Xi's Purges Reveal His Insecurity

Authored by Brahma Chellaney via Project Sybndicate,

From surveilling and repressing Chinese citizens to firing and prosecuting potential rivals, Chinese President Xi Jinping seems able to rule only through fear. But fear is not a foundation for long-term stability, and the more Xi seeks to consolidate power, the more vulnerable his position becomes.

During his 13 years in power, Xi Jinping has steadily tightened his grip on all levers of authority in China – the Communist Party of China (CPC), the state apparatus, and the military – while expanding surveillance into virtually every aspect of society. Yet his recent purge of nine top-ranking generals, like those before it, shows that he still sees enemies everywhere.

After taking power in 2012, Xi launched a crackdown on corruption within the CPC and the People’s Liberation Army (PLA). The campaign was initially popular, because China’s one-party system is rife with graft and abuse of power. But it soon became clear that enforcement was highly selective – a tool not for building a more transparent or effective system, but for consolidating power in Xi’s hands. In Xi’s China, advancement depends less on competence or integrity than on earning the leader’s personal trust.

But even after more than a decade of promoting only loyalists, Xi continues to dismiss officials regularly, including top military commanders. According to the US Office of the Director of National Intelligence, nearly five million officials at all levels of government have been indicted for corruption under Xi. And this is to say nothing of those who simply disappear without explanation.

True to form, Xi’s regime claims that the military leaders swept up by his latest purge – including General He Weidong, a member of the Politburo, Vice Chair of the Central Military Commission, and the third-highest-ranking figure in China’s military hierarchy – committed “disciplinary violations” and “duty-related crimes.” But a more plausible explanation is that Xi is playing an interminable game of Whac-a-Rival, desperately trying to preserve his grip on power.

Xi’s fears are not entirely misplaced: each new purge deepens mistrust among China’s elite and risks turning former loyalists into enemies. From Mao Zedong to Joseph Stalin, there is ample evidence that one-man rule breeds paranoia. By now, Xi may well have lost the ability to distinguish allies from foes. At 72, Xi remains so insecure in his position that, unlike even Mao, he has refused to designate a successor, fearing that a visible heir could hasten his own downfall.

None of this bodes well for China. By refusing to lay the groundwork for an eventual leadership transition, Xi sharply increases the risk that the end of his rule – however that comes – will usher in political instability. In the meantime, Xi’s emphasis on personal fealty over ideological conformity is weakening institutional cohesion in a system once grounded in collective leadership. Coupled with his arbitrary firings and prosecutions, Chinese governance is now increasingly defined by sycophancy and anxiety, rather than competence and consistency.

China’s military is paying a particularly steep price for Xi’s insecurity. In recent years, the PLA has undergone sweeping structural reforms aimed at transforming it into a modern fighting force capable of “winning informationized wars.”

But Xi’s purges risk undermining this effort by disrupting military planning and leadership. For example, his abrupt removal in 2023 of the leaders of the PLA’s Rocket Force, which oversees China’s arsenal of nuclear and conventional missiles, may have jeopardized China’s strategic deterrent.

Replacing experienced commanders with untested loyalists might ensure Xi’s political survival – and Chinese leaders have often used the military to safeguard their own power – but it does nothing for national security.

And when generals are preoccupied primarily with political survival, both morale and operational readiness suffer. Can the PLA fight and win a war against a major adversary like the United States or India while operating under the political constraints Xi has imposed on it?

So far, Xi has advanced his expansionist agenda through stealth and coercion rather than open warfare. But a paranoid leader surrounded by sycophants unwilling or unable to challenge him is always at risk of strategic miscalculation. Recall that Stalin decimated the Red Army’s leadership on the eve of the Nazi invasion – with disastrous results. In Xi’s case, it might be China that does the invading, if he orders an amphibious assault on Taiwan.

For all the pomp surrounding China’s rise, the country is beset by structural problems, including a slowing economy, rising youth unemployment, and an aging and declining population. Popular discontent may well be growing, but it is masked by repression, just as any potential challenge to Xi’s leadership is preempted by purges and prosecutions. Ultimately, Xi seems able to rule only through fear.

But fear is not a foundation for long-term stability. A leader consumed by fear of disloyalty may command obedience but not genuine fidelity. Obedience is not merely a poor substitute for strength; it can become a source of fragility, as it leaves little room for creativity, competency, or collaboration. The great irony of Xi’s approach is that the more he seeks to consolidate power in his own hands, the more vulnerable his rule becomes.

Mao’s purges culminated in chaos and national trauma. Xi’s methods are more sophisticated, but the underlying logic is the same – as could be the results.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of ZeroHedge.

Tyler Durden Wed, 10/22/2025 - 23:25

Anthropic's Anti-Nuke AI Filter Sparks Debate Over Real Risks

Now, for some news on the lighter side...like 'how to prevent machines from enabling nuclear armageddon"..

In August, Anthropic announced that its chatbot Claude would not — and could not — help anyone build a nuclear weapon. The company said it worked with the Department of Energy (DOE) and the National Nuclear Security Administration (NNSA) to ensure Claude couldn’t leak nuclear secrets, according to a new writeup from Wired.

Anthropic deployed Claude “in a Top Secret environment so that the NNSA could systematically test whether AI models could create or exacerbate nuclear risks,” says Marina Favaro, Anthropic’s head of National Security Policy & Partnerships. Using Amazon’s Top Secret cloud, the agencies “red-teamed” Claude and developed “a sophisticated filter for AI conversations.”

This “nuclear classifier” flags when chats drift toward dangerous territory using an NNSA list of “risk indicators, specific topics, and technical details.” Favaro says it “catches concerning conversations without flagging legitimate discussions about nuclear energy or medical isotopes.”

Wired writes that NNSA official Wendin Smith says AI “has profoundly shifted the national security space” and that the agency’s expertise “places us in a unique position to aid in the deployment of tools that guard against potential risk."

But experts disagree on whether the risk even exists. “I don’t dismiss these concerns, I think they are worth taking seriously,” says Oliver Stephenson of the Federation of American Scientists. “I don’t think the models in their current iteration are incredibly worrying … but we don’t know where they’ll be in five years.”

He warns that secrecy makes it hard to judge the system’s impact. “When Anthropic puts out stuff like this, I’d like to see them talking in a little more detail about the risk model they’re really worried about,” he says.

Others are more skeptical. “If the NNSA probed a model which was not trained on sensitive nuclear material, then their results are not an indication that their probing prompts were comprehensive,” says Heidy Khlaaf, chief AI scientist at the AI Now Institute. She calls the project “quite insufficient” and says it “relies on an unsubstantiated assumption that Anthropic’s models will produce emergent nuclear capabilities … not aligned with the available science.”

Anthropic disagrees. “A lot of our safety work is focused on proactively building safety systems that can identify future risks and mitigate against them,” a spokesperson says. “This classifier is an example of that.”

Khlaaf also questions giving private firms access to government data. “Do we want these private corporations that are largely unregulated to have access to that incredibly sensitive national security data?” she asks.

Anthropic says its goal isn’t to enable nuclear work but to prevent it. “In our ideal world, this becomes a voluntary industry standard,” Favaro says. “A shared safety practice that everyone adopts.”

Tyler Durden Wed, 10/22/2025 - 23:00

ICE Tracker Planned By Democrats Could Endanger Agents, Bondi Says

Authored by Tom Ozimek via The Epoch Times,

Attorney General Pam Bondi said on Oct. 22 that a plan by Democrats to launch an online platform tracking Immigration and Customs Enforcement (ICE) operations in Los Angeles could endanger federal agents and expose them to harassment or violence.

Rep. Robert Garcia (D-Calif) said during an Oct. 21 press conference alongside Los Angeles Mayor Karen Bass that Democrats on the House Oversight Committee will launch what Garcia called a “master ICE tracker.” The online database would allow the public to submit and review reports of ICE activity across the Los Angeles area, including videos and other data.

“Over the course of the next couple of weeks, the Oversight Committee will be launching on their website a master ICE tracker where we’re going to be essentially tracking every single instance that we can verify that the community will send,” Garcia said.

“You’ll be able to send us information on. It’ll be all available in one central place, and you’ll be able to look up that information as it relates to Los Angeles as well.”

Garcia described the initiative as part of a wide congressional investigation into alleged wrongful detentions by ICE under the Trump administration. Garcia also said he plans to hold a congressional field hearing in Los Angeles, where residents can testify about immigration enforcement concerns, calling it part of a broader inquiry into alleged civil rights violations by federal agents.

He has joined forces with Sen. Richard Blumenthal (D-Conn.), who is leading a parallel investigation through the Senate Permanent Subcommittee on Investigations. The two lawmakers recently sent a letter to Homeland Security Secretary Kristi Noem demanding records on what they described as the unlawful detention of U.S. citizens and immigrants by ICE agents.

The ICE tracker project drew swift condemnation from Bondi, who said such tools could compromise law enforcement operations and fuel organized hostility toward immigration officers.

“Shutdown Democrats are already refusing to pay our law enforcement agents. Now, @RepRobertGarcia and @SenBlumenthal are trying to put ICE agents at risk just for doing their jobs,” Bondi said in an Oct. 22 post on X.

“@TheJusticeDept has ZERO tolerance for violence against law enforcement—we will prosecute any person who physically assaults our agents.”

Border czar Tom Homan said recent heated rhetoric, along with efforts to expose the movements and identities of ICE agents, have already correlated with a surge in organized attacks on law enforcement personnel and facilities.

