Zero Hedge

UBS Finds iPhone Demand "Fizzled" In June, Expects Weak Momentum Ahead of September Launch

UBS Finds iPhone Demand "Fizzled" In June, Expects Weak Momentum Ahead of September Launch

Apple is set to report 3Q25 earnings next Thursday, with investor focus on iPhone performance, services growth, and progress on Apple Intelligence. UBS analysts flagged Monday that "iPhone demand fizzled" in June, following a front-loaded sales surge linked to tariff fears earlier in the quarter. 

"Following two strong well above seasonal months driven by fears of a potential iPhone price increase related to broad based tariffs, we estimate iPhone sell-through in the month of June declined 18% YoY as demand fizzled," a team of UBS analysts led by David Vogt wrote in a note to clients on Monday. 

June iPhone demand waned, but FX tailwind and April/May pull-in offset near-term downside. 

Here's the summary for June: 

  • iPhone demand fell 18% YoY in June, following front-loaded sales in April/May amid tariff fears.

  • Still, total iPhone units for the quarter rose 3.4% YoY to 45M (up from 43.5M estimate).

  • FX impact flipped to a tailwind, helping Apple beat revenue expectations.

"As such, we slightly raise our June quarter estimates but lower Sept given likely iPhone softness, below seasonal, given the prior pull-in," Vogt said. 

  • June iPhone revenue raised to $41.2B (+5.4% YoY); EPS upgraded to $1.46 (vs. prior $1.40).

September Quarter Outlook:

  • iPhone demand likely to remain below seasonal trends due to prior pull-forward.

  • iPhone unit forecast cut to 50M (from 52M); revenue lowered to $46.0B (from $47.7B).

  • September EPS trimmed to $1.64 (from $1.68).

Vogt expects FY26 EPS estimates to trend lower:

The pull-in of iPhone units in April and May likely has a lingering impact on iPhone demand into the launch of the iPhone 17 in our view. As such, our analysis indicates iPhone demand in the Dec-25 quarter (fiscal Q1 of FY26), and the next several quarters is likely to be muted as investors await a form factor change in the fall of 2026. Therefore, we forecast the iPhone business to be slightly up in FY26 vs the VA Cons embedding mid-single digit revenue growth. As such, even before factoring financial risk from a change in the economic relationship with Google, we expect consensus revenue and EPS estimates to continue to trend lower for fiscal 2026.

iPhone demand waning.

The analysts did not change their 12-month price target of $210.

UBS's warning highlights Apple's soft iPhone sales trend this summer and may point to lackluster demand for the next iPhone, set to launch in September. 

Tyler Durden Tue, 07/22/2025 - 14:00

Democrats' All-Electric USPS Fleet Sees Each Truck Come With A $6.8 Million Price-Tag

Democrats' All-Electric USPS Fleet Sees Each Truck Come With A $6.8 Million Price-Tag

Authored by Olivia Murray via AmericanThinker.com,

Another Joe Biden boondoggle numbering in the billions...

According to a recently published New York Post report, the Biden administration played a major role in the push to massively electrify the United States Postal Service mail truck fleet. From a USPS press release in 2022:

The United States Postal Service today announced that it expects to acquire at least 66,000 battery electric delivery vehicles as part of its 106,000 vehicle acquisition plan for deliveries between now and 2028. The vehicles purchased as part of this anticipated plan will begin to replace the Postal Service’s aging delivery fleet of over 220,000 vehicles.

The Postal Service anticipates at least 60,000 Next Generation Delivery Vehicles (NGDV), of which at least 75% (45,000) will be battery electric.

But, like Buttigieg’s E.V. charging stations, which cost about a billion dollars each, or Kamala Harris’s $42 billion rural internet “flop” that connected a whopping zero rural Americans to the web, or her one-billion-dollar solar panel plan for Puerto Rico which resulted in “only a few” installations), Biden’s “green” USPS plan has been an absolute cluster.

From the Post item:

A Biden administration plan to create a ‘green’ fleet of postal vehicles has churned out a mere 250 electric mail trucks in just over two years — after shelling out taxpayer funds meant to build thousands…

The nearly $10 billion project — which called for more than 35,000 battery-powered US Postal Service (USPS) vehicles to be completed by September 2028 — was funded in part by $3 billion in funding from former President Joe Biden’s 2022 Inflation Reduction Act.

(I suspect the Post item has a typo, because as you see above, the number from the USPS is 45,000, not 35,000.)

So far, the disbursed IRA funds are around $1.7 billion, which means that if Congress is able to claw back the $1.3 billion still allocated for the project, each of these 250 trucks have cost U.S. taxpayers a minimum of $6.8 million a piece—the whole plan was a $10 billion “investment,” so who knows how much else was spent from other sources. Now, “investments” are supposed to give the investors a return on their money, haven’t these financial whizzes heard?

The biggest issue with the program? The lucky contractor doesn’t even know what they’re doing:

‘This is the bottom line: We don’t know how to make a damn truck,’ one person involved with the manufacturing process told the Washington Post.

So, the federal government is only 44,750 short of its 45,000 goal. At this rate, purchasing around 83 electric mail trucks a year, it will take the government another 539-ish years to finalize their plans, which is a *bit* past the projected date of 2028. (Though we’ll all be long dead, Biden’s all-electric USPS fleet can be expected around the year 2564.)

And these are the people holding our pursestrings and running public policy?

I mean, I don’t care one bit if the USPS fleet doesn’t electrify, but this is just one more example of astounding corruption and incompetence.

Tyler Durden Tue, 07/22/2025 - 13:40

Lockheed Tumbles Most In Months After Slashing Outlook On $1.6 Billion Hit

Lockheed Tumbles Most In Months After Slashing Outlook On $1.6 Billion Hit

Shares of Lockheed Martin fell the most in months on Tuesday, pressuring industry peers, after the defense giant reported second-quarter earnings that missed the Bloomberg consensus. The company also slashed its full-year outlook after taking charges on a classified program tied to its aeronautics business segment and international helicopter programs at its Sikorsky business unit.

Lockheed reported a major miss, with operating profit plunging 65% to $748 million (vs. an estimated $2.15 billion) and revenue falling short at $18.16 billion. Shares slumped 9% by midday - the since the start of the year.  

Not a good trendline to break. 

Industry peers were also pressured lower...

Everything you need to know about Lockheed's Q2 earnings:

  • Big Miss: LMT reported a 65% drop in operating profit to $748M (vs. est. $2.15B) and missed revenue at $18.16B.

  • Massive Charges: $1.6B in write-downs tied to a classified aeronautics program and Sikorsky helicopter contracts (Canada & Turkey); plus $169M in other charges, including losing the USAF's F-47 jet contract to Boeing.

  • EPS Guidance Slashed: Full-year EPS forecast was cut to $21.70–$22.00 from $27.30, citing ongoing program review and execution efforts.

  • Market Reaction: Shares fell as much as 8.5% premarket.

  • F-35 Program: 50 units delivered in Q2, but the Pentagon cut its FY26 order; UK committed to more jets despite cost overrun warnings (£71B / $95.7B).

  • Industry Context: Analysts warn more charges may be lurking, citing the low-margin, high-risk nature of defense contracting.

  • Leadership Shift: Former CFO Jay Malave is now Boeing's new CFO.

  • Peer Update: Rival Northrop Grumman raised guidance, fueled by strong progress on its $140B Sentinel ICBM program.

Lockheed lowered its full-year earnings per share of $21.70 to $22, down from a previous level of as much as $27.30. 

Goldman analysts led by Noah Poponak provided a first take for clients, noting that earnings were mixed for the quarter and weighed down by $1.6 billion in charges.

Here's more from Poponak:

Bottom Line:

LMT reported mixed 2Q25 results, with revenue and FCF below consensus, but adjusted margins, EBIT, and EPS ahead. The revenue variance was largely due to weaker than expected sales in RMS, while the adjusted operating profit beat was primarily driven by margin strength at Aeronautics and Space Systems. LMT recorded $(1.6)bn in pre-tax losses on programs in Aeronautics and RMS in the quarter, an EPS impact of $(5.83). The company reiterated its 2025 revenue and FCF guidance, but lowered guidance for EPS and segment operating profit.

Details:

2Q25 adjusted EPS of $7.29 compares to FactSet consensus at $6.52 and our $6.81. Revenue is 2% below consensus driven by a miss in RMS. Adjusted segment EBIT is 10% above consensus and 7% above our model, driven mostly by Aeronautics and Space Systems. However, LMT took a $(950)mn charge in its Aeronautics segment for updated cost and schedule estimates on a classified program and a $(665)mn charge in RMS for revised costs at two helicopter programs, which put reported total earnings well below consensus. Reported book to bill in the quarter is 0.65X (LTM 1.1X), while total backlog is down 4% qoq and up 5% yoy. Free cash flow is $(150)mn, relative to consensus at $1.2bn; LMT repurchased $500mn worth of shares in the quarter. LMT updated its 2025 guidance, including revenue of $73.75-74.75bn (reiterated; vs. consensus of $74.3bn), EPS of $21.70-22.00 ($27.00-27.30 prior; vs. consensus of $27.36), and FCF of $6.6-6.8bn (reiterated; vs. consensus at $6.7bn).

LMT variance table vs. GS estimates ($mn, except EPS) 

LMT 2025 guidance ($mn)

Poponak maintained a 12-month price target of $406 with a "Sell" rating. 

"On one level you could argue this clears it all up, but on the other you could argue that it may be a roach motel, with more yet to emerge from under the bed, given the previous year's charges," Nick Cunningham, the managing partner at Agency Partners in London, wrote in a note to clients.

Cunningham emphasized, "This is typical of a defence contracting environment where growth is marginal, so there is no leeway to absorb problems, and a business of this size always has something bad going on."

Tyler Durden Tue, 07/22/2025 - 13:20

Western Union Joins Stablecoin Race, Eyes Crypto Partnerships; CEO Says

Western Union Joins Stablecoin Race, Eyes Crypto Partnerships; CEO Says

Authored by Adrian Zmudzinski via CoinTelegraph.com,

Western Union is exploring ways to integrate stablecoins into its services as the firm seeks to modernize cross-border payments.

During a Monday interview with Bloomberg, Western Union CEO Devin McGranahan said that the company views stablecoins as an opportunity. He also said it is exploring partnerships with major crypto industry players to offer stablecoin on-ramp and off-ramp services, as well as a digital wallet.

“We see stablecoin really as an opportunity, not as a threat. […] We’re 175 years old, and we’ve been innovative across [those] 175 years. And stablecoin is just yet one more opportunity to innovate,” McGranahan said.

McGranahan highlighted three areas where the company may leverage stablecoins: faster cross-border transfers, conversion between fiat and stablecoins and serving as a store of value in unstable economies.

Devin McGranahan talking to Bloomberg. Source: Bloomberg

Western Union is not new to crypto

Western Union is reportedly testing new settlement processes involving stablecoins in Africa and South America. However, this is not the firm’s first foray into crypto.

Western Union filed for three trademarks for crypto-related products as far back as late October 2022. The firm also partnered with Ripple to settle payments of remittances in 2015.

Still, Western Union’s partnership with Ripple remains in the test phase. The company expressed interest in crypto, but announced that it would not be adding crypto transfers to its services in 2018.

GENIUS Act spurs US stablecoin adoption

The renewed interest comes as the United States brings regulatory clarity to the stablecoin sector. The Government Evaluation of New Innovations in the US Act, or GENIUS Act, was signed into law on Friday. The new law creates a national licensing framework for stablecoin issuers.

The GENIUS Act also mandates one-to-one reserves, prohibits unbacked algorithmic stablecoins and subjects issuers to Anti-Money Laundering rules. Stablecoin holders are now also considered senior creditors in case of issuer insolvency.

Dante Disparte, chief strategy officer at major stablecoin issuer Circle, recently said that the GENIUS Act will also prevent technology giants and Wall Street behemoths from dominating the stablecoin market.

