higher Prices And The Substitution Affect
Price changes of a good or service are primarily a function of supply and/or demand variations. However, price indexes, the basis for which economists measure inflation, are constructed on the prices of a basket of goods and services. The goods and services within the basket are weighted by the consumption of said items.
Considering the difference between the price of one good and the inflation index for an economy, let’s think about how consumers react to higher prices.
If the price of an imported good increases due to a tariff and the company selling the good commensurately increases the price, consumers respond in three ways.
Some consumers will decide not to pay the higher price and purchase a substitute good.
Others decide not to pay the higher price or buy competing goods and save their money.
Another group of consumers will pay the higher price, leaving them with less money to buy other goods.
Consumers buying a substitute good at a lower price will shift the composition of the inflation basket of goods, minimizing the impact of the tariff.
Saving, thus not spending, will reduce economic activity, which is deflationary, as we will discuss when we consider how sellers might react to tariffs.
Some consumers will pay higher prices. While this is inflationary for the tariffed item, the consumers have less money for other items, which is deflationary for those goods.
While the prices of the tariffed item and substitute items may change with demand preferences, the net effect after re-weighting the inflation basket and accounting for any broad economic impact will be minimal.
The demand for goods and the prices within the inflation pie will shift with a tariff. However, the aggregate supply and demand should be largely unaffected unless new money is injected into the economic system.
Business Owners Reaction
The prior section focused on consumers’ reactions to business owners passing on 100% of the tariff through higher prices. Typically, that does not happen unless demand is inelastic, meaning consumers have no choice but to buy a good or service.
Despite the price of the tariffed good increasing, the sellers’ profit margin does not change. However, as noted, the seller will likely lose some sales to substitute goods or savings. Accordingly, in many cases, sellers decide to eat some of the tariff costs to avoid losing sales. Doing so reduces their profit margin.
Sellers, faced with reduced profit margins and lost sales, will try to reduce expenses to offset the loss from the tariff. This means they might lay off employees, reduce capital expenditures, or choose other cost-saving methods.
The bottom line is that reduced profit margins, diminished spending, and layoffs will reduce economic activity. The economy will suffer, and demand for more than just the tariffed goods will decline. The result would be lower inflation and growth.
Retaliatory Tariffs
It’s equally important to consider that countries may not readily accept tariffs on their exports to the US. Many countries will retaliate with tariffs on US imports into their country. Such tariffs would make US-made exports more expensive and, thus, less desirable to foreign consumers.
As a result, US exports would decline, thus reducing economic growth and resulting in potential job losses and less inflation.
With an appreciation for how tariffs can impact the economy and prices, let’s review the history books.
Smoot Hawley Tariff Act
In 1930, Herbert Hoover signed the Smoot-Hawley Tariff Act into law. The timing could not have been worse as the world was entering the Great Depression. Smoot-Hawley was intended to protect American jobs and farmers. The reaction from our trade partners was retaliatory tariffs on exported US goods.
US imports and exports were reduced by more than 50% within four years of the Act’s passage. Many Great Depression scholars blame the tariffs for playing a substantial role in amplifying the scope and duration of the Great Depression. The US paid a steep price for trying to protect its workforce through short-sighted political expedience.
While it’s hard to isolate the effect of the tariffs on the economy, GDP fell by an estimated 15% from 1930 to 1932. As a result, the unemployment rate rose to over 25%. From 1930 to 1932, the CPI index fell by 24%. The following table and graph, courtesy of Inflationdata.com, show the stunning deflation experienced in the early 1930s.
Trump 1.0 Tariffs
In 2018, Trump levied tariffs primarily aimed at China for a select group of goods. It is estimated the tariffs covered a little over $300 billion in imports. That accounted for about 12% of all imported goods. The tables below, courtesy of the Peterson Institute, show the share of the tariffs by country.
The following paragraph comes from The Impact of the 2018 Tariffs on Prices and Welfare, courtesy of the Journal of Economic Perspectives:
The figure shows a big surge in imports in the wave 1 products, washing machines and solar panels, prior to the imposition of tariffs, which was likely caused by importers moving forward import orders in order to obtain products before the imposition of the tariffs. For the remaining goods, it appears that on average their import levels were rising a little faster than for unaffected goods in the months prior to the imposition of the tariffs. In all cases, import values declined sharply after the imposition of the tariffs, typically falling 25 to 30 percent after the imposition of the tariffs. This drop is particularly striking given that imports for unaffected sectors and countries rose by about 10 percent over the same period, where this rise could in part reflect some import substitution from affected to unaffected countries and products in response to tariff changes.
As we wrote earlier, higher prices reduced the amount of imports of the tariffed goods and increased consumption of those goods not impacted by the tariffs. To this end, we just read the following headline: New York retailers stock up, switch suppliers as Trump tariffs loom
Furthermore, the article states:
Therefore, the full incidence of the tariffs has fallen on domestic consumers and importers so far, and our estimates imply a reduction in aggregate US real income of $1.4 billion per month by the end of 2018. We see similar patterns for foreign countries that have retaliated with their own tariffs against the United States, which suggests that the trade war has also reduced the real income of these other countries.
The graph below shows that US import prices fell from 2018 until the price surge due to the pandemic in late 2020.
Trump’s tariffs were designed to boost American industry. However, despite good intentions, the broader impact was reduced economic activity, with specific sectors facing deflationary pressures.
What About The Currency?
The reaction of the US dollar versus the currency of tariffed nations is also worth considering. For this, we lean on Hudson Bay Capital.
While in principle tariffs can be noninflationary, how likely is it? In the macroeconomic data from the 2018-2019 experience, the tariffs operated pretty much as described above. The effective tariff rate on Chinese imports increased by 17.9 percentage points from the start of the trade war in 2018 to the maximum tariff rate in 2019 (see Brown, 2023). As the financial markets digested the news, the Chinese renminbi depreciated against the dollar over this period by 13.7%, so that the after-tariff USD import price rose by 4.1%. In other words, the currency move offset more than three-fourths of the tariff, explaining the negligible upward pressure on inflation. Measured from currency peak to trough (who knows exactly when the market begins to price in the news?), the move in the currency was 15%, suggesting even more offset.
Measured CPI inflation moved from slightly above 2% before the start of the trade war to roughly 2% by the armistice. Measured PCE inflation went from slightly below the Fed’s target to further below the Fed’s target. Of course, there were crosscurrents like the Fed’s tightening cycle at the time, but any inflation from this trade war was small enough that it was overwhelmed by these cross-currents. This explains the Trump camp’s view that the first U.S.-China trade war was noninflationary.
Only 11% of Chinese goods are subject to tariffs. The prices of the other 89% of non-tariffed goods fell for Americans due to the depreciation of the Chinese yuan versus the dollar. The net currency effect of prices of all goods imported from China was negative. If we could, we would edit the last line in the comments above and say the US- China trade war was deflationary.
