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Noem Accuses Anti-ICE App Developer Of Obstructing Justice; Leavitt Blasts CNN For "Promoting" It

Zero Hedge -

Noem Accuses Anti-ICE App Developer Of Obstructing Justice; Leavitt Blasts CNN For "Promoting" It

Authored by Luis Cornelio via Headline USA,

Homeland Security Secretary Kristi Noem said Monday that “ICEBlock,” an app designed to alert individuals of immigration enforcement operations, appeared to constitute obstruction of justice. 

“This sure looks like obstruction of justice,” Noem wrote on X, responding to a CNN segment about the controversial app.

She also warned that the app threatens the safety of ICE agents by putting a target on their backs. 

“Our brave ICE law enforcement face a 500% increase in assaults against them,” she said.

“If you obstruct or assault our law enforcement, we will hunt you down and you will be prosecuted to the fullest extent of the law.” 

Noem’s comments followed a CNN story on tech developer Joshua Aaron, who created ICEBlock to push back against President Donald Trump’s ICE raids across the country. 

ICEBlock works by encouraging users to report suspected ICE sightings and broadcasts alerts to others nearby.

The app now has more than 20,000 users. 

“When I saw what was happening in this country, I wanted to do something to fight back,” Aaron told CNN, before comparing ICE raids to operations similar of Nazi Germany. “We’re literally watching history repeat itself.” 

According to Aaron, the app does not collect personal data and allows users to report ICE sightings anonymously. 

“We don’t want anybody’s device ID, IP address, location,” Aaron said.

“We don’t want anything being discoverable. And so, this is 100% anonymous and free for anybody who wants to use it.” 

During Monday afternoon’s White House press briefing, Press Secretary Karoline Leavitt ripped CNN for what had seemed to her like “unacceptable” behavior by “a major network” in “promot[ing]” the app...

"...surely it sounds like this would be an incitement of further violence against our ICE officers. As you know — as you stated, there has been a 500% increase in violence against ICE agents, law enforcement oficcers across the country who are just simply trying to do their job and remove public safety threats from our communities. And that’s something we, as Americans, including journalists at CNN, who live in many of these cities where illegal aliens are hiding and were let in from the previous administration, should be very grateful for. So, we haven’t seen the clip. We’ll take a look at it, but certainly it’s unacceptable that a major network would promote such an app that is encouraging violence against law enforcement officers who are trying to keep our country safe."

Tyler Durden Tue, 07/01/2025 - 13:40

Attorneys Push For Class Action In Birthright Citizenship Case After Supreme Court Ruling

Zero Hedge -

Attorneys Push For Class Action In Birthright Citizenship Case After Supreme Court Ruling

Authored by Sam Dorman via The Epoch Times,

Attorneys are urging a federal judge in Maryland to use an alternative legal mechanism for granting a sweeping block on President Donald Trump’s birthright citizenship order after the Supreme Court ruled against the use of nationwide injunctions.

A conference on June 30 marked the first set of public arguments in which attorneys and a judge attempted to wrestle with the implications of the Supreme Court’s decision just three days prior. Although the Supreme Court said nationwide injunctions were likely inconsistent with judges’ authority, it allowed plaintiffs like the ones in Maryland to pursue broad relief through class actions.

Class actions generally entail judges allowing a plaintiff to represent a larger group of people—otherwise known as a class—and seek relief, such as injunctions, for that class. Quickly after the Supreme Court’s June 27 opinion, attorneys for immigrant organizations and pregnant women asked the federal court in Maryland to recognize a class of people that was made up of people who would be ineligible for birthright citizenship as a consequence of Trump’s order.

During the June 30 conference, U.S. District Judge Deborah Boardman repeatedly asked the administration whether it thought it could deport recently born babies of illegal immigrant parents. Justice Department attorney Brad Rosenberg said it was his understanding that the government couldn’t do that until 30 days after the Supreme Court’s decision.

That’s because Justice Amy Coney Barrett, who penned the majority opinion, said that she was halting the lower court injunctions on the president’s birthright order but would still grant a 30-day delay for the most important section to take effect.

Rosenberg told Boardman that he was very confident in his understanding of the 30-day limit on deportations, but she required him to submit something in writing the following day. How the government responds, she said, will bear on how she proceeds with another potential block.

Granting that request could raise additional questions about the Supreme Court’s decision and how plaintiffs in other cases can seek to block the administration’s policies. Rosenberg laid out several potential issues with the judge certifying the class plaintiffs had requested.

He also referenced Justice Samuel Alito’s concurring opinion, which was joined by Justice Clarence Thomas and directed courts to “scrupulous[ly]” adhere to the federal rules around class certification. It also warned that universal injunctions would “return from the grave” if judges refused to abide by those safeguards.

William Powell, one of the plaintiffs’ attorneys, told Boardman that Alito’s opinion was joined by only one other justice. Boardman could grant relief for the proposed class without first certifying it, Powell suggested. He pointed to the Supreme Court’s recent decision to tentatively block Trump’s deportations under the Alien Enemies Act.

Even though a district court had not certified a class of potential deportees, a majority of the Supreme Court appeared to block deportations for that putative class. That decision saw a critical dissent from Alito, who was joined by Thomas then as well.

At one point on June 30, Rosenberg argued that Boardman lacked jurisdiction to effectively replace her prior nationwide injunction with another block. That’s because the case had already been transferred to the U.S. Court of Appeals for the Fourth Circuit, which had jurisdiction over the substance of her initial injunction. Boardman appeared unpersuaded, ordering expedited briefing and saying she was converting the plaintiffs’ request for a temporary restraining order into one for a preliminary injunction, which is more permanent.

There appeared to be some disagreement over what exactly the Supreme Court did in its June 27 decision. Barrett’s opinion temporarily halted the section of Trump’s order that establishes a policy of departments and agencies not issuing documents that recognize citizenship for certain people, including children whose parents were both illegal immigrants.

Another aspect of her opinion allowed the executive branch to follow Trump’s order to the extent that they would develop and issue public guidance on the government’s plan for implementation. That appeared to be a reference to Section 3 of Trump’s order, which directs agencies to issue guidance, among other things.

Powell expressed concern about a portion of that section that directs the secretary of state, attorney general, secretary of homeland security, and commissioner of social security to ensure their policies were consistent with the order. That portion, combined with a section expressing Trump’s view about the limitations of birthright citizenship, might lead to some kind of adverse enforcement for people like the plaintiffs, Powell suggested.

This case—known as CASA Inc. v. Donald Trump—is just one of several that resulted in nationwide injunctions on Trump’s policy.

The Supreme Court’s decision on June 27 did not say whether Trump’s policy was unconstitutional but instead focused on the legality of nationwide injunctions. It also left some wiggle room for lower courts to adjust their orders while not making it entirely clear whether injunctions in cases brought by state governments would lose their nationwide scope altogether.

Boardman asked both sides on June 30 how one of those nationwide injunctions, which was issued by a judge in Massachusetts, would impact the plaintiffs in Maryland. Rosenberg told her that injunction may end up being narrowed. Powell similarly indicated the injunction could be narrowed and that the plaintiffs should receive immediate relief.

Tyler Durden Tue, 07/01/2025 - 13:00

Circle Applies For US Trust Bank Charter To Manage Its USDC Reserve

Zero Hedge -

Circle Applies For US Trust Bank Charter To Manage Its USDC Reserve

Authored by Stephen Katte via CoinTelegraph.com,

Stablecoin issuer Circle has applied to establish a national trust bank in the United States that, among other duties, would oversee the firm’s USDC reserve on behalf of its US issuer. 

If the application is approved by the US Office of the Comptroller of the Currency (OCC), Circle’s First National Digital Currency Bank would be authorized to operate as a federally regulated trust institution, Circle said in a statement on Monday.

Circles Digital Bank also hopes to strengthen the infrastructure that “supports the issuance and circulation” of USDC and offer digital asset custody services to institutional customers, the stablecoin issuer added. 

Source: Jeremy Allaire

National Trust Banks can’t accept cash deposits or issue loans. However, they can offer custodial services and operate nationally under the oversight of the OCC, rather than having to apply for individual state-based money transmitter licenses or specific digital currency licenses, according to law firm Dave Wright Tremaine. 

GENIUS Act compliance 

Circle said a federally regulated trust charter would also help it meet requirements under the proposed GENIUS Act, which passed the US Senate on June 17 and moved to the House of Representatives, where it will face another vote before possibly becoming law. 

Circle co-founder and CEO Jeremy Allaire said Circle is taking “proactive steps to further strengthen our USDC infrastructure” and “align with emerging US regulation for the issuance and operation of dollar-denominated payment stablecoins.” 

National Trust Bank applications to the OCC are subject to a 30-day comment period, and the regulator usually decides to approve or reject within 120 days after receipt of a complete application. 

Other crypto firms also eye bank charters

Circle isn’t the only crypto firm hoping to create a national trust bank under the oversight of the OCC. 

Eleanor Terrett, the host of the Crypto in America podcast, said in an X post on Monday that there are several other crypto firms, including the digital currency wing of financial services giant Fidelity, that are applying for a national bank charter license from the OCC.

Circle has been considering a bank charter since at least 2022 and was also named in The Wall Street Journal report on April 21 as one of several crypto firms considering applying for a bank charter or license.

Anchorage Trust Company became the first crypto firm to receive a license from the OCC in January 2021, converting into Anchorage Digital Bank. 

Circles’ stock trades flat

Circle Internet Group (CRCL) shares have traded flat in the last trading session, rising 0.48% to $181, Google Finance data shows. In after-hours trading, the stock dropped 1.30% to $178. 

Circle’s share price was flat during the last trading session. 

After going public, Circle stock made a strong entry into the market on June 5, climbing 167% during its first trading session on the New York Stock Exchange. 

Tyler Durden Tue, 07/01/2025 - 12:20

"Party's Over": Auto Sales Sputter After Tariff-Fueled Surge

Zero Hedge -

"Party's Over": Auto Sales Sputter After Tariff-Fueled Surge

The auto sales slowdown that emerged in June is largely a hangover from the spring surge, when consumers rushed to dealerships nationwide to beat tariff hikes sparked by President Trump's escalating trade war and new tariffs on trading partners. With affordability still worsening and economic uncertainty elevated, industry researcher J.D. Power now expects sales to remain subdued through the second half of the year. 

Source: Bloomberg 

Bloomberg cited a new report from J.D. Power that showed consumers rushed to buy new vehicles before prices climbed, pushing Q2 sales up 2.5% year-over-year. But that momentum quickly fizzled with the annualized sales rate dropping to 15 million units in June — the slowest in 12 months — down from April's 17.6 million pace.

Source: Bloomberg 

"The party is over," Jonathan Smoke, chief economist for researcher Cox Automotive, said in an interview, adding, "It's slowing. It's because of affordability getting worse and forcing what we think will be production declines to keep supply in balance."

Smoke expects the annualized monthly rate of auto sales to hover around 15 million in the second half of the year, down from 16.3 million during the first six months. Last year, Americans purchased around 16 million cars and light trucks. In the analyst's view, this indicates an apparent slowdown, primarily driven by worsening affordability.

Cox data shows the average cost of a new car is rising, up 1% in June from a year ago to $48,799 — a 28% increase compared to 2019 prices. 

"Given the impact of tariffs, prices are likely to start rising at a much faster rate," Charlie Chesbrough, senior economist for Cox, recently noted. "Higher vehicle prices are coming to the new vehicle market."

Meanwhile, the Manheim Used Vehicle Value Index is beginning to rise again, indicating that used cars are increasingly being chosen as substitutes for new vehicles amid ongoing concerns about affordability. It also points to a tightening supply in the used vehicle market.

There is some good news: Goldman's Jan Hatzius wrote in a note to clients that he expects the Federal Reserve to begin cutting interest rates in September, with three 25-basis-point reductions anticipated by the end of the year.

As for this summer, affordability woes persist, and prices stay high—toxic combination for the automobile market.  

Tyler Durden Tue, 07/01/2025 - 11:45

Fannie and Freddie: Single Family Serious Delinquency Rates Decreased in May; Fannie Multi-Family Delinquency Rate Near Highest Since Jan 2011 (ex-Pandemic)

Calculated Risk -

Today, in the Calculated Risk Real Estate Newsletter: Fannie and Freddie: Single Family Serious Delinquency Rates Decreased in May

Excerpt:
Freddie Mac reported that the Single-Family serious delinquency rate in May was 0.55%, down from 0.57% April. Freddie's rate is up year-over-year from 0.49% in May 2024, however, this is below the pre-pandemic level of 0.60%.

Freddie's serious delinquency rate peaked in February 2010 at 4.20% following the housing bubble and peaked at 3.17% in August 2020 during the pandemic.

Fannie Freddie Serious Deliquency RateFannie Mae reported that the Single-Family serious delinquency rate in May was 0.53%, down from 0.55% in April. The serious delinquency rate is up year-over-year from 0.48% in May 2024, however, this is below the pre-pandemic lows of 0.65%.

The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59% following the housing bubble and peaked at 3.32% in August 2020 during the pandemic.
There is much more in the article.

Trump Vs. Musk: "Big, Beautiful Bill" Feud Sparks Overnight Political Firestorm

Zero Hedge -

Trump Vs. Musk: "Big, Beautiful Bill" Feud Sparks Overnight Political Firestorm

Update (0800 ET):

Elon Musk on President Trump this morning:

Musk continued: 

*   *   * 

Update (0800 ET):

President Trump on Elon Musk this morning:

  • TRUMP: MUSK IS UPSET HE LOST THE EV MANDATE BUT 'HE COULD LOSE A LOT MORE THAN THAT'

  • TRUMP, ASKED ABOUT DEPORTING MUSK, SAYS HAVE TO TAKE A LOOK

*   *   * 

Tesla shares slid in premarket trading in New York following a late-night clash between CEO Elon Musk and President Donald Trump. The feud played out across their respective social media platforms.

"Elon Musk knew, long before he so strongly Endorsed me for president, that I was strongly against the EV Mandate. It is ridiculous, and was always a major part of my campaign. Electric cars are fine, but not everyone should be forced to own one. Elon may get more subsidy than any human being in history, by far, and without subsidies, Elon would probably have to close up shop and head back home to South Africa," Trump wrote on Truth Social. 

The president continued, "No more Rocket launches, Satellites, or Electric Car Production, and our Country would save a FORTUNE. Perhaps we should have DOGE take a good, hard, look at this? BIG MONEY TO BE SAVED!!!" 

The Truth Social post came after Musk slammed Trump's "Big, Beautiful Bill" on X ahead of the final vote, vowing to launch a new political party, claiming that Republicans and Democrats are merely a 'uniparty' operating with a limitless taxpayer-funded credit card.

Tesla has long benefited from the $7,500 EV tax credit, which the BBB plan aims to eliminate. While this move has been widely anticipated, it could ultimately work in Tesla's favor, hitting rivals like Rivian, Lucid, and legacy automakers far harder, as many still rely heavily on such subsidies to stay afloat.

Tesla shares are down 4% in premarket trading, currently hovering around $303 per share. On the year, shares are down 21%, as of Monday's close. 

As for Trump's threat about "no more rocket launches, satellites" — referring to Musk's company SpaceX — good luck following through on that. SpaceX is the reason the U.S. is leading the global space race.

Who's going to replace SpaceX? Blue Origin... Laughable. 

Tyler Durden Tue, 07/01/2025 - 11:33

Oklahoma Ends Recommendation To Add Fluoride To Water

Zero Hedge -

Oklahoma Ends Recommendation To Add Fluoride To Water

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

The Oklahoma State Department of Health has removed its recommendation that fluoride be added to public water systems, joining a growing number of states that have rolled back similar guidance.

Oklahoma Gov. Kevin Stitt (L) with U.S. Health Secretary Robert F. Kennedy Jr. (R) at the Oklahoma State Capitol on June 26, 2025. Oklahoma Gov. Kevin Stitt's Office via The Epoch Times

An archived version of the webpage states the department “supports community water fluoridation and recognizes the practice as safe, cost-effective and beneficial to all who drink and use the water.” The page now returns an error message.

I’m instructing the Oklahoma Department of Health to stop recommending fluoride in our water,” Gov. Kevin Stitt, a Republican, said during a press conference on June 26. “Cities and water districts, they can still choose to do what they want, based on their constituents and the science, but it’s no longer going to be a recommendation from the state health department.”

An executive order issued by Stitt on the same day said that there is “growing public concern, evolving scientific research, and fundamental principle of informed consent that call into question the continued appropriateness of mandatory fluoridation of the public drinking water system, a practice historically supported by the State of Oklahoma as a means of promoting dental health.”

The order directs state health and environmental officials to “immediately cease any state-level promotion or endorsement of fluoridation of the public water supply.”

It also directs the officials to carry out a comprehensive review of all state policies and procedures related to adding fluoride to public water supplies.

Stitt ordered the officials to submit a written report of their findings to him and lawmakers within 90 days.

The report shall document fluoridation practices and include “concrete recommendations and a timeline for transitioning away from a position or practice that mandates or promotes the fluoridation of the public water supply,” according to the order.

Some states have acted against water fluoridation, including Utah and Florida, in recent months.

Fluoride is a mineral. Proponents of adding fluoride to water say it helps prevent cavities. Opponents say the practice can result in negative effects, such as lower IQ.

U.S. Health Secretary Robert F. Kennedy Jr. opposes water fluoridation and said in April he would tell the Centers for Disease Control and Prevention to stop recommending it.