He said that any non-bank that wants to mint a dollar-pegged token must spin up “a standalone entity that looks more like Circle and less like a bank.” This is particularly relevant considering that legacy financial institutions are already laying the groundwork for their entry into the stablecoin industry.

Tyler Durden Tue, 07/22/2025 - 13:00

"Go F**k Yourself": Colbert Now Ranting About Trump After Show Canceled

"Go F**k Yourself": Colbert Now Ranting About Trump After Show Canceled

Late-night propagandist Stephen Colbert slammed his own network and parent company and told President Trump to 'go fuck yourself' in a Monday night rant, after CBS canceled "The Late Show" - which was losing upward of $40 million a year. 

$40 million "is a big number," Colbert quipped. "I could see us losing $24 million," he continued, adding "But where could Paramount possibly have spent the other $16 million … oh wait" - referring to a $16 million payout from the network to President Trump earlier this month over a deceptively edited "60 Minutes" interview with former VP Kamala Harris last year designed to make her look less retarded.

Trump celebrated Colbert's cancellation, writing in a Monday Truth Social post that he "loves" it, and that Colbert has no talent. 

Colbert replied "Go fuck yourself."

Colbert took over David Letterman's "Late Show" in 2015 and immediately turned it into a far-left ideological bullhorn.  The show is a perfect representation of the inevitable evolution of progressive comedy - Abandoning all humor in the pursuit of political hegemony.

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While CBS claims that the decision was purely financial, multiple staffers told The Independent they think it was part of the "Trump shakedown" that began with the $16 million settlement. Colbert's firing comes days after he suggested on his show that the settlement was a "big, fat bribe.

Colbert will remain on the air for 10 more months, saying "Over the weekend, it sunk in that they’re killing off our show, but they made one mistake: They left me alive. And now, for the next 10 months, the gloves are off."

Let's not forget how 'funny' he is... like the time he shilled for that experimental mRNA vaccine: 

Or Mark Cuban's attempt at... whatever this is: 

Meanwhile Jon Stewart has his brother in propaganda's back: 

Trump also wrote "I hear Jimmy Kimmel is next," adding "Has even less talent than Colbert! Greg Gutfeld is better than all of them combined, including the Moron on NBC who ruined the once great Tonight Show." One can hope. 

Tyler Durden Tue, 07/22/2025 - 12:40

Schiff: Central Bankers Vs The Dollar

Schiff: Central Bankers Vs The Dollar

Via SchiffGold.com,

If Donald Trump has his way and recent reports are accurate, Federal Reserve Chair Jerome Powell is considering stepping down from his position. While extremely rare, Fed Chairs resigning before the end of their term isn’t entirely unheard of. Powell’s obligations would ordinarily extend to May 2026.

But if he abdicates, Trump would replace him with an ultra-dove who is committed to aggressively cutting short-term interest rates, delivering the cheap money he craves. This new dove will crush the dollar, eviscerate savers, and send long-term interest rates soaring much higher. 

Markets are watching Powell closely, and pundits are speculating on who might replace him in the extraordinary event that he decides to leave the Fed. But even if he doesn’t resign, the end result of central bankers tinkering with the economy is always net inflationary. Whether you’re talking about the Fed or the Bank of Japan, the end result on a long enough timeline is always an expanded money supply, a currency crisis, and a reset driven by economic catastrophe.

Central Bankers are why the dollar has dropped off a cliff in slow motion, losing over 96% of its value since 1913 when the Federal Reserve was created. Some commenters claim that this doesn’t matter, because standards of living are so much higher today. But that claim ignores the fact that inflation always rewards speculators, bankers, and insiders while punishing savers.

In today’s low rate-addicted economy, 5% and up is considered being on the “high” end. In a self-correcting free market, they would be drastically higher. Forcing low interest rates on the economy is like trying to keep a greased beach ball underwater, pushing it deeper and deeper as it continues inflating with even more air.

You’re not in control, and you never were. When you finally lose your grip, it rockets out of the surface of the pool even harder and faster.

US Consumer Price Index, 1913 to Present

SOURCE: FRED®/US Bureau of Labor Statistics

What makes the dollar different is its exorbitant privilege as the world reserve currency, and our ability to force that reality economically and geopolitically. But that privilege has been ending for many years in slow motion, and now, economic policies like capricious tariffs and “Big, Beautiful Bills” are accelerating its demise. Touted as a form of economic stimulus, Trump’s economic policies mean higher deficits.

Debt skyrockets, interest rates remain too low, deficits remain sky-high, growth remains low, and the cycle receives more and more fuel until something inevitably finally breaks the market’s trust. That’s when it all falls apart. Both Trump’s fiscal policy and Federal Reserve monetary policy, with or without Powell, are partners in crime for an economic crash.

As Peter Schiff said on The Peter Schiff Show:

“We are not changing course, we are headed on a course to a fiscal disaster. And we’re not veering from that course…we’re just stepping on the gas.”

Claims that the BBB’s spending will be magically funded by tariff revenues are nonsense. Tariffs will reduce demand for those goods, meaning the real revenue collected is always drastically lower than what hopeful projections like to pretend. Companies aren’t all going to pack up and move their manufacturing to the US, they’ll just stop selling to Americans. At absolute best, any companies that do move their manufacturing will take years, compromising Trump’s political dependence on instant results.

Despite a surprisingly good fiscal quarter for the US Government, the BBB makes it unlikely to last. We can rely on both Republican and Democrat administrations to be much better spenders than savers. When the government spends, it’s always with someone else’s money, and over 14% of that spending is just interest on the debt.

With or without the fiscal policies, inflation is all central bankers really know how to do. Sometimes they inflate slowly, at what they claim is the ideal 2% level, and sometimes they inflate a lot all at once, like in response to the 2008 financial crisis and COVID. The impact of monetary policy on ordinary Americans isn’t apparent right away. But eventually, the devastating effects of inflation are felt in the form of higher prices for everything people need to survive.

In the meantime we’re left with a boom and bust cycle where central bankers decide the “right time” to engineer a recession to try and stave off an all-out collapse. They always return to low interest rates and money printing because without them, the easy money-addicted system would collapse.

If Powell remains the Fed Chair, rate cuts will still come. It’s a matter of If, not When. But if he resigns, and is replaced with a dove hand-picked by Trump, inflation won’t just start to boil over —it will rocket into the stratosphere.

Tyler Durden Tue, 07/22/2025 - 12:20

Sam Altman, Masa Son's Massive "Stargate" Initiative Flops, Nothing But Hot Air Between Two Egomaniacs

Sam Altman, Masa Son's Massive "Stargate" Initiative Flops, Nothing But Hot Air Between Two Egomaniacs

Back in January, when the AI trade got its latest kick higher thanks to an announcement by the newly-created "Stargate" project between OpenAI and Japan's cartoonish momo-chasing titan Masa Son and his conglomerate SoftBank, that the initiative would spend $500 billion over 4 years to build new AI infrastructure for OpenAI in the US and would deploy $100 billion "immediately", we said that this was one giant pipe dream as the initiative was "spending $100BN in money which does not exist to generate IRR which are not positive." In other words, just another SoftBank special: pretending to throw crazy amounts of money which Masa Son simply does not have. 

Elon Musk, whose feud with OpenAI Sam Altman is one of the defining billionaire rivalries of our time, was even more forthright, and echoed our sentiment when he said that "they don't actually have the money."

Not surprisingly we, and Elon, were right. 

As the WSJ reported overnight, the $500 billion "effort" unveiled at the White House to supercharge the U.S.’s artificial-intelligence ambitions has struggled to get off the ground and has sharply scaled back its near-term plans.

Trump at the White House, accompanied from left by technology executives Larry Ellison, Masayoshi Son and Sam Altman in January.

Six months after Japanese billionaire Masayoshi Son stood shoulder to shoulder with Sam Altman and President Trump to announce the Stargate project, the newly formed company charged with making it happen has yet to complete a single deal for a data center.

SoftBank CEO Masayoshi Son with OpenAI CEO Sam Altman in Tokyo in February. The companies each pledged $18 billion to Stargate

But it's not just the lack of any actual capital that's a problem: it turns out that putting two narcissistic egomaniacs in the same room is not conducive to smoothly flowing consensus; instead the two have been "at odds over crucial terms of the partnership, including where to build the sites, according to people familiar with the matter."

While the companies pledged at the January announcement to invest $100 billion “immediately,” the project is now setting the more modest goal of building a small data center by the end of this year, likely in Ohio, the people said.

Stargate’s lethargic launch is a setback to the vast ambitions of Son, who despite spending billions of dollars over the years, has been playing catch-up in the fast-evolving AI sector. 

Earlier this year, SoftBank committed $30 billion to OpenAI... money, which it does not have. Which is hardly a surprise to anyone familiar with the company best known for its catastrophic investment in WeWork and countless other failures. Hoping to make everyone forget what a horrible investor it actually is, SoftBank upped the ante to ridiculous proportions making its AI bet by far the largest-ever startup investment — an enormous wager that has led SoftBank to take on new debt and sell assets. The investment was made alongside the plans for Stargate, giving SoftBank a role in the physical infrastructure needed for AI. 

A Stargate AI-infrastructure site under construction in Abilene, Texas

Meanwhile Altman, who actually does have some money, has been eager to secure the computing power to support the next generations of his company’s signature product, ChatGPT, has plowed ahead without SoftBank, signing deals for data centers with other operators.

Naturally, the leaders of both companies are lying that all is well in their joint effort. Last week they appeared on video at a SoftBank event, and Altman said they have an initial goal of building 10 gigawatts of data centers together. It is a “wonderful partnership,” he said... and the handful of people who watched couldn't help but laugh. 

In a joint statement, the two companies used even more laughable jargon, claiming they were advancing projects in multiple states and were “moving at hyperscale and speed to deliver the AI infrastructure that will power the future and serve humanity.”

Yet despite Stargate’s rocky start, it hasn’t slowed the data-center development spree that Trump has said is a national priority. AI enthusiasts say the world will require a gargantuan effort to build the warehouse-like structures filled with computer servers, and the electricity needed to supply them, on par with the construction of railroads in the 19th century.

Altman’s OpenAI recently struck a data-center deal with Oracle that calls for OpenAI to pay more than $30 billion a year to the software and cloud-computing company starting within three years. The deal, which may or may not go live in about 4-5 years, has already helped send ORCL stock to record highs, more than doubling where it was just back in April. 

That deal, which doesn’t involve SoftBank, totals 4.5 gigawatts of capacity, and would consume the equivalent power of more than two Hoover Dams, enough to power about four million homes. The data centers are spread among locations around the U.S. Of course, just like Stargate, that deal too will end up being nothing but lots of hot air.

According to the WSJ, taken with a smaller deal OpenAI struck with CoreWeave, OpenAI has now completed data-center deals for nearly as much capacity as Stargate promised for this year in January. (OpenAI has said $100 billion roughly equates to 5 gigawatts of data centers.)

Meanwhile, amid the catastrophic rollout of Stargate, Son has told associates he is bullish on OpenAI and would like to invest even more in the company. Yes, invest even more money he doesn't have.

Masa Son, who has long been viewed as something of an anti-Buffett one-hit wonder in the investing world (his only actual success was Alibaba), has long craved a prominent seat at the AI table. And yet, despite devoting the two largest startup funds ever raised - more than $140 billion - to finding the AI companies of the future, Son missed out on OpenAI and all of its competitors before the launch of ChatGPT, while being tarred by high-profile flops such as WeWork and construction startup Katerra.

In the fall of 2024, at long last he zeroed in on OpenAI. But Altman had ambitions on a scale without precedent: He has said trillions of dollars will be needed to fund the next stages of AI.

In November, Son and Altman met in Tokyo to hash out an agreement. They next brought their plans to Trump aides with the offer of announcing a giant U.S. investment. On the second day of Trump’s new administration, they stood smiling in the White House beside Trump, vowing to spend $500 billion by 2029. 