Let Capitalism Work
The US is one of the world’s most productive and wealthiest countries. Consider that our poorest state, Mississippi, has a higher GDP per capita than France. Our prosperity is the result of many factors, most of which are beyond the scope of this article. However, one key factor is that we generally have less government economic interference than most other countries.
While adding tariffs to level the playing field may win votes and sound like a good idea, they are government interference. This is not to say that discussions with our trade partners shouldn’t occur or actions shouldn’t be taken, but it is to say that tariffs tend to bode poorly for the economy and result in lower prices.
Taxes, regulations, and other domestic or international governmental actions are not a recipe for more robust growth.
Summary
Economic theory and experience tell us tariffs are not inflationary. It’s correct to claim that a tariff on a good will raise its price. However, the claim fails to consider how consumers and sellers of the goods will react to higher prices.
Once all the economic, price, behavioral, and currency impacts net out, another round of tariffs will likely prove deflationary and harmful to economic growth.
Futures Rise Ahead Of Nvidia After Putin Says Open To Ceasefire Talks With Trump
US equity futures are higher as traders hoped earnings from Nvidia after the close would unleash fresh buying momentum and wash away the bitter taste from Target’s catastrophic earnings this morning. As of 8:00am S&P futures rose 0.2% as small caps lagged after Wall Street benchmarks recovered from a bout of volatility following the escalation in Russia’s war against Ukraine; Nasdaq futures also rose 0.2% with Mag 7 stock mixed premarket and led by MSFT (+0.6%) and NVDA (+0.5%). Sentiment was also boosted after Putin said he was open to discussing a ceasefire deal with Trump, but is ruling out any territorial concessions (Moscow would freeze the conflict along the present battlelines) and wants a guarantee that Ukraine won’t join NATO. Bloomberg’s dollar gauge rose 0.3%, rebounding from a three-day drop. The 10-year US Treasury yield climbed three basis points after falling yesterday as investors fled to haven assets. On Commodities, oil and base metals are higher while precious metals are lower; Bitcoin is back to all time highs just around $94,000. All eyes on NVDA earnings after market close. Expectations remain higher with crowding positioning (more in our preview later). JPM’s TMT specialist Josh Meyers says that that “a nice beat seems widely anticipated tomorrow, with expectations for the guide starting at $38b and going up a bit from there”, but Goldman’s trading desk is more cautious warning that all the good news may already be in the priced-to-perfection stock.
In premarket trading, retailer Target promptly reversed all the goodwill from yesterday’s blowout Walmart earnings and crashed as much as 20% after the it trimmed its full-year outlook due to flat sales and an inventory buildup. Company executives said US consumers spent less on nonessential items such as clothes and home products – a weaker third-quarter picture than the one provided by Walmart Inc. on Tuesday. Here are some other notable premarket movers:
AppLovin (APP) shares rise 2.4% after Piper Sandler initiated coverage on the mobile technology company with an overweight recommendation.
EVgo Inc (EVGO) shares gain 3.8% after JPMorgan placed the electric vehicle charging company on a positive catalyst watch on expectation that the stock will rally on news of the closing of the Department of Energy loan.
Global-e Online (GLBE) shares gain 9.6% after the application software company boosted its full-year revenue forecast. Additionally, the company reported third-quarter revenue that came ahead of estimates.
Keysight Technologies (KEYS) shares rise 9.1% after the measurement instruments company reported fourth-quarter adjusted earnings per share that came ahead of estimates.
Kingsoft Cloud ADRs (KC) soar 22% after the company reported third-quarter revenue that met consensus estimates. The company said it will achieve accelerated revenue growth in the fourth quarter.
Lemonade (LMND) shares advance 6.3% after Morgan Stanley upgraded the online insurance company to equal-weight from underweight after an investor day event. The broker also increased its price target to a Street high of $42.
Newell Brands (NWL) shares gain 4.3% after Barclays upgraded the consumer-goods company to overweight from equal-weight.
Powell Industries (POWL) shares fall as much as 14% after fourth-quarter revenue from the electrical infrastructure company missed the average analyst estimate.
Wix.com (WIX) shares jump 12% after the web-platform company boosted its full-year revenue forecast. Analysts said third-quarter results showed continued momentum.
Investors will scrutinize Nvidia’s quarterly results to gauge if the world’s most valuable company can continue its remarkable run fueled by spending on artificial intelligence hardware, with the chipmaker edging higher in premarket trading after rising 4.9% in the previous session. Trading in options signals the results will be the most important catalyst left this year — more than the Federal Reserve’s December meeting, according to Barclays Plc strategists.
“The health of the market being driven by results of individual companies in itself points to a certain element of fragility,” said Subitha Subramaniam, chief economist at Sarasin & Partners. “Is it sufficient that they beat, is it sufficient that they beat by a big margin? We are hanging on every statement of the CEO.”
Traders will also monitor Donald Trump’s administration picks, especially his selection for the Treasury secretary role. Former Federal Reserve Governor Kevin Warsh and Apollo Global Management’s Marc Rowan are in contention, with the FT reporting that the Apollo boss has emerged as the top contender. Meanwhile, Trump tapped Cantor Fitzgerald CEO Howard Lutnick to lead the Commerce Department, a key role to facilitate his tariff and trade policies.
“As I look at the Treasury secretary race, I want to see exactly who is in that role because the tax policies, the debt limit all come back,” Ed Mills, Washington policy analyst at Raymond James, told Bloomberg TV. “We need to see exactly how that person has a relationship with the Federal Reserve, because monetary policy will quickly figure into all of this.”
Europe’s Stoxx 600 reversed Tuesday’s fall with the Stoxx 600 up 0.6% as reports suggest Putin is willing to talk with US President-elect Trump about a cease-fire deal in Ukraine; mining, technology and construction shares lead gains. The UK’s FTSE 100 underperformed after the latest inflation reading came in hotter than anticipated, with traders paring back expectations for Bank of England rate cuts. Among individual movers in Europe, Sage Group Plc was up as much as 22%, the biggest intraday gain on record, after the software firm announced a £400 million ($507 million) buyback and reported stronger revenues. La Française de Jeux SAEM shares fell as much as 6.9%, the biggest drop in seven weeks, after a shareholder sold 4.7 million shares in the gaming equipment company at a discount. Here are all the notable European movers:
Sage shares soar as much as 22%, the biggest intraday gain on record, after results and the announcement of a £400m buyback program.
Severn Trent shares gain as much as 4.3% after the UK utility reported an EPS beat, lower net debt and a reduced interest charge for the full year.
Rotork shares rise as much as 5.5% after the valve manufacturer reported broad-based growth in order intake across its divisions, which analysts said marked an improvement from what was delivered in the first half.
Dormakaba shares gain as much as 3.4% after the Swiss security company confirmed its targets, showing that the simplification of its complex structure is on track.