The CDC has not stopped recommending adding fluoride to water. The agency, which is part of Kennedy’s department, said in a May statement that “water fluoridation is beneficial for reducing and controlling tooth decay and promoting oral health across the lifespan.”

Kennedy joined Stitt for the June 26 news conference, during which Stitt also announced the launch of a Make Oklahoma Healthy Again (MOHA) campaign, modeled after Kennedy’s and President Donald Trump’s Make America Healthy Again (MAHA) initiative.

Stitt’s order established a MOHA advisory council and directed state officials to examine the use of artificial dyes in food for schools and programs.

“For far too long, we have settled for food that has made us sicker as a nation,” Stitt said in a statement. “In Oklahoma, we’re choosing common sense, medical freedom, and personal responsibility. President Trump and Secretary Kennedy have led the charge nationally, I’m grateful for their support as we Make Oklahoma Healthy Again.”

Kennedy told reporters on Thursday that the country is dealing with a mental health crisis and that “there’s more and more emerging science that shows how it’s directly connected to our food.”

He said that improving food through initiatives such as the ones introduced by Stitt will end the mental health crisis.

Tyler Durden Tue, 07/01/2025 - 11:25

FBI Charges 4 Californians In Largest-Ever COVID Tax Credit Fraud Scheme

Zero Hedge -

FBI Charges 4 Californians In Largest-Ever COVID Tax Credit Fraud Scheme

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

Four Californians were charged by a federal grand jury on June 11 for their alleged involvement in a $93 million COVID-19 tax credit fraud scheme, deemed to be the “largest ever identified,” the FBI said in a June 26 statement.

The Federal Bureau of Investigation (FBI) headquarters in Washington on Nov. 6, 2023. Madalina Vasiliu/The Epoch Times

The individuals are Kristerpher Turner, 52, of Harbor City; Toriano Knox, 55, of Los Angeles; Kenya Jones, 46, of Compton; and Joyce Johnson, 55, of Victorville.

The fraud is related to a COVID-19 tax credit program authorized by Congress called the Families First Coronavirus Response Act (FFCRA). The program required certain employers to provide workers with paid sick leave or expanded family and medical leave for reasons related to the pandemic. Employers would then be reimbursed in the form of tax credits.

In the fraud scheme, Turner and his co-conspirators allegedly submitted fraudulent forms under certain companies, including bogus ones, claiming FFCRA tax credits. These companies did not pay for sick or family leave to any employees at any time, the FBI said.

The defendants submitted fraudulent filings not only on behalf of their own purported businesses but also for companies under the name of other people—including romantic partners, family members, and friends—who were recruited into the scam, it added.

For each fraudulent client that received checks from the Treasury under the scheme, Turner reportedly charged somewhere between 20 to 40 percent of the receipts.

“In total, from approximately June 2020 and December 2024, the defendants and their co-conspirators submitted and caused the submission of fraudulent forms for at least 148 companies, seeking a total of approximately $247,956,938 in tax refunds to which they were not entitled,” the FBI said.

“In reliance on the fraudulent forms and the false statements, the IRS issued Treasury checks in the total amount of at least approximately $93 million.”

When defendants learned that the IRS was inquiring about the scheme, Knox, Jones, and other individuals attempted to murder Turner on or about Aug. 29, 2023, to prevent him from speaking to law enforcement, the FBI said. Turner was shot multiple times but survived and is now paralyzed.

All four defendants were charged with mail fraud, conspiracy to commit mail fraud, and conspiracy to submit false claims. Knox and Jones are charged with attempting to kill a witness and using a firearm in furtherance of that crime.

Each mail fraud charge carries a maximum prison term of 20 years. The attempted murder charge is punishable with a 30-year jail term, while the firearm charge can result in life imprisonment.

The Epoch Times was unable to reach the legal representatives of the four defendants.

Another case of a major COVID-19 tax credit fraud came to light earlier this year when seven people were charged with allegedly stealing millions of dollars.

On Jan. 22, the Department of Justice said the individuals were charged with “operating a multi-state conspiracy in which they attempted to defraud the United States of more than $600 million by filing more than 8,000 false tax returns claiming COVID-19-related employment tax credits.”

While the fraudsters filed for $600 million in tax credits, the IRS reportedly ended up disbursing $45 million.

Tackling Pandemic Fraud

On June 26, the Pandemic Response Accountability Committee (PRAC) announced the release of its semiannual report. PRAC was set up under the CARES Act for independent oversight of funds provided under the Act, as well as other related spending bills.

Between Oct. 1, 2024, and March 31, PRAC provided investigative support to over 49 law enforcement partners in more than 1,100 investigations related to the pandemic with a potential fraud loss of $2.4 billion.

“The PRAC’s data analytics tool has helped recover for the taxpayers hundreds of millions of dollars—far more than our total appropriation from Congress,” said Michael E. Horowitz, chair of the committee.

“Now, with three months remaining until our sunset, we urge Congress to maintain our data analytics center to assist agencies and the oversight community in fraud prevention.”

In an April 9 report, the Government Accountability Office said that the true scale of the fraud involved in the pandemic relief funds “will never be known with certainty.”

“The scope of the pandemic-relief response; the inherently deceptive nature of fraudulent activities; and the resources needed for detection, investigation, and prosecution of fraud make it difficult to measure. However, estimates indicate hundreds of billions of dollars in potentially fraudulent payments were disbursed,” the report said.

Between March 2020 and December 2024, the Justice Department secured more than 650 settlements and judgments worth more than $500 million to resolve fraud and overpayment allegations in connection with the pandemic relief programs, it said.

By the end of last year, the Justice Department had announced fraud-related charges against more than 3,000 defendants, of whom 2,148 were sentenced, according to the report.

Tyler Durden Tue, 07/01/2025 - 10:45

Labor Market Rebounds As Job Openings Unexpectedly Soar

Zero Hedge -

Labor Market Rebounds As Job Openings Unexpectedly Soar

One month after the BLS reported that in April the labor market rebounded, as the number of job openings rose sharply by 191K to 7.4 million, and far above estimates of a 7.1 million print, moments ago we got another indication that the labor market is staging a remarkable rebound when the BLS reported that in May the number of job openings soared by 374K to 7.769 million, the highest since Nov 2024 and smashing estimates of a drop to 7.3 million (from an upward revised 7.395 million print).

According to the BLS, the number of job openings increased in accommodation and food services (+314,000) and in finance and insurance (+91,000). The number of job openings decreased in federal government (39,000)..

... but the highlight is that after a mysterious spike last month which prompted us to muse if DOGE had achieved anything at all, we got a resounding answer today when the BLS confirmed that last month's jump was an outlier and the number of Federal government job openings tumbled by almost a third, from 128K to just 89K, the lowest since covid.

In  the context of the broader jobs report, it appears the US labor market may have dodged a bullet because whereas in March the labor market was almost demand constrained, when there were just 117K more openings than jobs in the US, since then the differential has risen and in May the number of job openings was 532K more than number of employed workers, suggesting the onset of a labor recession has once again been punted.

As noted previously, until this number turns negative - which it almost did but may have now averted for the foreseeable future - the US labor market is not demand constrained, and a recession has never started in a period when there were more job openings than unemployed workers.

Said otherwise, in May the number of job openings to unemployed rose for the first time in months, from 1.0x to 1.1x.

While the job openings data was a surprising big beat and continued rebound, there was some mixed news on the hiring side where the number of new hires dipped modestly to 5.503 million from 5.615 million, which was the highest in over a year, so hardly screaming collapse in the labor market. Meanwhile, the number of workers quitting their jobs - a sign of confidence in finding a better paying job elsewhere - rose modestly after dropping the previous month, and in May it grew to 3.293 million from 3.215 million.

How to make sense of this sudden improvement in the labor market? 

Well it may have to do with the DOL starting to factor in the collapse in the shadow labor market - the one dominated by illegal aliens - and the replacement of illegals with legal, domestic workers. And since this will surely lead to higher wages, we doubt many Trump supporters will hate the development, even if it means an increase in inflation down the line. 

 

Tyler Durden Tue, 07/01/2025 - 10:35

B-2 Or Not B-2? That Is The Dollar Question

Zero Hedge -

B-2 Or Not B-2? That Is The Dollar Question

By Michael Every of Rabobank

Equity markets at new record highs continue to think 2025 is more of the same-old, same-old. Bond markets whispering about a series of Fed rate cuts do too. Yet the US dollar just had its worst H1 -- down around 10% -- in over five decades. 

Those in markets who know economic history recall this was when the gold-backed-dollar Bretton Woods system was about to collapse under the Triffin Paradox demand for offshore dollars earned via a swelling trade deficit, with a fiscal deficit led by hot war in Vietnam, Cold War in general, and demands for more social spending. The Yom Kippur War in 1973 and the Iranian Revolution in 1979 then helped western inflation became entrenched and its politics often went haywire. 

In June 1970, TIME magazine wrote ‘Money: Anger at Dollar Imperialists’, noting:

The men who manage Europe’s money are increasingly annoyed with the US. They are upset by America’s old habit of spending, lending and investing more abroad than it takes in from foreign sources… The BIS annual report added that it is “hard to discern how the US authorities expect, by their own actions, to correct the balance of payments.” … Robert Triffin… [says] the US is unconcerned about its deficits because it has discovered that it can get away with a kind of “monetary imperialism.” The position of the dollar as the standard of value against which all other currencies are measured enables the US to escape the consequences that other countries suffer if they consistently overspend abroad. In any other country, a parade of deficits comparable to those the US has run would force devaluation of the currency. Devaluation of the dollar, the currency that more than any other has been considered as good as gold, would bring such chaos that it has been considered unthinkable.” 

No, history doesn’t repeat itself. Yes, it can rhyme.

On the fiscal front, are there are any serious global fiscal rules anymore even before we hit the next crisis? Italy will include a €13.5bn bridge to Sicily as NATO spending, suggesting the resolution to get broad defense from under 2% to 5% of GDP by 2035 will at least blow up deficits. UK PM Starmer is failing to win over party rebels opposed to welfare cuts. Trump just told Republicans to stop cutting spending and ‘go for growth’ to raise revenue “10 times”. Even Xinhua has reported the creation of a new “decision-making and deliberative coordination body” at the CCP’s Central Committee – does that lean towards more China stimulus? 

On the monetary front, Trump took his attacks on Fed Chair Powell to a new level in visually showing he’d like Fed Funds between 0.25% - 1.75% as Treasury Secretary Bessent said he can’t fund down the curve because of where yields sit, against whispers of zero-coupon bonds.

The ECB used its policy strategy review to underline that geopolitics, digitalisation, AI, demography, the environment, and changes in the international financial system all suggest inflation will be more volatile, with larger target deviations from its 2% CPI target in both directions. Yet while it’s prepared to take “appropriately forceful or persistent monetary policy action in response to large, sustained deviations of inflation from the target in either direction,” it flagged longer-term refi operations, QE, negative rates and forward guidance, all on the easing side – what’s the tightening equivalent? Lastly, there was market chatter that the RBA should drop its 2.5% CPI mid-point target: but only to cut, allowing housing to get even more expensive. 

In FX, all is in flux. Many countries that are not set up to see higher exchange rates are getting them anyway. There is deepening discussion of the strategic role that Bitcoin and dollar stablecoins will play within the new US and international financial architecture – and if a weaker dollar is now a US gameplan after markets rudely rejected what higher tariffs were supposed to achieve, which was a stronger greenback. There is equivalent talk of gold’s future in many circles, and in some of both Europe and China’s fresh attempt to internationalise their currencies… with almost zero realpolitik power in the former case, and a closed capital account and vast trade surplus in the latter. Anybody thinking this is markets business as usual frankly looks like they are wearing 1970’s flares.

In politics, not only are centrists failing and populists rising, but the latter are being outflanked. A farther right alternative to the UK Reform Party now leading opinion polls, the Advance UK Party, has just been launched by key ex-members. Openly socialist Democrat Zohran Mamdani could easily be the next Mayor of New York City. Elon Musk just posted: “If this insane spending bill passes, the America Party will be formed the next day. Our country needs an alternative to the Democrat-Republican uniparty so that the people actually have a VOICE.” A libertarian one that votes for austerity - really?

In geopolitics, we luckily just avoided another Middle East oil shock involving Israel and Iran. On that, one hopes for the best, and Israel is reported to be in advanced talks with Syria over officially ending hostilities running since 1948 and hopes remain for a ceasefire in Gaza, which President Trump reportedly wants to be permanent. He and PM Netanyahu will meet in the White House on Monday. However, we still have a hot war in Ukraine, with huge forces arrayed around Sumy, with clear risks of other global flash points.

One key difference from the 1970s is that protectionism is already back with a bang. The EU has reportedly accepted it’s going to get stuck with a 10% US universal tariff and now wants to find UK-style quota workarounds for 25% and 50% sectoral tariffs: following Canada’s humiliating climbdown on its digital services tax the day before, that’s another victory for the US brute force, which hasn’t changed since the 1970s. Japan was also called “spoiled” by Trump and criticised for not buying its rice - but it may buy US oil; and a trade deal with India is reported as close (again) - expect a flurry of activity over the next week, it seems. The US is already reshaping the global economy, despite markets saying TACO, and it will continue to do so.

For its part, the EU has promised greater market access for Ukrainian farm goods in return for aligning farm standards; as France and Germany combined to destroy an EU ethical supply chain law, says Politico.

Moreover, China warned it: “is pleased to see parties resolving their economic and trade differences with the US through equal consultation. At the same time, we urge all parties to stand on the side of fairness and justice, to be on the right side of history, and to firmly uphold international economic and trade rules and the multilateral trading system. China firmly opposes any party making a deal that sacrifices China’s interests in exchange for so-called tariff reductions. Should that occur, China will not accept it and will respond resolutely to safeguard its legitimate rights and interests.” In short, expect supply-chain friction ahead – and for years.

We also see more economic statecraft: Australia just moved to set up a domestic fuel reserve rather than exporting it all and then suffering local shortages.

So, yes, the dollar just had its worst H1 since 1973. But what happened to it after that? Not in H2, but structurally. It transmogrified into an even more powerful fiat currency than it was on gold. Given the Achilles heels everyone is now displaying, can a reverse change in the dollar occur – especially when it alone has mighty military muscles (for now)?

Look beyond all of the above to note that the dollar question is perhaps not “To be or not to be?”, but “B-2 or not B-2?” 

Tyler Durden Tue, 07/01/2025 - 10:15

BLS: Job Openings Increased to 7.8 million in May

Calculated Risk -

From the BLS: Job Openings and Labor Turnover Summary
The number of job openings was little changed at 7.8 million in May, the U.S. Bureau of Labor Statistics reported today. Over the month, both hires and total separations were little changed at 5.5 million and 5.2 million, respectively. Within separations, quits (3.3 million) and layoffs and discharges (1.6 million) changed little.
emphasis added
The following graph shows job openings (black line), hires (dark blue), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

This series started in December 2000.

Note: The difference between JOLTS hires and separations is similar to the CES (payroll survey) net jobs headline numbers. This report is for May; the employment report this Friday will be for June.

Job Openings and Labor Turnover Survey Click on graph for larger image.

Note that hires (dark blue) and total separations (red and light blue columns stacked) are usually pretty close each month. This is a measure of labor market turnover.  When the blue line is above the two stacked columns, the economy is adding net jobs - when it is below the columns, the economy is losing jobs.

The spike in layoffs and discharges in March 2020 is labeled, but off the chart to better show the usual data.

Jobs openings increased in May to 7.77 million from 7.40 million in April.
The number of job openings (black) were down 2% year-over-year. 

Quits were down 2% year-over-year. These are voluntary separations. (See light blue columns at bottom of graph for trend for "quits").

ISM® Manufacturing index Increased to 49.0% in June

Calculated Risk -

(Posted with permission). The ISM manufacturing index indicated expansion. The PMI® was at 49.0% in June, up from 48.5% in May. The employment index was at 45.0%, down from 46.8% the previous month, and the new orders index was at 46.2%, down from 47.6%.

From ISM: Manufacturing PMI® at 49% June 2025 Manufacturing ISM® Report On Business®
The report was issued today by Susan Spence, MBA, Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee:

The Manufacturing PMI® registered 49 percent in June, a 0.5-percentage point increase compared to the 48.5 percent recorded in May. The overall economy continued in expansion for the 62nd month after one month of contraction in April 2020. (A Manufacturing PMI® above 42.3 percent, over a period of time, generally indicates an expansion of the overall economy.) The New Orders Index contracted for the fifth month in a row following a three-month period of expansion; the figure of 46.4 percent is 1.2 percentage points lower than the 47.6 percent recorded in May. The June reading of the Production Index (50.3 percent) is 4.9 percentage points higher than May’s figure of 45.4, returning the index to expansion territory. The Prices Index remained in expansion (or ‘increasing’) territory, registering 69.7 percent, up 0.3 percentage point compared to the reading of 69.4 percent reported in May. The Backlog of Orders Index registered 44.3 percent, down 2.8 percentage points compared to the 47.1 percent recorded in May. The Employment Index registered 45 percent, down 1.8 percentage points from May’s figure of 46.8 percent.

“The Supplier Deliveries Index indicated slower delivery performance, though the pace picked up somewhat: The reading of 54.2 percent is down 1.9 percentage points from the 56.1 percent recorded in May. (Supplier Deliveries is the only ISM® Report On Business® index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.) The Inventories Index registered 49.2 percent, up 2.5 percentage points compared to May’s reading of 46.7 percent.