Son and Altman participated in a Tokyo-based tech event last week. They have been at odds over Stargate partnership terms

“This is the beginning of our golden age,” Son said at the White House, hoping that the bulk of the funding needs would be borne by US taxpayers. He was wrong. 

At the start, OpenAI and SoftBank each pledged $18 billion to the venture to get started, which they expected would develop data centers and then lease them to OpenAI. The two companies said they would jointly control the entity, with Son as its chairman. SoftBank would focus on the financial details and OpenAI on the operations, the companies added. 

That's when the chaos really started: they named Oracle and U.A.E. firm MGX as partners in the initial announcement, but their role was unclear. No agreement setting out their investment levels had been reached at the time.

Stargate is not formed yet,” Oracle Chief Executive Safra Katz said on an investor call last month. 

One recent complication between OpenAI and SoftBank has been over how extensively to build data centers on sites tied to SB Energy, a SoftBank-backed energy developer, according to people familiar with the matter. 

Meanwhile, Altman has used the Stargate name, shared with a B-grade 1994 Kurt Russell film about aliens who teleport to ancient Egypt, on projects that aren’t being financed by the partnership between OpenAI and SoftBank. The trademark to Stargate is held by SoftBank, according to public filings. For instance, OpenAI refers to a data center in Abilene, Texas, and another it agreed in March to use in Denton, Texas, as part of Stargate even though they are being done without SoftBank.

Which begs the question: where will all the money come from?

To be sure, as the WSJ notes, "building data centers isn’t easy. Companies need to find sites, develop the physical structures—or pay another company to do that—buy expensive AI chips, source vast loads of electricity and find lenders to cover much of the cost, among other details. Stargate is hoping to use a new, lower-cost design for its first project in Ohio."

Training new, better AI models requires evermore data processing and constant sources of new capital, which means companies including OpenAI are committing to larger and larger spending well before the business models of AI companies have proved profitable. Indeed, so far most analyses suggest that the IRR of AI remains solidly negative. 

Which again brings up the matter of money: OpenAI’s $30-billion-a-year deal with Oracle is roughly three times as much as what Altman’s company has recently projected in annual revenue. The company, which is losing billions of dollars a year, is betting its revenue will multiply thanks to the growing ranks of paying customers and advertising, allowing it to pay for its hefty commitments.

One - rather unpleasant - answer putting this all in context, comes from Morgan Stanley, which this weekend published some shocking new math: there is simply no way to pay for all the funding needs out of equity or cash flow, and "Paying For AI Capex Will Require Over $1 Trillion In New Debt By 2028"

Good luck with that, and good luck with those 50x forward AI valuations once the Koolaid finally wears off.

Tyler Durden Tue, 07/22/2025 - 11:55

Maybe AI Isn't Going To Replace You At Work After All

Maybe AI Isn't Going To Replace You At Work After All

Authored by Charles Hugh Smith via OfTwoMinds blog,

AI fails at tasks where accuracy must be absolute to create value.

In reviewing the on-going discussions about how many people will be replaced by AI, I find a severe lack of real-world examples. I'm remedying this deficiency with an example of AI's failure in the kind of high-value work that many anticipate will soon be performed by AI.

Few things in life are more pervasively screechy than hype, which brings us to the current feeding-frenzy of AI hype. Since we all read the same breathless claims and have seen the videos of robots dancing, I'll cut to the chase: Nobody posts videos of their robot falling off a ladder and crushing the roses because, well, the optics aren't very warm and fuzzy.

For the same reason, nobody's sharing the AI tool's error that forfeited the lawsuit. The only way to really grasp the limits of these tools is to deploy them in the kinds of high-level, high-value work that they're supposed to be able to do with ease, speed and accuracy, because nobody's paying real money to watch robots dance or read a copycat AI-generated essay on Yeats that's tossed moments after being submitted to the professor.

In the real world of value creation, optics don't count, accuracy counts. Nobody cares if the AI chatbot that churned out the Yeats homework hallucinated mid-stream because nobody's paying for AI output that has zero scarcity value: an AI-generated class paper, song or video joins 10 million similar copycat papers / songs / videos that nobody pays attention to because they can create their own in 30 seconds.

So let's examine an actual example of AI being deployed to do the sort of high-level, high-value work that it's going to need to nail perfectly to replace us all at work. My friend Ian Lind, whom I've known for 50 years, is an investigative reporter with an enviably lengthy record of the kind of journalism few have the experience or resources to do. (His blog is www.iLind.net, ian@ilind.net)

The judge's letter recommending Ian for the award he received from the American Judges Association for distinguished reporting about the Judiciary ran for 18 pages, and that was just a summary of his work.

Ian's reporting/blogging in the early 2000s inspired me to try my hand at it in 2005.

Ian has spent the last few years helping the public understand the most complex federal prosecution case in Hawaii's recent history, and so the number of documents that have piled up is enormous. He's been experimenting with AI tools (NotebookLM, Gemini, ChatGPT) for months on various projects, and he recently shared this account with me:

"My experience has definitely been mixed. On the one hand, sort of high level requests like 'identify the major issues raised in the documents and sort by importance' produced interesting and suggestive results. But attempts to find and pull together details on a person or topic almost always had noticeable errors or hallucinations. I would never be able to trust responses to even what I consider straightforward instructions. Too many errors. Looking for mentions of 'drew' in 150 warrants said he wasn't mentioned. But he was, I've gone back and found those mentions. I think the bots read enough to give an answer and don't keep incorporating data to the end. The shoot from the hip and, in my experience, have often produced mistakes. Sometimes it's 25 answers and one glaring mistake, sometimes more basic."

Let's start with the context. This is similar to the kind of work performed by legal services. Ours is a rule-of-law advocacy system, so legal proceedings are consequential. They aren't a ditty or a class paper, and Ian's experience is mirrored by many other professionals.

Let's summarize AI's fundamental weaknesses:

1. AI doesn't actually "read" the entire collection of texts. In human terms, it gets "bored" and stops once it has enough to generate a credible response.

2. AI has digital dementia. It doesn't necessarily remember what you asked for in the past nor does it necessarily remember its previous responses to the same queries.

3. AI is fundamentally, irrevocably untrustworthy. It makes errors that it doesn't detect (because it didn't actually "read" the entire trove of text) and it generates responses that are "good enough," meaning they're not 100% accurate, but they have the superficial appearance of being comprehensive and therefore acceptable. This is the "shoot from the hip" response Ian described.

In other words, 90% is good enough, as who cares about the other 10% in a college paper, copycat song or cutesy video.

But in real work, the 10% of errors and hallucinations actually matter, because the entire value creation of the work depends on that 10% being right, not half-assed.

In the realm of LLM AI, getting Yeats' date of birth wrong--an error without consequence--is the same as missing the defendant's name in 150 warrants. These programs are text / content prediction engines; they don't actually "know" or "understand" anything. They can't tell the difference between a consequential error and a "who cares" error.

This goes back to the classic AI thought experiment The Chinese Room, which posits a person who doesn't know the Chinese language in a sealed room shuffling symbols around that translate English words to Chinese characters.

From the outside, it appears that the black box (the sealed room) "knows Chinese" because it's translating English to Chinese. But the person--or AI agent--doesn't actually "know Chinese", or understand any of what's been translated. It has no awareness of languages, meanings or knowledge.

This describes AI agents in a nutshell.

4. AI agents will claim their response is accurate when it is obviously lacking, they will lie to cover their failure, and then lie about lying. If pressed, they will apologize and then lie again. Read this account to the end: Diabolus Ex Machina.

In summary: AI fails at tasks where accuracy must be absolute to create value. lacking this, it's not just worthless, it's counter-productive and even harmful, creating liabilities far more consequential than the initial errors.

"But they're getting better." No, they're not--not in what matters. AI agents are probabilistic text / content prediction machines; they're trained parrots in the Chinese Room. They don't actually "know" anything or "understand" anything, and adding another gazillion pages to their "training" won't change this.

The Responsible Lie: How AI Sells Conviction Without Truth:

"The widespread excitement around generative AI, particularly large language models (LLMs) like ChatGPT, Gemini, Grok, and DeepSeek, is built on a fundamental misunderstanding. While these systems impress users with articulate responses and seemingly reasoned arguments, the truth is that what appears to be 'reasoning' is nothing more than a sophisticated form of mimicry.

These models aren't searching for truth through facts and logical arguments--they're predicting text based on patterns in the vast datasets they're 'trained' on. That's not intelligence--and it isn't reasoning. And if their 'training' data is itself biased, then we've got real problems.

I'm sure it will surprise eager AI users to learn that the architecture at the core of LLMs is fuzzy--and incompatible with structured logic or causality. The thinking isn't real, it's simulated, and is not even sequential. What people mistake for understanding is actually statistical association."

AI Has a Critical Flaw -- And it's Unfixable

"AI isn't intelligent in the way we think it is. It's a probability machine. It doesn't think. It predicts. It doesn't reason. It associates patterns. It doesn't create. It remixes. Large Language Models (LLMs) don't understand meaning -- they predict the next word in a sentence based on training data."

Let's return now to the larger context of AI replacing human workers en masse. This post by Michael Spencer of AI Supremacy and Jing Hu of 2nd Order Thinkers offers a highly informed and highly skeptical critique of the hype that AI will unleash a tsunami of layoffs that will soon reach the tens of millions. Will AI Agents really Automate Jobs at Scale?

Jing Hu explains the fundamental weaknesses in all these agents: it's well worth reading her explanations and real-world examples in the link above. Here is an excerpt:

"Today's agents have minimal true agency.

Their 'initiative' is largely an illusion; behind the scenes, they follow (or are trying to) tightly choreographed steps that a developer or prompt writer set up.

If you ask an agent to do Task X, it will do X, then stop. Ask for Y, and it does Y. But if halfway through X something unexpected happens, say a form has a new field, or an API call returns an error, the agent breaks down.

Because it has zero understanding of the task.

Change the environment slightly (e.g., update an interface or move a button), and the poor thing can't adapt on the fly.

AI agents today lack a genuine concept of overarching goals or the common-sense context that humans use.

They're essentially text prediction engines."

I've shared my own abysmal experiences with "customer service" AI bots:

Digital Service Dumpster Fires and Shadow Work

Here's my exploration of the kinds of experiential real-world skills AI won't master with total capital and operational costs that are lower than the cost of human labor: oops, that hallucination just sawed through a 220V electrical line that wasn't visible but the human knew was there:

What AI Can't Do Faster, Better, or Cheaper Than Humans (June 2, 2025)

And here is a selection of my essays on AI, which I have been following since the early 1980s:

Essays on AI

Wait, what did you just say? The AI agent heard something else:

*  *  *

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

Become a $3/month patron of my work via patreon.com.

Subscribe to my Substack for free

Tyler Durden Tue, 07/22/2025 - 11:40

Neoliberal Economic Orthodoxy Is Now Up For Review

Neoliberal Economic Orthodoxy Is Now Up For Review

By Benjamin Picton, Senior Market Strategist at Rabobank

Equities again struggled for direction on a day with very little consequential economic data. US indices closed mixed with the Dow slightly in the red, while the S&P500 and NASDAQ both lifted enough to see the former close above the 6,300 level for the first time. European equities were similarly unsure, with the CAC40 falling 0.3% while the FTSE100 and German DAX both posted small gains. Asian markets were broadly higher but the ASX200 had its worst day since April to close more than 1% lower.

Treasury Secretary Scott Bessent appeared in a wide-ranging interview on CNBC. When pressed on whether he advised Trump not to try to fire Jerome Powell Bessent kept mum, but he did suggest that the Federal Reserve as an institution needs to be examined. “We should think has the organization succeeded in its mission? If this was the FAA and we were having this many mistakes, we would go back and look at why has this happened.”

We’ve been reasonably vocal for some time now that the shibboleths of neoliberal economic orthodoxy are now very much up for review. Given the recent attacks on Powell, it seemed fairly clear that central bank independence is one such area where ideas are being questioned from first principles and that the price of money may become subject to inconvenient democracy, or at least the free market. But could Bessent have something else in mind?