Edenred gains as much as 4.4% as Jefferies upgrades to hold from underperform, writing in note that the French payment-service provider’s shares seem to already reflect growing headwinds.
Cement stocks gain as JPMorgan sees further upside ahead for European heavyside building materials companies, upgrading Holcim to overweight, Buzzi to neutral and adding Heidelberg Materials to its Analyst Focus List as new top pick.
Avolta rises as much as 3.1% after Berenberg initiated coverage of the world’s largest duty-free operator with a recommendation of buy, saying it can continue to win market share.
Helios Towers shares slide as much as 6.7% after a shareholder sold a stake in the telecommunications tower operator at a discount.
Elior shares plunge as much as 20% after results, with analysts at Oddo BHF saying the commercial catering company is still lagging behind key competitors on some key metrics, noting a worse retention rate and drop in net new business during the recently-ended financial year.
Earlier in the session, Asian equities retreated as traders awaited Nvidia’s earnings and forecasts to gauge if spending on artificial intelligence hardware will remain strong. The MSCI Asia Pacific Index dipped 0.5% after advancing 1% in the previous session. Gains in Hong Kong, mainland China and South Korea were offset by weakness in Taiwan and Japan. Across the region, technology stocks weighed on the benchmark most, followed by financial shares.
In FX, the pound erased its post-CPI gains as dollar strength takes over. The Bloomberg Dollar Spot Index rises 0.4%. The yen is the weakest of the G-10 currencies, falling 0.7% to around 155.80 against the greenback.
“The pound was last week’s underperformer, so it does at least have some scope to reverse some of that move” with the dollar having lost momentum, said Stuart Bennett, head of G10 currency strategy at Santander CIB. “If risk improves and the market gets carried away by the data alone, last Wednesday’s high at 1.2768 looks possible for cable, but it will depend on the US dollar and risk”
In rates, treasury futures held losses accumulated during London morning, led by gilts after UK inflation quickened more than expected in October. Meanwhile, haven demand that supported Treasuries Tuesday has ebbed since reports that Russia’s Putin is open to discussing a cease-fire in Ukraine with US President-elect Trump. US yields are 2bp-3bp cheaper across a slightly steeper curve; 10-year around 4.425%, about 2.5bp higher on the day, outperforms gilts in the sector by 3bp, bunds by 1.5bp. Gilts lead a selloff in European government bonds after UK inflation accelerated more than forecast in October, prompting traders to trim bets on the Bank of England’s interest-rate cuts path. UK 10-year yields rise 5 bps to 4.49%. US session includes 20-year bond auction at 1pm New York time; the new issue has a WI yield around 4.68%, about 9bp cheaper than last month’s auction result
In commodities, oil prices rise for a third day. Spot gold falls $6 to $2,626/oz. Bitcoin rises 1% to above $93,000.
Bitcoin rises to another all-time high, rising more than 2% above $94,000 supported by a series of developments highlighting the deepening embrace of the digital-asset industry in the US under crypto cheerleader Trump.
The US economic data calendar is blank, while Fed speaker slate includes Barr (10am), Cook (11am), Bowman (12:15pm) and Collins (4pm).
Market Snapshot
S&P 500 futures up 0.2% to 5,950.50
STOXX Europe 600 up 0.5% to 503.25
MXAP down 0.7% to 182.62
MXAPJ down 0.3% to 580.53
Nikkei down 0.2% to 38,352.34
Topix down 0.4% to 2,698.29
Hang Seng Index up 0.2% to 19,705.01
Shanghai Composite up 0.7% to 3,367.99
Sensex up 0.3% to 77,578.38
Australia S&P/ASX 200 down 0.6% to 8,326.29
Kospi up 0.4% to 2,482.29
German 10Y yield little changed at 2.36%
Euro down 0.4% to $1.0554
Brent Futures up 0.4% to $73.62/bbl
Gold spot down 0.4% to $2,622.55
US Dollar Index up 0.37% to 106.60
Top Overnight News
US companies are stocking up on inventory from China in anticipation of Trump tariffs. Already, exports from China surged last month with outbound shipments from China rising nearly 13% in October from a year earlier, well above consensus expectations and up sharply from 2.4% growth in September. WSJ
Japan’s exports gained 3.1% year on year in October, beating estimates. Imports posted a surprise gain and trade deficit widened. BBG
Putin is open to discussing a ceasefire deal w/Trump, but is ruling out any territorial concessions (Moscow would freeze the conflict along the present battlelines) and wants a guarantee that Ukraine won’t join NATO. Reuters
The US embassy in Kyiv closed after it was informed of a “potential significant air attack” today. BBG
A senior U.S. mediator said on Tuesday there was a “real opportunity” to end the conflict between Israel and Hezbollah and that gaps were narrowing, signaling progress in Washington’s efforts to clinch a ceasefire. Reuters
Euro-zone wages jumped 5.4% from a year ago, the biggest increase since the euro was introduced. The data may complicate the ECB’s easing plans. BBG
Apollo’s Marc Rowan has emerged as a top contender for the Treasury Sec role, and will meet with Trump on Wednesday to discuss the position (other names being considered include Bessent, Warsh, and Hagerty). FT
Republicans in Congress are pushing back against the idea of paying for a giant tax bill with a massive wave of tariffs. Semafor
Retailers warn they will be forced to hike prices if Trump enacts an aggressive wave of tariffs. Axios
Economists expect Trump to impose 38% tariffs on Chinese goods early next year. Trump’s proposed tariffs may cut China’s 2025 growth by around 0.5-1%. China are likely to roll our more stimulus to counter these tariffs: Reuters
A more detailed look at global markets courtesy of Newsquawk
APAC stocks traded mixed following the price swings seen across global markets on Tuesday in which the US indices staged a recovery from the initial risk-off conditions triggered by the Ukraine-Russia escalation, while participants now await NVIDIA’s earnings. ASX 200 pulled back from recent record highs but with losses contained by a quiet calendar and light macro newsflow. Nikkei 225 traded indecisively despite the mostly better-than-expected Japanese trade data, while there were firm gains seen in Seven & I Holdings and media powerhouse Kadokawa following respective M&A-related headlines. Hang Seng and Shanghai Comp swung between gains and losses with price action indecisive following the lack of fresh major catalysts in the region, while there were also no surprises from the PBoC’s announcement of the benchmark Loan Prime Rates which were maintained at their current levels following last month’s 25bp cuts.
Top Asian News
Japanese gov’t to invest JPY 200bln in Rapidus (chipmaker) in FY-2025, via Nikkei.