Protestors demonstrate against ICE operations while blocking the Sixth Street Bridge between Boyle Heights and the downtown area of Los Angeles, on July 1, 2025. Mario Tama/Getty Images

“Death threats, attacks up over 1,000 percent,” Homan said in a recent interview on The Alex Marlow Show, attributing the escalation to “hateful rhetoric” by some media figures and politicians who compare ICE to Nazis or the Gestapo.

He said the Department of Justice (DOJ) was already investigating the financing of organized groups that attack ICE agents and facilities in a coordinated way

“They will find out who is funding this, and they will be held accountable,” Homan said, adding that the riots are “absolutely organized.”

The DOJ under the Trump administration previously pressured Apple and Meta to remove apps and social media pages that tracked ICE operations. Apple deleted an app called ICEBlock earlier this month following a DOJ request, citing potential risks to agents’ safety.

Rep. Robert Garcia (D-Calif.) at the Capitol in Washington on April 1, 2025. Travis Gillmore/The Epoch Times

Garcia has defended his proposal, saying that the tracker would expose civil rights violations by immigration officers.

Citing a recent ProPublica report, he said at least 170 U.S. citizens had been wrongly detained by ICE agents.

“Why? Because they look like me, because they are of Latino origin, or because they are suspected to not be a U.S. citizen, or because they are suspected of crimes that they have not committed,” Garcia said on Oct. 21.

After Bondi’s social media warning, Garcia responded in an online post: “Hey @AGPamBondi, ICE detaining over 170 U.S. citizens is not them ‘just doing their jobs.’”

Department of Homeland Security Assistant Secretary for Public Affairs Tricia McLaughlin rejected the criticism. She told The Epoch Times in an emailed statement that the department “enforces federal immigration law without fear, favor, or prejudice.”

She said claims that ICE targets U.S. citizens or engages in racial profiling are “disgusting, reckless, and categorically false.”

McLaughlin added that assaults on ICE officers have risen by more than 1,000 percent amid “smears” from “sanctuary politicians,” and warned that anyone who obstructs or assaults law enforcement will face consequences.

She said that since June 6, ICE and U.S. Customs and Border Protection have arrested more than 7,100 illegal immigrants in the Los Angeles area.

Tyler Durden Wed, 10/22/2025 - 22:35

America's Sixth Default Is Coming - What It Means For Gold And Your Wealth

Authored by Nick Giambruno via InternationalMan.com,

Every time the US government has faced an existential financial crisis in its history, it has chosen to change the rules rather than honor its promises in full... usually by replacing gold or silver with paper.

From the War of 1812 when interest payments were missed, to the Lincoln’s Greenbacks, to Roosevelt voiding gold clauses in 1933, the end of silver redemption in 1968, and Nixon closing the gold window in 1971, Washington has defaulted five times before—often by shifting the terms of payment rather than admitting outright failure.

There’s no doubt these episodes were defaults. To claim otherwise would be like trying to unilaterally change the terms of your dollar-denominated mortgage or credit card bill so that you could pay your liabilities with Argentine pesos or Zimbabwe dollars—and then pretending that somehow it wasn’t a default.

The US government is essentially telling its creditors the same thing Darth Vader once said: “I am altering the deal. Pray I don’t alter it any further.”

Just like in Star Wars, the message is clear—Washington will change the rules whenever it needs to. Creditors may get paid, but not in the way they were promised, and certainly not in the way they expected.

Today, the US government is once again in an existential financial bind. The national debt is unmanageable, federal spending is locked on an upward path, and interest on that debt has already surged past $1 trillion a year. At this pace, interest could soon overtake Social Security as the single largest item in the federal budget.

The largest expenditures are entitlements like Social Security and Medicare. No politician will cut them—in fact, they’ll keep growing. Tens of millions of Baby Boomers, nearly a quarter of the population, are moving into retirement. Cutting benefits is political suicide.

Defense spending, already massive, is also off-limits. With the most precarious geopolitical environment since World War 2, military spending isn’t going down—it’s going up.

Welfare programs are similarly untouchable.

The only way to meaningfully reduce spending would be to slash entitlements, dismantle the welfare state, shut down hundreds of foreign military bases, and repay a large portion of the national debt to lower the interest cost. That would require a leader willing to restore a limited Constitutional Republic.

However, that’s a completely unrealistic fantasy. It would be foolish to bet on that happening.

Here’s the bottom line: Washington cannot even slow the spending growth rate, let alone cut it.

Expenditures have nowhere to go but up—way up.

Tax revenue won’t save the day either.

Even if tax rates went to 100%, it would not be enough to stop the debt from growing.

According to Forbes, there are around 806 billionaires in the US with a combined net worth of about $5.8 trillion.

Even if Washington confiscated 100% of billionaire wealth, it would barely fund a single year of spending—and it wouldn’t do a thing to stop the unstoppable trajectory of debt and deficits.

That means interest expense will keep exploding. It has already surpassed the defense budget and is on track to exceed Social Security soon. At that point, interest could consume most federal tax revenue.

The old accounting tricks and fiat games won’t hide the reality for much longer.

In short, the skyrocketing interest bill is now an urgent threat to the US government’s solvency. I have no doubt Washington will soon find itself unable to meet its obligations once again.

So the question now is: what will the sixth default look like?

I don’t think the sixth default will be a dramatic, one-day event like in 1933 or 1971. It will be a slow-motion process: steady debasement of the dollar to cover a debt burden that cannot be serviced honestly. And just like in the past, Washington and its lackeys in the media will never admit it’s a default.

Unlike the past, the US no longer has obligations tied to gold or silver. Everything is denominated in fiat currency that the Federal Reserve can create without limit.

The mechanics are different, but the outcome will be the same: creditors will get stiffed with money worth far less than what was promised.

After the 1971 default, which cut the dollar’s last tie to gold, the unspoken promise was that Washington would be a responsible steward of its fiat currency.

At the core of that promise was the illusion that the Federal Reserve would act independently of political pressures. The idea was simple: without at least the appearance of independence, investors would see the Fed for what it is—a funding arm for spendthrift politicians—and confidence in the dollar would collapse.

That illusion is now shattering.

The government must issue ever-growing amounts of debt while keeping rates low to contain exploding interest costs.

That’s where the Federal Reserve comes in.

Backed into a corner, Washington will force the Fed to slash rates, buy Treasuries, and launch wave after wave of monetary easing. These measures will debase the dollar while destroying the illusion of Fed independence.

That’s why I believe the collapse of the Fed’s credibility as an independent institution will define the sixth default.

One of the clearest signs is Trump’s push to consolidate power over the Fed.

Let’s be clear: central banks were never “independent.” They exist to siphon wealth from the public through inflation and funnel it to the politically connected. The Fed’s independence was always a mirage—and now it’s disappearing fast.

Trump is simply doing what any leader in his position would do. No one believes China’s central bank is independent of Xi. If any nation faced a similar crisis, its central bank would fall in line with government demands.

I expect Trump will get his way with the Fed. The Fed will bend to his demands, debasing the dollar to keep the debt burden from spiraling out of control. He will either force Powell to get in line or replace him outright, stacking the Fed with loyalists. The result will be money printing on a scale we’ve never seen before.

Trump’s efforts are already starting to work. At Jackson Hole, Powell admitted that “the shifting balance of risks may warrant adjusting our policy stance,” signaling that rate cuts could come soon.

And that’s exactly what happened. On September 17, the Fed cut rates by 25bps and indicated more to come.

Further, Stephen Miran, Trump’s most recent successful nominee to the Federal Reserve Board, has been pushing the idea of what he calls the Fed’s “third mandate.”

Traditionally, the Fed has two mandates: price stability and maximum employment. Miran’s proposed third mandate would be for the Fed to “moderate long-term interest rates.”

What that really means is that the Fed would openly finance the federal government by creating new dollars to buy long-term debt, keeping yields artificially low. In other words, the so-called third mandate is an explicit admission that the Fed is no longer independent. It would become a political tool used to fund government spending.

Without this support, massive federal spending would flood the market with Treasuries, pushing interest rates much higher. But with the Fed stepping in, Washington can keep borrowing while holding rates down—at least for a while. The catch is that this comes at the cost of debasing the dollar. Eventually, that debasement will force investors to demand higher yields anyway, which only worsens the problem.

I believe it’s only a matter of time before the Fed fully capitulates, shattering the illusion of independence once and for all.

Mike Wilson, CIO at Morgan Stanley, recently made it explicit:

“The Fed does have an obligation to help the government fund itself.”

“I’d be nervous if the Fed was totally independent. The Fed needs to help us get out of this deficit problem.”

This is the essence of the sixth default.

It won’t come through missed payments or rewritten contracts. It will come through the collapse of the myth that the Fed is independent. Once monetary policy is fully political, the fallout will be enormous—for the dollar, for Treasuries, and for gold.

And it’s not happening in isolation. As Washington sinks deeper into debt, the rest of the world sees exactly what’s coming. Central banks are moving to protect themselves. I believe they know debasement is inevitable, and they don’t intend to be left holding the bag. Their response has been clear: abandon paper promises and move back toward gold.

In short, the sixth default won’t be a headline—it will be a bleed-out.

When the dollar is quietly debased and the Fed’s “independence” finally cracks, it will be too late to reposition.

If you’ve read this far, you already sense the window is closing. Do not wait for confirmation from the evening news.

The question now is not if but how this crisis will unfold, and whether you’ll be on the losing end of it.