Bessent’s criticism of the Fed’s ability to fulfill its basic mission of providing stability to financial markets, regulating the banking system and conducting monetary policy might suggest that Trump could bypass questions of whether he has the legal authority to fire Powell and ‘do an Andrew Jackson’ by abolishing the central bank altogether.

Bessent went on to muse over “all these PHDs over there, I don’t know what they do. This is like universal basic income for academic economists.” The insinuation that the Fed is staffed by a cadre of highly-paid elites doing esoteric and largely useless busywork perhaps sits uncomfortably alongside claims in the FT today that ‘Fiscal Populism is Coming for Central Banks’ and the ‘US Government HR chief aims to institutionalize DOGE efficiency drive’.

On some views the tale of the tape is not flattering for the Fed. On financial stability they arguably played a major role in seeding the 2008 financial crisis via too-low interest rates after 9/11 and were then slow in responding once the crisis emerged (remember Bernanke saying sub-prime is “contained”?). On banking regulation they seem to have missed the vulnerabilities inherent in the balance sheets of Silicon Valley Bank and others (to say nothing of Bear Stearns, Lehman etc) which they then blew up through their conduct of monetary policy. On the question of monetary policy itself, many will remember the erroneous assurances that the inflation is transitory – a mistake repeated all around the world.

Further scepticism over the success of inflation targeting is perhaps warranted while supposedly inert physical gold outperforms the S&P500, physical silver is surging (currently testing resistance at $39/oz) and house prices decouple from the wages used to pay for them. All of that seems to suggest a general inflation underway, but the Fed has already cut rates three times and markets are pricing more.

Despite Bessent’s criticisms of the Fed, the Treasury curve bull flattened over the course of yesterday. Yields for US 10s fell 4bps to 4.38% while the 2-year yield fell 1bp to 3.86%. US bonds did underperform European sovereigns where France and Italy both saw 10-year yields fall by more than 10bps, while yields in Greece, Spain and Portugal weren’t far behind. Swedish bonds were a conspicuous underperformer, as were UK gilts.

As noted in this Daily yesterday, recent economic data for the US has mostly been better than expected. Right on cue, an article in the WSJ yesterday opined that ‘The U.S. Economy is Regaining Its Swagger’ and Bloomberg asked ‘Is Wall Street Still Too Bearish on the Impact of Tariffs?

Maybe swagger comes before a fall, but for now it looks like US exceptionalism is making a comeback just in time for the August 1st tariff deadline.

Tyler Durden Tue, 07/22/2025 - 11:00

Kohl's Joins Meme Stock Mania With Massive Short Squeeze

Kohl's Joins Meme Stock Mania With Massive Short Squeeze

We began the week with the "glorious return" of meme stock mania—first with the roller coaster ride of Opendoor Technologies, and then, on Tuesday morning, with heavily shorted Kohl's Corp. shares doubling in the early cash session. 

Kohl's shares jumped as much as 105% out of the gate—the largest intraday gain on record for the stock. The surge evoked memories of the meme stock mania during the Covid era. Trading was briefly paused for volatility after the stock pared gains to around 20% by 10:00 a.m. EST. 

What goes up must come down... 

No surprise here. 

Meme stocks are melting up...

Most evident of the meme stock craze was the mindblowing gamma squeeze in Opendoor Technologies (more details here)... 

Steve Sosnick of Interactive Brokers told Bloomberg, "It's all social media chatter. Remember that a highlight of the meme stock era was a dose of nostalgia for companies like GameStop and AMC." 

Mentions of "meme stocks" on X.

Sosnick noted, "Social media chatter can become self-fulfilling."

Tyler Durden Tue, 07/22/2025 - 10:40

"No Spare Capacity": Watchdog Warns Largest US Grid Is Maxed Out Amid Data Center Buildout

"No Spare Capacity": Watchdog Warns Largest US Grid Is Maxed Out Amid Data Center Buildout

America's largest power grid has issued multiple 'Maximum Generation' and 'Load Management' alerts this summer, as summer heat pushes power demand to the brink with air conditioners running at full blast across the eastern half of the U.S. The deeper issue: there's not enough baseload capacity to support the explosive growth of power-hungry AI server racks at new data centers. 

"There is simply no new capacity to meet new loads," said Joe Bowring, president of Monitoring Analytics, which is the independent watchdog for PJM Interconnection, who Bloomberg quoted. "The solution is to make sure that people who want to build data centers are serious enough about it to bring their own generation."

New AI data centers are popping up across the PJM Interconnection—the largest U.S. power grid, serving 65 million people across 13 states and Washington, D.C. Part of PJM's territory includes Loudoun County, Virginia—known as 'Data Center Alley'—which is recognized as one of the world's largest hubs for data centers.

The problem is that next-generation server racks at AI data centers are now consuming more than twice the power they did just a few years ago. For example, Nvidia's GB200 AI rack draws 120 kW, compared to 60–80 kW for the earlier HGX models. Multiply that by thousands of racks in large, hyperscale centers, and it's clear that AI computing is rapidly gobbling up grid capacity while baseload power in the form of fossil fuel power generation has been retired

On Sunday, we cited the EIA's Short-Term Energy Outlook for July, which showed that average summer wholesale power prices across the PJM, NYISO, and ISO-NE grids are the highest in the nation. These prices now far exceed those in Texas' ERCOT, the U.S. average, and even the traditionally high-cost West Coast markets. The blame is squarely focused on the Democrats' initiative to recklessly decarbonize power grids.

Bowring is entirely right about grid limitations in the era of data center buildouts. Take, for example, just how fragile the grid is across the Mid-Atlantic area:

In Maryland:

We've warned over the last year about the power crisis unfolding across the Mid-Atlantic:

Last month, Pennsylvania boasted about saving Maryland's power grid from near collapse:

The result of failed green policies and surging power demand has created a perfect storm that could constrain AI data center buildouts across the region.

Tyler Durden Tue, 07/22/2025 - 10:20

'No Miracles': Russia Downplays 3rd Round Of Ukraine Talks Set For Wednesday

'No Miracles': Russia Downplays 3rd Round Of Ukraine Talks Set For Wednesday

President Zelensky's office has confirmed that bilateral Russia-Ukraine peace talks are set to resume in Turkey on Wednesday, following deadly Russian ballistic missiles strikes on Kiev Monday. Tit-for-tat drone and missile strikes have become a nightly reality at this point in this tragic war of attrition which Russia has the clear upper-hand in.

Russia is meanwhile downplaying the likelihood of any major progress in these fresh peace talks. Ukrainian officials too remain pessimistic, given they've just reported that a child was killed and more than 20 people were injured in the latest overnight Russian attacks. The messaging from both sides is to expect no miracles or breakthroughs at the Turkey-hosted talks.

"We see no reason to expect any kind of breakthrough," Kremlin spokesman Dmitry Peskov told reporters on Tuesday, adding that such a development is "hardly possible under the current circumstances."

The 2nd round of talks, Anadolu/Getty Images

The engagement will mark the third round of direct talks in recent months, with past talks only having resulted in prisoner swaps and the return of fallen soldiers' remains, but which failed to produce the broader goal of a ceasefire agreement.

Russia has not yet revealed who will represent its side in the talks - after the last round was led by Vladimir Medinsky, a conservative historian and head of the Russian Union of Writers, whom Ukraine dismissed as lacking real decision-making authority.

Indeed the broad Western media consensus was that Putin sent a mid-level or 'B-team' and that it showed he wasn't serious. However, other analysts pointed to the reality that no major decisions could be made without Putin's direct consultaion regardless, and that he chose a loyal team.

When asked in a press briefing about the Kremlin’s expectations for a possible timeline on reaching a peace deal, Peskov said he could not provide any estimates.

"There is a lot of work to be done before we can talk about the possibility of some top-level meetings," Peskov also said, addressing the question of whether Zelensky and Putin would ever meet.

President Trump has meanwhile lately approved new weapons to Ukraine, but these are said to be defensive in nature, while the US has still apparently resisted the kind of long-range offensive weapons that Zelensky has been seeking. Trump has dismissed reports that he's ready to give weapons 'that can reach Moscow' as fake news.

In the war itself, Russia's air war continues to be crippling and punishing. As an example of the kind of nightly attacks Ukrainian cities are facing, Al Jazeera writes that "two powerful Russian glide bombs were dropped on Sumy city, wounding at least 13 people, including a six-year-old boy, and damaging five apartment buildings, two private homes and a shopping centre in the attack. The blasts shattered windows and destroyed balconies in residential buildings, acting Mayor Artem Kobzar said."

Tyler Durden Tue, 07/22/2025 - 09:40

'What Do All Those PhDs Do?' - Bessent Calls For 'Fundamental Reset' Of Financial Regulations

'What Do All Those PhDs Do?' - Bessent Calls For 'Fundamental Reset' Of Financial Regulations

Treasury Secretary Scott Bessent on Monday called for a “fundamental reset” of financial regulations to ensure they are aligned with the nation’s domestic and international priorities.

Speaking at the Federal Reserve Capital Conference, Bessent said there is a need for “deeper reforms” in bank regulation, noting that the system has been marked by “regulation by reflex,” where bank regulators tend to introduce new rules after issues have already occurred.

“Rather than preempting crises, regulators all too often react to them after the fact. They play the role of a hazmat cleanup team instead of preventing dangerous spillovers in the first place,” Bessent said.

“Rather than reflexively regulate anything that hits the headlines, we need to instead be more explicit about our vision for the financial system,” he added.

As Aldgra Fredly reports for The Epoch TimesBessent said the Treasury will reinforce reform efforts by working to “break through policy inertia, settle turf battles, drive consensus, and motivate action to ensure no single regulator holds up reform.”

He suggested that bank regulators should review outdated capital requirements that place “unnecessary burdens on financial institutions” and reduce bank lending.

Bessent specifically referenced a July 2023 proposal that would subject banks to two sets of capital requirements. He believes that bank regulators should consider scrapping the dual-requirement structure.

“This dual-requirement structure did not derive from a principled calibration methodology. It was motivated simply to reverse-engineer higher and higher capital aggregates,” he said.

Bessent noted that the framework “was at odds with capital reform as a modernization project because it would have preserved the antiquated capital requirements as the binding floor for many, perhaps most, large banks.”

He also suggested allowing any bank that is not subject to modernized capital requirements the choice to opt in, extending the benefits of reduced capital requirements to smaller banks.

“We cannot give only large banks the benefit of these reduced requirements, as actually contemplated by the last administration,” he said.

The Trump administration has been at loggerheads with the Federal Reserve over interest rate cuts. President Donald Trump wanted the Fed to lower interest rates to make borrowing less expensive, but the central bank has kept its benchmark policy rate unchanged at 4.25 to 4.50 percent.

Federal Reserve Chair Jerome Powell has said the lack of certainty over tariff-driven inflation has made the Fed delay lowering interest rates for now, since price impacts are expected to manifest weeks or months after tariffs settle into the markets.

In a social media post on Monday, Bessent called on the Fed to conduct “an exhaustive internal review” of its non-monetary policy operations, noting that the central bank has been “threatened by persistent mandate creep into areas beyond its core mission.”

“The Fed does regular reviews of its monetary policy framework. I would urge Fed leadership to similarly undertake, publish and implement a comprehensive institutional review across its entire mission to buttress its credibility,” he stated on X, citing excerpts from his interview with CNBC that aired on July 21.

When pressed on whether he advised Trump not to try to fire Jerome Powell Bessent kept mum, but he did suggest that the Federal Reserve as an institution needs to be examined.

“We should think has the organization succeeded in its mission? If this was the FAA and we were having this many mistakes, we would go back and look at why has this happened.”

On some views the tale of the tape is not flattering for the Fed.

  • On financial stability they arguably played a major role in seeding the 2008 financial crisis via too-low interest rates after 9/11 and were then slow in responding once the crisis emerged (remember Bernanke saying sub-prime is “contained”?).