China’s GDP growth seen at 4.8% in 2024, 4.5% in 2025 (unrevised from October), according to a Reuters Poll
Chinese Loan Prime Rate 1Y (Nov) 3.10% vs. Exp. 3.10% (Prev. 3.10%); 5Y 3.60% vs. Exp. 3.60% (Prev. 3.60%)
China’s SCIO is reportedly to hold a briefing on Friday to outline measures for stabilising foreign trade growth, while the Vice Commerce Minister and officials from MOFA, MIIT, PBoC and Customs will attend the briefing, according to source on X.
US vowed more sanctions on Hong Kong officials after 45 pro-democracy activists were recently jailed, according to SCMP.
US Democratic Senator Blumenthal said Elon Musk’s China ties are a profound threat to US national security and his business interests could be exploited by Beijing, according to SCMP.
China’s smartphone sales -9% Y/Y during Singles’ Day 2024, via Counterpoint Research. Huawei sales +7% Y/Y. Apple (AAPL) and Honor both declined by double-digit %.
European bourses opened the session entirely in the green and have generally traversed best levels throughout the morning. European sectors hold a strong positive bias, with only a couple of sectors found in negative territory. The breadth of the market to the upside is fairly narrow, with no clear outperformer. Construction & Materials tops the pile, joined by Tech and then Basic Resources; the latter pair buoyed by the positive risk tone. Real Estate is found at the foot of the pile, given the relatively higher yield environment. US equity futures (ES +0.2%, NQ +0.2%, RTY +0.2%) are modestly firmer across the board, attempting to build on the prior day’s gains and as traders remain laser-focused on NVIDIA (+0.3% pre-market) results after-hours.
Top European News
UK PM Starmer is to visit Saudi Arabia and UAE to try to secure investment, according to FT.
The Resolution Foundation think tank says the UK’s ONS may be underestimating the number of people in employment by almost 1 million and overstating the extent of the country’s inactive workforce problem, according to The Times.
ECB warns of bubble in AI stocks, low cash buffers at funds.
ECB’s de Guindos says current low growth scenario has to more with structural policy; monetary policy is not almighty.
ECB’s Escriva says floods in Spain to impact the Spanish economy by 0.2% in Q4.
FX
After three sessions of losses, DXY is notably higher as the USD out-muscles all peers alongside a pick-up in US yields. Fed speak today includes Barr, Cook, Bowman & Collins. DXY is currently in touching distance of yesterday’s 106.63 peak.
EUR is swept up by the broadly firmer USD with EUR/USD’s brief foray above 1.06 overnight very much in the rear-view mirror. The latest EZ wage data saw a jump in Q3 to 5.42% from 3.54% but this had little follow-through for EUR. EUR/USD is currently holding above yesterday’s low at 1.0523. ECB’s Lagarde and de Guindos due to speak later in the session.
Yesterday’s geopolitically-induced support for JPY has proved to be short-lived with USD/JPY resuming its trend seen since the US election. USD/JPY has printed a fresh WTD peak at 155.84.
Cable vaulted higher in early trade following across-the-board hotter-than-forecast inflation metrics. GBP/USD rose from sub 1.27 levels to a peak of 1.2714. Note, the Y/Y services print was in-fitting with MPC forecasts.
Antipodeans are both softer vs. the broadly stronger USD and trimming recent gains with fresh macro drivers on the light side.
PBoC set USD/CNY mid-point at 7.1935 vs exp. 7.2386 (prev. 7.1911).
Fixed Income
A softer start for USTs as they continue to unwind Tuesday’s Russia-driven haven bid, taking USTs below Tuesday’s 109-19 base but still over 10 ticks clear of Monday’s 109-04+ base. Benchmark was largely unreactive to UK data or most recently EZ negotiated wages. Fed speak ahead include Barr, Bowman, Collins & Cook.
Bunds were directionally in-fitting with peers, but magnitudes slightly more contained going into the release of the EZ Negotiated Wage Rates (Q3); a release which saw Bunds slip back to the 132.00 mark but pared almost immediately to pre-release levels. A well received German outing had little impact on Bunds.
Gilts gapped lower by 48 ticks and then slipped another 23 to a 93.44 trough after hotter than expected inflation data for October. A release which has further reduced the odds of a December cut. It is worth noting that whilst the Services Y/Y figure surpassed the consensus, it matched the BoE’s own forecast.
Germany sells EUR 0.804bln vs exp. EUR 1bln 1.80% 2053 Bund and EUR 0.818bln vs exp. EUR 1bln 0.00% 2052 Bund.
Commodities
WTI and Brent are in the green, having climbed to session highs in early European trade; more recently, the complex has edged off worst levels. Reuters reported that President Putin is open to talking about a ceasefire with President-elect Trump; news which ultimately had little impact on price action.
Gold is in the red though only modestly so, and still comfortably clear of Tuesday’s USD 2610/oz base and by extension significantly above Monday’s USD 2562/oz base.
Copper is firmer, but only modestly so. Benefitting from the general rebound in risk sentiment. 3M LME copper is in the green but only modestly so holding in a narrow USD 9.12-9.17k band.
Trading Hub Europe announces the gas storage neutrality charge from January 2025 is EUR 2.99/MWh
Equinor’s (EQNR NO) Johan Sverdrup oilfield (775k BPD peak) output capacity is fully restored following a power outage. Producing steadily at normal levels.
Hezbollah’s Qassem to speak in today’s session (time TBC). In response to the announcement that US Envoy Hochstein will arrive in Israel this evening
Israeli army said Hezbollah fired 75 rockets from Lebanon towards Israel on Tuesday, according to Asharq News.
US Envoy Hochstein will stay in Lebanon until Wednesday and then go to Israel, while the new wording of the proposal stated that each side has the right to self-defence if attacked, provided the US guarantees that Israel does not carry out pre-emptive strikes. However, Israel’s Channel 13 noted Hochstein’s visit to Tel Aviv may be delayed due to large gaps between Israel and Lebanon, while the main dispute at the moment is Israel’s demand to maintain freedom of military action in southern Lebanon, according to Al Jazeera.
Saudi representative to the Security Council said they condemn Israeli military actions against Lebanon and reject the threat to its security and stability, according to Asharq News.
Iranian Foreign Minister Araqchi told French Minister for Europe and Foreign Affairs Barrot that Tehran warns France, Germany and Britain about submitting a resolution against Iran at the IAEA Board of Governor’s meeting, while Araqchi added the European resolution draft contradicts the ‘positive atmosphere’ created between Iran and the UN nuclear watchdog and will complicate matters.
Geopolitics: Ukraine
Russia’s Kremlin says Putin constantly states that he is ready for contacts and negotiations on Ukraine; also says the option of freezing the conflict will not suit Russia.
Ukrainian air defence units attempted to repel a Russian air attack on Kyiv, according to Ukraine’s military.
US State Department said the US embassy in Kyiv received specific information of a potential significant air attack on November 20th, while the Kyiv embassy will be closed and it recommended that US citizens be prepared to immediately shelter in the event an air alert is announced, according to a post on X cited by Reuters.