That’s why I’ve prepared a special report, The Most Dangerous Economic Crisis in 100 Years… and the Top 3 Strategies You Need Right Now.

Inside, you’ll learn what risks are ahead, what they mean for your wealth and personal freedom, and the practical steps you can take today to protect yourself. Click here to get your free PDF copy.

Tyler Durden Wed, 10/22/2025 - 20:55

Brooklyn Man Accused Of Dumping Boyfriend’s Rotting Body In Trash

A Brooklyn man allegedly tossed his boyfriend’s decomposing body out with the garbage — but the stench was so overpowering that it quickly gave him away, according to the NY Post.

38 year old Christopher Moss was arrested Sunday for concealing a human corpse after police found the remains of his boyfriend, 35 year- old Darrell Montgomery, in a trash bag outside their East 21st Street apartment in Flatbush. Officers had been called to the building after tenants complained of a “putrid stink” seeping through the halls, law enforcement sources said.

The NY Post writes that the body was so badly decomposed that investigators initially believed it had been dismembered. The medical examiner’s office had to remove the remains from the bag for examination, sources said.

Photos: NY Post

No immediate signs of foul play were found, and Moss was initially charged with concealing a corpse and resisting arrest. When officers later tracked him down near Nostrand Avenue and Beverly Road, Moss allegedly headbutted one cop and grabbed for another’s gun, sources said. He now faces additional charges of assault on a police officer, attempted robbery, criminal possession of a weapon, resisting arrest, and obstructing governmental administration.

Neighbors said Moss’s behavior had grown increasingly erratic in the weeks before the grisly discovery.

“[He] has been out front talking to himself,” said fifth-floor resident Sayuri Abundis, 23. “He’s just been saying, ‘Where are you? Open the door!’ over and over again.”

“They were always together but the last two weeks it was only him,” she added. “Before he would get locked out he’d call up to Darrell and ask him to buzz him in and they would be arguing.”

“[Christopher] would scream at him, ‘Wait till I get up there!’” Abundis said. “They were always arguing. It’s always been like that. But the last two weeks he’s been alone and he’s just been talking to himself out loud.”

Neighbor Carl Smith, 62, said he had often seen the couple together until recently. “[Moss] walked around mumbling a lot of s—t before that happened, before they found the body,” Smith said. “He was talking to himself, walking back and forth right out here in front of the building and just walking around the block… I don’t know why he did what he did.”

Tyler Durden Wed, 10/22/2025 - 20:30

Peanut Allergies In Children Have Dropped Significantly: Study

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

Allergies to peanuts and other foods dropped significantly after the introduction of new guidelines, according to a study published on Oct. 20.

The authors estimated that for about every 200 infants exposed to food allergens early in life, one child could be prevented from developing a food allergy. AlexandrMusuc/Shutterstock

Just 0.45 percent of young children from 2017 through 2019 had an allergy to peanuts, according to researchers with the Children’s Hospital of Philadelphia’s allergy and immunology division and other institutions. That was down from 0.79 percent from 2012 through 2014.

“Our results support ongoing efforts to encourage early food introduction to prevent food allergy,” Dr. Stanislaw J. Gabryszewski, an attending physician at Children’s Hospital of Philadelphia and one of the researchers, said in a video presentation that was released alongside the study by the journal Pediatrics.

Food allergies, which develop when a person comes into contact with a protein in food that their immune system identifies as harmful, are the most common cause of severe allergic shock in children. The shock can in rare instances lead to death.

The researchers analyzed diagnosis codes and other information in electronic health records from 48 facilities, including 17 privately owned pediatric offices. They looked at the incidence of allergies among children from Sept. 1, 2012, through Aug. 31, 2014, before new guidelines were introduced; from Sept. 1, 2015 through Aug. 31, 2017, after the introduction; and from Sept. 1, 2017, to Aug. 31, 2019, after the guidelines were updated.

For years, doctors and groups—including the American Academy of Pediatrics, which runs Pediatrics—recommended not giving children peanuts or peanut products early in life. The academy said in 2008 there was no evidence delaying peanuts and other foods prevented allergies.

It was not until after a trial called Learning Early About Peanut Allergy that found early introduction of peanuts reduced the risk of peanut allergy that organizations said, in 2015, that infants at high risk of allergies should consume products such as peanuts and eggs early in life.

In 2017, federal officials broadened that guidance to more children. In 2021, experts said it applied to all kids.

Gabryszewski and co-authors said they looked at records from young children because the peak time of incidence of peanut allergies is 15 months of age, while the peak for any food allergy is 13 months. They also said that because the guidelines and addendums came in 2015 and 2017, it was not possible yet to assess whether they impacted allergies for older children.

The researchers estimated that exposing about 200 infants to a food allergen earlier in life prevents one child from developing an allergy.

They also said they found that within the population they studied, peanuts are now the second most common allergen, down from first. Eggs moved to first from second. Milk remains third.

Limitations of the study include the reliance on diagnosis codes. Funding came from the U.S. government and the Food Allergy Fund, among other institutions. The researchers reported no conflicts of interest.

In a commentary also published by Pediatrics, Dr. Ruchi Gupta of the Center for Food Allergy & Asthma Research at Northwestern University and two co-authors said that the paper provided evidence that efforts to revamp preventing peanut allergies may be starting to pay off.

They said, the data may not be nationally representative because it came from a small subset of U.S. facilities.

“Future analyses should seek to validate these trends in larger, more diverse samples using expanded diagnostic criteria, such as food allergy testing and oral food challenges,” they said.

Tyler Durden Wed, 10/22/2025 - 20:05

Note: Mortgage rates are from MortgageNewsDaily.com and are for top tier scenarios.

Thursday:
• At 8:30 AM ET, The initial weekly unemployment claims report will be released. (WILL NOT BE RELEASED)

• At 8:30 AM, Chicago Fed National Activity Index for September. This is a composite index of other data.

• At 10:00 AM, Existing Home Sales for September from the National Association of Realtors (NAR). The consensus is for the NAR to report sales of 4.06 million SAAR. Last year, the NAR reported sales in September 2024 at 3.90 million SAAR. 
Housing economist Tom Lawler expects the NAR to report sales of 4.00 million SAAR for September.

• At 11:00 AM, Kansas City Fed Survey of Manufacturing Activity for October.<

Note: This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment including multi-family residential.

From the AIA: ABI September 2025: Weakness persists at architecture firms

The AIA/Deltek Architecture Billings Index (ABI) score of 43.3 for the month is the softest reading since April and represents an increase in the share of firms reporting a decrease from August. In addition, inquiries into new projects remained flat for the second consecutive month, following growth over the summer, and the value of newly signed design contracts decreased for the 19th consecutive month. All of these indicators mean that the soft conditions that many architecture firms have been experiencing since late 2022 are likely to persist for the foreseeable future.

Recent revisions to work in the pipeline continue to erode as well. In the aftermath of the pandemic-induced downturn in 2020, architecture firm backlogs reached the highest levels we have seen since we started collecting that data regularly 15 years ago. Backlogs have gradually declined since the third quarter of 2022 and currently stand at an average of 6.1 months, down from 6.5 months at the beginning of the year. Backlogs are averaging just five months at firms with multifamily residential and commercial/industrial specializations, but stand at an average of eight months at firms with an institutional specialization. But despite the recent decrease in backlogs at firms, they still stand at levels nearly comparable to those before the pandemic.

Billings declined at firms in all regions of the country in September, except for firms located in the Midwest, where billings were essentially flat. Billings were softest at firms located in the West for the fourth consecutive month, where they have weakened the most over the last year. By firm specialization, business conditions were weakest at firms with an institutional specialization this month and continued to soften at firms with a commercial/industrial specialization, which reported conditions approaching growth over the summer.
...
The ABI serves as a leading economic indicator that leads nonresidential construction activity by approximately 9-12 months.
emphasis added

• Northeast (43.8); Midwest (49.8); South (47.9); West (40.6)

• Sector index breakdown: commercial/industrial (46.6); institutional (44.3); multifamily residential (47.2)

Click on graph for larger image.

This graph shows the Architecture Billings Index since 1996. The index was at 43.3 in September, down from 47.2 in August.  Anything below 50 indicates a decrease in demand for architects' services.
This index has indicated contraction for 34 of the last 36 months.

Note: This includes commercial and industrial facilities like hotels and office buildings, multi-family residential, as well as schools, hospitals and other institutions.

This index usually leads CRE investment by 9 to 12 months, so this index suggests a slowdown in CRE investment throughout 2025 and into 2026.
Multi-family billings have been below 50 for 38 consecutive months.  This suggests we will some further weakness in multi-family starts.



 

 

At The Money: How Big Can Active ETFS Get?  (Dave Nadig , October 22, 2025)

 

Full transcript below.

~~~

About this week’s guest:

Dave Nadig is President and Director of Research at ETF.com, and he shares with us how investors should navigate all of these new products. Dave helped design and market some of the first exchange-traded funds. He is the author of  “A Comprehensive Guide to Exchange-Traded Funds” for the CFA Institute.

For more info, see:

LinkedIn

Twitter

Substack

~~~

 

Find all of the previous At the Money episodes here, and in the MiB feed on Apple Podcasts, YouTube, Spotify, and Bloomberg. And find the entire musical playlist of all the songs I have used on At the Money on Spotify

 

 

 

TRANSCRIPT:

Intro: Pump it up, When you don’t really need it. Pump it up, Until you can feel it

When we think about ETFs, we tend to think about large, cheap passive indexes. After all, those are the biggest ETFs from places like BlackRock, Vanguard, and State Street.