“The New Export Orders Index reading of 46.3 percent is 6.2 percentage points higher than the reading of 40.1 percent registered in May. The Imports Index gained back its loss from the previous month, registering 47.4 percent, 7.5 percentage points higher than May’s reading of 39.9 percent.”
emphasis added
This suggests manufacturing contracted in June.  This was slightly above the consensus forecast. New export orders were still weak; employment was weak and prices very strong.

Transcript: Velina Peneva, Swiss Re Chief Investment Officer

The Big Picture -

 

 

The transcript from this week’s, MiB: Velina Peneva, Swiss Re Chief Investment Officer, is below.

You can stream and download our full conversation, including any podcast extras, on Apple Podcasts, SpotifyYouTube, and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here.

~~~

This is Masters in Business with Barry Ritholtz on Bloomberg Radio.

Barry Ritholtz: On the latest Masters in Business podcast. I have another extra special guest, Belina. Eva is group Chief Investment Officer for insurance, giant Swiss Ray. She runs their private internal fund, about $108 billion that she manages primarily in fixed income, private credit, a variety of other assets. Really a fascinating conversation with someone who is uniquely situated in the investment world. Swiss Ray is a global, very well known insurer and reinsurer. They cover just about everything that’s out there. Not only are they the insurance company for insurance companies, but they have a variety of lines of business. She has a fascinating career. She helped develop the private equity group for Bain Company and Zurich before heading over to Swiss Ray. I thought this conversation was fascinating, and I think you will also, with no further ado, my discussion with Swiss Res Valina, Heva. Valina. Pva, welcome to Bloomberg.

Velina Peneva: Thank you, Barry. It’s a pleasure to be here. Well,

Barry Ritholtz: It’s a pleasure to have you let, let’s start out with your background. Bachelor’s in economics and a BS in computer science from Wellesley in Boston and then an MBA from Harvard Business School. What were the original career plans?

Velina Peneva: So, I was one of the first generations of Eastern Europeans after the wall came down, who had the opportunity to come to the US If I had not come to the us my passion was to become a doctor. And in Bulgaria where I came from, getting a medical degree meant that after high school, you go to medical school for five years,

Barry Ritholtz: No college, high school right to medical school.

Velina Peneva: And then after five years, you can practice. So I arrived at Wellesley with the plan to do pre-med. And when I got there, I realized that pre-med meant that I study some generic biology and chemistry for four years. Right. Then I have to apply to medical school, then I have to go to residency. Right. And during that whole time, I have to keep on accumulating debt. Right. And at some point in my late twenties, I may be able to practice

Barry Ritholtz:. Right. It’s like a 12 year process. It’s pretty, it’s pretty intimidating. For, for, and yet all the medical schools seem to be filled

Velina Peneva: Exactly. But for me, this was not an option. And what I decided to do is just experiment and see what else I could do. And I’m pretty mathematically oriented. I took a lot of math classes. I took a computer science class, which I found super fascinating. I mean, back then in 94 it was the early days

Barry Ritholtz:  Were you, were you still in the punch card era?

00:03:15 [Speaker Changed] No, but I was, I started coding in Pascal.

Barry Ritholtz: Okay.

Velina Peneva: So I, I think a lot of your listeners probably don’t know Right. What that computer language is. So it was Pascal then c plus plus, and then I took an economics class and that’s when the lights went off because it was a very mathematical field in many ways, but also with a link to the Rio economy. I couldn’t give up math in computer science. So I ended up finishing with two majors and a minor. But business and applying economic concepts and, and actually going into business was what I decided to do after the second year. at Wellesley.

Barry Ritholtz: That, that’s really, that’s really interesting. So at some point you spend time within the high speed data division of a company that eventually became part of at and t that was in the 1990s. Tell what was that experience like?

Velina Peneva: So when I was a junior in college, I tried to get an internship and I was looking at the typical paths of consulting or banking. It is very difficult to get an internship in junior year. And I had a professor in economics who suggested that I look at this company called Media One in Boston that had recently been acquired by Con No, it was, it used to be called Continental Cable Vision. It had been acquired by US West, a Denver based company, and they had rebranded it as Media One. And there I worked in strategy and the strategy focus was on rolling, rolling out high speed data through coax cable. And so

Barry Ritholtz: Broadband before we really knew broad what broadband was.

Velina Peneva: Absolutely. And the team actually that did all the technology in media, one ended up being the core technology team for Cisco. So it was really cutting edge at that point. Huh,

Barry Ritholtz: Really interesting. So how did you end up as a consultant in Boston at Bain? When did that start?

Velina Peneva: So, if the company had stayed in Boston, if Media one had stayed in Boston, I probably would’ve gone back after I graduated, I had an offer, but they decided to relocate to Denver and I really wanted to stay on the East Coast. So given I had been doing strategy work and the fact that I wanted to learn as much about business as possible, I thought consulting would be the right next step. So it was similar enough to what I’d been doing, but consulting would allow me to broaden my iew

Barry Ritholtz:. And, and Bain and Company is one of the biggest consultancies in, in the United States. What was it like working at, in Boston at Bain? What, what sort of projects were you working on?

Velina Peneva: So Boston is the headquarters biggest office when I joined and was a huge variety of projects. So I did a project for Amex, looking at their credit card solicitation program, how can they can be better competitive with other credit card companies. I worked for Motorola and then I spent quite a bit of time in the emerging private equity practice. So Bain was the pioneer in consulting, two private equity companies focusing on strategic due diligence of m and a transactions. And it was very fast, fast pace environment. You do a due diligence in 1, 2, 3 weeks and you need to basically keep pace with the private equity team to make sure that the assumptions they need for the model and the conviction for buying an asset could be backed by the analysis the Bain team was doing.

Barry Ritholtz: This is in the 1990s, private equity was still relatively small back then. This is almost 30 years ago. Did you have any sense as to how rapidly private equity would grow and how big it could? It eventually became,

Velina Peneva: I mean, it was, I would say in its second inning back in the 1980, like 1990s. Yeah. 98. It, 90, 97, 98, it was, I mean it was attracting a lot of talent. So if you look at who was going to private equity, it was the best from the consulting teams. Huh? It was the best from the investment banking teams. And I think the value proposition was just very compelling. Right. I mean, the returns at those times were easily in the mid to upper twenties. Really?

Barry Ritholtz:  That’s impressive. And at the time, I remember NASDAQ was similarly putting up high 20%, 20, 25, 30% returns. Yeah. Very unusual number of years in a row. I had no idea private equity was putting up those sort of numbers back then. You end up as the head of Bain’s private equity experience. Was that in the US or overseas?

Velina Peneva: So I spent in total 19 years at Bain. If you add the time I spent in business school and I, I was in, I was first in Boston. I actually spent six months in Australia as well. Wow. And then I moved to San Francisco after business school and was again, quite focused on the private equity space Right before 2009, I felt I was ready to do something else. And that’s something else was renewable infrastructure, private equity. So that was an emerging space back then. And my Renewable infrastructure

Barry Ritholtz:. So this is everything from solar and wind to battery to more efficient Exactly. Power lines. Exactly. Still a burgeoning area. How, how long did you work in that space?

Velina Peneva: The catch was that the fund had to raise money and me going to that fund was contingent on them raising the next, the next round.

Barry Ritholtz: Yeah. And ’09 got in the way, and

Velina Peneva: Oh nine got in the way. And I had already told Bain, I had told Bain, listen, I, you know, I’ve, I’ve been here for a long time. It had been, you know, 10 years by then, I need to look at something else. I need to do something else. And they told me, listen, instead of leaving, why don’t you do a six month transfer in Europe? Why don’t you go to Zurich, for example? It’s a small office. There’s interesting clients, there’s quite a lot of us partners there. Why don’t you see how you like another office and then you can come back in six months and we can think about whether you wanna still leave or pick up and, and go down the partner track. So,

Barry Ritholtz: So that, that was six months and that six months turned into how long?

Velina Peneva: That six months turned into a year and that year turned into a permanent relocation. And

Barry Ritholtz: How long did you stay with Bain in Zurich for?

Velina Peneva: So I stayed in, oh, until I came to Swiss Re. So I moved to Zurich in 2009 and I left Bain in 2017.

Barry Ritholtz:  London, a lot of money centers were kind of imploding during 2009. What was the view like from, from Zurich?

Velina Peneva: I would say not that different really. Right. It was agl, we call it a global financial crisis. So business was difficult across the globe. Europe was in a difficult situation. I mean, I was in Zurich, but I was serving a lot of the European clients. And it was hard. But the, what was different about Zurich compared to San Francisco is Zurich at that time was a very small office with very few partners on a growth trajectory. So it felt like going from a well-established company to a startup. And that’s where I could develop also business lines and service areas that were not so established across Bain. So institu, no supporting institutional investors. Right. We had worked a lot with private equity funds, but we had not done as much work with sovereign wealth funds, pension funds, and the problems that those institutional investors face when investing in private markets are well served by the knowledge that Bain had in the space. So that’s where I found the niche and what, that’s where I focused when I moved to Zurich.

Barry Ritholtz: You have a history and an expertise in private equity consulting analysis, just generally the space which was small, but rapidly growing. How far were you able to take that for Bain? At what point did you realize, hey, I’ve gone as far as I can go with this? We can only do so much as a, as a consultant, I really wanna deploy capital in this space.

Velina Peneva: So that had been on the back of my mind for a long time. I mean, obviously when you work with investors, you are always quite vested in the decisions being made. You are advising on setting up of a new mandate or executing an investment strategy. And that’s super intellectually challenging. But the issue is that at some point you need to hand it over. Right? Here is the plan, here’s how you should go about in this deal or in, in this new asset class. But then it’s up to the client to implement it. Right. And what Swiss three provided me with was the platform to actually do the investing and to take the strategy that I had helped them develop and implement it.

Barry Ritholtz: We’re gonna come back to Swiss Re in in a few minutes. I wanna just stay with your time at Bain and Zurich. So you’re on the investment committee at in Zurich. Were you looking at global opportunities, just Europe, the rest of the world? Ex us what, what was your playground?

Velina Peneva: So I, I’ll, I’ll give a bit of background on what this investment committee is. So Bain does a lot of due diligence for private equity clients. And as part of that relationship, we as a partnership, were allowed by the private equity fund to co-invest in transactions that we hit diligence. And

Barry Ritholtz: That’s a vote of confidence. Oh, we think you should put money into this and we’re gonna co-invest along with you.

Velina Peneva: Absolutely. Hmm. Well, it, it’s, it, it helps with, with kind of the broader relationship and it’s, it’s an attractive opportunity for, for the employees of Bain who invest in those co-invest vehicles because you are able to do that co-investment without fee and carry. Wow. And as you know, well those fee and big and carries are a pretty big chunk of, of the cost of the product. Huh. So the investment committee was a small group of global partners that had to decide which ideas that came from the teams we would put into the Bain co-investment fund. So we were the diligence on the diligence team.

Barry Ritholtz:  So you really have to know your stuff. If you’re doing the due diligence for the due diligence team, I mean, that’s

Velina Peneva: Well and you need to be willing to say no, right. To colleagues and friends who then have to deal with the repercussions of saying to the private equity fund, well, we think it’s a good deal, but our investment committee decided to pass.

Barry Ritholtz: Really? So, so does that create a problem or is it, Hey, we only have so much money to, to do and this is broader than we usually like, or how, how do they manage around that?

Velina Peneva: I think that the, the clients understand that when you’re thinking about portfolio construction, you can have only so much allocation to a given geography redundancy to a different industry sector. Yeah. So I, I think that nobody took, took it personally. I think if you consistently say no to a co-investment from a particular client, it may raise questions, but generally the quality of those proposals was very high.

Barry Ritholtz: Huh. Really, really interesting. So the question that’s gonna lead us to Swiss Re is, how did your time at Bain and Company influence your approach to investment management strategy, private equity selection? This had to be pretty seminal in your development as a, as an investor.

Velina Peneva: Yeah. So if you think about what you learn as a consultant, first of all, you observe a lot of management teams, right? So ultimately it’s all about the team and the quality of the team and the people that’s both with clients and also within Bain. And I think that’s also very true about how you set up an investment organization. You can have the frameworks, you can have the processes, but at the end of the day, it’s about the quality of the team, the trust between team members and the culture you create. And I think, you know, you may be surprised to hear that’s the first thing I start with, but I truly believe that quality investment requires just the very strong team behind it.

Barry Ritholtz: It, it’s the venture capitalists say, we like to bet on the jockey, not the horse. It’s very much a people business. You have to be able to evaluate not just folks ability and, and insight, but their ability to execute and, and make stuff happen. So is it safe to say all the decade you spent in private equity at Bain carried forward to Swiss Re?

Velina Peneva: No, absolutely. And maybe there are two, two more things that I would say carry over. When we talk about investing, we really focus a lot about on macro, right? But at the end of the day, good investing is a good balance between macro thinking. So what’s happening with the global economy, what’s happening with interest rates, what is the Fed going to do? And micro right. And understanding how different segments of the economy, how different businesses make money, make profit, what, you know, not everything is correlated to GDP growth. And I think that balance, I, I brought that balance from my consulting days. ’cause a lot of the colleagues in the investment organization think first macro and then micro. And I think both in private equity and in consulting, it is more of that balance.

Barry Ritholtz:  Really, really interesting.

Velina Peneva: And the third is decision making, right? So decision making, I’m an analytical person and in consulting you focus on the data on the model, but also observing behavior and stakeholder management. So understanding how the data and how the analytics drives the decision. But then also how do the biases of different stakeholders drive the decisions?

Barry Ritholtz: A absolutely fascinating. Coming up, we continue our conversation with Valina Eva group, chief Investment Officer for Swiss Ray, discussing how she found her way to the insurance giant. Let’s jump into Swiss ray a little bit. You join in 2017 after you had been a consultant for Bain and Company for 19 years. What motivated the transition to full-time asset management?

Velina Peneva: So Barry, as we spoke, consulting is exciting because you get to work on your client’s most challenging problems. It is super intellectually stimulating and rewarding. However, you lack ownership in the solution that you bring. So for me, that was always the one piece missing in my consulting job, you, you can come up with the best framework, with the best answer, but then you hand it over and how it gets implemented and whether it succeeds you, you don’t get to follow the whole journey. So the opportunity for me to come to Swiss Re and actually invest and implement a strategy was extremely exciting.

Barry Ritholtz: I’m curious if consultants run into the same problem that I call it the cocktail party problem. If someone asks you about a particular stock at a cocktail party and you give them an answer, well if it works out it’s ’cause they’re a genius. But if it doesn’t work out, it’s your fault. Do consultants run into that same lack of agency issue?

Velina Peneva: I don’t think it’s lack of agency. I think it’s lack of opportunity to follow through, right? I mean, consultants are expensive, right? So if you are a company and you wanna hire consultants, you wanna focus them on getting you the answer, that’s hard, right? Consultants often ask the question, why is the client’s problem so hard? And if you can’t really answer that question, then it’s, you know, why are you then add the client in the first place, right? If the, if the, if the problem is not hard. And that’s why companies focus their resources on consulting, on really solving the hardest piece of the problem. But companies run big operations and the implementation is typically something that takes a long time. And even if you were to bring a consultant in to help you with implementation, it’s the cost benefit is just not there. Hmm. So I think if you ask many people who were in consulting, that’s always the complaint that they have is, yes, I follow through you, you know, you obviously keep in touch with your client, you have multi-year clients, but you, you have a huge sense of ownership for the solution you have created. You have a huge sense of responsibility, but then you don’t have control. You don’t have control over the outcome.

Barry Ritholtz: So you moved to Swiss Re in 2017 as head of private equity. Did you have ownership and control? What was that transition like?

Velina Peneva: Absolutely. I had a few a, p and L. So the mandate that I had to set up was selecting private equity funds, co-investments, secondaries to put into Swiss three’s portfolio. And then to make sure that we beat the private equity benchmark or the equity benchmark with that selection.

00:22:26 [Speaker Changed] How, how do they figure out what the targets are for private equity? I know there’s a bunch of different benchmarks. There’s us, there’s Europe, there’s global. Did you have the mandate to go anywhere or just find us the best deals? Or were they focused focusing you in particular sectors or geographies? 00:22:47 [Speaker Changed] So I was also responsible for deciding that. And ultimately the decision was to focus more on developed markets. So we, we really emphasized US. Europe developed Asia, we,

00:23:00 [Speaker Changed] Which is primarily Japan and Korea or

00:23:03 [Speaker Changed] Australia. Japan. Okay, sure. Korea. Yes.

00:23:06 [Speaker Changed] Hmm. All right. So how long were you running private equity for Swiss Re before they said, Hey, we think we have bigger things in mind for you.

00:23:16 [Speaker Changed] So sadly, only two years. It was a exciting,

00:23:19 [Speaker Changed] Sadly you got a giant promotion. Why? Sadly?

00:23:22 [Speaker Changed] Well, because I had just set the mandate up, right? It was, it was a lot of effort to, you know, get with the relationships back with, with private equity funds, right? To build the team, to build the operations, to build the systems. And just when things were running and were looking like you could cruise for a while, you know, opportunity knocked. And I had to jump into a completely new and unknown area to me at the time.

00:23:50 [Speaker Changed] So, we’ll, we’ll talk a little bit about your role as group chief investment officer for Swiss Re. But I’m curious as when you are running private equity, are you allocating capital to different private equity funds? Were you investing directly into private equity opportunities as a co-investor along with PE funds? A little bit of everything. What, how are you allocating Swiss ray’s? Internal capital?