North Korean troops participated in some battles as part of Russia’s airborne unit and marines in the Ukraine war, according to News1. It was also reported that North Korea shipped howitzers and multiple rocket launchers to Russia, while a South Korean lawmaker said South Korea’s spy agency is still trying to determine any North Korean troop casualties and surrenders in the Ukraine war, according to Reuters.
Russian President Putin is reportedly open to talking about a Ukraine ceasefire with US President-elect Trump, via Reuters citing sources; but rules out making any major territorial concessions. Russia could broadly agree to freeze the front-line conflict in any deal; insists Ukraine abandons ambitions to join NATO; could be open to withdrawing from patches of territory in the Kharkiv and Mykolaiv regions. Finally, there could be negotiating room over dividing up Donetsk, Luhansk, Zaporizhzhia and Kherson.
US Event Calendar
07:00: Nov. MBA Mortgage Applications 1.7%, prior 0.5%
Central Banks
10:00: Fed’s Barr Testifies Before House Financial Services Committee
11:00: Fed’s Cook Speaks on Economic Outlook, Policy
12:15: Fed’s Bowman Speaks on Agency Policymaking
16:00: Fed’s Collins Speaks on Policy, Career
DB’s Jim Reid concludes the overnight wrap
Welcome to Nvidia’s quarterly earnings day. They report after the bell in what is likely to be the biggest event of the week. With a market cap of $3.61tn and nearly as big as the entire DAX and CAC combined, it’s going to be a big event. To give you a scale for their astonishing earnings trajectory over such a short period of time, at the recent lows in Jan 2023 Nvidia earned $4.4bn over the preceded last 12m. However, today the consensus will see them earn $61.4bn over the last 12 months. Then, by the time we hit 2027, they are expected to earn $118.1bn LTM. There has never been a large cap company like it in the history of financial markets. Last quarter, the revenue outperformance was the smallest relative to expectations in six quarters, so it wasn’t the sort of massive beat that Nvidia has often reported over the last couple of years. And in turn, their share price was down -6.38% the following day. However, since then, the share price is up around 20%, so no lasting damage was done.
The anticipation of this event seemed to pull markets up from their early geopolitical worries with the S&P 500 closing +0.40%, after S&P futures were down more than -1% shortly before the US open. It was a similar story for bonds, as the 10yr bund yield was initially down more than -10bps, before paring that back to just -3.4bps by the close.
The initial slump began thanks to fears of an escalation in the Russia-Ukraine conflict. Specifically, Ukraine made its first US-sourced ATACMS strike inside Russia, and President Putin signed a revision to Russia’s nuclear doctrine, allowing for a wider set of conditions under which they could use nuclear weapons.
The escalation news immediately led to a significant move into perceived safe havens, with assets like gold, sovereign bonds and the Japanese Yen all advancing. In addition, European equities were hit across the board, and the DAX was down -1.96% at its intraday low (-0.67% at the close).
But after those early losses, markets began to recover as the focus turned to Nvidia’s results. Leading up to the release, Nvidia (+4.89%) posted a strong gain yesterday, making it the top performer among the Magnificent 7 (+1.76%). That helped to lift equities more broadly, with the S&P 500 (+0.40%) managing to post a decent gain. Nevertheless, many stocks didn’t perform so well, and the equal-weighted S&P 500 was down -0.26%, which showed again how the Magnificent 7 were single-handedly driving the broader market. Meanwhile in Europe, there was a much stronger underperformance given the geopolitical developments. For instance, the STOXX 600 (-0.45%) posted a third consecutive loss, which took the index down to a 3-month low.
For sovereign bonds, there were modest gains on both sides of the Atlantic amid the broader geopolitical fears, though the rally eased off as the day went on. The 2yr Treasury yield traded as much as -7bps lower early on before closing virtually flat on the day (+0.1bps), whilst the 10yr yield fell by -1.8bps to 4.40% after earlier trading as low as 4.34%.
Over in Europe, sovereign bonds rallied across the board, with yields on 10yr bunds (-3.4bps), OATs (-2.0bps) and BTPs (-1.7bps) all moving lower. Alongside the geopolitical fears that drove the initial moves, we also had some dovish comments from the ECB’s Panetta, the Italian central bank governor. He said that “restrictive monetary conditions are no longer necessary”, and that they needed to “normalize our monetary-policy stance and move to neutral – or even expansionary territory, if necessary.”
Elsewhere in the political sphere, there’s still no confirmation of who the next US Treasury Secretary will be. The speculation so far this week has increasingly centred around former Fed Governor Kevin Warsh, although others including Scott Bessent and Apollo CEO Mark Rowan have also been widely reported as candidates with Rowan rapidly moving up the pecking order on Polymarket.com. It’s all changing hour by hour. One name that had reportedly been in contention was Howard Lutnick, but yesterday it was confirmed that Lutnick had been selected as Trump’s nominee for Commerce Secretary.
Asian equity markets are trading in a relatively tight range this morning with the S&P/ASX 200 (-0.57%), the Nikkei (-0.28%) and the Hang Seng (-0.06%) are edging lower while the KOSPI (+0.58%), and the Shanghai Composite (+0.46%) are higher. US stock futures are up around a tenth of a percent.
Early morning data showed that Japan’s exports rebounded +3.1% y/y in October (v/s +1.0% expected), led by strong growth in the shipment of chip making equipment. It followed the prior month’s decline of -1.7%, which marked a 43-month low. Meanwhile, imports climbed +0.4%, compared with a -1.9% decline forecast by economists (v/s +1.8% in September). At the same time, the trade deficit widened to -¥461.2 billion from -¥294.1 billion.
In monetary policy action, the People’s Bank of China (PBOC) kept the 1-yr and 5-yr loan prime rate (LPR) intact at 3.1% and 3.6%, respectively, as Beijing continues to assess the effects of its recent stimulus measures.
There wasn’t too much data yesterday, although Canada’s CPI for October was a bit higher than expected at +2.0% (vs. +1.9% expected). Otherwise, US housing starts and building permits were both somewhat beneath expectations in October, with housing starts at an annualised pace of 1.311m (vs. 1.334m expected).
To the day ahead, and the main highlight will be Nvidia’s earnings results after the US close. Otherwise, data releases include the UK CPI report for October as we go to print. Lastly, central bank speakers include the Fed’s Barr, Cook, Bowman and Collins, the ECB’s de Guindos, Stournaras and Makhlouf, and the BoE’s Ramsden.
‘Bomb Cyclone’ Blasts Pacific Northwest, Cutting Power To Over 600,000 In Washington
A massive bomb cyclone slammed into the Pacific Northwest on Tuesday night, unleashing torrential rains and tropical storm-like wind gusts up to 77 mph for certain areas. More than 600,000 customers across western Washington state are without power on Wednesday morning.