But when we look at all the new ETF launches, they tend to not be passive indexes, not be cheap, and not come necessarily from those three big companies. They’re active and they are involved in all sorts of different areas, that are off the beaten path.

To figure out what this means for you and your portfolio, let’s bring to figure out what this means for your portfolio. Let’s bring in Dave Nadig. He is the President and Director of Research at ETF.com and an ETF structural expert, really since the inception of the entire sector.

Dave, we’ve seen an explosion in the growth of not just new ETFs, but primarily active ETFs in all sorts of niches. What are you seeing in this space?

Dave Nadig: Well, you know, for a long time ETF meant cheap index, right? I mean you go back to SPY and then the first iShares products, and then even when we started getting into the big expansion of the two thousands, it was all just index, index, index. Then we got some smart beta where we tried to be a little bit more clever and it wasn’t really until the late 2010 cycle where Kathy Wood at Ark Invest, launched ARKK and really put herself out there as the portfolio manager in a way that I don’t really frankly remember seeing since the dot-com boom, right?

It’s been a long time since we’d had superstar managers on CNBC talking about, you know, pounding the table for a single stock. And Kathy did that and obviously had enormous amounts of success, has had some performance hiccups along the way, but that sort of went a little bit dormant during some of the pandemic when people really discovered trading.

What we’ve seen now is this resurgence – particularly to folks I’d mentioned Dan Ives Wedbush, people know him;  and Tom Lee from Fundstrat with his Granny Shots ETF, both of which have pulled in huge money,

Barry Ritholtz: Billions of dollars?

Dave Nadig: Billions and billions of dollars. And for the reasons you would expect because you’ve got smart people talking on podcasts and TV and on their own air and their own newsletters telling you why they own what’s in the fund. I know that sounds so dumb, but that’s why people love superstar managers because they can look and they can see Tom Lee on screen and he can sit there and say, yeah, this is why we like Bitcoin here. Here are the three firms we have in our fund because of it. We might be wrong, we might be right.

There’s a level of authenticity to that that I think is really appreciated. I also think the fact that they’ve doubled the S&P this year doesn’t hurt.

Barry Ritholtz: So to put some flesh on the bones here, Kathy Woods during 2020 was a huge Tesla and Bitcoin bull. The fund arc put up giant numbers, triple digit gains. Dan Ives has been an apple and an Nvidia bull, pretty much for as long as I can remember. He’s been a whole lot more right than wrong, and Tom Lee has been very constructive exactly when it paid to be constructive and stay bullish.

All three of those managers have really big followings. What does the resurgence of brand name active managers mean for the ETF space?

Dave Nadig: Well, first of all, I think it’s great for the ETF space because I think the dichotomy that we’d had where people thought of active as being a thing that happens somewhere else and ETFs were only passive, wasn’t helpful. I think we are moving towards a world where all of your exposures, for the most part are gonna be in an ETF wrapper. So by all means we should get active managers as part of this mix. And now we’ve got lots of them. You know, we’ve got a bunch of active funds from PIMCO was early, we’ve got lots in the bond space. You know, everything from Cumberland advisors to State Street with the double line and, and Jeff Gundlach. Lots of active managers in lots of different areas. I think that’s very healthy for the industry.

For the individual investor, it doesn’t necessarily make your life easier because as much as I happen to, like all the people we have talked about, Dan, Dom Lee and Kathy – personally as people I would have dinner with, the math is not on their side as an industry, right?

Barry Ritholtz: Why is that?

Dave Nadig: As an industry, we have to point out active managers categorically underperform over time. Doesn’t mean they all do, but it means that you’ve gotta be the special person who managed to pick the right active manager at the right time. That is a tough business and even the active managers running these funds will tell you trying to time when to get in and out of their own funds is gonna be tough. So that’s the problem is

that active management is tough to evaluate.

Barry Ritholtz: Yeah, and to put some numbers there, half of all active managers underperform in any given year. You go out to 10, five years, it’s 80% underperform; at 10 years it’s 90%. So it’s a tough road to hoe

But let’s talk about what makes active ETFs somewhat different than active mutual funds. And that data I referenced where all mutual fund data, mutual funds have to do a regular filing each quarter about their largest holdings, there has been a lot of back and forth about

how transparent active ETFs have to be versus other active funds. What’s the state-of-the-art today? What is the regulatory environment?

Dave Nadig: So there are solutions if you’re an active manager and you don’t want to tell everybody what you’re doing every day. There are solutions and there’s plenty of funds that have been launched on them. Fidelity has their versions. T Rowe Price has been one of the more successful funds out there. They have a pretty popular blue chip strategy called T Chip, which isn’t semi-transparent, meaning they’re not telling you the whole portfolio every day. They’re telling you once in a while and they’re giving the street just enough information to make a good market, not knowing all the information. So it’s sort of a, a clue, a bit of a hack to be semi-transparent.

This solves a problem for some asset managers. It doesn’t solve a single problem for an individual investor, right? So like I’ve never heard an individual investor say, golly, I wish I knew less about what I owned. Right?

Barry Ritholtz: Let’s talk about why it’s a problem for fund managers. Fund managers don’t buy a stock on a Monday and then they’re done. If they say, “Hey, we like XYZ, they’re buying that stock trying to take advantage of drawdowns buying it over days, weeks, even months. So there is a price advantage to the investor if the fund manager can be a little less transparent. Fair, fair description.

Dave Nadig: That’s the, that’s certainly the argument that the active management industry who does not wanna disclose what they’re doing would give you.

So you have articulated that side of the argument. Well, my counter to that would be if your strategy requires you buying securities where your action is going to move the market absent disclosure or absent, you know, obfuscation, then that strategy probably doesn’t belong in an ETF because you’ve got bigger problems, right? That means that you are in something small or a liquid or micro cap, at which point already, my question would be how do you plan on running a $10 billion ETF with that strategy?

Because you can’t really close an ETF. So if you are a special situations manager, if you are a really sort of obscure nichey finding those stocks, nobody else knows about manager, you do not belong in the ETF industry. I’ll just flat out say it as simple as that. The mutual fund structure or even better, a liquidity cap structure like a CEF or an interval fund is actually a better structure for those kinds of investments. Everybody else, CEF, honestly there’s so much liquidity. I think it’s tough to argue that somebody like Tom Lee is being particularly hurt by being transparent. He’s double, he’s at 30% for the year. The S&P500 is up 15%

Barry Ritholtz: CEF stands for closed end funds as opposed to ETFs.

Dave Nadig: Yes.

Barry Ritholtz: So, let’s talk about some other varieties of active funds that are a little bit out there. We see funds with options, futures, derivatives, inverse leveraged, and along with some wild income promises in an ETF wrapper. Tell us about some of those products.

Dave Nadig: Yeah, the, the interesting thing about those is most of them are very mechanical, right? So if you’re running a leveraged strategy, you’re not making any decisions, right? I’ve got Apple, I need 2X Apple, I’m gonna go to my swap counterparty overnight and they’re just gonna settle up my two x swap. That’s the whole management process.

But technically that’s gonna be an actively managed fund because you can’t just automate that whole process. Somebody still has to make a call about whether or not you’re teeing up the swap at this rate or that rate.

Same thing with almost anything in the option space, because the options are constantly changing and constantly repricing and constantly rolling off. It’s very difficult to create solid index product around actively or high frequency moving positions in the options market. So for convenience as much as anything, almost all of those type products you mentioned are listed as active products.

I refer to them as AiNOs — Active in Name Only, because they’re really, there’s no Tom Lee saying I really want Apple options today. There’s some guy generally Jay, pastor Elliot at title, sitting on a desk somewhere pushing a button to say yes, we want those options because the model says we need to roll. And that becomes active management.

And consequently, I mean it is active management, it has higher costs associated with it for a reason. Some of that is the profit that the issuer wants, but some of it is legitimately you need a trading desk with a bunch of people doing work.

Barry Ritholtz: So let’s talk about another niche. Illiquid alts, things like private equity, private credit, private debt, real estate. Are we gonna see those asset classes that really don’t trade on their own — because they’re not public – are we gonna see those in an ETF wrapper?

Dave Nadig: We’re starting to, we’re starting to the, the canary in the coal mine here was some products from State Street, the big ones, priv, PRIV for private, which has a bunch of Apollo private credit in it. Generally pretty short maturity stuff, two, three year kind of things and, and fairly straightforward, understandable private credit. Intel needs to bill a fab in Ireland. They go get a loan, Apollo gives ’em the loan, you get a slice of it.

Nothing super complicated, nothing super interesting either. I mean, it’s not, you’re not getting 20% yields out of or anything like that. You’re getting some marginal increase in the yield you would get if you were simply investing in say, junk or short term co corporates.

So those products are starting to come to market. The concerns I have about them is they’re just gonna be untested. We’re not gonna really know how they’re going to perform when the markets go hinky, right?

And, and also what does that even mean? Like if we had a corporate bond blowout and we saw a bunch of triple C stuff start defaulting, I have no idea what the impact on Apollo private credit issued in Ireland to Intel is going to be when that happens.

I also have no idea how they’re gonna respond if half the fund decides they want out on that Tuesday and now you’ve got a bunch of illiquid stuff, which can be up to 35% of the portfolio that literally the only buyer is Apollo.