00:24:20 [Speaker Changed] So it’s a little bit of all, but it’s mostly investing in private equity funds. So I would say about 70, 80% of the allocation is in, in funds and the, then the rest is in co-investments alongside the funds that we have invested in. Huh,

00:24:36 [Speaker Changed] Really interesting. All right, so two years later you get a promotion. Your head of Swiss Ray’s group, your chief investment officer for Swiss Ray’s group, that’s their internal pool of assets they

00:24:50 [Speaker Changed] Invest? Not yet. Not yet. So not

00:24:52 [Speaker Changed] Yet. So

00:24:52 [Speaker Changed] What’s, I had an intermediate promotion.

00:24:54 [Speaker Changed] So what was the 2019 promotion? So, so

00:24:56 [Speaker Changed] The 2019 promotion was head of client, co-head of client solutions and analytics. And I was focused more on the a LM side of the business,

00:25:07 [Speaker Changed] A LM Beam

00:25:08 [Speaker Changed] Asset Liability Management. So it was, if you think about insurance asset management, we have, you know, we obviously serve the group, but we have business units and legal entities and each of these business units and legal entities have their own strategic asset allocations. So my role was to manage those business unit and legal entity asset allocations.

00:25:35 [Speaker Changed] So. So how long did you do that for? From 2019 till when?

00:25:39 [Speaker Changed] Until I got the CIO job,

00:25:41 [Speaker Changed] Which

00:25:42 [Speaker Changed] Was in 23.

00:25:43 [Speaker Changed] Okay, so 17, 19 23. So for the past two years, you’ve been chief investment officer for Swiss Ray’s internal fund, which is a hundred something billion dollars, is that right?

00:25:57 [Speaker Changed] 108 hundred and 10, 108.

00:25:59 [Speaker Changed] Yeah. What’s a billion or two between friends, how much of that is allocated to private equity and alternatives? How much of that goes to public assets like stocks and bonds? Is it a different set of strategies, a very different mandate than you had when you were running private equity?

00:26:18 [Speaker Changed] So maybe before I answer this question, I, for your listeners, I wanna give a very quick primer of what insurance asset management is and how it’s different from asset management for other institutional investors. Sure. Because I think the, you know, the answer will make a lot more sense with that. Okay. With that in mind. So if you think about insurance asset management, the optimizing function that we have is in three pillars. First is long-term value creation with focus on stable, sustainable returns and cash flows. And our liabilities, if you think about especially the life business, are super long-term, 00:27:02 [Speaker Changed] But you do have annuity.

00:27:05 [Speaker Changed] We don’t have annuities, but we

00:27:06 [Speaker Changed] Have not annuities, I’m using the wrong word, so I’m gonna have to pull that out. You, you have life expectancy tables, so you have some sense of what you’re Exactly. Life insurers have a sense of, hey, we have this much of a future liability, it’s contractual. Exactly. 20, 25, 30 years down the road. Exactly. We don’t know who’s gonna pass away when, but with a large enough group, we can more or less have a sense of future liabilities.

00:27:30 [Speaker Changed] No, no, we have a, we have a decent sense of, of future liabilities, but we also need to make sure we have a portfolio that’s resilient across cycles. The second pillar is asset liability management. Right? So because we have a view on our liability profile, we need to make sure we match our assets on a currency duration and liquidity basis. So the strategy is very intricately linked with what’s happening on the other side of the balance sheet. And then the third pillar is capital efficiency and diversification. I think that is one of the big differences with other institutional investors. We are regulated and we have a risk-based capital regime, which means that the cost that we have for holding certain high volatility asset classes is very high, such as equities or high yield. And that means that we maximize return on a risk adjusted basis. So it’s, you know, maximizing risk adjusted return per unit of capital.

00:28:44 [Speaker Changed] That make, that makes sense. When, when we were talking about private equity, I was thinking about those future liabilities. A lot of people realize private equity has tends to be a liquid Yeah. For five or seven years at a time. But I would imagine that you could ladder or s stagger that, so there’s always some fund coming up when, when a future liability arises, it, it may be a liquid for five years or seven years, but you’re talking about 20, 30, 40 years in the future

00:29:15 [Speaker Changed] On the life side, right? I mean we also have a property and casualty business, which is much shorter.

00:29:20 [Speaker Changed] A little more random.

00:29:21 [Speaker Changed] Yeah, well it’s annual renewal and it’s a function of what happens with natural catastrophes, right? So whether you have a hurricane or an earthquake, but that business renews every year. So it’s a very short tail

00:29:35 [Speaker Changed] Business on the, on the liability side of that, it feels these days like natural catastrophes are not just more frequent, but so random. I don’t know if we’re just paying more attention to them or if they’re actually happening more frequently. How do you manage around having that sort of future liability when it kind of feels a little random when a hurricane hits or tornado hits a wildfire happens, all these things just seem to come outta nowhere.

00:30:06 [Speaker Changed] Well, so I think that’s why the whole element of liquidity and stability is so important. On the asset side, we need to have a sustainable portfolio regardless of cycle and regardless of what happens, which means we need to hold more liquidity than you would think at first glance. And we need to have a portfolio that can cover liability. So it cannot be the case that if a hurricane hits and we have claims and people are waiting to get paid to rebuild their roof, we say we’re sorry, but there is a market crisis.

00:30:40 [Speaker Changed] We’re in a lot of alternatives, we’re locked up, we can’t help it.

00:30:41 [Speaker Changed] Exactly. So you need to really keep that

00:30:44 [Speaker Changed] In mind. You know, in the US I think Swiss Re is known primarily as a giant reinsurer, same situation. Obviously you never know when some insurance company gets to, to make a claim on their reinsurance policy. I’m gonna assume that having stability, sustainability, and liquidity is really important for those future liabilities as well.

00:31:09 [Speaker Changed] No, no, absolutely. I mean, we are ultimately the insurer of insurance companies. We insured the tail. So every time you open the paper and there’s a big event, you should think of Swiss Re really and what the impact is. So whether there is a, you know, the sue canal is, is blocked or there’s a big earthquake or the airplanes have been, cannot be returned to the lessers in Russia. All of these macro big events ultimately hit reinsurance. Or if there’s a big pandemic and the, the Tokyo Olympics are delayed, that is a reinsurance level event.

00:31:51 [Speaker Changed] Wow. So, so it’s interesting ’cause you spend so much time in private equity, but it sounds like what Swiss Ray does internally is gonna be a little less alternative focused, a little more liquidity focused. Is that a fair statement?

00:32:09 [Speaker Changed] No, absolutely. And if you look at our portfolio, we are 85% fixed income.

00:32:15 [Speaker Changed] Oh, no kidding.

00:32:16 [Speaker Changed] Of which half is government bonds. And we use government bonds to match liabilities. That is our risk-free way of matching liabilities. And then the rest is corporate credit and private debt. And private debt has been one of the asset classes that we have participated in for a long time, but where we’re seeing a lot of opportunities. So if you say 85% fixed income, the rest is private equity, listed equity, we have some minority positions and then real estate.

00:32:47 [Speaker Changed] Huh. That’s, that’s really fascinating. I wouldn’t have guessed so much we’re in government bonds, but I guess if you want liquid and you want stable and you want, despite, what’s the tenure now? Four point a half percent.

00:33:03 [Speaker Changed] That’s not so bad.

00:33:05 [Speaker Changed] Well, with inflation two point a half percent it’s not so good. Yeah. Well, so what do you, how do you think about the return? It’s, it’s really more about staying ahead of inflation than it is about generating market beating returns. Is that, is that fair?

00:33:21 [Speaker Changed] Well, you wanna, so as, as I mentioned, we, we do focus on long-term value creation. Right? And if you think about, again, our optimizing function, most institutional investors focus on economic returns. We focus on economic returns and accounting returns. And we always need to strike that balance

00:33:44 [Speaker Changed] Of define accounting returns versus economic returns.

00:33:48 [Speaker Changed] So economic returns is, you know, if you have a bond and you know the market value of that bond moves in a negative direction, even if it pays your yield, you know, net net, you might be losing economic value on holding that position in IFRS. If you hold a corporate bond, the market movements would not go through p and l. Right. So it

00:34:12 [Speaker Changed] ’cause you’ll eventually get par when it, when it

00:34:14 [Speaker Changed] The choice because we hold it to maturity. Right, exactly. All right. Huh? So what features into our IFRS result is only the yield on that bond, not the market movement.

00:34:25 [Speaker Changed] So here we are in 2025, we’re still debating whether or not the Fed is gonna cut. How much attention do you pay as, as chief in chief investment officer to all of the noise around? Will the Fed cut, will they not cut? Are they staying put? Oh, here comes the dot plot. Like how noisy and, and or in significant is everything around central bank activity.

00:34:54 [Speaker Changed] We start the year always with highlighting where we think markets will go and what is our baseline and what are our scenarios. So of course, what the Fed will do impacts markets, impacts valuations, impacts interest rates. So of course we follow it. We are a long-term investor, so we try to, while we, I’d say sometimes obsessively follow the market news, we, we try to separate the noise from what we really need to do.

00:35:27 [Speaker Changed] You guys were in private credit before it became very popular as it seems to have done recently. At, at what point does that become a little bit of a crowded trade, or given the size and, and the history of Swiss Re in this space, you have your favorite places to, to play in, you know, the funds you like, the private credit shops you like, like how are you looking at the change in private credit over the past five years? How is that affecting your investment strategy?

00:36:01 [Speaker Changed] Private credit is in the news a lot these days. The reality is that private credit is not one asset class. There are many, many flavors and you have private credit that is mostly ig like investment grade, like senior secured loans. You have some pretty speculative asset classes. And Swiss Re has been focusing on the former. So we started building and, and we play in that asset class in a more direct way. So we provide infrastructure loans directly to projects and we underwrite each of those loans. So we have a pretty high bar of what we see as quality and also the private debt premium. So that’s the premium above the spread that those loans provide in order to put those in our portfolio.

00:36:59 [Speaker Changed] So, so I mentioned the 10 years, about four and a half percent today, go back before 2022. And, and the yield on government bonds were, you know, half or or worse. What were, what were you guys doing when we were in an era of 1% inflation and two and a half percent yield? Does that get you to where you wanna be or is that still, did that raise problems for being insurers like Swiss Re

00:37:31 [Speaker Changed] I think this was a problem for the whole industry, especially for the insurance industry, given how much reliance we have on fixed income. And that was the driver in a way for us to start looking at areas like private debt, right? Because there you have bespoke transactions and you can definitely earn a premium versus what you get even in the corporate bond space. But I mean, I’m not gonna lie, you, you are looking to, you’re reaching for yield in those, in those moments? Well,

00:38:00 [Speaker Changed] There’s reaching for yield like people did during the financial crisis and then there’s senior secured privately due diligence

00:38:10 [Speaker Changed] Yes.

00:38:11 [Speaker Changed] Debt that didn’t carry the same leverage and risk characteristics like we saw with securitized junk mortgages. That was a very different world. But I, I, I guess the insight that I’m picking up from you is, hey, two decades of 0% interest rate from the US Central Bank and other central banks really is the key driver of what’s expanded private debt, private court credit, private equity, and a whole slew of alternatives that substituted for sovereign treasuries and other issuances. Fair, fair insight.

00:38:50 [Speaker Changed] No, it’s a fair insight. And I think if there’s one concern that we have is, if you look at when this space really exploded, it was after the financial crisis and there hasn’t been a test of the market. So since 2010 there hasn’t been a real credit crisis to really test the quality of these of these products. And I think they, they have, you know, new, new products have kept coming to the market, some with a, a very short history and we still don’t know how private credit will actually react in a more prolonged crisis. So that,

00:39:33 [Speaker Changed] Well, 2022 was pretty much a down 15% year for treasuries and down 20 plus for equities. That’s kind of unusual. I think you have to go back to 1981 to have ’em both down double digits in the same year. Yeah.

00:39:49 [Speaker Changed] How But we had no defaults, so our portfolio had no defaults.

00:39:53 [Speaker Changed] So the fact that, and the accounting hold till maturity Yeah. Means we don’t care what the noisy day-to-day stuff is, we’re in it until this matures. So well,

00:40:02 [Speaker Changed] We care about quality because what hurts us is defaults and re ratings. Right.

00:40:08 [Speaker Changed] So you had no defaults to any re-rating?

00:40:11 [Speaker Changed] We’ve had some re-rating, but I mean, we were ex we also have middle market lending, so we have been expecting to see some wobble. Right. But

00:40:21 [Speaker Changed] Not so much.

00:40:21 [Speaker Changed] Right. And not so much. Yeah. Yeah. And I think, and, and you know, you always attribute good outcomes to skill when maybe some of it is attributable to luck, but so far our very conservative underwriting has paid off. Huh.

00:40:38 [Speaker Changed] Really, really very interesting. Coming up, we continue our conversation with Alina Eva, group Chief Investment Officer for Swiss Re discussing the state of markets and fixed income today. So it’s 2025, the year is just about halfway done. Kind of been a wacky year. What, what surprised you most about the global economy in 2025?

00:41:06 [Speaker Changed] So I have to say, coming into the year sentiment was very bullish. I was, I was in DeVos in January, and there’s always the joke of whatever you hear in DeVos, the reverse will happen.

00:41:18 [Speaker Changed] Whatever you hear Where

00:41:19 [Speaker Changed] In DeVos at the World Economic Forum.

00:41:21 [Speaker Changed] Oh, Davos. Okay. Yeah. Yeah. So yeah, that’s, it’s, Davos has a tendency to pick tops and bombs accidentally.

00:41:29 [Speaker Changed] Exactly. But back in January, the sentiment was super bullish. It was all about us exceptionalism. It was all about AI and how AI will drive returns to the moon. And the sentiment has vastly shifted. So just the speed with which we saw sentiment re reverse and the narrative reverse this year a few times now has been to some degree surprising. To

00:42:02 [Speaker Changed] Be fair, as much as the US president has been talking about tariffs his whole adult life, it’s his favorite word. Call me tariff man. You know, I believe that everybody saw his first term, all right, we’ll get some 10% tariffs we can live with that. It, it feels like a collective failure of imagination as to what took place on April 2nd. I, I’m, I’m loathed to call it liberation day, because the only thing that was liberated were a bunch of people were liberated from their money. But other than that, everybody seemed to be surprised by that. And, and should we have been, should we have expected that? Or just collectively knowing, why would you mess with this? This is going so well, seems to be the Wall Street consensus. Hey, you’ve inherited a great economy and the stock market’s trending higher, just leave it alone. Like, how, how does that perceived from Europe?

00:43:07 [Speaker Changed] So I wish I said that we were super surprised. I mean, we, we do always tend to be a little bit glass half empty because, you know, we are a risk company, we’re a risk knowledge company, but

00:43:18 [Speaker Changed] Bond investors are always about return of capital, not return on capital. So you are the glass half empty, the equity side is the glass half full. But even given that it still feels like this was really a surprising year,

00:43:33 [Speaker Changed] I think the extent of the announcement on April 2nd was a shock. I don’t think that, I mean, if you remember that day, people couldn’t understand the magnitude of some of the numbers that were shown on that chart. Right, right. And what the formula was and what it really meant. But I think the direction of travel was, you know, if you had listened to also what the president said before the election, you know, the, the, you know, we, we expected some level of increase in terrorists. I think it was just the way it was communicated, right. And, and the execution of it, that that caught many, including us off guard.

00:44:15 [Speaker Changed] It, it seemed to be a little ham fisted, especially when we see how the pains, the Federal Reserve takes to not surprise the markets. Hey, there’s a rate increase coming. Couple of months, get ready. Hey, we’re two months away. Look at CPI look at, look at PCE, and then all the Fed governors go out and they all speak at the various clubs. Like the Fed really takes pains to not surprise the market. It kind of felt like this was a purposeful surprise to the markets. How big of an impact did that have?

00:44:51 [Speaker Changed] I think the good news for us was that we don’t hold a lot of listed equities. Right? Right. So it was more an opportunity to think about our playbook of when do we add exposure in the market versus, you know, stressing. So we actually, if we, if we look back at that period of about a month where you had extreme volatility, we didn’t make a lot of sharp turns. Right? It was about, you know, are we still comfortable with the portfolio? We, we are holding? We had come into the year with a cautious optimism, right? But I think the emphasis is uncautious and we felt comfortable holding the risk that we had in the book. At the same time, we were surprised by the resilience of the market, right? I mean, this was a very sharp reaction, but the recovery was also lightning fast.

00:45:46 [Speaker Changed] So I’m glad you used the word resilience, because that’s the word that keeps coming up. Resilience in the economy, resilience in consumer spending, even if their consumer sentiment is kind of weak and resilience in, in both equity and bond markets. It seems that you can throw anything at this economy in this market. And at least so far, it brushes itself up often and just keeps going. How surprising has that been?

00:46:16 [Speaker Changed] I mean, if you look at the, the valuations, if you look at the fundamentals, it is, it’s surprising, right? Because you would expect, I mean, you are seeing the consumer slowing down. You still have high interest rates. Valuations, especially in the US are in their top deciles and outlook is, is, is, is not looking as promising as a few months back. So from, I think from a pure fundamentals perspective, it’s surprising. But markets are not, you know, better than me, markets are not driven purely by fundamentals. There are a lot of technicals that have maintained the resilience of the market. First of all, there’s just a lot of money out there,

00:47:00 [Speaker Changed] Endless, endless amounts of capital sloshing

00:47:02 [Speaker Changed] Around. And there’s not that many assets to invest in. So if you look at the size of the stock US stock market versus the amount of money that needs to be invested, you have a bit of a supply demand and balance, which basically is keeping valuations higher than historically.

00:47:22 [Speaker Changed] And, and isn’t the same true in sovereign treasuries, not just the us but there really isn’t a lot of sovereign paper, at least a rated paper around. It’s almost as if there’s a shortfall of sovereign treasury paper.

00:47:37 [Speaker Changed] Well, and if you think about also IG credit, investment grade credit, you could almost argue now the, the other surprise has been how tight spreads have become in, in high quality credit.

00:47:52 [Speaker Changed] Right? Why go risky if you’re not getting paid to take that risk?

00:47:56 [Speaker Changed] But if you think about what companies are issuing that credit, these are, maybe this will sign sound controversial. Some of these companies are more credit worthy than some governments. So in a way, you could imagine a situation where, you know, some investment grade credit even goes tighter, you know, could be crazy, crazy. So Microsoft, yeah, Microsoft could have negative spread, right?