FOX Forecast Center said the powerful atmospheric river, coupled with a bomb cyclone, will unleash heavy rains and high winds across the area through Saturday.
“The two storms are powering the event, the first of which is a powerful bomb cyclone. The strength of the low has kicked up strong winds up and down the coast, which have caused power outages and some damage,” Fox Forecast Center explained.
Early Wednesday, data from Poweroutage.US showed that over 600,000 power customers across Washington State had no power. The bulk of the outages were in King County and Snohomish County.
FOX Forecast Center noted, “Measurements showed the storm dropped 66 millibars in pressure in 24 hours, eventually becoming a storm with a central pressure of 943 millibars – on par with a major Category 4 hurricane,” adding, “It easily qualified for the title of “bomb cyclone,” given when a storm strengthens about 24 millibars in 24 hours.”
Satellite imagery shows the cyclone formation of the storm as it slammed into the Pacific Northwest overnight.
An incredible view of the ‘bomb cyclone’ strengthening and approaching the Pacific Northwest. pic.twitter.com/UeKyd0VA0z
We have confirmed reports of trees down in Issaquah, Washington from the bomb cyclone, with power lines also taken out in the process.
The storm has provided wind speeds of up to 70 MPH, with pressure being around 940-945 mb, which is the standard for a Category 4 hurricane. pic.twitter.com/IXYh9NuB1h
The issues arising from thousands of illegal immigrants pouring into Chicago from around the world have united many in the city’s black and Hispanic communities, who blame the government for the resultant social problems, including crime.
Local citizens say that their neighborhoods are less safe, their schools are overcrowded, already scarce jobs are now even harder to come by, and the distribution of municipal resources favors illegal immigrants.
“My beef is with the government, not with the migrants,” said Hector, a Hispanic pastor from Brighton Park on the city’s south side.
“There are a lot of injustices. We do not see equality. The migrants are given everything. The money is coming from our pockets.”
The city has provided housing for the new arrivals, ranging from large tents and warehouses to hotels scattered throughout the city and in some suburbs.
Chaplain Antonio, who ministers to immigrants, has observed criminal gang colors, signs, and emblems among them as he greets the newcomers on their arrival in Chicago.
“We are not against legitimate immigration, but this problem should have been stopped at the border,” he said.
Antonio also said the government is favoring the new noncitizen immigrants over people who are already here.
On a recent night, The Epoch Times met up with Tee and X (not their real names), two black men well-acquainted with life on Chicago’s mean streets, for a drive through some of the South Side’s deadliest neighborhoods.
X called the area “Cowboy Land,” where anything can happen at any time.
Driving through blocks of dilapidated houses and boarded-up storefronts, the pair pointed to street corner after street corner where someone had been shot to death recently.
X, who survived gang involvement well into his early 30s, said he can name 100 people killed in street violence.
Despite all that, he said, “I love my city. I wouldn’t leave. South Chicago is my land.”
Cautious in word and action, X avoided prison. Today, he lives in a small house in a neat, working-class area and works in construction. He is a single parent raising two sons.
X said he has nothing against the Venezuelans who make up the largest segment of the new arrivals. “They’re just trying to make a living,” he said.
Tee, a middle-aged elder statesman of Chicago’s gang and street life who is no stranger to the prison system, said: “Our life is hell. People are dying over here.”
Tee pointed to a woman he knew on the sidewalk. “You see that homeless woman? She’s been a resident of Hyde Park her entire life. She is a United States citizen. She fell bad on her luck. She’ll be sleeping outside tonight,” he said.
“If she were an illegal Venezuelan, she would show up at the entrance to a luxury hotel downtown or on Lake Michigan and be taken right in. They are given everything.
“When I need rent assistance, I can’t get it. But if I am Venezuelan, no problem.
“We have no problem with them being here. The problem is, they’re living here free.
“This is a sanctuary city. Yet my people live in poverty.”
According to Tee, the rising demand for housing will only get worse.
“The illegals need somewhere to live. They are not going to stay in those shelters forever,” he said.
“Some Venezuelans are squatting in run-down and abandoned residential buildings. They take them over, and nothing happens to them. They are immune from the law.
“If a black man has an old felony conviction, when he goes to apply for a benefit, he’s told, ‘Sorry, you have a prior felony that disqualifies you.’
“Yet thousands of illegals come here with no background check. Who knows what they did back home? Yet, they are signed up right away.”
Like Hector, Tee sees the government, not the Venezuelans, as the problem.
“I believe the illegal migrants are brought in by the government to displace the blacks,” he said.
“They are bringing into already impoverished cities like Chicago poor, military-age men with no women. What could go wrong?
“We’ve got no problem with people coming here the right way. What we don’t like is the government immediately handing them resources that we have to stand in line for.
“I don’t see color. I see right or wrong.”
A registered voter, Tee said he would be voting for former President Donald Trump and was strongly urging his friends to do the same.
“Trump will remove the illegal aliens from our communities,” he said.
“I like Trump. He is a felon. Everybody is against him. I like that.”
Economic Frustration
African American Pastor Dave Lowery’s ministry works out of a string of connected storefronts on the corner of 113th Street and Michigan, a rough and economically depressed section of Chicago where jobs are hard to come by.
Lowery, 67, remembers the days when there were many black-owned local businesses, whose owners taught their children to become entrepreneurs.
“We didn’t worry about jobs because we created them ourselves,” he said.
Lowery said that when the younger generation of black politicians and community leaders abandoned that tradition and those values in favor of a culture of dependency, the change fostered an unhealthy and dangerous “hatred of self” among many black residents.
“The politicians tell black women, ‘We can’t give you welfare if your man remains in the house.’ That destroyed the black family and destroyed the black economic engine,” he said.
“As capital and resources dwindled, black people turned on each other for pennies. Today, I’d have to shoot somebody to defend a business in Chicago.
“Nowadays, they don’t teach the basics in our schools. Our children have not been taught to become men and women, husbands and wives.
“It’s little wonder that we don’t do the right thing as individuals.”
Lowery is worried that the influx of illegal immigrants into the schools and neighborhoods could affect the black community “in ways they might not come back from.”
He spoke of the resentment black residents feel when, for example, “the city gives migrants free cars from the impound yard.”
Black community activist David Barnes added: “For some time, there has been a migration out by our people as soon as they can afford to do so. This has decimated communities such as Roseland. It is a dying community.
“The city of Chicago has to replace those people so it is relying on immigration.”
Lowery added, “The city is giving housing vouchers to illegal migrants and placing them in apartments at the rate of 55 [people] per day, while black citizens are struggling for their very existence.”
Unfair Competition and Favoritism
Morris Anderson is a licensed, bonded, and insured general contractor.
Anderson, an African American, said his once thriving business declined by 60 percent after the arrival of the migrants.
“The Venezuelans hang out at the Home Depot waiting to be hired by my competitors to work under the table for a quarter of what I pay my workers,” he said.