Technically they’ve got answers to all those questions. I’m, and I read all the answers to those questions and I’m sort of not convinced, but it’s one of those things that if you wanna be, if you wanna be out there on the edge, by all means go ahead. But I think the private securities in the daily liquid vehicle has not really been through the ringer yet, so I remain very skeptical.

Barry Ritholtz: So let’s talk a little bit about crypto and, and how that’s going to impact in both investor behavior and portfolio construction. Last year, BlackRock, was it last year or this year, BlackRock introduced IBIT. 2024. So it’s a year ago coming up on a 100 billion dollars in assets, probably the fastest ETF ever to do that. What does this mean? And explain the concept of tokenization.

Dave Nadig: Yeah, so what it means is all of these assets are going to be more and more available to the average Joe like us who’s just trading in their Schwab account or something like that. And because the SEC has said they’re gonna make it very easy very soon, we’re gonna have every major coin that people know about a Solana and Avay whatever. There’ll be a sleeve of that in an ETF that you’ll be able to trade. That’s all great.

Then having those building blocks is awesome, also because it will now allow portfolio managers to create portfolios of those individual securities, which right now you can’t even do, you can’t even buy an index right, of the top 10 coins because there isn’t a target for the top 10 coins to invest in. So that will be fun when we get that, and I suspect you’ll see firms like Bitwise and BlackRock who’ve got some real bonafides in the crypto management space, start bringing pretty institutional active management products there. That’s probably a 2026 side.

Long term though, if we wanna talk 10 years from now, that’s when crypto starts becoming an interesting competitor to the ETF space. I think we will eventually end up in a world where how you move your ownership of Apple around is going to happen. Not by going to the New York Stock Exchange and exchanging ledger entries to move around your Schwab account. Instead, you’re gonna have an actual token. You’ll be able to look at the serial number of it, you’ll be able to put it in a wallet and say, “Oh no, this is worth a hundred shares of Apple.” And that wallet will be able to directly move that security to your wallet without any exchange being part of the process.

Most of it will happen, like crypto happens now on giant exchanges because price discovery. But just like with Bitcoin, I could walk up to you when we could engage in a direct transaction, you’re gonna start seeing that with other securities.

It’s happening more in bonds and real estate now. To do it in equities is gonna require some actual legislation and we don’t make so many laws these days. So that may take some time. Instead, what we’ll do is we’ll wrap a lot of stuff. So you, you’ll probably hear about things like Wrapped Apple and wrapped Cisco and what that’s gonna be is a token that owns the security in some sort of trust pool. That’s a baby step, but that’s what we’ll start hearing first. So be skeptical when people say we’re tokenizing everything ’cause it’s gonna be a decade.

Barry Ritholtz: I had a conversation with Jose Minyana who is the head of wealth strategies at investment Giant BNY (Bank in New York) and he was saying, Hey,

we went from T+3 to T+1, meaning it used to take three days to settle a trade. Today it’s gonna take one day. If we wanna get to T+0, we have to really have confidence in both sides of the transaction. And theoretically, tokenization solves that problem.

Dave Nadig: It does. Although think about how many big transactions in the world that we could be doing easier. We deliberately put breaks on, think about buying a house…

Barry Ritholtz: Wiring money?! 

Dave Nadig: BarryRight? So it, there’s, you know, the, there’s escrow, there’s secondary inspection processes, there’s separate contracts around just the intention to buy and sell. So the bigger and more interesting a transaction gets, the less T zero is actually a good idea, right? I mean, I, the, the thing I always say about T zero is, did you really want T zero during the flash crash in 2010? Like, did you really want no recourse for that? That fat fingered billion dollar pennies on the dollar trade? No. You wanted this ecosystem that protects you from a bad actor spoofing something into the system. So we we’re gonna have a lot to evaluate as a market, what we actually want. The idea of slowing down markets has actually gotten a lot of traction, like speed bump markets, things like that, that, that are actually pushing against this idea of instantaneous settlement for anything. I don’t even want instantaneous settlement for my bank account. I like knowing that I’ve got somebody I can call when something goes wrong.

Barry Ritholtz: So, so you’ve written about volatility and liquidity laundering. Explain what this is and are these really gonna be ETFs?

Dave Nadig: They already are, man. So volatility laundering is simply moving volatility from one bucket to another and charging something for the privilege of doing that. Right Now you can buy something like MSTY, which will give you a hundred percent income return on a MicroStrategy position through the magic of options, right? And it creates a synthetic long position. Then it does a synthetic covered call against the synthetic long position, and then it does a whole lot of return of capital to give you your money back and promises you this endless stream of high distributions, a high percentage distributions that is volatility laundering.

Because what you are actually doing is you are trying to sell other people the volatility of MicroStrategy, which is probably not a fantastic idea because it, the vol of all is high in those cases. So you are being the person picking up the, in this case, quarters in front of the steamroll, not the pennies, but you’re still exposed to MicroStrategy collapsing and going to nothing. That volatility laundering is what all of these options strategies are really doing.

Barry Ritholtz: So really to wrap this up, the bottom line is bring the same level of common sense and scrutiny to new ETFs that you would to any financial product.

Make sure you understand what the product is, how it generates gains, the sort of risks you’re incurring, especially with these exotic products — And the costs. Are these products worth spending 75, 100, 125 basis points more than what you would get for a plain vanilla passive index that seems to be dominating the asset allocation space and the space for ETFs? Be smart, be thoughtful, do your homework.

I’m Barry Ritholtz. You’ve been listening to Bloomberg’s at the Money.