00:48:22 [Speaker Changed] Microsoft is more credit worthy than a lot of large
nations out there.

00:48:27 [Speaker Changed] Exactly. That,

00:48:28 [Speaker Changed] That, that’s

00:48:28 [Speaker Changed] Pretty, and that is what I think has been keeping, you know, both equities higher and spreads as tight as they are.

00:48:35 [Speaker Changed] So you mentioned we’re in the top decile evaluation in the us but for almost a year now, Europe has been outperforming very quietly, at least for the first, for the, for the tail end of 2024, but a little more visibly in 2025. Europe has been significantly outperforming the us you know, people have been waiting for this mean reversion to take place, this leadership swap for a decade. It finally seems to be happening first. Why do you think that is? Is it strictly a function of valuation or are some of these things being driven by policy, by the US dollar, by a return of capital away from the United States? What is leading to this outperformance elsewhere in the world?

00:49:27 [Speaker Changed] So I wanna start by saying that Europe still has a lot of catching up to do for sure. So if you look at multiples in, in Europe, they’re in kind of the mid teens now. Multiples in the US are, you know, mid twenties, low, mid twenties. So there’s still a pretty big valuation gap. And some of that is just the constitution of the market. You know, you have more high tech, more high growth, but some of it is kind of a European penalty just given all the, you know, regulation and slow growth and challenges that Europe has been facing. So yes, we have done better in Europe in, in, in the equity space than in the last year than, you know, than in the last 10. But I think the gap is still pretty meaningful. And I think there’s some level of optimism that Europe will need to really speed up investments, whether it’s military or infrastructure. I think that Europe has woken up to the fact that in order to quote unquote survive in this new geopolitical environment, they need to get their act together and they need to start focusing on investing and, and reducing a bit the regulatory burden that, that we’ve had on companies on the continent. It,

00:50:45 [Speaker Changed] It, it’s much greater on the continent. But the flip side of that is, I, I vividly recall in 2000, right in the middle of the.com implosion going to London, going to Brussels, and New York was very stressed out. Hey, I lose my job, I lose my healthcare. What, what happens if my kid needs a surgery? Hmm. In Europe, people were still having cappuccino and cigarettes in the cafes there was it, it just felt a lot looser and a lot less stressful. Is that simply a quality of life trade off that hey, the Europeans know how to live. Yeah. The Americans can make a fast growth tech companies, but we have a better lifestyle. H how do you, how do you respond to that sort of position?

00:51:36 [Speaker Changed] I mean, I think the European expectation for what a good life is, is probably quite a bit different from the American definition. I think that there’s some ba people see certain elements of government service as basic, right? So be it healthcare, right. Education. Right. I can, I can send my kids to a Swiss university for, I don’t know, a thousand francs Wow. A year. And, you know, you can get an MIT type education for, you know, a small fraction of what you pay in the us right? And, and that’s considered a social good, right? Right. So I think they, but the

00:52:14 [Speaker Changed] Taxes are much higher, so you pay for it. Taxes

00:52:16 [Speaker Changed] Are paying one way, taxes are higher, but there is this
social web that you know, that people value. Right? Right. You also, you know, you go to most European cities, you don’t see homeless people right. On the street to the degree. Right. You don’t have, you don’t have some of these, you know, extreme situations that you, you have in the us No. And the question is how far is, you know, what’s the right balance? So I’m not saying that it’s all good. Right, right. Because you also have a generation in Europe that expects this but doesn’t understand the cost that it comes. It comes at and expects a lifestyle and expects work life, life balance, but at the same time, you know, doesn’t have the work ethic required to, to keep, to keep the economy successful. Hmm.

00:53:13 [Speaker Changed] So we’re recording this. The Russian Ukraine war is still ongoing. The Israel Hamas war has now become an Israel Iran war. There are all these geopolitical tensions and shifts taking place. How do you think about what’s going on in the broader geopolitical area when you’re thinking about making investments for 10, 20 years down the road? Is it significant or is it something that, hey, there’s a war every year. It’s just something we have to deal with.

00:53:49 [Speaker Changed] So if you look at history and what impact wars have on markets, the conclusion is that yes, there’s a short term shock, but in the long term, even within a few months, that that dissipates. So making near term investment decisions give driven by geopolitics is probably not the best investment strategy,

00:54:15 [Speaker Changed] No, say the least.

00:54:16 [Speaker Changed] I think what matters is what is the symptom behind these events? So these wars are a symptom of the fact that we have deglobalization, we are moving in different spheres of influence. And Swiss Re is a truly global company. So the, the value we bring is that we can, we can ensure tail risks because we can diversify a lot of tail risks at a global level, right? We reinsure earthquakes in California and in Japan, and hurricanes in Florida and pandemics. And those risks are uncorrelated at a global level. And in order to provide that extra cover, you need to have a global mindset. And in an environment where globalization is no longer what it was 10 years ago, one needs to think about what, what, how does that impact truly global businesses? So, so, so we think about it as long-term trend and impact on where we think the portfolio needs to go versus making tactical decisions influenced by short-term events.

00:55:37 [Speaker Changed] So, so given that, that you’re a long-term thinker, you’re not playing the tactical game, you still end up with these disruptions and risks and opportunities. How do you assess the state of the market today? What, what do you, where do you see opportunities? Where do you see risks?

00:55:58 [Speaker Changed] So I would say that, and, and maybe that’s my private markets background. I continue to see opportunities in private markets, in part because you have imperfect information, you can actually add value to your portfolio if you really have the channels and expertise. I think areas like infrastructure debt are ones that will only grow in the next few years because the world needs a lot more new infrastructure and companies that provide loans, but also equity in the infrastructure space will both find a lot of deals, but also have a lot of opportunities. So you need to think of it from a macro perspective of what, you know, where is the need for capital and can, do we have the expertise as a team to provide a solution that is uniquely fitted to that.

00:56:59 [Speaker Changed] So, so you mentioned private equity and private credit. European Central Bank has cut rates recently a number of times. Does that work as a tailwind for, for private credit? How, how does that impact what you see out there?

00:57:14 [Speaker Changed] It’s definitely a tailwind for private equity, right? So what we see is European funding cost has actually fallen 20 basis points, this liberation day versus in the US funding cost has gone up, gone the other way. Yeah. 20 points. Yeah. And if you think about what makes private equity successful, it is, you know, it’s a leveraged buyout, right? That’s ultimately part of the value of those transactions is in the leverage part. And lower interest rates clearly are beneficial for the private equity space.

00:57:48 [Speaker Changed] So the, the phrase we hear and and quite honestly hear way too much in the US is so much uncertainty, so much economic uncertainty. How do you see this lack of clarity, at least around policy decisions in the US affecting your outlook for, for the markets, for the economy? How, how does this sort of new regime in, in Washington, DC affect the global economy?

00:58:17 [Speaker Changed] So if you think about how we plan, right? On an annual or three year basis for many years, we, we would have a baseline, right? We’ll say we think there’s a 70% chance that this will happen, and we’ll set up our portfolio and our decisions based on this core scenario. And then there’s some tail scenarios which we’ll assess and we’ll look at, you know, what are, you know, how, how could we assess whether we are moving into those scenarios today, our baseline, quote unquote, is a 40% odds. Wow. So I, I, I don’t wanna even call it a baseline. And we have moved from thinking in baseline and other scenarios to what is the range of outcomes that we should expect and what do we need to be tracking on the macro side, on kind of the high frequency data side to understand, are we moving from the scenario we think we’re in right now to something else?

00:59:16 But if you have that path, you have fewer surprises, right? So that’s one thing that we have done, and we dynamically assess the probabilities of those scenarios on a monthly basis. We have an investment committee and we do an, a survey of 15 investment committee members to say, you know, what do you think the odds are? It’s kind of the wisdom of the crowd’s idea. And we discuss, you know, where in, in which scenario are we moving? So that, that’s one thing we have done. And I think that provides a lot more flexibility in thinking. And the second is, we think ahead of risk events. So markets are much more volatile today, and typically at the depth of a correction, you are scared, you don’t know how to interpret the information you’re getting, and you’re paralyzed in making decisions. So what we do is we have playbooks to say, if the market moves up or down at certain levels, this is, these are the levels at which we’ll add risk, this amount of risk. And is, you know, as the market goes down, we’ll continue to add risk. And then we have playbooks to think about, okay, at what levels if the market recovers, has it gone too far? And we lighten up on risk? And those playbooks have taken the emotion and the bias out of the decisions, and it makes it much, you know, much less stressful in a way to execute on strategy.

01:00:53 [Speaker Changed] Because, because you have a plan that you created when you were calm and relaxed. Exactly. As opposed to responding when you’re stressful. I’m kind of fascinated by the 70% baseline in normal circumstances, but this year it’s more of a 40% baseline. It sounds like you are saying that tail risk is rising. Is is that a a, a fair assessment?

01:01:18 [Speaker Changed] Yes. This is, you call it fatter tails, right? So we see, we see the, you know, more uncertainty means that it’s less clear what will turn out to be. So there are more scenarios that are more likely

01:01:33 [Speaker Changed] In including the possibility of something really extreme on, on either end of the tail.

01:01:39 [Speaker Changed] Exactly. And we do, I mean, again, we are in the business of tail, tail risk, right? So we also do think about what could be a really, really tail scenario and what that means for our business. But we do it not just at the asset management level, more broad, more broadly at the group

01:01:55 [Speaker Changed] Level. You do it across the entire insurance company, I would imagine. All right. I only have you for a few more minutes. So let’s jump to our favorite section, our favorite questions we ask all of our guests, starting with what are you watching or listening to these days? What’s keeping you entertained?

01:02:14 [Speaker Changed] So I have two kids and I try to show them some more, you know, intellectual programming, right? And the latest show we’ve been watching is called The Real Bugs Life, okay. On Disney, which is, if you know a Bugs Life, it was a Disney movie, right? This is real. So it’s amazing technology that’s being used to, to record this, but it follows different insects in their natural environment at a very, with, with amazing cameras, right? So they have you, you basically get a, a macro view of, you know, how a dragonfly flies and how a dragonfly, you know, runs away from, from, its from frogs or other animals. Hmm. So it’s a, it’s, it’s a fascinating show. So that’s on the, on the TV side, on podcasts, in good company. I guess this might be a competitive podcast to yours. It’s Nikolai Tongan,

01:03:18 [Speaker Changed] That who, who hosts that? That sounds,

01:03:20 [Speaker Changed] It’s Nikolai Tongan. He’s the CEO of the Norjes Bank. So that’s the largest sovereign wealth fund in, in Norway. And they’re large equity investor, and they,

01:03:33 [Speaker Changed] I’m gonna look into that. That sounds

01:03:35 [Speaker Changed] Interesting. They hold one or 2% share in some of the largest companies, right? So he gets to interview CEOs of these companies, and it’s a, it’s a always pretty fascinating discussion.

01:03:45 [Speaker Changed] Oh, I’m gonna definitely check that out. That sounds good. Tell us about your mentors who helped to shape your career

01:03:53 [Speaker Changed] Early on. It was definitely my grandmother. She, she was a professor of agronomy back in the day. Agronomy, agronomy is the science of agriculture. And she took a keen interest in my education and really pushing me to push myself to do better, to have the right moral compass. So some of the lessons that weren’t instilled in me are, are still from her time. And then during the Bain years, a partner called Dan Haas, who was one of the founders of our private equity practice back in Boston, and whom I met in Zurich, and who I blamed for staying in Zurich right permanently after I came in 2009. But he really has played a fundamental role in kind of coaching me, you know, on both my career moves, on how I approach problems, just listening at times and really being an invaluable friend and coach.

01:05:00 [Speaker Changed] Hmm. Let’s talk about books. What are some of your favorites? What are you reading right now?

01:05:06 [Speaker Changed] I’d say my all time favorite is the Three Body Problem. Huh? It’s a trilogy by, I’ll mispronounce the name Lu hin. Right. And it’s sci-fi mixed with history, philosophy, game theory, you name it. I don’t know if you are familiar with the book.

01:05:27 [Speaker Changed] Oh, I’m very familiar with the book and I actually watched the Apple TV series.

01:05:32 [Speaker Changed] Yeah. Which is not as good.

01:05:34 [Speaker Changed] Well, it, it seems like it just pulls a handful of things out of it. Although I, to be honest, I started reading the first book and the three body problem for those people who aren’t physics nerds are, we can predict two bodies, but once you introduce a third body, the range of outcomes are practically infinite. And you really have no idea where these three gravitational bodies are gonna, are gonna take us. Exactly. But it was, I believe the author is Chinese. It was originally written in Chinese and then translated. The US translation is a little challenging to fight your

01:06:12 [Speaker Changed] Oyster, especially the second book, I’d say. Yeah. Yeah.

01:06:14 [Speaker Changed] So I, I, I found the first book difficult. Like it’s a
little, like, you could see that whoever did the translation, English wasn’t
necessarily their, their native language,

01:06:24 [Speaker Changed] But the concepts were pretty fascinating. Fascinating. Yeah. Fascinating to think about. I mean, I mean, it was a lot about game theory, right? And, and, and, and the fact that humanity lacks the ability of reacting to, you know, exit existential long-term threats. Right, right. And what is the psychology behind it? Even when faced with something that, you know, guarantees destruction of humanity, we still squabble right around more earthly, earthly problems,

01:06:54 [Speaker Changed] Tribal arguments, as opposed to, Hey, we’re all gonna
die. We better do

01:06:58 [Speaker Changed] Something. The aliens are coming. Right?

01:06:59 [Speaker Changed] That’s right. And we know you get 50 years to prepare.
Yeah.

01:07:02 [Speaker Changed] It was 500 in the book. It was five. Oh it 500. Yeah. And even with that, I mean, on the positive side, it also awoke amazing innovation. Right. So it shows you also the best of humanity that, you know, when, when people put their mind to it, they can solve really impossible problems. But I think that the outcome is a mixed bag for humanity. Huh.

01:07:25 [Speaker Changed] And what else are you reading? What else do you enjoy? 01:07:27 [Speaker Changed] So today I’m reading a book called Humankind. It’s by a Dutch writer called Rutger Bregman. And the premise of the book is that humans are innately kind. And, and, and meanwhile, so our, our human nature is not savage, but it’s actually good. Right. And he goes through

01:07:51 [Speaker Changed] Cooperative social primates. Right,

01:07:53 [Speaker Changed] Exactly. But a lot of history has been telling us that, you know, we have this veneer of civility and underneath we we’re untrustworthy and evil beings. And I think he goes through a lot of that and disproves a lot of historical beliefs. And it, it, you know, in, in this day and age, you need some optimism. Sure. And I’d say this, this book gives you belief and trust in humanity.

01:08:20 [Speaker Changed] So, so humankind kind of the opposite of sapiens.

01:08:24 [Speaker Changed] Exactly.

01:08:25 [Speaker Changed] Like that, that, that book was fascinating, but like a little bit, gee, we really suck as a species, don’t we? Yeah.

01:08:33 [Speaker Changed] Or the selfish gene. Right, right. That’s a Richard Dawkins book that also, I mean, he, this author disproves some of the thesis, right. Because Richard Dawkins basically says, well, our genes basically make us, you know, the, the species we are. And there’s a lot of not on good features. This version says, well, there, there’s a lot of misrepresentation there. And ultimately he shows examples of, you know, why people, I mean, he gives them the example of when soldiers in the first world war, you know, what percent of deaths was caused by people directly shooting at the enemy. And that was a tiny percent because really soldiers had a very difficult time to look the enemy in the eye and kill them. So most of the deaths were done by, you know, grenade or kind of indirect means, because ultimately, you know, humans don’t want to hurt other humans.

01:09:28 [Speaker Changed] Huh. That’s, that’s really fascinating. Our final two questions. What sort of advice would you give a recent college grad interested in a career in either investing or private equity or, or finance?

01:09:42 [Speaker Changed] I would say don’t narrow down your options too early. As, as I’ve experienced in my career, I’ve, I’ve done a lot of different things and I learned in each experience, even though they might not look related, I’ve learned things that have made me a better investor, a better leader. And I think a lot of young people today come in to the workforce and say, I, I know what I want to do. And I think that they actually don’t. Right. Right.

01:10:12 [Speaker Changed] And your experience going from consulting to private equity to being CIO, did you have any idea that would be your path when you first started?

01:10:22 [Speaker Changed] Well, I thought I wanted to be a doctor, so here we go. There

01:10:25 [Speaker Changed] You go. Well, so, so not just one pivot, but multiple pivots.

01:10:29 [Speaker Changed] Exactly. So I think that that young people really need to be open-minded and explore and, you know, take opportunities for what they are. Right? So if you’re given the chance to, if you’re loving what you do, but you’re given the chance to experiment with something else, instead of immediately saying no, think twice and thinking, what could I learn? What, how could this be good for me? Because I think that richness of experience at the end makes you, makes you a better, better business person.

01:10:55 [Speaker Changed] And, and our final question, what do you know about the world of investing today that would’ve been helpful back in the nineties when you were first getting started?

01:11:04 [Speaker Changed] Well, so when you study in academia, you do a lot of analysis, right? So we talked about markets are overvalued, multiples are high. I think when I was starting out, I had a lot more belief in, you know, rigorous analysis and numbers give you the right answer. I think investing is much more messy, right? So putting in the rigor of the analysis with understanding behavior and human biases, technicals flows, that is the way you get a fuller picture of the investment space. And I think we talk a lot. I mean, there’s a lot of very smart people that are very good with numbers, but I think understanding behavior and people is just as important.

01:11:51 [Speaker Changed] Huh. Really, really, really fascinating. We have been speaking with Ena Eva group, chief Investment Officer for Swiss Ray. If you enjoy this conversation, well be sure and check any of the 500 we’ve done over the past 11 years. You can find those at iTunes, Spotify, YouTube, Bloomberg, wherever we you find your favorite podcasts. Be sure and check out my new book, how Not to Invest the ideas, numbers, and behaviors that destroy Wealth and how to avoid them, how not to invest Wherever you find your favorite books, I would be remiss if I did not thank the Crack staff that helps put these conversations together each week. Peter Nicolina is my audio engineer. Anna Luke is my producer, Sean Russo is my researcher. I’m Barry Riol. You’ve been listening to Masters in Business on Bloomberg Radio.

 