  • On banking regulation they seem to have missed the vulnerabilities inherent in the balance sheets of Silicon Valley Bank and others (to say nothing of Bear Stearns, Lehman etc) which they then blew up through their conduct of monetary policy.

  • On the question of monetary policy itself, many will remember the erroneous assurances that the inflation is transitory – a mistake repeated all around the world.

Bessent went on to muse over “all these PHDs over there, I don’t know what they do. This is like universal basic income for academic economists.”

Bessent’s criticism of the Fed’s ability to fulfill its basic mission of providing stability to financial markets, regulating the banking system and conducting monetary policy might suggest that Trump could bypass questions of whether he has the legal authority to fire Powell and ‘do an Andrew Jackson’ by abolishing the central bank altogether.

Tyler Durden Tue, 07/22/2025 - 09:20

Klaus Schwab Blasts WEF Board, Denies Report He Fudged Data, Racked Up $1.1M In Expenses

Klaus Schwab Blasts WEF Board, Denies Report He Fudged Data, Racked Up $1.1M In Expenses

The founder of the World Economic Forum is firing back after a bombshell investigation  accused him of cooking economic reports and billing over a million dollars in questionable expenses.

Klaus Schwab, the 87-year-old architect of Davos and the WEF’s global elite gatherings, slammed the organization’s board of trustees on Sunday, accusing them of breaking a confidentiality deal by letting media outlets get wind of the allegations.

I am in a position to refute all the accusations brought up against me,” Schwab said in a statement after Swiss newspaper SonntagsZeitung detailed preliminary findings from a law firm’s probe.

The investigation, conducted by Swiss law firm Homburger and ordered by the WEF’s own board, reportedly found that Schwab interfered with the forum’s flagship economic rankings to favor political allies and avoid controversy - and submitted 900,000 Swiss francs (about $1.1 million) in expenses that investigators say lacked proper justification.

Three months ago we reported that Schwab was under investigation by the WEF after a whistleblower alleged financial and ethical misconduct by Mr. "eat the bugs" and his wife.

In an anonymous letter from sent to the board of directors by 'current and former Forum employees,' Schwab and his wife are accused of commingling their personal affairs with WEF resources without proper oversight, and much more...

Among the most serious allegations:

  • Schwab asked junior employees to withdraw thousands of dollars from ATMs on his behalf and used Forum funds to pay for private, in-room massages at hotels.
  • His wife Hilde, a former Forum employee, scheduled “token” Forum-funded meetings in order to justify luxury holiday travel at the organization’s expense.
  • The letter also raises concerns about how Klaus Schwab treated female employees and how his leadership over decades allegedly allowed instances of sexual harassment and other discriminatory behavior to go unchecked in the workplace

Other allegations include the Schwab family's use of Villa Mundi - a luxury property bought before the pandemic by the Forum located next to the organization's Geneva headquarters, which the whistleblower letter maintains that Hilde Schwab maintains tight control over, and which the forum paid $30 million to purchase and another $20 million to renovate - also overseen by Hilde.

Schwab says he paid the WEF back for said 'in-room massages', and denied the allegations about luxury travel and withdrawing funds.

According to the WEF, its board unanimously supported the decision to launch an independent investigation "following a whistleblower letter containing allegations against former Chairman Klaus Schwab. This decision was made after consultation with external legal counsel."

Schwab abruptly resigned from the WEF in April after the allegations surfaced. A replacement has yet to be named.

The report claims Schwab personally intervened to tweak the WEF’s Global Competitiveness Report to protect ties with key leaders like Indian Prime Minister Narendra Modi. In 2017, Schwab allegedly ordered a delay in releasing the rankings to avoid souring relations with India, whose score took a dive. He also reportedly advised holding back on boosting the UK’s ranking to avoid giving ammo to Brexit supporters.

In another incident in 2022, Schwab allegedly shared draft rankings with an unnamed country official whose position slipped, pushing to kill that year’s report entirely. The WEF later blamed the cancellation on COVID-related disruptions.

Schwab insists he’s been deceived, saying he offered to sit for an interview with investigators on July 15 and was promised a chance to review the findings before any conclusions were published.

In this respect I feel deceived,” he said. “I am willing to defend my interests with all my strength, even in the context of a legal dispute.”

The WEF stayed tight-lipped when contacted by Bloomberg, saying only that it would comment once the probe concludes, likely by late August.

Sunday’s revelations ramp up an already heated battle between Schwab and his former colleagues. Just weeks ago, the WEF and its founder released a joint statement claiming they were working to “normalize” their strained relationship.

But with accusations of data manipulation and lavish spending now in the open, that détente looks increasingly shaky.

Tyler Durden Tue, 07/22/2025 - 09:00

Futures Rally Pauses At All Time High With Mag7 Earnings On Deck

Futures Rally Pauses At All Time High With Mag7 Earnings On Deck

US equity futures are trading flat, erasing an earlier loss following record highs in both the S&P and Nasdaq while the small cap Russell 2000 sits 8.5% below its ATH. As of 8:00am ET, S&P futures are unchanged while Nasdaq futures are down 0.1% as investors brace for corporate news on how tariffs are filtering through to their earnings. In pre-market trading Mag7 names are mixed with AAPL, GOOG, and META higher and NVDA pulling semis lower. Cyclicals are weaker with Industrials outperforming. Treasuries and the dollar steadied before an 830am speech from Fed Chair Jerome Powell in which he is not expected to discuss monetary policy. Powell has faced relentless criticism from the Trump administration, mostly over decisions to hold interest rates steady so far in 2025. The yield curve is seeing a slight twist steeper with 10s and 30s +1bp; USD is modestly lower after yesterday seeing its largest daily decline since June 12. Commodities are weaker with Energy/precious lower, base metals higher, and Ags mixed. Today’s macro data focus is on regional Fed activity indicators. 

In premarket trading, Mag7 stocks are mixed (Alphabet +0.4%, Meta +0.3%, Apple +0.2%, Amazon +0.09%, Microsoft is little changed, Tesla -0.2%, Nvidia -0.6%). Here are some other notable premarket movers: 

  • Calix (CALX) rises 3% after the communication software company reported second-quarter results that beat expectations and gave an outlook that is seen as strong.
  • Circle Internet Group (CRCL) falls 2% after the stablecoin issuer was downgraded to sell from neutral at Compass Point Research & Trading LLC as it sees more competition for Circle now that the US stablecoin bill has passed.
  • CSX (CSX) rises 4% after Semafor reported that Berkshire Hathaway-owned BNSF is working with Goldman Sachs to explore a takeover of a rival. It wasn’t immediately clear whether BNSF has its eye on Norfolk Southern or CSX, report says.
  • Danaher (DHR) slips 1% after the company reported operating loss in its life sciences unit for the second quarter, surprising analysts who’d forecasted a profit.
  • D.R. Horton (DHI) gains 6% after the homebuilder narrowed its revenue forecast for the full year.
  • General Motors Co. (GM) falls 3% after second-quarter profit fell as President Donald Trump’s tariffs on foreign-made vehicles and parts chopped $1.1 billion from adjusted earnings.
  • Medpace (MEDP) gains 44% after the clinical research company raised its sales and profit guidance.
  • Norwegian Cruise Line Holdings Ltd. (NCLH) climbs 1% after receiving a bullish initiation from TD Cowen, which added the cruise operator to its top picks ahead of the the Florida-based company’s earnings next week.
  • NXP Semiconductors (NXPI) falls 6% after the chipmaker issued a third-quarter revenue forecast that missed some bullish analysts’ estimates.
  • Sarepta Therapeutics (SRPT) falls 2%, on course to extend losses into a third session, as Barclays downgrades the stock to equal-weight from overweight. Separately, the drugmaker said it will temporarily pause shipments of Elevidys, its gene therapy to treat Duchenne muscular dystrophy, reversing its prior stance.
  • Sherwin-Williams (SHW) drops 3% after the paint company cut its adjusted earnings per share guidance for the full year.
  • Shopify’s US-listed shares (SHOP) fall 2.7% after Loop Capital Markets cut its recommendation on the stock to hold from buy, citing valuation concerns.

In earnings, NXP Semiconductors gave a less bullish third-quarter forecast than some investors had anticipated, while Steel Dynamics second-quarter adjusted EPS missed.

A record-breaking stock rally has powered on in the face of growing uncertainty over trade negotiations ahead of the Aug 1 tariff deadline. But with valuations stretched, the strong second-quarter earnings season is failing to illicit much of a reaction from investors so far, as they wait for more concrete information on the tariff fallout.

“Of course we see beats, but that won’t tell us a huge amount about where we are going forward,” JP Morgan Asset Management Global Market Strategist Hugh Gimber told Bloomberg TV. “That’s where we are spending our energy on this earnings season, trying to gauge where the hit from tariffs will come through.”

After hitting a series of all-time highs, the S&P 500 is trading around 22 times expected 12-month profits. The S&P 500 hasn’t posted a 1% up or down day since late June. Reports from megacaps Tesla Inc. and Alphabet Inc. are due Wednesday.

Wall Street giants such as Invesco, Fidelity and JPMorgan Asset Management are leaning harder into the rally in risk assets. The high-octane wager is that while Trump is threatening to disrupt the economic order anew, he will step back from the brink.

The 50 global companies with the highest US sales exposure are now expected to post average earnings growth of 10% this year, down nearly 400 basis points from estimates at the start of the year, according to BI strategists. The 50 firms with the least US exposure have seen upward estimate revisions. Elsewhere, Goldman Sachs traders said chip stocks are the most crowded pocket of tech, if not the market, on AI enthusiasm.

On the trade front, President Donald Trump may issue more unilateral tariff letters before the tariff deadline, White House Press Secretary Karoline Leavitt said. More trade deals may also be reached before the deadline, she added. Philippine President Ferdinand Marcos Jr. will be the latest foreign leader eager to make a deal before the deadline when he visits Trump in the Oval Office later Tuesday. A team of US officials will visit India in the second half of August to hold talks on a bilateral trade deal, the Financial Express reported Tuesday.

Firms such as Invesco Ltd., Fidelity International Ltd. and JPMorgan Asset Management are leaning harder into the rally in risk assets. The high-octane wager is that while Trump is threatening to disrupt the economic order anew, he will step back from the brink.

European stocks are in the red amid a mixed batch of earnings as investors await the results of trade negotiations between Brussels and Washington. The Stoxx 600 is down 0.5%. Chemical and tech shares are lagging, while utilities and miners are gaining. Among individual stocks, Akzo Nobel falls after cutting its profit forecast for the year. Here are the biggest movers: 

  • Norsk Hydro gains as much as 4.3%, the most since April, after reporting a solid set of second-quarter figures, according to analysts, with weakness in the Aluminum Metal arm offset by strength elsewhere, with a significant beat in its Energy division.
  • Compass Group gains as much as 8.9% after the catering and support services company lifted its full-year guidance and announced the acquisition of Dutch caterer Vermaat.
  • Centrica shares gain as much as 6.8%, most in five months, after the energy company agreed to take a 15% stake in the UK’s Sizewell C nuclear power plant.
  • GB Group shares rise as much as 4.8%, after the cybersecurity company reassured investors with in-line trading during the first quarter following disappointing annual results back in June.
  • Greencore Group shares jump as much as 9.3%, trading at their highest level since January 2020, after the food manufacturer lifted its profit outlook for the year.
  • Akzo Nobel shares fall as much as 5.3%, the most since early April, with Morgan Stanley analysts calling it a “disappointing set of results” with pricing/mix coming in below their expectations.
  • Lindt & Spruengli shares fall as much as 5.8%, after the chocolate maker reported weaker-than-expected volume growth and first-half earnings missed estimates amid soaring cocoa prices.
  • Givaudan shares drop as much as 7.2%, the most in over three months, after like-for like sales missed in the second quarter.
  • Sartorius shares drop as much as 7.9%, the most since April 7, after the German lab equipment maker reported results for the second quarter.
  • Kier drops as much as 8.6%, snapping a run of four straight gains, after the UK construction company announced that CEO Andrew Davies will retire at the end of October.
  • Asker Healthcare falls as much as 6.4%, the most since April, after reporting its first earnings since its listing on Stockholm in March.
  • Alfa Laval shares fall as much as 5.3%, the most since April, after the Swedish industrial group reported earnings.
  • TietoEVRY falls as much as 8.4%, the most since February, after the Finnish software and services firm reported “another soft quarter,” according to Morgan Stanley.