 

~~~

Find our entire music playlist for At the Money on Spotify.

 

The post At The Money: How Big Can Active ETFS Get? appeared first on The Big Picture.

Tesla Earnings Preview: Record Deliveries, Margin Pressure And AI In Focus

Tesla is set to report its third-quarter 2025 earnings results after the market closes today. Wall Street’s focus this quarter is squarely on whether record deliveries and energy deployments will translate into meaningful profit growth amid persistent price pressures and an increasingly competitive EV landscape. Additionally, Robotaxi, AI and robotics will be in focus for investors looking to model the company's future. 

Revenue and EPS Expectations

Analysts expect Tesla to post earnings of $0.52 per share on revenue of $26.27 billion, while the so-called whisper number stands slightly higher at $0.61 per share. According to Bloomberg’s consensus, adjusted EPS is estimated at $0.54, with total revenue of $26.36 billion, gross margins near 17.2%, operating income of $1.65 billion, free cash flow of $1.25 billion, and capital expenditures around $2.84 billion.

If Tesla meets expectations, the company will post its highest quarterly revenue ever—powered primarily by its record vehicle deliveries. Earlier this month, Tesla disclosed it produced 447,450 vehicles and delivered 497,099 during the quarter, the highest in its history. That total included 481,166 deliveries of the Model 3 and Model Y and 15,933 deliveries of other models. Tesla also confirmed deployment of 12.5 GWh of energy storage capacity during the period, another record for the company. These figures have solidified expectations for top-line growth, even as margins continue to compress.

On the production side, Tesla built 447,450 vehicles, down 4.8% from a year earlier and just under the consensus of 450,313. Model 3/Y production totaled 435,826, a 1.8% decline but still ahead of forecasts. Production of other models slipped to 11,624, down 13% from the prior quarter.

Despite those records, Wall Street does not expect record profits. Tesla earned $0.72 per share during the same period last year, and consensus estimates now suggest an earnings downtrend driven by ongoing price cuts and cost competition across the global EV market. The company’s earnings per share have fallen steadily since peaking in 2022, and analysts expect full-year 2025 EPS of around $1.75, down from $2.28 in 2024 and $3.12 in 2023.

Auto Focus: EV Credit Pull Forward and Cheaper Model Y

Tesla’s automotive business still dominates its results, accounting for the majority of revenue despite Elon Musk’s frequent characterization of the company as an AI and robotics leader. For now, the automaker’s financial health remains tightly linked to the number of vehicles it delivers, not autonomous driving or humanoid robots. 

Recall, Tesla unveiled a cheaper Model Y today weeks ago with prices starting at $37,990–$39,990, about 15% below the previous base model, as the company works to reverse slowing sales and lost U.S. tax incentives. Elon Musk has long promised a mass-market EV, though he scrapped a $25,000 car plan last year. Still, he argued in July: "The desire to buy the car is very high. (It's) just (that) people don't have enough money in the bank account to buy it. So the more affordable we can make the car, the better."

While Tesla just had a record quarter, global sales are down about 6% this year, and analysts expect U.S. EV sales to fall sharply after the credit’s removal.

What Analysts Are Expecting

Analyst opinions ahead of tonight's report are mixed but focused on several key themes. Cantor Fitzgerald’s Andres Sheppard said investors will be watching for “several upcoming key material potential near-term catalysts,” including the rollout of Robotaxi programs in Texas and California, ramp-up of lower-cost Model 3/Y variants, FSD adoption in China and Europe, and updates on the Optimus humanoid robot and future Cybercab launch. Cantor maintains a $355 price target, implying roughly 20% downside from current levels.

Goldman Sachs analysts are watching five key areas in tonight’s call: vehicle delivery guidance, automotive profit margins, progress on robotaxis and FSD, growth in the energy business, and fresh details on the Optimus robot. Goldman’s price target is $425 per share with a Neutral rating, expecting Tesla to have delivered about 475,000 vehicles in Q3, slightly below the reported total.

RBC is more bullish, setting a $500 price target based on a “sum-of-the-parts” valuation that assigns increasing weight to Tesla’s AI and robotics divisions. RBC analyst Tom Narayan recently raised his target after management discussions around Optimus production, which the bank believes could represent a $9 trillion total addressable market over time. Morningstar’s Dave Sekera, meanwhile, is looking for updates on Robotaxi timelines and Tesla’s recently launched lower-cost Model 3 and Model Y variants, suggesting that affordability could be critical for reigniting demand.

Wedbush’s Dan Ives continues to frame Tesla’s next chapter as the “AI era,” emphasizing that “the most important chapter in Tesla's growth story is now beginning with the AI era now here.” Ives believes autonomous driving and robotics could add $1 trillion in value to Tesla’s story in the coming years, positioning the company at the intersection of mobility and intelligence.

Despite the futuristic focus, some are also wary about Tesla’s fundamentals. The company recently recalled nearly 13,000 Model 3 and Model Y vehicles due to a defect that could cause sudden battery power loss, forcing in-person repairs rather than software fixes. The recall underscores the tension between Tesla’s cutting-edge ambitions and its ongoing manufacturing and reliability challenges.

Musk's $1 Trillion Pay Plan Would Be Helped By A Bullish Report

Also in focus will be Elon Musk’s proposed new pay package, valued at nearly $1 trillion in Tesla stock, and which has ignited opposition from unions, pension funds, and governance watchdogs ahead of a shareholder vote next month. The plan would boost Musk’s voting control to about 25% and extend his leadership for another decade.

Proxy firms ISS and Glass Lewis have urged investors to vote against it, while supporters on Tesla’s board say it’s needed to retain Musk’s focus and vision. The vote will test shareholder confidence in Musk’s leadership as Tesla’s growth slows and scrutiny over governance intensifies.

In the short term, analysts and investors alike expect a bullish tone from management on the call. Tesla strategically delayed its annual shareholders meeting to early November, likely to coincide with this strong quarter ahead of key votes on Musk’s compensation and board seats. With tax credit expirations pulling demand into Q3, Tesla has good reason to spotlight its record quarter before potentially facing a tougher demand environment in coming periods.

Tyler Durden Wed, 10/22/2025 - 14:40

Today, in the Calculated Risk Real Estate Newsletter: 2nd Look at Local Housing Markets in September

A brief excerpt:

The NAR is scheduled to release September Existing Home sales on Thursday, October 23rd at 10:00 AM. The consensus is for the NAR to report sales of 4.06 million SAAR. Last year, the NAR reported sales in September 2024 at 3.90 million SAAR.

Housing economist Tom Lawler expects the NAR to report sales of 4.00 million SAAR for September.

September sales will be mostly for contracts signed in July and August, and mortgage rates averaged 6.72% in July and 6.59% in August (lower than for closed sales in July).

In September, sales in these markets were up 8.2% YoY. Last month, in August, these same markets were down 2.5% year-over-year Not Seasonally Adjusted (NSA).

Important: There were one more working days in September 2025 (21) as in September 2024 (20). So, the year-over-year change in the headline SA data will be lower than the NSA data suggests (there are other seasonal factors).
...
More local markets to come after the NAR release.

There is much more in the article.

All That Is Gold Does Not Glitter

By Michael Every of Rabobank

With the BoE Governor warning about pre-2008 bubble conditions in private credit; UK public-sector borrowing coming in higher than thought; Canadian CPI hotter; yet gold -6% Tuesday, its biggest sell-off since 2013, with silver -8.7%, and both -2% again this morning; and Bitcoin soaring as gold fell, then dropping in tandem, there is a lot going on. And I don’t mean GOP leaders are eyeing a new stopgap spending measure to end the government shutdown. Rather:

"ECB's Lane flags dollar risk for banks amid tariff turmoil’ as “Eurozone banks may come under pressure if dollar funding were to dry up,” as their dollars accounted for 7 - 28% of liabilities and 10% of assets in Q2, all reliant on borrowing from US banks. Reuters notes central banks are toying with the idea of pooling their dollar reserves to backstop banks in case the Fed were to withdraw its emergency swap lines. But any such cooperation would be politically difficult and insufficient given the multi-trillion-dollar size of the international market for dollar loans. This is a point of US economic statecraft strength flagged here repeatedly: more so if the Fed is politicised.

"Bessent’s Plan Runs Short on Time to Line Up Argentina Financing’ (Bloomberg) where the market doubts he can find the second $20bn of his $40bn package from the private sector before Sunday’s key election as ‘The US Is Trying to Drive a Wedge Between Argentina and China’ (WSJ).

"China eyes 3-way currency swap with Japan and South Korea amid Trump’s tariff war’ (SCMP) as “Beijing seeks to strengthen regional financial ties and boost yuan use as US trade pressures weigh on East Asian economies”. This would be the same Japan and China rearming against threats from each other, and the South Korea focused on North Korea that is now friendly with China again? Moreover, Blomberg says Ethiopia is in talks with China to convert its dollar loans to CNY, which follows the lead set by Kenya: lower rates – and different pressure points.

Politico underlines ‘Greenland could become the biggest car crash in Atlantic relations’, as “If the US President presses ahead… others can and will follow elsewhere.” Yet what could Europe do given the situation Lane just underlined and its need for US exports, LNG, tech, and arms?

Plans for a Trump-Putin summit in Budapest have been shelved, as Trump said it would be a “waste of time’’ given Russia is clinging to territorial ambitions that make a peace deal with Ukraine impossible. So, more war, with more tit-for-tat blows to Russian and Ukrainian energy infrastructure: and elsewhere? Blasts just hit both Romanian and Hungarian oil refineries tied to Russia. This time last week I was telling clients to prepare for the fat tail risks of deliberate targeting of upstream commodity supply chains as part of a Grand Macro Strategy to strengthen one bloc over another.

Trump again said Modi agreed to ease Russian energy buys, but scepticism remains there; and that’s as India reestablished relations with the Taliban as Afghanistan fights Pakistan.

As Trump threatened Hamas again, VP Vance is “optimistic” the Gaza peace deal will hold, and said the US won’t force Israel to host foreign troops, while US Special Envoy Kushner stated Israel and Hamas are “transitioning to a peacetime posture.” Perhaps: but note the Saudi Crown Prince is expected to visit Trump at the White House on November 18, which flags something is afoot.

The UK Foreign Office dismissed as “nonsense” claims that Mauritius was in discussions with China over selling it one of the Chagos Islands for $10bn, which the UK is handing over shortly alongside a £30bn bill to retain the century lease on its critical airbases there. The FO stated foreign forces are prohibited from building bases in the archipelago as part of the treaty: and treaties are always fully complied with is obviously the UK view as the global system crumbles.

"Colombia's president embraces war of words with Trump’ (AFP), saying “President Trump doesn't like us being out of his control… they want a coup against me." We still wait to see what the new, “substantial” US tariffs on Colombia will look like.

"Trump Sees Successful Xi Meeting, But Allows It Might Not Happen" (Bloomberg), again underlining 155% tariffs are going live from 1 November if he doesn’t get the deal he wants.

"How US-Australia rare earth deal aims to loosen China’s grip on critical minerals market’ (SCMP), as ‘China fires warning at Australia over ‘bloc confrontation’’ (Australian) for doing so.