~~~

 

 

 

 

The post Transcript: Velina Peneva, Swiss Re Chief Investment Officer appeared first on The Big Picture.

Watch: Rare Footage Of Kim Jong Un Mourning Over Coffins Of DPRK Troops Killed In Ukraine War

Zero Hedge -

Watch: Rare Footage Of Kim Jong Un Mourning Over Coffins Of DPRK Troops Killed In Ukraine War

In a surprising first, North Korea's state-run media aired footage on Monday showing leader Kim Jong-un mourning the deaths of North Korean soldiers, said to be killed while fighting in Russia's war in Ukraine as part of allied forces.

Primarily the estimated ten to fourteen thousand DPRK troops dispatched to assist Moscow fought in Russia's Kursk province, where they helped repel the over six-month Ukrainian occupation of the southern border oblast.

The broadcast, released by Korean Central Television, featured Kim solemnly placing a North Korean flag over a coffin during an emotion-laden and patriotic ceremony.

The occasion for the memorial footage was the return of the soldiers' remains from Russia, though no details were given as to the number of the deceased being remembered.

This was played before an audience attending joint cultural event hosted by North Korea and Russia in Pyongyang on Sunday. The footage was aired presumably for the first time publicly at this event.

This weekend marked the first anniversary of the signing of the two countries' "comprehensive strategic partnership" treaty. This served as the 'legal basis' on which the North Korean troop deployment to Russia happened.

According to more details of the released footage via Yonhap News agency:

These images were broadcast after photos of North Korean soldiers were shown alongside Russian troops, and of a blood-stained notebook believed to belong to a North Korean soldier retrieved from the battleground in Russia's Kursk region.

In the notebook, a message read that "The decisive moment has finally come," and "Let us bravely fight this sacred battle with the boundless love and trust bestowed upon us by our beloved Supreme Commander," which refers to Kim, according to the broadcast.

It's been reported that North Korean state media has been repeatedly airing clips of Russian Culture Minister Olga Lyubimova and other attendees wiping away tears during the event.

Watch the footage below:

One interesting observation from the state footage of the return of the soldiers' remains is the winter clothing on Kim and other officials, which suggests that Pyongyang may have begun receiving its dead soldiers back a few months ago.

Back in April, President Putin released a statement saying, "The Russian people will never forget the heroism of the Korean special forces. We will always honor the Korean heroes who gave their lives for Russia and for our shared freedom, alongside their brothers-in-arms from the Russian Federation."

Tyler Durden Tue, 07/01/2025 - 07:45

Too Late To Buy Gold? Not Even Close...

Zero Hedge -

Too Late To Buy Gold? Not Even Close...

Authored by Matthew Piepenburg via VonGreyerz.gold,

Many are wondering if it’s too late to buy gold, that gold has peaked and they have missed their opportunity.

We hope the below series of facts, figures and common-sense reality-checks will put such fears squarely to rest, as gold’s role, price direction and days are only just beginning.

A Light House in the Fog

In a world of geopolitical tensions, can-kicking monetary fantasies, falling bombs, rising debt, discredited leadership, impotent summits, weaponized trade and a comically discredited media narrative, it’s hard to find a lighthouse in such fog.

Even with the world closest to the brink of nuclear war since the Cuban missile crisis, the markets, forever certain that a life-boat of mega liquidity is just one crisis away, churned Titanically forward with no ice berg fears.

VON GREYERZ advisor, Ronnie Stoeferle, sarcastically described the recent S&P, NASDAQ and NIVIDIA behavior as being almost like that of a Zen monk.

But there’s nothing “Zen” about these markets, times, currencies or financial systems. And there’s certainly nothing “Zen” about the once-sacred 10Y UST…

How do we know this? How have we always known this?

In short, what has been our lighthouse?

The answer is as simple as it timeless, indestructible, and honest: Gold.

The Quiet Accumulation Phase

Unlike politicians scrambling for power like donkeys fighting for hay (Chamfort) and squawking threats, promises and miracle solutions for one more X follower, vote or concession, sophisticated gold investors—from generational family offices, portfolio managers and sovereign wealth funds to eastern central banks and even the IMF and BIS—have been quietly accumulating gold at unprecedented levels.

For the last 3 years (since the US foolishly weaponized the world reserve currency), central banks have been annually accumulating over 1000 tons of gold.

Average central bank gold stacking has skyrocketed from 118 tons (pre-2022), to over 290 tons per/bank/year post weaponization.

In short, despite all the fog, squawking, speculating and debating, precious metal investors have been watching what gold does rather than listening to what failed policy makers and systems are saying.

The Unofficial Reserve Currency

Nassim Taleb bluntly said the quiet part out loud in a recent Bloomberg interview, namely that gold is effectively becoming the unofficial global reserve currency.

We have been saying the same for years, not because we fawn on every empty phrase of every empty politico or market pundit, but because we have been watching what gold does.

And let’s look at what gold has been quietly, calmly and historically doing—and SIGNALING—for years.

Signals Rather than Words

In 1971, when the USD lost its golden chaperone, money supply expansion, inflation and hence a gold price explosion followed, held in check only by Volcker’s aggressive, post-1980 rate hikes.

Even the Great Financial Crisis of 2008, in which gold ultimately out-hedged a perfect market storm, the only thing to “save” that not-so-Zen equity market was Bernanke’s money printing to the moon.

But as US public debt levels crawl toward $37T, we objectively know (and knew from day-one) that raising rates wouldn’t work for Powell as they did for Volcker, and hence Powell’s “higher-for-longer” policies were doomed from the onset by the hard math of fiscal dominance.

Or stated more simply, America was too far in debt to afford its own so-called “inflation killing” rate hikes.

We also know that QE to the moon is another useless option, and that Bernanke’s Nobel Prize for such a “temporary” solution has since devolved into a currency destroying nightmare.

In short, the Fed is Trapped. Cornered. Out of good options.

Period.

More Recent Signs of Golden Power

But there are far more current yet ignored signals from that modest pet rock, which has been quietly getting the last laugh on a global system that is loudly getting more desperate and hence more centralized.

From Day-One of the Putin sanctions, we said that trust in, and hence demand for, the dollar and UST would fall as gold slowly rose to replace this mistrust.

That, of course, is precisely what followed despite polite debates with strong-dollar proponents as the reality of de-dollarization became more than just a headline, but a global and irreversible trend.

We also carefully tracked the critically important move by the BIS to rate physical gold as a Tier-One, global reserve asset.

This was another quiet, yet media-ignored BIS signal, that gold was becoming a far more trusted and objectively superior store of value that an over-issued and increasingly weaponized/unloved UST.

We then tracked yet another obvious, yet again, media-ignored signal from the extraordinary physical gold demand/deliveries in the COMEX exchange.

This was neon-flashing evidence that nations preferred physical gold to paper money or unloved US IOUs.

The Old System Nearing Its Gettysburg Moment

Such signals from the BIS, the COMEX, and the BRICS de-dollarization policies were analogous to armies slowly preparing their financial cannons for a massive shift in a global monetary and financial system.

Sadly, yet objectively, this very system– unknown to most participants and trend speculators—was already reaching a clear Gettysburg Moment in which the fight to save it may continue, but the war is already lost.

The Biggest Casualty? The USD…

Today we see the desperate signs of this losing war in the desperate measures to give credit to an otherwise discredited and debased world reserve currency which even JP Morgan confesses is 15% over-valued based on long-term real exchange rates.

This year alone, the USD has lost 10% of its power and is seeing its worst first-half performance in nearly 40 years.

Meanwhile the EUR-USD is nearing 1.17 and gold is consolidating.

Too Late for Gold?

But despite all these signals of gold rising (more than 75 All-Time-Highs in 2025 alone and outperforming the S&P total return for two decades), there are those who would say gold is too volatile or that it peaked at $3500.00.

In other words, there are those who think it’s too late to catch “the gold bubble”?

Oh dear… what a complete misunderstanding of reality, markets, gold and broken financial systems such a view embodies.

Gold: No Mania, just a Sober Culmination

Gold is not in a bubble.

Gold is not to be compared to a tech stock or a speculation craze, and gold is no longer even a volatility “hedge” or “allocation.”

Rather, gold is becoming the base money for a system that is openly denying its own slow death and losing war.

In other words, gold’s exponential growth and role are not peaking, they are only just beginning.

But let’s show rather than say that, as words have become just as cheap as dollars in a system terrified of its own unravelling.

Gold is not spiking because the future of the global financial system and paper currencies is looking brighter.

Instead, and based on the string cite of signals above, gold is rising because that very debt-based, MMT-fantasy pushing addiction to mouse-clicked money and debt-based (currency-destroying) “growth” is failing.

Trust: Hard to Quantify but Easy to Own

The recent and extraordinary (but entirely inevitable) “rally” in the gold price had nothing to with its yields or earnings (it offers none), but everything to do with its trust.

But as we’ve said for years, trust is hard to quantify for those who don’t understand gold.

Or stated otherwise, Gold is not changing, but trust in the global financial and currency system is.

Gold is doing nothing other than what it has done for millennia when debt levels unmask the sins and addictions of its fiat money comptrollers: It is signaling a slow reset toward real money from paper currencies.

In such moments of dramatic global change, looming resets and embarrassing policy failures, the old correlations break down.

Strong dollar or weak dollar, low inflation or high inflation, positive real yields (2023,24 & 25) or negative real yields—gold is rising in all scenarios because gold is breaking away from a broken system that has printed, borrowed, taxed and even traded itself into debt trap.

Who Is Afraid?

Yes, gold loves chaos, but today it’s not Main Street that is running to gold, it is the very central bankers who are terrified of the chaotic system they alone created and broke which are running to this metal.

In short, it’s not the people who are scared—it’s their governments.

Even the IMF, which has recently admitted that it doesn’t fully know what is coming, at least knows that whatever (even horrific CBDC) reset arises, it will have gold (the last truly politically neutral asset in a global financial war) as its anchor rather than a hitherto chastised “pet rock.”

And so, in this backdrop of reality rather than spin, we ask again, is it too late to buy gold?

Silver Speaks

In addition to the foregoing reality checks and answers, let us not forget what silver is saying to us.

Those familiar with long-term, sophisticated precious metal investing are well aware that rising silver (and mining stocks) confirm a bull market in gold, which we argue has not yet even begun despite gold’s recent record highs.

As of this writing, the gold/silver ratio still hovers in the 100:1 area and silver ETF inflows are yawning.

In short, silver, despite its steady movements North, is still greatly lagging the gold moves of late, suggesting that gold has yet to make its true move in price, role and use.

Today silver lags, but when it moves, its move will be explosive.

For us, the current silver lag is a sign that gold is still early rather than too late in its secular direction.

Peak Distrust, Not Peak Gold

The recent gold price tops at $3500 were not a sign of mania or peak gold, but simply an early indicator (and reflection) of the rotten debt foundations beneath a global credit and currency system slowly teetering toward a massive shift.

In such a setting/shift, gold’s value today is merely a fraction of what is to come.

For those thinking beyond the next equity trend or miracle stock toward protecting and growing their wealth, they are not even close to “too late,” but rather right on time.

Tyler Durden Tue, 07/01/2025 - 07:20

The No-Win Bubble "Wealth Effect": Either Way We Lose

Zero Hedge -

The No-Win Bubble "Wealth Effect": Either Way We Lose

Authored by Charles Hugh Smith via OfTwoMinds blog,

I have endeavored to explain how our economy has changed dramatically over the past 50 years beneath the surface. Nothing that's going to happen in the future will make sense unless we understand this, so refill your beverage of choice and let's go through what changed.

Wages gained ground 1945 - 1975, and lost ground 1975 - 2025. In the "glorious 30" (Trente Glorieuses) years of sustained global growth 1945 - 1975, wages' share of the economy remained around 50% of the nation's income. As the economy expanded, wages increased in step with the economy.

Since the mid-1970s, that trend has reversed. Wages have lost ground for the past 50 years. As the economy expanded, wages's share declined, meaning the economy's gains flowed to capital rather than wages. (Chart #1 below)

This wealth transfer was non-trivial: $150 trillion was siphoned from wages to owners of capital.

As the chart below shows, Federal debt as a percentage of GDP declined in the the decades of organic growth, meaning the economy expanded from increases in productivity, efficiencies and resource extraction, as opposed to the synthetic growth of using debt / financialization to boost consumption.

Financialization took off in the 1980s as unlimited credit for financiers enabled a synthetic boom of corporate takeovers and mergers. Financialization expanded into every nook and cranny of the economy in the 1990s and 2000s, so that assets such as the family home became commoditized assets that could be sold as securities to global capital.

As the Federal-debt-GDP charts illustrates, Federal debt rose faster than GDP as financialization hollowed out the US economy. The acceleration of globalization from 2001 advanced this hollowing out.

The destabilizing nature of financialization manifested in 2008 as the Global Financial Crisis, when heavily financialized subprime mortgage securities catalyzed a global meltdown.

the 2008-09 crisis and response was a critical juncture in American history , as the organic economy became subservient to the synthetic economy of debt, bubbles and "the wealth effect," the toxic harvest of hyper-financialization and hyper-globalization.

Federal debt, which has risen from 40% of GDP in the early 1980s to 60% in 2007, exploded higher to 120% as the synthetic "growth" of using debt to inflate asset bubbles that generated "the wealth effect" became the engine of consumption.

As a result of policy decisions made in 2008-2010, our economy became dependent not on wages but on "the wealth effect" for consumption: as asset valuations bubble higher, the owners of the assets feel wealthier, and are incentivized to borrow and spend more of their phantom wealth.

The top 10% of US households now account for 49.7% of all US consumer spending: The U.S. Economy Depends More Than Ever on Rich PeopleThe highest-earning 10% of Americans have increased their spending far beyond inflation. Everyone else hasn't. (WSJ.com)

The problem is that unlike wages, which are broadly distributed, asset ownership is concentrated in the top 10% of households, so "the wealth effect" dramatically boosted wealth and income inequality. So all the synthetic "growth" since 2009 has flowed to the top tier of households as wages' share of the nation's income continued losing ground.

This sets up a can't win scenario: if the Everything Bubble that drives "the wealth effect" continues inflating, wealth inequality will crack our society wide open. If the bubble pops, consumption implodes, jobs will be lost and the Great Recession that was pushed forward in 2009 will kick in with a vengeance.

Beneath the superficial surface of rising GDP, the policies of inflating debt-bubbles to drive "the wealth effect" have hollowed out not just the economy but society. Courtesy of @econimica (X/Twitter), these charts show the pernicious consequences of relying on debt for consumption and channeling gains to the owners of assets.

The net effect was to load younger generations with debt while funneling the majority of Federal spending to the older generations who also happen to own most of the assets. Since younger workers couldn't buy assets when they were cheap, few have gained from "the wealth effect."

By effectively impoverishing the nation's younger generations, we've chosen a demographic doom-loop as marriage and birth rates have collapsed from 2007. Guess what happens when you make starting a family and buying a house unaffordable to younger generations? They no longer start families and have children.

As the Boomer generation retires, the legacy of retirement programs designed in the 1930s (Social Security) and the 1960s (Medicare) is fiscal bankruptcy as these programs are driving the expansion of federal spending and borrowing.

It's called a Doom Loop, with no exit, for all speculative asst bubbles pop. Once "the wealth effect" reverses, assets get sold off to raise cash and since only the wealthy can afford to buy them, there's no buyers left, so valuations crash.

It didn't have to be this way, but our leadership chose poorly, and the consequences will fall on us. Let's go through the charts supporting this grim reality.

Wages share of the national income has declined for 50 years.