A key Asian stock benchmark erased a gain and dipped, weighed down by losses in South Korean and Taiwanese chipmaker shares. The MSCI Asia Pacific Index fell as much as 0.5%, set for its first decline in four sessions. Taiwan Semiconductor Manufacturing and Samsung Electronics were the biggest drags. Lenders in Australia weighed down the index further ahead of the earnings season. South Korean stocks retreated from near an all-time high ahead of this week’s tariff talks with the US and upcoming earnings releases. Japanese shares had a volatile session as investors weighed policy implications from the ruling Liberal Democratic Party’s historic setback in Sunday’s elections. Prime Minister Shigeru Ishiba’s plan to remain in his role alleviated some worry of a sudden upheaval, though uncertainty has risen over the stability of his government. Among other nations hoping for positive trade talks, Malaysia is said to be seeking a milder US tariff rate of 20%, while Philippine President Ferdinand Marcos Jr. plans to meet with President Donald Trump later Tuesday. Elsewhere, Thailand is set to name its new central bank chief on Tuesday, ending a months-long search.

In FX, the dollar kicked off the day stronger but has seen that fade. The Bloomberg Dollar Spot Index is now down for the day after having yesterday seeing its largest daily decline since June 12. The New Zealand dollar is the worst G-10 performer after seeing first quarterly decline in exports for two years, and the yen continues its wild gyrations as markets are in denial over the coming fiscal easing tsunami that will send the currency tumbling. 

In rates, Treasuries are under slight pressure as US trading day begins, after Monday’s rally sent yields across tenors to lowest levels in more than a week. 10- to 30-year yields are higher by 1bp-2bp with shorter-maturity tenors little changed; the 10-year near 4.39% is back above the 200-day moving average level it dipped below Monday and hasn’t closed below since July 2. Potential catalysts are in short supply as the US economic calendar is light and Fed policymakers are in self-imposed external communications blackout ahead of their July 29-30 meeting, however Chair Powell is slated to give welcoming remarks at a regulatory conference in Washington at 8:30am, and Governor Michelle Bowman, the Fed’s vice chair for supervision, is slated to appear on CNBC at 7:30am. UK bonds are falling after the country’s budget deficit hit the highest since April 2021. The yield on 10-year gilt bonds is up four basis points, lagging comparable Treasuries and bunds, where their respective yields are each up by a basis points. 

Oil is falling, with tariff worries and supply concerns the culprits. Brent futures down 1.1% and below $69/barrel. Gold weaker, down around $8 to about $3,388/oz.

In commodities, oil fell for a third session, and gold slipped. Iron ore headed toward the highest in nearly five months as traders eyed China’s prospective supply-side reforms for the steel industry and plans for a massive dam project

The US economic data calendar includes July Philadelphia Fed non-manufacturing activity (8:30am) and July Richmond Fed manufacturing index and business conditions (10am). Fed officials are in external communications blackout ahead of their July 30 rate decision, anticipated to be no change in the fed funds target range of 4.25%-4.5%

Market Snapshot

  • S&P 500 mini -0.1%
  • Nasdaq 100 mini -0.3%
  • Russell 2000 mini -0.1%
  • Stoxx Europe 600 -0.4%
  • DAX -0.8%, CAC 40 -0.5%
  • 10-year Treasury yield +1 basis point at 4.39%
  • VIX +0.3 points at 16.95
  • Bloomberg Dollar Index little changed at 1200.52
  • euro little changed at $1.1701
  • WTI crude -1.1% at $66.47/barrel

Top Overnight News

  • Scott Bessent called for a review of the Fed’s HQ renovation, urging the central bank to also scrutinize its non-monetary policy operations. He warned of “significant mission creep.” BBG
  • SoftBank and OpenAI's $500bln AI project struggles to get off the ground with the Stargate venture, introduced at a White House event earlier this year, now setting a more modest goal of building a small data centre by year-end: WSJ.
  • Trump’s targeting of trade loopholes would threaten 70% of China’s US exports and more than 2.1% of GDP. BBG
  • The prospects of an interim trade deal between India and the United States before Washington's August 1 deadline have dimmed, as talks remain deadlocked over tariff cuts on key agricultural and dairy products. RTRS
  • A growing number of European Union member states, including Germany, are considering using wide-ranging "anti-coercion" measures targeting U.S. services if the EU cannot reach a trade deal with U.S. President Donald Trump
  • Japan’s chief trade negotiator Ryosei Akazawa spoke with Howard Lutnick for two hours yesterday to discuss a tariff agreement. BBG
  • Bank of Japan officials see little need to shift their policy stance of gradually raising interest rates in the wake of Prime Minister Shigeru Ishiba’s latest election setback. BBG
  • France urges Brussels to take a more confrontational approach to trade talks w/Washington. Politico
  • The UK borrowed billions more than forecast in June as a surge in debt-interest payments sent the budget deficit to £20.7 billion. BBG
  • GM’s second-quarter profit fell as Trump’s tariffs chopped $1.1 billion from earnings. Shares retreated -285 bps premarket. Goldman thinks positioning was longer and thinks expectations were for lower tariff impact. Details: EPS beat ($2.53x vs. $2.34 cons) on Q2 net sales of $47bn (slightly above $46bn cons). BBG 

Trade/Tariffs

  • Canadian PM Carney issued a statement following a meeting with US Senators and stated they discussed work to strengthen continental defence and security, as well as Canada’s successes in dismantling illegal drug smuggling and securing the border.
  • Canada's Minister of Intergovernmental Affairs Leblanc will be in Washington this week for trade discussions.
  • Japan's tariff negotiator Akazawa and US Commerce Secretary Lutnick met for over two hours in Washington on Monday and held frank talks to seek agreement benefiting both Japan and the US, while Japan will continue to seek common ground on tariff issues with the US, according to the Japanese government.
  • South Korean Finance Minister Koo said he will hold trade talks with his US counterpart on July 25th, while Koo added that the Foreign Minister and Industry Minister will conduct meetings with US counterparts as soon as possible.
  • India and US mini trade deal is ruled out before August 1st, according to CNBC TV18, citing sources.
  • India-US trade deal prospects are dim ahead of the August 1st deadline, sides remain deadlocked over ags and dairy products, according to Reuters sources.
  • Malaysia has been asked by the US to extend tax exemptions for US EVs, while Malaysia is seeking a 20% US levy, but is said to be resisting EV and ownership demands, according to Bloomberg.
  • "Chinese experts warned that if the US attempts to weaponize trade talks and tariffs...Beijing will not yield to the pressure. Such moves would also risk undermining the trade negotiation mechanism between the two countries", via Global Times.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded mixed after failing to sustain the early upward momentum seen at the open following the fresh record intraday highs on Wall St and with two-way price action seen in Japan following the ruling coalition's upper house election loss. ASX 200 was rangebound as strength in the mining, materials, resources and healthcare sectors offset the losses in financials, energy and industrials, while the RBA Minutes from the July meeting provided very little to shift the dial but continued to signal future cuts ahead. Nikkei 225 initially surged to above the 40,000 level as participants returned from the long weekend, but then wiped out its gains and then some, as participants second-guessed the ramifications of the ruling coalition's upper house election setback. Hang Seng and Shanghai Comp kept afloat in rangebound trade amid a lack of major fresh catalysts and after the Hong Kong benchmark breached the 25,000 level.

Top Asian News

  • Japanese Finance Minister Kato said it was a tough upper house election result for the LDP and the government will take the outcome of the upper house elections seriously, while he added that the government has repeated that sales tax cuts are not appropriate.
  • RBA Minutes from the July meeting stated the Board agreed further rate cuts are warranted over time, while the focus was on the timing and extent of easing. The Minutes stated that the Board considered whether to leave rates at 3.85% or to cut by 25bps and a majority agreed it was prudent to await confirmation on inflation slowdown before easing, while the majority felt cutting rates three times in four meetings would not be cautious and gradual. The case for no change cited some data as inflation had been slightly firmer than expected, the job market had also not loosened as expected and there was less risk of a severe global downturn. Furthermore, members agreed monetary policy was modestly restrictive, though financial conditions had eased and it was difficult to know how far rates can fall before policy is no longer restrictive, so prudence is needed.
  • BoJ is likely to leave its benchmark rate unchanged next week, according to Bloomberg sources; sees little impact from election on rate stance; watching for trade talk impact before any hikes; sees upward price risks if there is large fiscal loosening.
  • China's Forex Regulator says overseas investors in general net increased their onshore equity and bond holdings in Q2; supply and demand in the FX market is "basically stable"; Yuan has been basically stable at reasonable and balanced levels this year.
  • PBoC Shanghai Head Office says foreign holdings of yuan-denominated bonds traded on China's interbank market totalled CNY 4.23tln at the end of June.

European bourses (STOXX 600 -0.4%) opened mostly lower and sentiment continued to deteriorate as the session progressed. Downside, which followed a mixed APAC session, where indices failed to sustain early upward momentum. European sectors hold a slight negative bias, with only a handful of industries managing to stay afloat. Utilities takes the top spot, joined closely by Basic Resources and then Travel & Leisure to complete the top three. Chemicals sits at the foot of the pile, with two of the top 10 industry constituents reporting today; Givaudan reported weak sales and Akzo Nobel missed across its headline figures, alongside a cut to its FY Adj. EBITDA view.

Top European News

  • BoE Governor Bailey says they have seen steeper yield curves and it's a global phenomenon; UK experience is not out of line with other markets. The cause of the steeper yield curve reflects greater uncertainty on trade policy. The steeper yield curve also reflects global uncertainty on fiscal policy.
  • UK Deputy PM Rayner is pushing for councils to be given new powers to tax tourists, despite opposition from Chancellor Reeves, according to The Telegraph.
  • ECB July Bank Lending Survey: Corporate credit demand is weak but rose in Q2 and expected to rise further in Q3 Credit standards for firm loans remained broadly unchanged. Credit standards tightened slightly for housing loans and more markedly for consumer credit. Housing loan demand continued to increase strongly, while demand for firm loans remained weak. Trade war was a drag on demand but did not lead to a tightening in credit standards.
  • UK FCA says "borrowers will find it easier to remortgage, saving time and money, under changes confirmed by the FCA". Under these changes, buyers will: Find it easier to reduce their mortgage term, helping to lower the total cost of borrowing and reduce the risk of repayment extending into retirement. More easily remortgage with a new lender, helping them access cheaper products. Be able to discuss options with their mortgage provider and get advice when they need it.

FX

  • DXY is flat after declining around 0.6% on Monday. There was no obvious fundamental catalyst for the pullback in the USD on Monday with some pinning the move on the flattening of the US curve and price action being exaggerated by summer trading conditions. The macro narrative since the start of the week is relatively unchanged, with trade deals between the US and global trading partners remaining elusive and the Fed in its blackout period. On the latter, both Powell and Bowman are due on the speaker slate today but are not expected to comment on monetary policy. DXY has failed to make its way back onto a 98 handle with a current session peak at 97.99.
  • EUR is flat. Focus at the start of the week has been on the trade agenda with the EU reportedly looking at a wider set of potential countermeasures against the US in the event that a deal is not reached by August 1st. Note, if a deal is not reached by the deadline, the EU will be subject to a 30% tariff rate by the US. As August 1st draws closer and a deal is lacking, the EUR will likely embed a greater risk premium. EUR/USD currently trading around the 1.17 mark, session high at 1.1703.
  • JPY is softer vs. the USD as Japanese participants return to market and digest the upper house election results, which saw the ruling majority lose its coalition. Today's losses appear to be more of a scaling back of Monday's upside vs. the USD rather than a reassessment of the outcome of the election.
  • GBP is flat vs the Dollar. Today's main macro highlight from the UK has come via a worse-than-expected outturn for UK borrowing figures with Borrowing in June coming in at GBP 20.7bln vs. Exp. GBP 16.75bln; the second-highest June borrowing since monthly records began in 1993, after that of June 2020. BoE Governor Bailey is currently speaking with the Treasury Select Committee; nothing too pertinent thus far. Cable is back on a 1.34 handle and trades in a 1.3462-91 range.
  • Antipodeans are both at the bottom of the G10 leaderboard alongside the current flimsy risk tone. Little follow-through was seen into AUD following the RBA minutes, which provided very little incrementally. The account noted that the majority agreed it was prudent to await confirmation on inflation slowdown before easing, although the Board agreed further rate cuts are warranted over time with focus on the timing and extent of easing.