The EU is to stockpile critical minerals amid supply chain threats. From whom, when they aren’t easily available right now? That’s as the ‘Dutch seek solution to stand-off with China over chipmaker Nexperia, while carmakers fret’ as ‘VW says production pauses planned, denies chip crunch as reason’ (Reuters). If chips aren’t available soon then that correlation will be obvious.

"South Korea Senior Officials to Visit US Again for Tariff Talks’ (Bloomberg) as Seoul said it wants to produce more of its own weapons – who doesn’t? And with whose rare earths?

Transcending all of the areas above, the FT reports ‘US army taps private equity groups to help fund $150bn revamp.’ On one hand: “This special military operation was brought to you by Snickersnacks.” On the other, as @michaeljmcnair notes, the Office of Strategic Capital (OSC) and International Development Finance Corp (DFC) could be mutating into a private equity-style sovereign wealth fund vehicle. Previously, OSC and DFC credit/equity investments were scored at face value, but a new accounting rule means only the net present value of the expected subsidy is charged to the federal budget so a defence deal may run:

1. DFC/OSC puts in 10% equity or a thin guarantee covered by Treasury debt;
2. Crowd in SWFs/PE funds for the 90% - a lot of this has been pledged already via tariff threats;
3. The OBBBA lets the DFC retain and redeploy proceeds/dividends, not return them to Treasury.

In short, this would be what I call financial ‘fartcraft’ to transform the US for warcraft via fiat not gold, even if gold -- and Bitcoin -- may play a role in the process later. That still needs the hard physical supply side, which is where deals with Australia and threats to LatAm come in – and then all the market disruption and inflation (and deflation) that comes with it.

All that is gold does not glitter; Not all those who wander are lost

Meanwhile, the FT op-ed bewails ‘The hard task of exiting the populist trap’, flagging Argentina as a bad role model, which the US is following: fair comment, perhaps. Yet a French mega opinion poll in Le Monde notes “France's democratic crisis is showing increasingly alarming symptoms.” Indeed, the numbers are shocking:

Of those surveyed, 96% feel dissatisfied or angry about the state of the country; 90% believe it is in decline; 81% don’t think democracy is working for them; 66% think most politicians are corrupt; 71% think their living standards are getting worse; 57% have trouble making ends meet; 85% think France ‘needs a real leader to restore order’; and 63% say they don’t ‘feel at home any more’. That sounds like FT-friendly technocratic centrism leads to populism, as was flagged way back in 2019’s ‘The Age of Rage’ – and this survey was taken before France’s crown jewels were humiliatingly stolen from the Louvre in minutes, with no official resignations in response yet.

FT chief economics commentator Martin Wolf, we are *still* waiting for your promised blueprint for a global economic system that works sustainably and inclusively for everyone: don’t keep us in suspense any longer!

Tyler Durden Wed, 10/22/2025 - 14:25

The post The Economics of Trade and Trump’s Little Water Pistol appeared first on CEPR.

A Dip Below $100k "Seems Inevitable", But StanChart Sees Bitcoin At $200k By Year-End

The 10 October US-China trade war fear-driven selloff put paid to any further push higher in crypto, according to Standard Chartered's Geoffrey Kendrick, and the question now is how far does Bitcoin need to fall before finding a base?

On that Kendrick is now thinking a dip below 100k seems inevitable, although the dump may be short-lived. 

To determine when the turn higher comes, which I think it will, I am watching:

Gold v Bitcoin flows.

Yesterday’s sharp gold selloff coincided with a strong intra-day bounce in Bitcoin. This was presumably a sell gold, buy Bitcoin flow.

Medium term I expect more of this, and further such evidence would be constructive for a Bitcoin low being formed.

Gold has been outperforming Bitcoin a lot recently (as chart), something which has perhaps started to turn

Fig – Bitcoin/gold ratio

Liquidity type measures.

There are several of these which have mostly been getting tighter. The question for me is when does the Fed see them as “tight” and react by either acknowledging said measures or stopping QT...

Fig – USD Liquidity proxy

On a side note, liquidity on a global basis signals considerable upside for crypto...

Technicals

Although I am not a technical analyst I note that the 50 week moving average in Bitcoin has held since early 2023 (when Bitcoin was 25k and I forecast it to reach 100k by end-2024)

Stay nimble, Kendrick warns, and be ready to buy the dip below 100k if it comes. 

It may be the last time Bitcoin is EVER below 100k.

As CoinTelegraph's Zoltan Vardai notes, despite the volatility, he remains confident that Bitcoin will rebound as markets stabilize.

“My official forecast is $200,000 by the end of the year,” he told Cointelegraph during an exclusive interview at the 2025 European Blockchain Convention in Barcelona. 

Despite the “Trump noise around tariffs,” Kendrick said he still sees a price rise “well north of $150,000” in the bear case for the end of the year, assuming the US Federal Reserve continues cutting interest rates to meet market expectations.

Kendrick said the aftermath of the liquidation event may take several weeks to settle, but investors may soon view the sell-off as another accumulation phase.

This could ultimately become the next significant “buying opportunity” for investors, he said.

Kendrick predicted continued inflows to Bitcoin exchange-traded funds (ETFs) as the primary driver of Bitcoin’s price momentum for the rest of the year.

Bitcoin ETFs recorded a sharp rebound in flows this week after several days of politically driven outflows.

And sure enough, on Tuesday, the funds saw $477 million in net positive inflows, according to Farside Investors, breaking a four-day losing streak.

The current dip will prepare us for another leg up, “mostly on the back of the ETF inflows,” Kendrick said, adding:

“There’s no reason for them to stop. The US government shutdown, Fed rate cuts. All that story is playing out already in gold.”

Gold’s recent all-time highs will also translate into more momentum for Bitcoin, as its safe-haven asset narrative reemerges, he added.

Tyler Durden Wed, 10/22/2025 - 13:35

Impressive 20Y Auction Sees Jump In Foreign Demand, First Stop Through In Months

With market risk mostly off, especially among high beta momentum stocks, bonds have again emerged as a flight to safety and this was certainly on display during today's auction of 20Y paper.

The reopening of 19 Year, 10 Month paper (cusip UN6) was the week's only coupon auction, and was issued flawlessly and without a glitch amid solid -mostly foreign - demand; the high yield of 4.506% was up notably from last month's 3.953% but more importantly, stopped through the When Issued 4.518 by 1.2bps, the first stop since July and followed two weak, tailing auctions.

The bid to cover surged to 63.6% from 56.4%, but was still slightly below the six-auction average of 67.3%. And with Directs taking down 26.3% (just above the recent average of 23.1%), Dealers were left with 10.0%, which was also in line with the average of 9.6%.

Overall, this was an impressive auction, although to be expected in a day when suddenly everything in stock world is coming unhinged, and not surprisingly yields slumped back toward session lows.

Tyler Durden Wed, 10/22/2025 - 13:24

The "Triumph Of Big Government" Created The Current Sovereign Debt Crisis

Authored by Daniel Lacalle,

A few years ago, The Economist published an issue called “The Triumph of Big Government,” highlighting the rise of government intervention as the main driver of economic recovery and growth. The years of budget and deficit control were over. Mainstream economists hailed the decisive action of governments in developed nations, committed to spending to boost growth and abandoning the old “austerity” principles.

Only a few years later, The Economist publishes an issue titled “The Coming Debt Emergency,” mentioning the enormous deficit and debt problems in France, the United Kingdom, Japan, and the United States.

What happened? How can long-term bond yields rise when central banks are cutting rates? How did government debt lose its place as a reserve asset? Easy. Developed economies’ governments of all colours, from Biden and Sunak to Macron and Ishiba, bought the MMT fallacy that “deficits do not matter” and “sovereign nations can issue all the debt they need without risk.” Virtually all international bodies hailed statism as the global solution. However, in 2022, global central banks and investors started abandoning sovereign debt as a reserve asset and decided to add gold.

Developed nations have surpassed the three limits of indebtedness: the economic, fiscal and inflationary limitations. When more public debt creates lower economic and productivity growth, the economic limit has been surpassed. When interest expenses and deficits continue to rise despite rate cuts and higher taxes, the fiscal limit collapses. Additionally, when governments become addicted to issuing more debt in any part of the cycle, with diminishing investor demand, inflation becomes persistent.

No one really believes developed nations’ governments will control their public finances, and constant tax hikes and excessive regulation have choked the productive economy.

Employment is showing the negative effect of the “triumph of big government”. Bloating government spending may disguise GDP but does not create jobs.

Even as government spending continues to artificially elevate headline GDP figures, global labour markets are showing weakness. According to S&P Global’s October 2025 PMI Bulletin, the global economy continues to show headline growth, but employment growth has stalled, and productivity improvement has declined sharply.

S&P Global’s global composite PMI stood at 52.4 in September, its lowest level in three months. Companies are attempting to manage high taxation and regulatory burdens, resulting in stagnant employment levels and output growth. Employment was broadly flat across both manufacturing and services sectors, a sign of declining confidence and cost-saving across advanced economies.

The eurozone is a key example of how big government destroys employment growth, real wage improvements and investment. The modest improvement in activity comes with a decline of hiring and investment. The United Kingdom’s tax hikes and net zero policies have decimated the industry and obliterated employment growth.

These evident deteriorating employment trends come in a period of artificial GDP growth. Government spending is now one of the leading factors in “economic growth” in France, the UK, Germany, Japan and other major economies. Excluding the government spending increase, most of these economies are in recession. S&P Global’s October 2025 Global Economic Outlook signals that output growth is increasingly supported by governments’ fiscal irresponsibility rather than private sector dynamism. The report states, diplomatically, that “looser fiscal stances in the US and Germany are growth-supportive” but warns that the “fragility of sovereign debt markets in many of the world’s largest economies remains a key source of risk.” State-driven “investment” programmes in the eurozone and the UK have partially offset weak private demand. An enormous trail of debt remains, leading to further tax increases.

Government spending and persistent inflation bloat nominal growth, while real economic productivity and private labour opportunities deteriorate. The erosion of value-added generated by the productive economy is alarming. Considering that major governments are borrowing heavily to fund what they call stimulus measures, and they refuse to reduce current spending, GDP figures are being inflated by debt-financed public sector demand.

This labour market stagnation highlighted by S&P Global coincides with a significant slowdown in real wage growth. Although headline CPI has eased in most advanced economies, real inflationary pressures are elevated and continue to erode disposable income even using official CPI figures. This situation leads to weak real consumption and worsening demographic trends.

Big government means low growth, high taxes, weak real wages, and a persistent productivity drag. Malinvestment and excessive government intervention are now the norm in major economies. SP Global explains that “the most interest rate–sensitive sectors, such as manufacturing and construction, account for a smaller share of economic activity in advanced economies than in the past.” However, the problem is not just interest rates but rising taxes and insurmountable regulations that dampen activity in high multiplier sectors.