As a percentage of GDP, Federal debt has tripled from 40% of GDP to 120% of GDP as synthetic "growth" replaced organic growth:

Thanks to the policy decision to reply on "the wealth effect" for consumption, wealth inequality has soared: the net worth of the top 10% (34 million Americans) is 2X the net worth of the bottom 90% (306 million Americans) and 27X the net worth of the bottom 50%--170 million Americans.

Most of the future expansion of Federal spending and debt is in programs for the older generations and rising interest payments on the expanding debt to pay for these programs.

Here are Econimica's explanatory comments on his three charts reprinted below:

"Federal Reserve policies have far-reaching consequences, well beyond interest rates and economics / finance. Given the Fed is a non-democratically elected entity making policy that is ultimately deciding the winners and losers or our modern-day society...perhaps it's time for a rethink of the power that has been handed to them?

Consider since 2007 (when ZIRP & QE were implemented):

---US births (blue columns) have declined by -0.7 million/yr (-16%...or 12 million fewer births than Census projected since '07 w/ the delta only continuing to grow)
---US female childbearing population (red line) +4.2 million (+11%)
---US 65+yr/old pop (white line) increased +27 million (+72%)

Think of who the economic / financial policies implemented since '07 favor (elderly/institutions holding the bulk of assets) and who they punish (young adults w/ little to no assets to shield them). Young adults have made the logical choice to have fewer or avoid children altogether. Unless something dramatic changes, suggest births/families will continue moving significantly lower and the future of the US working class is likewise deteriorating.

2007 was also the interest rate driven explosion in student loan debt and consumer debt (vehicles, credit cards, etc.) to allow a flat consumer population to continue consuming more."

Note how debt serviced by younger generations exploded higher from 2008 while the population and workforce made only marginal gains.

GDP minus federal debt was positive until 2008-09, and has since crashed into deeply negative territory. It's called eating our seed corn, spending money borrowed from future productivity and generations to fund unsustainable consumption today. Spoiler alert: this ends badly.

Regardless of assurances that this bubble will never pop, all bubbles pop, and they do so with remarkable symmetry, returning to their starting point.

Either way, we lose: if the Federal Reserve manages to keep the Everything Bubble inflated, we decimate the nation's younger generations, fatally destabilizing our society. If the bubble finally pops, all the phantom wealth that's been propping up consumption goes to Money Heaven, gone for good.

We will collectively bear the burdens of catastrophically short-sighted / self-serving policies of 2009-2025 for decades to come. Beneath the easily gamed statistical veneer, our economy and society have been hollowed out to the benefit of the few at the expense of the many.

These are real-world problems, not monetary problems. Unfortunately, playing around with "money" doesn't make all this go away: stablecoins, Universal Basic Income (UBI) and Modern Monetary Theory (MMT) are all disconnected from the real world: what ultimately matters is resources extracted, productivity and efficiency, and how the gains and losses of these real world factors are distributed.

"Money" in all its manifestations is simply the unit/medium used to instantiate the distribution.

*  *  *

Check out my new book Ultra-Processed Life and my new fiction/novels page.

Tyler Durden Tue, 07/01/2025 - 06:30

Winding Up For A Comeback: UBS Eyes Rolex Recovery Cycle 

Zero Hedge -

Winding Up For A Comeback: UBS Eyes Rolex Recovery Cycle 

A team of UBS analysts led by Zuzanna Pusz pointed to new June data from the KOF Swiss Economic Institute showing deteriorating sentiment across Swiss watchmakers, further validating their cautious stance on the global luxury market.

June readings from the KOF Swiss Economic Institute (monthly survey of Swiss watch producers) show that expectations of production plans over the next three months decelerated m/m to -7.3 (restated May -5.5). Additionally, sentiment on expected orders over the next three months also decreased to -14.8 (May -10.7), the second lowest point in 2025ytd. -Pusz

The survey revealed declines in both production expectations and order outlooks, suggesting that a meaningful recovery in the global global luxury market might not occur until 2027.

The Jun readings show a sequentially more negative picture regarding sentiment in the industry vs. May, supporting our cautious view about the potential recovery in the global luxury market in 2025, as we believe it may take until 2027 for the sector's momentum to meaningfully re-accelerate.-Pusz

With secondary market prices for timepieces having already fallen sharply in recent years, as per Bloomberg Sundial data below, perhaps conditions may soon be ripe for contrarian investors to begin bottom-fishing Rolexes. 

Used Rolex prices are unlikely to rebound meaningfully until the Federal Reserve initiates an interest rate-cutting cycle (and price rebound could occur in the form of a lag).

According to Morgan Stanley's Michael Wilson, that easing cycle could begin as early as next year, with the potential for at least seven rate cuts.

If realized, this shift in monetary policy could provide a supportive backdrop for risk assets—including stocks and also luxury watches—heading into the second half of 2025.

Still, UBS's Zuzanna Pusz emphasized that both the watch segment and the broader luxury market remain on shaky ground, reiterating that any "momentum to meaningfully re-accelerate" is unlikely before 2027.

Tyler Durden Tue, 07/01/2025 - 05:45

How The IMF Prevents Global Bitcoin Adoption (And Why They Do It)

Zero Hedge -

How The IMF Prevents Global Bitcoin Adoption (And Why They Do It)

Authored by Daniel Batten via BitcoinMagazine.com,

The Global Pattern

In recent years the IMF has:

  • Successfully pressured El Salvador to (de facto) drop Bitcoin as legal tender, and rollback other Bitcoin policies

  • Successfully pressured CAR’s 2023 Bitcoin repeal through regional banking bodies

  • Been responsible for the lack of follow through from Bitcoin campaign rhetoric to action from Milei in Argentina.

  • Cited “serious concerns” with Pakistan’s Bitcoin plans

  • Consistently framed crypto as a “risk” in loan negotiations

Here’s a summary

 

As we can see, the only nations that were able to resist IMF pressure were El Salvador, prior to gaining an IMF loan, and Bhutan which does not have an IMF loan. 

Each country with an IMF loan who has adopted, or attempted to adopt Bitcoin at a nation-state level has been successfully thwarted, or largely thwarted by the IMF. 

How is it that the IMF has been so successful in preventing global nation state adoption, with the exception of Bhutan, and why do they aggressively move to prevent it?

In this detailed report we do a deep-dive into each of the three nations where the IMF has successfully pushed back against Bitcoin adoption, and the signs that it is likely to be successful achieving the same result with Pakistan. 

In the last section of this report, we look at the IMFs five reasons to fear Bitcoin, and how Bitcoin is still thriving from a grassroots level despite top-down Bitcoin abandonment, or partial abandonment, by various nation states.

1. Central African Republic: When Colonial Money Met Digital Hope

The Central African Republic (CAR) uses the CFA franc. The CFA isn’t just currency—it’s a geopolitical chain, backed by France and governed by the Bank of Central African States (BEAC). Of its 14 member nations, the 6 Central African nations (including CAR) must still deposit 50% of foreign reserves in Paris.

This control over reserves fosters economic dependency, while establishing export markets for French goods at favorable terms. In 1994 for example, the CFA was devalued by half, a policy that was influenced by Western pressure, particularly from the IMF. This caused the cost of imports to leap, leading to exporters (mainly EU based) being able to procure resources from CFA nations at half the cost. Locally the impact was devastating, leading to wage freezes, layoffs, and widespread social unrest across CFA countries.

When the Central African Republic (CAR) announced in 2022 it was adopting Bitcoin as legal tender, BEAC and its regulatory arm COBAC immediately voided the law, citing violations of the CEMAC Treaty; The treaty which established the economic and monetary community of Central Africa. This wasn’t bureaucracy—it was a warning shot from the monetary guardians of la Françafrique.

Why it mattered: To this day, CAR’s economy relies heavily on IMF bailouts. With $1.7Billion in external debt (61% of GDP), defying BEAC meant risking financial isolation.

The IMF’s Silent Campaign

The IMF moved fast. Within two weeks (May 4, 2022), it publicly condemned CAR’s “risky experiment,” citing legal contradictions with CEMAC’s crypto ban. The move raised “major legal, transparency, and economic policy challenges,” the IMF said, that were similar to the concerns the IMF raised about El Salvador’s Bitcoin adoption: risks to financial stability, consumer protection, and fiscal liabilities. (For context, none of those risks materialized in El Salvador).

But their real weapon was leverage. As CAR’s largest creditor, the IMF tied its new Extended Credit Facility (ECF)—a $191M lifeline—to policy compliance.

The Timeline That Tells All

This table traces the IMF’s shadow campaign:

Key to scuttling CAR’s Bitcoin ambitions was ensuring that the Sango project — a blockchain-hub initiative from the CAR government to sell “e-residency” and citizenship for $60K in Bitcoin — did not proceed.

The Sango Project – coincidence or collusion?

In July 2022, CAR launched the Sango Project. It aimed to raise $2.5B (100% of GDP).

It failed catastrophically. By January 2023, only $2M (0.2% of target) was raised. While IMF reports cite “Technical obstacles with 10% internet penetration” as the reason for the failure, our analysis shows a different picture. Two factors scuttled the project.

  1. Investor flight
  2. A CAR Supreme Court ruling formally blocked the Sango project

However, on closer examination, both of these factors hint at IMF involvement.

Let’s take a closer look at the evidence.

Investor Flight

The IMF’s role in this investor flight is circumstantial but compelling. On May 4, 2022, the IMF expressed concerns about CAR’s bitcoin adoption, stating it raised major legal, transparency, and economic policy challenges. This statement, made before the Sango Project launch, highlighted risks to financial stability and regional economic integration, potentially deterring investors. Further, in July 2022, during a staff visit for the Staff-Monitored Program (SMP) review, the IMF noted “economic downturns due to rising food and fuel prices”, which could have compounded investor caution. Reports also mention that the IMF and COBAC warned of inherent risks in CAR’s crypto move, adding to the skepticism.

The timing of these IMF statements aligns with the observed investor flight, suggesting that their cautionary stance may have influenced perceptions. While circumstantial, the sequence of events suggests IMF influence as a respected financial institution in the investor community likely played a role in investor flight.

Supreme Court Ruling

On the surface, the Supreme Court ruling looks like an independent event, until we dig beneath the surface and find big question-marks over the independence of CAR’s judiciary, a country that itself ranks 149/180 on its Corruption Perception Index (extremely low).

As mentioned, one week after CAR announced its Bitcoin strategy, the IMF reported “concerns”, including risks to financial stability, transparency, anti-money laundering efforts, and challenges in managing macroeconomic policies due to the volatility. (Bloomberg, 4 May, 2022)

On 29 Aug 2022, 117 days later, the Supreme Court of CAR ruled that the Sango project was illegal. For context, the Supreme Court which forms part of CAR’s judiciary is described by international transparency bodies such as Gan Integrity as one of the most corrupt institutions in the country, with evidence pointing to inefficiency, political interference, and likely influence from bribes or political pressure.

The Sango project’s collapse became the IMF’s Exhibit A: “Proof Bitcoin can’t work in fragile economies.” But the reality was, the IMF’s consistent expression of “concerns” created the environment where the project was structurally undermined in advance, so that this conclusion became possible.

5,200 miles away, in the small nation of Bhutan we see the stark contrast of the successful Bitcoin rollout that was possible without IMF’s “involvement”.

The Unspoken Conclusion: Bitcoin’s Resilience Beyond Borders

CAR’s reversal wasn’t about Bitcoin’s viability. It was about raw power. The IMF weaponized regional banking unions (CEMAC), starved CAR of capital, and leveraged a $191M loan to extinguish the threat of financial sovereignty. When the Sango Project struggled—the trap snapped shut.

Yet this defeat reveals Bitcoin’s enduring power. Notice what the IMF didn’t destroy:

The pattern is clear: Where grassroots adoption takes root—Bitcoin survives. But for countries announcing top-down Bitcoin manifestos who have large IMF loans, all 4 have met with crushing levels of resistance: El Salvador, CAR, Argentina and now Pakistan.

CAR’s outstanding $115.1 million IMF loan balance made it vulnerable to heavy IMF pressure. In nations without IMF loans such as Bhutan, Bitcoin slips through the IMF’s grip. Every peer-to-peer payment, every Lightning transaction, erodes the old system’s foundations.

The IMF won the CAR round. But the global fight for financial sovereignty is just beginning.

2. Argentina’s $45 Billion Bitcoin Adoption Roadblock

If CAR was thwarted in its Bitcoin plans, Argentina never made it to the start line. Precampaign rhetoric from President Milei suggested big things were in store for Bitcoin. Yet nothing materialized. Was this just a politician’s rhetoric fizzling out post-election, or was something else at play? This section pulls back the lid on what really happened to Argentina’s aborted Bitcoin aspirations.

Understanding how Bitcoin adoption is going, is like assessing whether a rocket is going to reach escape velocity: we must look at both the thrust and drag factors.

I’m an optimist: I believe Bitcoin will win: it is so clearly a better solution to the broken money legacy system we currently have. But I’m also a realist: I think most people underestimate the strength of entrenched forces which oppose Bitcoin.

When I was running my tech company, we encountered the same thing. Our technology was 10x better, faster and more cost effective than the legacy system we eventually replaced. But they didn’t relinquish their incumbent monopoly easily!

What happened in Argentina?


When libertarian Javier Milei was elected Argentina’s president in November 2023, many Bitcoin advocates cheered. Here was a leader who called central bankers “scammers,” vowed to abolish Argentina’s central bank (BCRA), and praised Bitcoin as “the natural reaction against Central Bank scammers.” The case became a litmus test for whether Bitcoin could gain mainstream acceptance through government adoption rather than grassroots growth.

Source: Coinsprout. 14 Aug 2023

Yet eighteen months into his presidency, Milei’s Bitcoin vision remains unfulfilled. The reason? A $45 billion leash held by the International Monetary Fund.

The IMF’s Bitcoin Veto in Argentina

The constraints had already been put in place by the time of Milei’s election. On 3 March, 2022, Argentina’s previous government signed a $45 billion IMF bailout agreement. In the weeks following, details emerged that the agreement had contained an unusual clause: a requirement to “discourage cryptocurrency use.” This wasn’t a suggestion—it was a loan condition documented in the IMF’s Letter of Intent, citing concerns about “financial disintermediation.”

The immediate effect:

  • Argentina’s central bank banned financial institutions from crypto transactions (BCRA Communication A 7506, May 2022)

  • The policy remains enforced under Milei, despite his pro-Bitcoin rhetoric

Milei’s Pivot

After taking office, Milei:

✔ Slashed inflation from 25% monthly to under 5% (May 2024)
✔ Lifted currency controls (April 2025)
✔ Secured a new $20 billion IMF deal (April 2025)

But his manifesto’s flagship proposals—Bitcoin adoption and abolition of BCRA (Argentina’s Central Bank) — are conspicuously absent. The math explains why: Argentina owes the IMF more than any other nation, giving the Fund unparalleled leverage.

Yet there’s irony in Argentina’s case: while the IMF blocks official Bitcoin adoption, Argentinians are embracing Bitcoin anyway. Cryptocurrency ownership grew by 116.5% between 2023-2024 in South America.

Across the region, Argentina has the highest ownership rates, at 18.9%, a figure almost 3 times the global average, and which has surged as citizens hedge against high annual inflation of 47.3% (April 2025) — a quiet rebellion the IMF can’t control.

.

What Comes Next?

All eyes are on the October 2025 mid-term elections. If Milei gains legislative support, he may test the IMF’s red lines. But for now, the lesson is clear: when nations borrow from the IMF, their monetary sovereignty comes with strings attached.

Key Takeaways

  • The IMF’s 2022 loan explicitly tied Argentina’s bailout to anti-crypto policies

  • Milei has prioritized economic stabilization over Bitcoin advocacy, to maintain IMF support

  • Parallels exist in El Salvador, CAR and now Pakistan revealing a consistent IMF playbook

  • Argentinians are circumventing restrictions through grassroots Bitcoin adoption

3. El Salvador: A partial IMF-victory

When El Salvador made Bitcoin legal tender in 2021, it wasn’t just adopting a cryptocurrency—it was declaring financial independence. President Nayib Bukele framed it as a rebellion against dollar dominance and a lifeline for the unbanked. Three years later, that rebellion hit a $1.4 billion roadblock: the IMF.

The Price of the Bailout

To secure its 2024 loan, El Salvador agreed to dismantle key pillars of its Bitcoin policy. The conditions reveal a systematic unwinding:

  1. Voluntary Acceptance Only
    Businesses are no longer required to accept Bitcoin (2021 mandate repealed). source

  2. Public Sector Ban
    Government entities prohibited from Bitcoin transactions or debt issuance. This includes bans on tokenized instruments tied to Bitcoin. source

  3. Bitcoin Accumulation Freeze
    All government purchases halted (6,000+ BTC reserve now frozen)
    Full audit of holdings (Chivo wallet, Bitcoin Office) by March 2025. source

  4. Trust Fund Liquidation
    Fidebitcoin (conversion fund) to be dissolved with audited transparency. source

  5. Chivo Wallet Phaseout
    The $30 incentive program winds down after surveys showed most users traded BTC for USD. source

  6. Tax Payment Rollback
    USD becomes the sole option for taxes, eliminating Bitcoin’s utility as sovereign payment. source

Bukele’s Calculated Retreat

El Salvador’s compliance makes fiscal sense:

  • The loan stabilizes debt (84% of GDP) as bond payments loom
  • Dollarization remains intact (USD still primary currency)

Yet the backtrack is striking given Bukele’s 2021 rhetoric. The Chivo wallet’s low uptake  likely made concessions easier.