Fixed Income

  • JGBs climbed higher overnight in reaction to Sunday’s Japanese Upper House election. At best, posted gains of 40 ticks to a 138.71 peak but ended the Japanese day off highs, though still markedly clear of the 138.31 open.
  • USTs are in the red, but only marginally. In a thin 111-01+ to 111-06+ band as fresh catalysts are light and the US docket, ex-earnings, is limited on account of the Fed blackout. Note, a handful of Fed speakers due today incl. Chair Powell; however, remarks are not expected to be pertinent to monetary policy. Elsewhere, Richmond Fed Index is also due. If the current marginal pressure extends, Friday’s low resides at 110-21+, that week’s low at 110-10+, and the current WTD base at 110-08.
  • Bunds are in-fitting with USTs. Softer in a 130.24 to 130.49 band. Specifics this morning have been light with no pertinent EU trade updates, data or speakers thus far; as is the case for the Fed, the ECB is currently in its quiet period, so while President Lagarde is scheduled today, she is not expected to provide any pertinent commentary. No reaction to this morning’s ECB Bank Lending Survey, where credit standards were broadly unchanged for firm loans in Q2, tightened slightly for households but more markedly for consumer credit. If the morning’s bearish bias extends, then the July 7th low stands at 130.02 before the figure and then numerous levels from the last two weeks between 129.73 and 129.02.
  • Gilts are underperforming a touch, began the morning lower by 12 ticks in-fitting with the above modest bearish bias before slipping another 20 to a 91.46 base. While in the red by just over 30 ticks at worst, the benchmark remains clear of Monday’s 91.29 low and last week’s 91.08 trough. This morning’s underperformance is seemingly a function of the latest PSNB data. A series that showed borrowing in June was above market consensus and the second-highest June figure since records began; highest was in 2020, during COVID. A series that provides no relief for the Chancellor’s fiscal position and keeps the narrative for the Autumn Budget firmly towards tax increases. Elsewhere, BoE Governor Bailey is currently speaking with the Treasury Select Committee; nothing too pertinent thus far.
  • UK sells GBP 1.7bln 1.125% 2035 I/L: b/c 3.35x (prev. 3.02x) & real yield 1.588% (prev. 1.386%).
  • Germany sells EUR 0.422bln vs exp. EUR 0.5bln 2.30% 2033 Green and EUR 0.931bln vs exp EUR 1bln 2.50% 2035 Green Bund.

Commodities

  • Subdued trade across the crude complex as prices move in tandem with broader sentiment, with just over a week left until US President Trump's August 1st tariff deadline, with little in the way of deals announced in recent days. WTI trades towards the bottom of a USD 65.07-65.86/bbl range while Brent resides in a USD 68.36-69.12/bbl parameter.
  • Precious metals are taking a breather following Monday's rise and with macro newsflow rather light ahead of the August 1st tariff deadline, which also coincides with the US jobs report and the ISM Manufacturing PMI. Spot gold trades in a USD 3,344.90-3401.65/oz range after failing to sustain above USD 3,400/oz in APAC hours.
  • Mostly but modestly subdued trade across base metals, although losses seem somewhat cushioned by the recent Chinese dam project, with iron ore prices overnight closing higher for a fifth consecutive session. 3M LME copper meanwhile trades flat in a notably narrow USD 9,827.70-9,883.00/t range at the time of writing.
  • Coking coal prices overnight surged by 8%, hitting the daily limit. Some cited unverified market chatter that the Chinese National Energy Administration has reportedly issued a verification notice requiring all mines that have exceeded production capacity to suspend operations for rectification.

Geopolitics

  • Iran's Foreign Minister said Iran is open to talks with the US but not directly for now, while it was separately reported that Iran's Foreign Minister told Fox News they cannot give up Iranian enrichment.
  • Iranian Foreign Minister reiterates that Iran will not give up uranium enrichment program, via IRNA.
  • World Health Organisation's Tedros said WHO staff residence in Deir al Balah, Gaza, was attacked three times on Monday as well as its main warehouse, while he demanded the immediate release of the detained staff and protection of all its staff. Tedros said two WHO staff and two family members were detained although three were later released and one staff member remained in detention.

US Event Calendar

  • 8:30 am: Fed’s Powell Gives Welcome Remarks at Regulatory Conference
  • 8:30 am: Powell Gives Opening Remarks
  • 1:00 pm: Fed’s Bowman in Fireside Chat with Sam Altman
  • Fed’s External Communications Blackout (July 19 - July 31)

DB's Jim Reid concludes the overnight wrap

If you see any evidence of me working harder this week it's because I was told last night how much it would cost to redecorate the house.There are people in the house who think that after 6 plus years post a complete renovation and having lived in it with three grubby kids, it is in desperate need of some fresh licks of paint. There are others (ok me) who disagree. I think we all know which argument will come out on top. 

60/40 portfolios have generally come out on top over the last 24 hours with both equities and bonds continuing to rally even if the high-water mark for equities seemed to be the European close last night. The S&P 500 (+0.14%) crept up to a fresh record helped by the slew of good earnings reports but drifted around half a percent off its highs around the time Europe closed. The bigger move has been in sovereign bonds, with a large global rally that saw 10yr BTPs (-10.1bps) and OATs (-10.4bps) lead the way. 10yr bund yields (-8.3bps) posted their biggest daily decline since January (same for BTPs), and 10yr USTs (-3.9bps) also rallied. So this all helped to ease some fears about fiscal policy, as well as concerns about tighter financial conditions that had accompanied the recent rise in long-end bond yields. Overnight Japanese yields have re-opened after the election and holiday with 10yr yields -4bps lower but 30yr yields a couple of basis points higher. The ultra long end has marched to its own beat in recent weeks. 

That small US equity rally was powered by the ongoing strength in big tech stocks, with the Magnificent 7 (+0.70%) posting a 9th consecutive advance for the first time since 2023. That left the index just half a percent beneath its all-time high from December, whilst the NASDAQ (+0.38%) hit an all-time of its own. We see Tesla and Alphabet report after the close tomorrow. As mentioned at the top, the equity rally did lose some steam later in the session, with almost two thirds of the S&P 500 constituents lower on the day, while the small cap Russell 2000 fell by -0.40%.

Another factor supporting bonds and equities in recent days has been a growing confidence that Fed Chair Powell was unlikely to be fired after the peak fears last week. However there were comments from Treasury Secretary Bessent yesterday that “we need to examine the entire Federal Reserve institution and whether they have been successful.” But they weren’t seen as particularly aggressive, and the 30yr Treasury yield came down -4.3bps to 4.94%, some way beneath the 5.07% intraday peak it reached last week. That was echoed across the yield curve, with 2yr yields down -0.9bps to 3.86%, and the 10yr yield as discussed at the top down -3.9bps to 4.38%. The flattening in the yield curve was the mirror image of the large steepening as Powell’s position came into focus last week. However, that decline in long-end yields also took out some support for the dollar, with the dollar index (-0.64%) seeing its biggest daily decline since mid-June after having rallied the previous two weeks.

Over in Europe, the picture was initially very different, as worries over the fate of the EU-US trade deal weighed on investors’ minds ahead of the August 1 deadline. Officials are expected to continue negotiating this week, and Bessent said on CNBC yesterday that things “don’t have to get ugly with the Europeans.” But the lack of concrete progress has continued to give investors pause. That meant the major indices were down for most of the session, although several managed to pare back their losses as the positive mood from US earnings spread more widely. So the STOXX 600, which had been down -0.41% intraday, recovered to close only -0.08% lower, and there were gains for the FTSE 100 (+0.23%) and the DAX (+0.08%) as well. 

Japanese stocks opened significantly higher this morning (up around a percent) but have subsequently slipped with the Nikkei now -0.38% lower as focus shifts to the August 1st trade deadline and how the ruling coalition will deal with being three seats short of a majority. 

Elsewhere in Asia the Hang Seng and Shanghai Composite are both up around a quarter of a percent but with the KOSPI (-1.58%) sliding after a strong start. It seems that August 1st is starting to focus investor minds in Korea as well. The S&P/ASX 200 (-0.17%) is slightly lower alongside S&P 500 (-0.05%) and NASDAQ 100 (-0.14%) futures. 

Finally on geopolitics, Iran’s Tasnim news agency reported that Iran had agreed to hold talks with the UK, France and Germany over its nuclear program, expected to take place this Friday and separate to ongoing discussions on indirect talks with the US. And separately on Ukraine, Bloomberg reported that the US and Germany had agreed to send two Patriot systems to Kyiv. This follows last Friday’s announcement that the EU had approved “one of its strongest sanction packages” against Russia, including a lower oil price cap from $60 to $47.6/bbl. Brent crude fell as much as -1.23% intra-day on Monday but was a mere -0.10% lower at $69.21/bbl by the close. Those oil moves helped support the bond rally during European hours before its partial reversal later in the US session.

Now for the day ahead, we’ll get the US July Philadelphia Fed non-manufacturing activity, Richmond Fed manufacturing index, UK June public finances and France’s retail sales. We’ll also get the ECB’s bank lending survey and RBA minutes of the July meeting. Central Bank speakers include Fed Chair Powell and BoE Governor Bailey. Finally, today’s earnings reports include SAP and Coca-Cola.

Tyler Durden Tue, 07/22/2025 - 08:29

CDC: COVID-19 Infections Rise In Some Parts Of US

CDC: COVID-19 Infections Rise In Some Parts Of US

Authored by Jack Phillips via The Epoch Times (emphasis ours),

While activity for COVID-19 remains low in the United States, recent statistics released by the Centers for Disease Control and Prevention (CDC) show that infections are rising in parts of the country.

This scanning electron microscope image shows the novel coronavirus (orange), which causes COVID-19 disease, isolated from a patient in the U.S., emerging from the surface of cells (green) cultured in the lab. Photo published on Feb. 13, 2020. NIAID-RML

The CDC said in a July 18 update that “COVID-19 activity is increasing in many Southeast, Southern, and West Coast states. COVID-19 levels are ranked as ”low,” the second-lowest level on the CDC’s scale, according to the update.

Citing wastewater data for COVID-19, the agency said that positive tests are increasing around the United States, while emergency department visits appear to be increasing among children ages 0 to 4.

Wastewater detections for COVID-19 updated by the CDC suggest that high levels of the virus are being reported in California, Florida, Hawaii, Louisiana, Nevada, South Carolina, and Texas. No states were experiencing very high levels, according to a map from the agency.

Seasonal influenza activity is considered by the CDC to be low, and RSV activity is considered very low, the CDC said. Overall, U.S. respiratory illness activity, which refers to “how frequently a wide variety of respiratory symptoms and conditions are diagnosed by emergency department doctors,” remains very low.

Other illnesses that are covered in the update include Mycoplasma pneumoniae, sometimes called “walking pneumonia,” which the CDC said has become elevated in some parts of the United States over the past several weeks. Mycoplasma pneumoniae, a type of bacteria, can cause upper respiratory tract infections but sometimes causes pneumonia, researchers say.