“Only a small number of the migrants have work permits, but that doesn’t keep them from working.”
Lowery said that the city held a special event called a “hiring hall” at an area church, but when black laborers showed up, “they were met by security and were told the event was just for the immigrants.”
“That kind of thing provokes the citizens against the illegals,” Anderson said. “It could start a civil war between us and the government over how we are being treated.”
Lowery said that the influx of thousands of foreign, military-age men into Chicago neighborhoods is like “putting a bunch of lions into a small pit and throwing in one piece of meat.
“There’s a big ongoing fight over scarce resources,” he said.
He favors Trump’s plan for mass deportation and called for the elimination of Chicago’s sanctuary city status.
He also advocates for the creation of a black financial consortium and new city projects set aside for black contractors, as ways to defuse what he said could be a “terrible summer of 2025.”
Political Realignment
Devin Jones, 38, opened a Republican campaign office at the corner of South Pulaski and 85th Street on the city’s South Side because he believes the “America first” agenda would better serve the interests and meet the needs of Chicago’s African American community.
Jones, a black Navy veteran who can trace his ancestry in the United States back to 1781, said: “I didn’t know there was anything but America first. I always thought it was our priority.
“It is a strange use of our tax dollars to support illegal immigrants within and foreign countries without, while the generational wealth of my people is being taxed away to pay for it.”
A GOP committeeman and local political activist, Jones said he noticed the infiltration of illegal immigrants into his majority-black neighborhood when he circulated various petitions door-to-door.
“Many people couldn’t sign because they were foreign nationals,” he said.
“Here they are, with no stake in the game, building a life on the shoulders of those of us who struggled for years to acquire and maintain a nice home and business.
“They get to live off of the fruits of our labor without having contributed anything.
“We are American citizens who just want to keep what we have earned.”
Jones, a college graduate born and raised on the South Side, where he still resides, understands the connection between a good education and upward mobility.
He said he became angry when he noticed a shift in the priorities of the already poor Chicago Public Schools away from meeting the needs of black students who are U.S. citizens in favor of “dual-language students.”
The Treasury Department is expanding the review process for land purchases around more than 60 military bases following a land-buying spree by Chinese entities.
The department announced the new rule on Nov. 1, saying it “significantly expands its ability to review certain real estate transactions by foreign persons near more than 60 military bases and installations across 30 states.”
As chair of the Committee on Foreign Investment in the United States (CFIUS), the treasurer has the authority to recommend that the president block or undo certain real estate deals deemed to negatively impact national security.
“The Biden-Harris Administration will continue to use our strong investment screening tools to advance America’s national security and protect our military installations from external threats,” Treasury Secretary Janet Yellen said in an associated statement.
A 2018 law grants CFIUS jurisdiction over real estate transactions dealing with the foreign purchase of U.S. land in close proximity to military installations.
The new rule expands that jurisdiction, allowing CFIUS to review purchases anywhere within a one-mile radius of 40 military sites and anywhere within a 100-mile radius of 27 others.
The purchase of large amounts of farmland near U.S. military bases by Chinese entities has spooked members of the U.S. national security establishment in recent years.
Chinese holdings of U.S. agricultural lands reached more than 352,000 acres in 2020, more than 25 times the 14,000 acres owned in 2010, according to U.S. Department of Agriculture estimates.
States with the largest Chinese holdings include Texas at 159,640 acres, North Carolina at 44,776 acres, Missouri at 43,071 acres, Utah at 32,447 acres, and Virginia at 14,382 acres.
The Chinese landholdings represent just 1 percent of all the foreign-owned land in the United States. Still, there is now a fear that the Chinese Communist Party (CCP) could use access to these parcels to collect intelligence or otherwise compromise U.S. military readiness and national security.
“Certain real estate transactions near military ranges owned by each of the Armed Forces could reasonably provide a foreign person the ability to collect intelligence, perform surveillance, or otherwise expose national security activities at such installations,” the final rule reads.
The rule also comes amid another concerning trend of recent years, in which Chinese nationals have attempted to enter U.S. military bases without authorization, sometimes going so far as to attempt to drive at blistering speed through the front gate.
U.S. Navy Adm. Daryl Caudle said in May that the Navy alone now faced such incidents multiple times a week. House Oversight Committee leaders have subsequently urged the Government Accountability Office to review how the Department of Justice investigates instances of foreign nationals probing sensitive U.S. facilities.
Some Chinese nationals have likewise been prosecuted and convicted for their efforts to illegally gain access to U.S. military bases.
Numerous states are now seeking to bar the CCP and other potentially hostile entities from purchasing U.S. land. In 2023, there were some 53 related measures considered in 23 states across the nation.
Enforcement remains a key problem with any state-level legislation, however. Many local governments don’t have the resources to independently vet every land purchase near military sites in their state, particularly if the site is near a population center.
To that end, the new rule is aimed at helping to shore up a critical national security risk and decrease the ease with which foreign powers might collect information on key U.S. sites.
“This final rule will significantly increase the ability of CFIUS to thoroughly review real estate transactions near bases and will allow us to deter and stop foreign adversaries from threatening our Armed Forces, including through intelligence gathering,” Yellen said.
The new rule will go into effect in approximately 30 days.
Vanguard Adds 3 New Proxy Vote Options, Expands Shareholder Choice Pilot
In the latest evidence of the ongoing erosion of the environmental, social and governance (ESG) movement, investment titan Vanguard has doubled the amount of assets covered by a program that gives investors the power to choose a proxy-voting philosophy — while also adding two more voting options within that program.
“Vanguard Investor Choice is grounded in the foundational belief that empowering investors to influence how their proxies are voted helps create a healthier corporate governance ecosystem,” said John Galloway, Global Head of Investment Stewardship at Vanguard. The program will now cover nearly 4 million investors and almost $250 billion in assets — still a small slice of the more than $10 trillion in Vanguard assets under management.
Vanguard also announced that it is working with retirement plan sponsors to extend the pilot program’s availability to 401(k) and other retirement plan participants. Here’s the updated list of funds eligible for the program, with the three new additions in italics:
Vanguard S&P 500 Growth Index Fund
Vanguard Russell 1000 Index Fund
Vanguard ESG U.S. Stock ETF
Vanguard Mega Cap Index Fund
Vanguard Dividend Appreciation Index Fund
Vanguard High Dividend Yield Index Fund
Vanguard Tax-Managed Capital Appreciation Fund
Vanguard Tax-Managed Small-Cap Fund
The decades-long rise of passive investing has put the Big Three indexers — BlackRock, Vanguard and State Street –in a position of major power to steer corporate agendas. It’s also put them in the crosshairs of angry investors and federal and state Republican officials who think shareholder returns should be the only consideration when voting proxies.