What’s Left of the Experiment?

The IMF hasn’t killed Bitcoin in El Salvador—just official adoption. Grassroots use persists:

  • Bitcoin Beach (local circular economy) still operates, in fact thrives
  • Tourism draws increasing numbers of Bitcoin enthusiasts

But without state support, Bitcoin’s role potentially shrinks to a niche tool rather than a monetary revolution, at least in the short term.

The Road Ahead

Two scenarios emerge:

  1. Slow Fade: Bitcoin becomes a tourist curiosity as IMF conditions take full effect
  2. Shadow Revival: Private sector keeps it alive despite government retreat

One thing’s clear: when the IMF writes the checks, it also writes the rules.

Key Takeaways

  • IMF loan forced El Salvador to reverse 6 key Bitcoin policies
  • Precedent set for other nations seeking IMF support
  • Grassroots Bitcoin use may outlast government involvement

El Salvador made a lot of Bitcoin concessions. While arguably this doesn’t hurt El Salvador much, it sends a strong message to other LATAM nations such as Ecuador and Guatemala who were watching El Salvador and thinking of copying their playbook (until they checked the size of the IMF loan they had). So on net balance it was a partial IMF win, a partial El Salvador win. 

4. Bhutan: the IMF-free success story

We are now 2 years into Bhutan’s Bitcoin experiment. 

That means we now have some good data on how it has affected the economy. 

The IMF warned that nations embracing Bitcoin would destabilize their economy, be less effective at attracting foreign direct investment, and endanger their decarbonizing and environmental initiatives. It specifically voiced concerns over Bhutan’s “lack of transparency” with crypto-adoption.

What does the data say?

1. The bitcoin reserves have directly addressed pressing fiscal needs. “In June 2023, Bhutan allocated $72 million from its holdings to finance a 50% salary increase for civil servants”

2. Bhutan was able to “use Bitcoin reserves to avert a crisis as foreign currency reserves dwindled to $689 million”

3. Prime Minister Tshering Tobgay in an interview said that bitcoin also “supports free healthcare and environmental projects”

4. Tobgay also said their Bitcoin reserves helped in “stabilizing [the nation’s] $3.5 billion economy”

5. Independent analysts have now said that “this model could attract foreign investment, particularly for nations with untapped renewable resources”

Considering how the IMF analysis was not just wrong, but roughly 180° off target, it begs the question, were the IMF’s predictions ever based on data? 

5. Five reasons the IMF may fear Bitcoin

“Get all your friends, libertarians, democrats, republicans, get everyone to buy Bitcoin – and then it becomes democratized.” encouraged John Perkins ~ Bitcoin 2025

What if the IMF’s greatest fear isn’t inflation… but Bitcoin, and can Bitcoin Break the IMF/World Bank Debt Grip?

During my recent conversation with John Perkins (Confessions of an Economic Hit Man), something clicked. Alex Gladstein previously and brutally exposed how IMF “structural adjustments” did not eliminate poverty, but in fact enriched creditor nations. Perkins layered this with his own first-hand accounts. 

Perkins laid bare to me how the Global South is trapped in a cycle of debt—one designed to keep wealth flowing West. But here’s the twist: Bitcoin is already dismantling the playbook in five key ways.

1. Reducing Remittance Costs to Loosen the Debt Noose

Chris Collins’ Sculpture symbolically captures the debt noose

Remittances—money sent home by migrant workers—often make up a significant part of developing nations’ GDP. Traditional intermediaries such as Western Union charge fees as high as 5–10%. This acts as a hidden tax that drains foreign reserves. For countries like El Salvador or Nigeria, every remittance dollar that doesn’t flow into the country is a dollar their central bank must store to stabilize their currencies. Often this store of US dollars is provided by the IMF.

Bitcoin Changes the Game

With Lightning, fees drop to almost zero, and transactions settle in seconds. In 2021, El Salvador’s president Bukele optimistically predicted that bitcoin could save $400 Million in remittance payments. The reality has been there’s little evidence remittance payments using bitcoin have reached anywhere near that threshold. However the potential is clear: more remittances in bitcoin leads to higher dollar reserves, which leads to less need for IMF loans.

Little wonder the IMF mentioned Bitcoin 221 times in their 2025 loan conditions for El Salvador. They’d like to remain a relevant lender.

Bitcoin isn’t just cheaper for remittances—it bypasses the dollar system entirely. In Nigeria, where the naira struggles, families now hold BTC as a harder asset than local currency. No need for central banks to burn through dollar reserves. No desperate IMF bailouts.

The numbers speak for themselves:

• Pakistan loses $1.8 billion yearly on remittance fees—Bitcoin could save most of that
• El Salvador already saves $4M+ annually with just 1.1% Bitcoin remittance adoption

Adoption isn’t universal yet—only 12% of Salvadorans use Bitcoin regularly, while over 5% of Nigeria’s remittances flow through crypto. But the trend is clear: every Bitcoin transfer weakens the debt dependency cycle.

The IMF sees the threat. The question is: how fast will this silent revolution spread?”

Remittances totaled almost $21 billion in 2024, representing over 4% of Nigeria’s GDP

2. Evading Sanctions and Trade Barriers

Oil-rich Iran, Venezuela and Russia have had restricted USD access due to US sanctions in 1979, 2017 and 2022 respectively, resulting in the export of vastly fewer barrels per day of oil in each case.

Whether we agree with the ideologies of these nations or not, Bitcoin breaks this cycle. Iran already evades sanctions by using Bitcoin as a way to effectively “export oil”, whereas Venezuela has used Bitcoin to pay for imports, evading sanctions.

Iran is also able to bypass sanctions by monetizing its energy exports through mining. This avoids the IMF’s “reform-for-cash” ultimatums while keeping economies running.

The petrodollar’s grip weakens as Russia and Iran pioneer Bitcoin oil deals.

Another nation that has used Bitcoin to avoid the economic hardship caused by sanctions is Afghanistan, where humanitarian aid flows through using Bitcoin. NGOs like Code to Inspire bypassed Taliban banking freezes, and Digital Citizen Fund have used Bitcoin to deliver aid post-Taliban takeover, preventing families from starving.

Afghanistan’s “Code to Inspire” NGO uses Bitcoin donations, which cannot be intercepted by the Taliban, to train women to write software.

Though Bitcoin’s share of sanctioned trade is small—under 2% for Iran and Venezuela’s oil exports—the trend is growing.

Sanctions are a critical tool for geopolitical leverage, often supported by the IMF and World Bank through their alignment with major economies like the U.S. Sanctioned nations using Bitcoin reduces IMF control over financial flows while simultaneously threatening U.S. dollar dominance.

3. Using Bitcoin as a Nation State Inflation Shield

When nations like Argentina face hyperinflation, they borrow USD from the IMF to bolster currency reserves and stabilize their currency, only to face austerity or the enforced sale of strategic assets at a low price when repayments falter. Bitcoin offers a way out by acting as a global, non-inflatable currency that operates independently of government oversight, and which appreciates in value.

El Salvador’s experiment shows how Bitcoin can reduce dollar dependency. By holding BTC, nations can hedge against currency collapse without IMF loans. If Argentina had allocated just 1% of its reserves to Bitcoin in 2018, it could’ve offset the peso’s 90%+ devaluation that year, sidestepping an IMF bailout. Bitcoin’s neutrality also means no single entity can impose conditions, unlike IMF loans that demand privatization or unpopular reforms.

Bitcoin doesn’t have debt-leverage or a long history of the IMF to draw on when encouraging adoption. However, due to the Lindy Effect (see chart below), each passing year Bitcoin becomes a more viable alternative.

Lindy Effect: The longer something has been successful, the more likely it is to continue being successful. Bitcoin’s longevity strengthens its potential to disrupt

4. Bitcoin Mining: Turning Energy into Debt-Free Wealth

Many developing nations are energy-rich but debt-poor, trapped by IMF loans for infrastructure like dams or power plants. These loans demand cheap energy exports or resource concessions when defaults hit. Bitcoin mining flips this script by turning stranded energy—like flared gas or overflow hydro—into liquid wealth without middlemen or transport costs.

Paraguay’s earning $50 million yearly from hydro-powered mining, covering 5% of its trade deficit. Ethiopia made $55 million in 10 months. Bhutan’s the standout: with 1.1 billion in Bitcoin (36% of its $3.02 billion GDP), its hydro-powered mining could produce $1.25 billion annually by mid-2025, servicing its $403 million World Bank and $527 million ADB debts without austerity or privatization. Unlike IMF loans, mined Bitcoin appreciates in value and can be used as collateral for non-IMF borrowing. This model—monetizing energy without surrendering assets—scares the IMF, as it cuts their leverage over the energy sector.

Bhutan’s Prime Minister, Tshering Tobgay, calls Bitcoin a “strategic choice to prevent brain drain”

5. Grassroots Bitcoin Economies: Power from the Ground Up

Bitcoin is not just for nations—it’s for communities. In places like El Salvador’s Bitcoin Beach or South Africa’s Bitcoin Ekasi, locals already use BTC for daily transactions, savings, and community projects like schools or clinics. These circular economies, often sparked by philanthropy, aim for self-sufficiency. In Argentina, where inflation often tops 100%, 21% of people used crypto by 2021 to protect wealth. If scaled up, these models could reduce reliance on national debt-funded programs, which is of course the last thing the IMF want.

Hermann Vivier, founder of Bitcoin Ekasi, says his community was inspired by El Salvador’s Bitcoin Beach to replicate their Bitcoin circular economy in S.Africa

Conclusion 

By fostering local resilience, Bitcoin undermines the IMF’s “crisis leverage”. Thriving communities don’t need bailouts, so the IMF can’t demand privatization in exchange for loans. In Africa, projects like Gridless Energy’s – which has already brought 28,000 rural Africans out of energy poverty using renewable microgrids tied to Bitcoin mining – cut the need for IMF-backed mega-projects. If thousands of towns adopt this, dollar shortages would matter less, and trade could bypass USD systems. 

While the IMF occasionally engages in spreading misinformation about Bitcoin energy consumption and environmental impact as a way to obstruct adoption, its preferred and much more powerful tool is simply to use the financial leverage it has over IMF-indebted nations to “strongly encourage” compliance with its Bitcoinless vision of the future. 

The IMF fought Bitcoin adoption in El Salvador, CAR, and Argentina. Now they are fighting Pakistan’s intention to mine Bitcoin as a Nation State. Scaling these grassroots efforts is likely to force the IMF’s hand to crack down more and more transparently.

Above: Children from South Africa’s poorest villages learn to surf via the Bitcoin Ekasi township project

Grassroots Bitcoin economies empower communities to thrive without IMF bailouts. And people-power is needed to find new innovative ways to overcome the IMF’s counterpunch. 

Tyler Durden Tue, 07/01/2025 - 05:00

British MPs Invite Deposed Shah's Son To Promote Iran Regime Change In Parliament

Zero Hedge -

British MPs Invite Deposed Shah's Son To Promote Iran Regime Change In Parliament

Via Middle East Eye

The son of Iran's ousted shah is giving an address to British MPs in the UK parliament on Monday, numerous sources within parliament and the Labor Party have told Middle East Eye. 

According to an invitation to the event seen by MEE, Pahlavi is set to brief MPs and peers on "the ongoing situation in Iran and his plan for the collapse of the current regime and for a stable transition to a secular democracy".

AFP: Reza Pahlavi, son of Iran’s deposed last shah, speaks at the Richard Nixon Presidential Library and Museum in Yorba Linda, California, on 22 October 2024

The event was set for 5pm in a committee room in parliament and is co-hosted by Labour MP Luke Akehurst and Conservative MP Aphra Brandreth.

Akehurst told MEE: "It is for the Iranian people to decide what type of government they want, but clearly MPs are going to be interested in hearing what different opposition voices have got to say about the future of such an important country." MEE also contacted Brandreth for comment.

Referred to among his supporters as a "king in exile", Reza Pahlavi, 64, is the eldest son of Mohammad Reza Pahlavi, the late shah of Iran, who was toppled during the 1977-1979 popular uprising that led to the establishment of the Islamic Republic as we now know it. 

Ali Milani, chair of the Labor Muslim Network, told MEE that the planned event in the UK parliament is a "slap in the face of every Iranian fighting for freedom and justice".

Milani said that Pahlavi "has spent an entire career in exile refusing to condemn his father's oppressive regime."

He added: "Countless Iranians were disappeared, tortured and murdered at the hands of his father's secret police, which he has never properly acknowledged. "Leadership for the people of Iran must come from Iranians themselves on the ground. They deserve real freedom and prosperity."

As a staunch defender of a US-backed monarchy that he hopes to bring back to Iran, Pahlavi has made several visits to Israel, taken photographs with Prime Minister Benjamin Netanyahu and cast himself as the only viable leader of a modern Iran if the Islamic Republic collapses.

On June 16, during the recent hostilities between Israel and Iran, Pahlavi said that "the root cause of the problem has been the regime and its nature, and the only solution, ultimately, that will benefit both the Iranian people as well as the free world is for this regime to no longer be there".

Responding to Pahlavi's comments, Pakistani Defense Minister Khawaja Asif made headlines by calling the shah's son a "bloody parasitical imperial whore".

The last Shah of Iran

"If Iranian people are energized and motivated according to you," Asif said in a post on social media platform X, "show some balls and go back and lead them and remove the regime."

'Important message from Reza Pahlavi'

Labor MP Akehurst, who was first elected last July, described a June 14 video address by Pahlavi calling for regime change as an "important message from Reza Pahlavi about backing the Iranian people".

In 2021, Akehurst was asked if he regarded the UN as antisemitic because the Security Council, of which Britain is a member, ruled that "Israel’s establishment of settlements in Palestinian territory occupied since 1967, including East Jerusalem, had no legal validity". Akehurst answered: "Yes."

In November 2023, he said that the "major West Bank settlement blocks" should become part of Israel as part of a land exchange with Palestine, adding that he wants the Golan Heights "to remain part of Israel". 

The establishment and expansion of Israeli settlements in the occupied West Bank, East Jerusalem and the Golan Heights, according to a recent UN report, amount to a war crime. Before becoming an MP, Akehurst was also once photographed wearing a T-shirt describing himself as a "Zionist shitlord".

Tyler Durden Tue, 07/01/2025 - 02:00

The Future Of Strategic Arms Control Is Dim Due To The Ukrainian Conflict & The Golden Dome

Zero Hedge -

The Future Of Strategic Arms Control Is Dim Due To The Ukrainian Conflict & The Golden Dome

Authored by Andrew Korybko via Substack,

There’ll likely be a much greater potential for future conflict, including between Great Powers by proxy...

Russian Deputy Foreign Minister Sergey Ryabkov shared some insight into his country’s thinking the future of strategic arms control in an interview with TASS in early June. He began by clarifying that Ukraine’s strategic drone strikes in early June didn’t destroy any planes, it only damaged them, and they’ll all be restored. He then revealed that the Americans were asked “why do you allow yourself to provide the criminals with the relevant data, without which nothing like this could have happened”?

Rybakov didn’t share the answer that they gave his side, but he soon thereafter claimed that “Brussels ‘strategists’ are not giving up their attempts to convince US President Donald Trump to return to the policy pursued by his predecessor. And that policy implied unconditional support for Ukraine and further escalation.” This suggests Russian suspicion that the Trump Administration might be partially influenced by their pressure campaign, and that could account for why it gave Ukraine the data for those attacks.

He was very careful not to accuse Trump himself of any foul play, instead reaffirming that his position towards the Ukrainian Conflict “has become a reason for cautious optimism”, so Russia might have concluded or been convinced by the US that Biden-era officials are to blame for that provocation. In any case, without a normalization of their relations, which requires ending NATO expansion and resolving the aforesaid conflict in a way that resolves its root issues, strategic arms control talks can’t be resumed.

Additionally, Trump’s Golden Dome missile defense initiative (previously known as the Iron Dome just like Israel’s) greatly complicates any such talks even in the unlikely event that they’re resumed, which is due to it militarizing space and turning it into an arena of armed confrontation in Ryabkov’s words. The joint Sino-Russo “Prevention of an Arms Race in Outer Space” (PAROS) draft treaty could help manage these risks, but the US isn’t interested in discussing it, which could make a new space race inevitable.

Ryabkov elaborated that the Trump Administration denies the interrelationship between strategic offensive and strategic defense weapons while also refusing to return to the New START’s fundamental concept of equal and indivisible security. Accordingly, “There are no grounds for a full-scale resumption of the New START Treaty in the current circumstances. And given that the treaty ends its life cycle in about 8 months, talking about the feasibility of such a scenario is increasingly losing its meaning.”

He declined to speculate on what might replace it or what the world would look like without strategic arms control between its top two nuclear powers, but the overall mood of his interview is morose, with him lamenting the future that might soon unfold upon the New START’s expiry next February. As an old-school diplomat who’s invested considerable time in strategic arms negotiations with the US since entering into his position almost 17 years ago, it clearly pains him to see the end of this era.

Looking forward, Russia will ensure its national security interests, but the rapid evolution of military technologies such as first-person view drones, increasingly audacious attacks like Kiev’s recent ones, and Trump’s Golden Dome is transforming this sphere.

That’s not to say that strategic arms control is useless, but just that even the best agreements are no longer as relevant as before for maintaining international stability, which raises the potential for future conflict, including between Great Powers by proxy.

Tyler Durden Mon, 06/30/2025 - 23:25

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