The 2030 agenda, along with the so-called green regulations and net zero policies, has resulted in capital misallocation and distortions in policy. Thus, productivity gains are increasingly limited to digital and financial sectors.

Fiscal expansion now drives most of the headline economic activity in developed nations with negative side effects everywhere. The debt service burden is crowding out productive expenditure, high taxes limit investment and hiring, and regulation makes the economy stagnant. As sovereign yields climb, countries like France and the UK are already facing “vicious cycles” of slower growth and higher financing costs.

The reader may think that this is the result of incompetence and malinvestment, and if governments spent wisely and invested in productive activities, all would be fine. No. Central planning never works, even if there are some allegedly beneficial intentions. Keynesianism and social democracy always fail. Why are governments not worried? Because they can raise your taxes and present themselves as the solution.

The solution is simple. Less government means more growth.

Tyler Durden Wed, 10/22/2025 - 13:00

Another 'Cockroach': Subprime Auto-Lender PrimaLend Enters Bankruptcy

Another cockroach?

PrimaLend Capital Partners, which provides financing to auto dealerships that cater to subprime borrowers, filed for bankruptcy after months of negotiations with creditors following missed interest payments on its debt. 

Its products include financing for receivables, real estate and automobile inventory, according to its website.

This follows the sudden collapse of Tricolor (subprime auto lender) and First Brands (after-market auto parts supplier) with PrimaLend listing estimated assets and liabilities below $500 million each, according to court documents it filed in the Northern District of Texas. 

In a press release, PrimaLend said it was pursuing a sale of the business in bankruptcy court and would continue to fund and service loans to its own borrowers.

PrimaLend finances “buy here, pay here” auto dealerships, which serve low-income borrowers.

“No debt is being called due or accelerated as a result of this process,” PrimaLend’s chief executive officer, Mark Jensen, said in the release.

“We deeply value our dealer-borrower relationships and look forward to continuing to serve the buy-here-pay-here industry as we move forward.”

The company has received a commitment for bankruptcy financing to help fund operations in Chapter 11 from existing lenders, according to the release.

None of this should come as a surprise since we have seen auto loan delinquencies soar and now repossession breaking records.

Building a business on the back of lending to illegal immigrants to enable the purchase of a rapidly devaluing asset - brilliant!

There are many more dominoes left to fall (or cockroaches left to discover) in this space - the question is, will there be contagion? Even Bank of England Governor Andrew Bailey chimed in this week, warning that the First Brands (and similar Tricolor) collapses could signal "much bigger financial problems" ahead.

Tyler Durden Wed, 10/22/2025 - 12:40

As Auto Loan Delinquencies Soar, Repossessions On Track To Break Record

On Friday we noted that auto loan delinquencies among low-tier consumers have surged 50% since 2010, as new vehicle prices have spiked over 25% since 2019 and 20% of borrowers forking over at least $1,000 per month for their depreciating asset (at 9% APR, no less). 

Via CBS / Vantagescore

And so it makes perfect sense that with over 100 million auto loans in America, the number of cars being repossessed is approaching records.

According to data from the Recovery Database Network (RDN), there have been over 7.5 million repossession assignments in the United States so far this year - meaning, authorizations given to an agency to recover a vehicle on behalf of a lender. This figure is on track to exceed 10.5 million by the end of the year. Of note, an assignment =/= a repossession, as repo men aren't always successful.

Yet despite recovery ratios having fallen in recent years, over three million cars could be repossessed this year, a level not seen since 2009. 

Paycheck to Paycheck

According to a Goldman survey published earlier this month, around 40% of Americans under the age of boomer report living paycheck to paycheck as inflation continues to erode purchasing power.

For those living primarily paycheck to paycheck, the top issue cited by 87% of those asked was "Too many monthly financial expenses" - like an auto loan. In second place is financial hardship (81%) such as home repairs, followed by credit card debt (77%). 

Meanwhile, Fitch reports that 6.43 percent of subprime auto loans were at least 60 days past due in August, while Cox Automotive reported last week that the average transaction price for a new vehicle hit $50,000 last month - the highest level eva. 

"Auto finance is at a breaking point, as Americans owe over $1.66 trillion in auto debt. Delinquencies, defaults, and repossessions have shot up in recent years and look alarmingly similar to trends that were apparent before the Great Recession," wrote the Consumer Federation of America, a nonprofit advocacy group.

"Cars are more expensive than ever, due in part to economic factors, but also due to the fraught experience of buying and financing a car. Dealers and lenders have long engaged in deceptive and predatory practices that jack up prices for car buyers in order to line their pockets."

Tyler Durden Wed, 10/22/2025 - 11:30

'Worst Of The Worst' Illegal Immigrants Arrested In Memphis, DHS Says

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

Immigration and Customs Enforcement officers have arrested multiple “worst of the worst criminal illegal aliens” in Memphis, Tennessee, as part of President Donald Trump’s push to crack down on violent crime and make the city safe, the Department of Homeland Security (DHS) said in an Oct. 20 statement.

FBI agents patrol Beale Street in Memphis, Tenn., on Oct. 5, 2025. Travis Gillmore/The Epoch Times

Arrested individuals include alleged pedophiles, gang members, drug traffickers, domestic abusers, and rapists, according to the agency.

Among the arrested are a Honduran national who allegedly committed “the sex offense of fondling a child,” an alleged Mexican Sureno 13 gang member with convictions of assault and possession of narcotic equipment, and a Guatemalan national who allegedly committed domestic violence.

“Memphis has suffered from historic levels of violent crime including a murder rate that is four times higher than Mexico City. No American should be afraid to walk down the streets in their own neighborhoods,” DHS Assistant Secretary for Public Affairs Tricia McLaughlin said.

“In Memphis, DHS law enforcement is working hand in glove with Attorney General [Pam] Bondi to enhance public safety, fight crime, and provide much-needed support to our law enforcement partners at the local, state, and federal level. The Trump administration WILL make America safe again.”

Trump issued a presidential memorandum on Sept. 15 to establish a Memphis Safe Task Force and make National Guard personnel available to support public safety and law enforcement operations in Memphis.

“The city of Memphis, Tennessee, is suffering from tremendous levels of violent crime that have overwhelmed its local government’s ability to respond effectively,” the memorandum states.

The National Guard started patrolling in Memphis on Oct. 10.

Memphis has the highest violent crime rate among U.S. cities at 2,501 per 100,000 residents in 2024, much higher than second-ranked Detroit at 1,781 violent crimes. Memphis’ violent crime rate last year was around six times higher than the national average.

Trump’s deployment of the National Guard in Tennessee has faced opposition. On Oct. 17, a group of state officials filed a lawsuit against Tennessee Gov. Bill Lee and other officials.

Tennessee’s Constitution limits the governor’s ability to use the state’s National Guard, stating that such troops shall only be called into service in the case of rebellion or invasion, the lawsuit said.

The state’s General Assembly must declare that, by law, such deployment is necessary for public safety, it said, adding that state statutes forbid the governor from unilaterally using the military for civilian law enforcement.

“Defendants have trampled on Tennessee law by unilaterally deploying Tennessee National Guard members in Memphis as a domestic police force. On October 10, 2025, military police in fatigues descended upon Memphis, in a deployment of the Tennessee National Guard authorized by Governor Bill Lee,” state officials said in the complaint.

“Governor Lee acted at the request of President Donald Trump, but not at the request of any Memphis or Shelby County officials. He also had no approval or authorization from the Tennessee General Assembly. The deployment is patently unlawful.”

The lawsuit asked the court to issue a temporary injunction requiring the defendants to cease the deployment of National Guard personnel in Memphis for civilian law enforcement purposes.

In a Sept. 13 post on X, Memphis Mayor Paul Young said that the governor and the president have the authority to deploy the National Guard to his city.

He shared a clip from an MSNBC interview in which the host asked what the National Guard could do for his city.

“We do have issues with blight in our community, and if there is a way for them to help support our team on that front, we have a deficit of about 300 to 500 officers that we need,” Young said.

In his X post, Young added that he never asked for such a deployment and does not believe this is the path to bring down crime in Memphis.

“However, the decision has been made. As your Mayor, my commitment is to work strategically to ensure this happens in a way that truly benefits and strengthens our community,” he said in a follow-up post.

Trump and FBI Director Kash Patel said during an Oct. 15 press conference that the administration’s crime crackdown has resulted in more than 28,000 violent criminals being arrested over the past seven months.

“We’re going to go into other cities that we’re not talking about, purposely,” Trump said. “We’re going to have a surge of strong, good people, patriots, and they’re going to go in, [they’re going to] straighten it all out.”

Tyler Durden Wed, 10/22/2025 - 11:10

Stocks Extend Momentum Meltdown As Trump Admin Mulls Massive China Export Ban

Update (1235ET): US equity markets were already down notably, dragged down by momentum weakness, when Reuters reported the Trump admin is mulling broad software curbs on chip exports to China.

The United States has ordered a broad swathe of companies to stop shipping goods to China without a license and revoked licenses already granted to certain suppliers, said three people familiar with the matter.

The new restrictions - which are likely to escalate tensions with Beijing - appear aimed at choke points to prevent China from getting products necessary for key sectors, one of the people said.

Products affected include design software and chemicals for semiconductors, butane and ethane, machine tools, and aviation equipment, the people said.

The Commerce Department said it is reviewing exports of strategic significance to China, while noting "in some cases, Commerce has suspended existing export licenses or imposed additional license requirements while the review is pending."

This sparked an immediate drop in all the US Majors...

*  *  *

As we detailed last night, the market is experiencing a strong degrossing in recent narrative themes, and that is most evident in Goldman's high-beta momentum basket which is getting slammed again this morning...

It appears that momo meltdown is finally bleeding over into the broad markets...

The outperformance from the momentum factor this year (pure factor up 7% our baskets up between 15 and 35% depending on the pair) has been driven by the long leg...

...which could be at risk of giving up more of the gains as clients protect performance going into year end...

The last six days have seen momentum longs dumped and momentum shorts bid (until today), hitting the overall momentum market with a double whammy.

The drawdown in Momentum may be at risk to continue as November through January is the worst 3 months period for Momentum...

For a tactical market hedge Goldman likes limited loss on their X7 (Top 500 Ex Mag 7) index, given hedges are outright cheaper than S&P 500 hedges.

More here from the rest of Goldman's Sales & Trading team available to pro subs.

Tyler Durden Wed, 10/22/2025 - 10:56