Giving investors the power to choose their own proxy-voting philosophy for shares held on their behalf extricates Vanguard and other firms from competing pressures applied by ESG enthusiasts and opponents. Vanguard now provides a choice of five such proxy philosophies for funds that are covered by the expanding Investor Choice pilot program:
Vanguard-Advised Funds Policy: Shares are voted “in a manner that seeks to maximize long-term shareholder returns.”
Company Board-Aligned: The fund investor’s proportionate share of votes on each measure is cast in alignment with the recommendations of the company’s board of directors
Glass Lewis ESG: Glass Lewis is a proxy advisor; in this option, the investor’s shares go all-in on the woke agenda that emphasizes “climate action,” diversity, “equity” and social issues
Third Party Wealth-Focused Policy: An investor’s shares are voted per the recommendation of Egan-Jones, which will focus on maximizing shareholder value without consideration of political or social factors
Mirror Voting Policy: Votes an investor’s proportionate shares in approximately the same proportions as the votes cast by other shareholders. (This follow-the-crowd approach replaces a “not voting” policy that directed Vanguard to not cast any vote on any proposal.)
The last two are new for the 2025 proxy-vote season. In September, Vanguard shared data on the breakdown of choices made by investors in the Investor Choice pilot using the previous set of options. Putting aside the outlier ESG US Stock ETF fund, Vanguard investors overwhelmingly favored non-ESG voting, with around 75% choosing to go with either the company board recommendation or Vanguard’s judgement on the best option for shareholder returns:
BlackRock, State Street, and Vanguard collectively own a *giant* chunk of nearly all public companies. They foist environmental & social agendas (“ESG”) onto their portfolio companies via proxy voting & shareholder engagement. The corporate virtue-signaling game is a symptom of a… https://t.co/mNXvaUsExR
Suicides increased among U.S. military service members in 2023, continuing a gradual rise seen over the past decade, according to the Department of Defense’s annual report on suicide in the military.
A total of 523 service members—including active, reserve, and National Guard—died by suicide in 2023, up from 493 in 2022, according to the Pentagon’s report, while the total force rate of suicide deaths per 100,000 service members was 9 percent higher than in 2022, at 25.6 per 100,000.
The Pentagon’s report highlighted an upward trend since 2011 among active-duty military members: A total of 363 active-duty service members died by suicide in 2023, up from 331 in 2022 and 328 in 2021.
The report noted that military suicide rates have been comparable to those seen across the wider U.S. population between 2011 and 2022.
The findings “urgently demonstrate the need for the Department to redouble its work in the complex fields of suicide prevention and postvention. One loss to suicide is one too many,” Defense Secretary Lloyd Austin said in a Nov. 14 statement.
The defense secretary said the Pentagon is focused on long-term, sustained initiatives to prevent suicide and is taking a “comprehensive” and “integrated” approach to increasing protective factors and decreasing the risk of suicide among service members.
“Our efforts aim to meet the military community where they are in their personal and professional lives—whether through bolstering financial readiness and support, building healthy relationships, improving mental health, or supporting them through life transitions,” Austin said.
The defense secretary noted that there has been a decrease from previous years in the number of military family members (spouses and dependent children combined) who died by suicide.
A total of 146 military family members died by suicide in 2022 compared to 165 in 2021, and 200 in 2020, according to the report. Numbers for 2023 were unavailable due to the time it takes to process data for this category.
The report noted that the complexity of suicidal behavior means it is difficult to identify a single root cause that might explain the trend.
Pentagon Working to Combat Suicide Rates
Overall, in 2023, 158 deaths were attributed to suicide among active-duty Army personnel, according to the report. Another 72 were reported among active-duty members of the Air Force, 70 among Navy members, and 61 among Marine Corps members, while two suicides were reported among members of the Space Force.
Among reserve members, 44 suicides were reported in the Army, 10 in the Marine Corps, eight in the Navy, and seven in the Air Force.
Similar to previous years, the majority of the deaths (around 60 percent) were among males under the age of 30, the Pentagon report found.
Firearms were the primary method of suicide deaths for service members and their families, according to the Pentagon, which noted the importance of promoting awareness regarding safely securing and storing firearms.
Speaking on Thursday, Austin touted the work the Pentagon is doing to tackle rising suicide rates among military personnel, including establishing the Suicide Prevention Response and Independent Review Committee in 2022 to conduct a review of clinical and nonclinical suicide prevention and response programs.
That review has resulted in more than 100 recommendations so far, Austin said.
In 2025, the Department of Defense also plans to invest $250 million in suicide prevention, Austin and other officials noted.
“We are dedicated to fighting for our Service members by fostering supportive team cultures and tackling the stigma of asking for help and other barriers to care,” Austin said.
“We continue working hard to improve the delivery of mental health care, bolster suicide prevention training, and educate people about lethal means safety. There’s still much more work to do, and we won’t let up.”
If you or someone you know is experiencing a mental health crisis, considering suicide, or engaging in substance abuse, dial or text the U.S. Suicide & Crisis Lifeline at 988 to speak with a counselor. If you’re in the UK, call the Samaritans at 116123.
Natural Gas Prices In US Northwest And Western Canada At Record Lows
The prices of natural gas at the key regional hubs in the U.S. Pacific Northwest and Western Canada have hit this year the lowest level on record, amid rising production in the Western Canadian Sedimentary Basin (WCSB) and high inventory levels in these regions.
Monthly average natural gas spot prices at the northwestern U.S. and western Canada border pricing hubs reached historic lows in the first ten months of 2024, the U.S. Energy Information Administration (EIA) said on Tuesday, citing data from Natural Gas Intelligence.
The Western Canada benchmark, Westcoast Station 2, saw the daily spot natural gas price average $1.04 per million British thermal units (MMBtu) through October, with the lowest monthly average of $0.31 per MMBtu in September.
The Westcoast Station 2 pricing hub is near Fort St. John, British Columbia, close to natural gas production activities in the Western Canadian Sedimentary Basin.
At the key pricing hub for the U.S. Pacific Northwest, Northwest Sumas, the daily spot price averaged $1.87 per MMBtu in 2024 through October and reached its lowest monthly average this year of $0.97 per MMBtu in May. The monthly average price at Northwest Sumas for the first 10 months of this year was the lowest for this period of any year since the EIA began collecting data for this hub in 1998.
As Charles Kennedy writes at OilPrice.com, the key reasons for the low regional gas prices were the high natural gas production in the WCSB since the end of 2022 and relatively high natural gas exports into the western United States.
To compare, the monthly average of the U.S. benchmark, Henry Hub, daily spot price was at $2.20 per MMBtu in October 2024, the EIA’s latest Short-Term Energy Outlook (STEO) showed earlier this month.
The U.S. administration expects the Henry Hub price to average around $2.90 per MMBtu in 2025, as global demand for U.S. LNG exports, a component of U.S. natural gas demand, continues to increase.