Meanwhile, cases of whooping cough, or pertussis, “are lower than their peak in November 2024, although they remain elevated in 2025 compared with immediately before the COVID-19 pandemic.” Whooping cough has the highest risk of causing severe disease and complications in children ages 1 and younger, according to the Mayo Clinic.

Symptoms of the bacterial infection include a bout of coughing fits that can last weeks, vomiting while coughing, as well as a characteristic “whooping” sound that occurs during inhalation after the coughing fits.

The CDC has not updated its COVID-19 variant estimates since mid-June. In the last update, it noted that there were growing proportions of variants such as NB.1.8.1 and XFG, which were both declared “variants under monitoring” by the World Health Organization (WHO) in May and June, respectively.

“The available evidence on NB.1.8.1 does not suggest additional public health risks relative to the other currently circulating Omicron descendent lineages,” the WHO said about the NB.1.8.1 strain. The U.N. health body issued a similar statement about the XFG variant in June.

The NB.1.8.1 appears to have been driving a rise in cases across mainland China since earlier this year. Because of the Chinese Communist Party’s history of blocking access to information and publishing inaccurate data, including underreporting COVID-19 infections and related deaths since 2020, information provided by local doctors and health workers is more valuable for understanding the situation on the ground there.

The recent CDC update comes after agency researchers said that COVID-19 appears to follow a twice-per-year pattern. Cases usually peak in the summer, or July through September, before peaking again in the winter, or December through February.

“Our analysis revealed biannual COVID-19 peaks in late summer and winter, a pattern that is expected to persist as long as the rapid evolution of SARS-CoV-2 and cyclical S1 diversity continues,” CDC researchers wrote in a report released earlier this month.

Tyler Durden Tue, 07/22/2025 - 08:05

Pivotal Week For Housing Data As Goldman Sees Broader Slowdown

Pivotal Week For Housing Data As Goldman Sees Broader Slowdown

It's a pivotal week for the U.S. housing market, with key June home sales data due just as the Federal Reserve enters its pre-meeting blackout ahead of the July 30 FOMC.

The upcoming housing data is "the canary in the coal mine, and it's looking queasy," Bloomberg Economist Anna Wong wrote in a note. Existing home sales for June will be released on Wednesday, followed by new home sales on Thursday.

While interest rate swaps still aren't pricing in a 25bps cut, political pressure is mounting. President Trump has renewed his attacks on Fed Chair Jerome Powell, accusing him of playing politics. He's been vocal about the urgent need to begin a rate-cutting cycle, claiming Powell is "late as usual." 

Treasury Secretary Scott Bessent stated earlier...

Ahead of the mid-week data dump, Goldman Sachs Chief Economist Jan Hatzius and his team of analysts published a note highlighting that the housing market slowdown is broadening. The analysts point out that construction is being scaled back, demand is cooling, and price growth is nearly flat. They expect further weakness into year-end, with tight monetary policy and affordability remaining key headwinds.

Goldman Sachs Mid-Year 2025 Housing Outlook — Summary

Residential Investment Falls Sharply:

  • After a modest 1% annualized decline in Q1, residential fixed investment is estimated to have dropped 10% in Q2. Full-year 2025 RFI is forecast to fall 5.7% (Q4/Q4), reversing 2024's +2.8% growth.

Mortgage Lock-In Freezes Market:

  • With 87% of borrowers holding mortgage rates below market levels, housing turnover remains depressed. Existing home sales are expected to total 4.1 million in 2025—23% below 2019.

Single-Family Resilience Cracks:

  • Despite elevated rates, single-family starts had held up early in the year but are now declining—down 20% (starts) and 13% (permits) since February. Starts are projected to fall 11% YoY to .91 million.

Demand Cooling:

  • Strong demographics and a healthy labor market support demand, but reduced immigration and affordability issues—evidenced by widespread use of mortgage-rate buydowns—are acting as constraints.

Home Prices to Stall:

  • National home prices are forecast to rise just .2% YoY in 2025 and .8% in 2026, as elevated supply and softening demand push homeowner vacancy rates up to 1.6% by end-2026.

Multifamily Sector Weakens Further:

  • Construction backlog has shrunk 26% but remains above pre-pandemic levels. Starts are expected to stay low as developers work through completions, now at a 40-year high.

Shelter Inflation Moderates:

  • With rent growth slowing to 2–3% and the rent gap between new and existing leases now closed, Goldman expects PCE shelter inflation to fall from 4.1% to 2.6% by December 2026.

In a separate housing note last week, Goldman analyst Vinay Viswanathan expects "mortgage rates will likely grind lower" and open the door for "modest affordability relief over the next 2 years."

Pro subscribers can read the full housing note here... 

Tyler Durden Tue, 07/22/2025 - 07:45

The Fed Is To Blame For The Dollar's Recent Weakness. Still, There Is No Fiat Alternative...

The Fed Is To Blame For The Dollar's Recent Weakness. Still, There Is No Fiat Alternative...

Authored by Daniel Lacalle,

There are plenty of comments about the death of the US dollar as the world’s reserve currency. These tend to appear when the dollar index declines. However, these “dollar death” reports are greatly exaggerated and fail to answer a simple question: What is the alternative?

If you want to bet on the euro as a global reserve currency ahead of the imposition of the digital euro, which will obliterate all limits to central bank surveillance and excess, be my guest.

Furthermore, the enormous military spending and public expenditure plans that have been announced in 2025 add to the giant committed unfunded liabilities of member states, moving from 350% in the case of Germany to 500% of GDP in the case of Spain.

The Chinese yuan is only used in 4.5% of global transactions. With capital controls, exchange rate fixing and significant legal and investor insecurity due to government control of institutions, it is difficult to believe that China’s yuan will be an alternative to the US dollar. Additionally, I do not believe that the Chinese government wants to eliminate those barriers and, as such, has no desire to be a world reserve currency. This is a similar problem with the currency of Brazil, Russia, India, or South Africa. Would you accept your salary and savings in a currency issued by countries with capital controls as well as significant legal and investor security challenges?

Gold and bitcoin are reserve-value alternatives to fiat currencies for investors but cannot replace the US dollar due to the low liquidity and supply.

Currently, we are observing a decline in the value of the dollar as investors take on more risk, following the euro’s collapse to nearly parity in 2024 and the yen’s drop to 40-year lows against the US dollar. This is driven by the Federal Reserve’s stubborn rate policy.

How is the Fed responsible for a weaker dollar?

For international investors, buying US treasuries can be uneconomical due to the large hedging costs created by elevated US rates. At the same time, rates are plummeting in Europe, making it more reasonable to purchase European assets and debt despite the weak fundamentals and solvency. Fearing a non-existent inflation burst, the Fed is engineering a dollar decline by maintaining high rates.

One can criticise tariffs for a variety of reasons, but they don’t trigger inflation. Tariffs do not create more units of currency in the system and do not drive higher monetary velocity. What causes inflation is government spending and money printing. Furthermore, those that fear tariff impacts on prices never consider the elevated levels of overcapacity in the export world, the complexity of supply chains, or the working capital challenges created by not exporting to the United States.

Even with all the negative headlines and the Fed’s negative impact, the US dollar index is significantly above where it was in 2009-2018 and is only reflecting a short bounce of the euro and yen (73% of the index).

The dollar index (DXY) is at 98.5 at the close of July 18th. The DXY averaged approximately 93.15 during Obama’s presidency and 100.0 through Biden’s tenure. Furthermore, the Broad Trade-Weighted Dollar Index is at 120.35. It averaged 98 during Obama and 118 with Biden. It is hard to call the current level “a collapse”.

Higher US rates and carry trade bets are driving a typical risk-on bounce.

A set of structural, institutional, and market realities support the dollar’s dominance, despite frequent calls for de-dollarization or speculation about emerging alternatives.

1. Deep and Liquid Financial Markets

  • The United States boasts the largest, most transparent and most liquid capital market in the world.
  • US Treasuries continue to be the main reserve asset for central banks worldwide, followed by gold. If there is anything we have seen, it is the decline of the euro as a central bank reserve asset, according to the latest Bloomberg figures.
  • In 2025, nearly 90% of all global foreign exchange transactions involved the US dollar, according to the Bank for International Settlements.

2. Trusted Legal and Institutional Frameworks

  • A transparent legal system, strong property rights, and independent institutions attract global investors and underpin confidence in the dollar.
  • The dollar’s supremacy requires more than economic size; it depends on the trust that legal and political checks and balances will endure.

3. Global Trade and The Network Effect

  • The dollar is used in about 54% of global export invoicing—far ahead of other major currencies. The euro stands at about 30%, while the Chinese yuan is at just 4%.
  • Entire commodity markets—including oil—are dollarised, and over 48% of global SWIFT payments settle in dollars, compared to the yuan’s 4.5%. Think about this: not even the Chinese or Russian oil companies use local currency for all their activities.

To be a world reserve currency, alternatives must have open markets, full capital account convertibility, legal transparency, and sizable, investable assets. There is no alternative to the US dollar with these criteria. The euro faces redenomination risk and the imposition of the central bank digital euro and lacks a truly unified fiscal policy. The Chinese yuan is constricted by capital controls, state intervention, and a less open legal system.

The US dollar’s status as a world reserve currency remains because there is no fiat alternative. Gold and Bitcoin may be investment options, but they do not fulfil the functions or trust needed at a global level.

The only risk for the United States is that all the benefits of having the world reserve currency become enormous liabilities if confidence is lost due to fiscal indiscipline. However, the fiat world is not about who wins but who loses first.

No fiat currency can be an alternative to the US dollar if the government is more fiscally imprudent, institutions are less independent and capital markets less open than in the United States.

What saves the US dollar from losing its status as a world reserve currency is that the fiscal, legal and economic situation of the alleged alternatives is even worse.

The U.S. dollar remains the world reserve currency because it has no contenders. This is not because the government and Federal Reserve policies are always sound, but because others are much worse. The greatest threat to the dollar’s dominance is internal: fiscal and trade deficits and political dysfunction. Yet, unless and until another currency can match the US dollar’s unparalleled combination of depth, trust, liquidity, and legal robustness, the dollar’s primacy endures. You cannot dethrone the US dollar by being worse than the king.

It is sad, but true. The dollar’s biggest strength is the atrocious monetary, legal and fiscal irresponsibility of its alternatives.

Tyler Durden Tue, 07/22/2025 - 07:20

"Painful Decision": Sarepta Suspends All Elevidys Shipments Nationwide Amid Deaths 

"Painful Decision": Sarepta Suspends All Elevidys Shipments Nationwide Amid Deaths 

Just hours after Children's Hospital Los Angeles halted the use of Sarepta Therapeutics' Elevidys, the pharma company announced late Monday that it will temporarily suspend all shipments of the gene therapy for Duchenne muscular dystrophy. The move follows three reported deaths linked to the treatment.

"This proactive step will allow Sarepta the necessary time to respond to any requests for information and allow Sarepta and FDA to complete the ELEVIDYS safety labeling supplement process," Sarepta wrote in a press release, adding, "The Company looks forward to a collaborative, science-driven review process and dialogue with the FDA." 

Sarepta CEO Doug Ingram stated, "The decision to voluntarily and temporarily pause shipments of ELEVIDYS was a painful one, as individuals with Duchenne are losing muscle daily and in need of disease-modifying options." 

"It is important for the patients we serve that Sarepta maintains a productive and positive working relationship with FDA, and it became obvious that maintaining that productive working relationship required this temporary suspension while we address any questions that FDA may have and complete the ELEVIDYS label supplement process," Ingram said. 

In pre-market trading, shares fell another 4%, compounding yesterday's 5.36% loss. Year-to-date, the stock is down a staggering 89%, trading at lows not seen since 2015.

On Monday, HC Wainwright & Co. analyst Mitchell S. Kapoor made the rare move of slashing Sarepta's price target to zero—from a prior target of $10—while maintaining a sell rating. According to the latest Bloomberg data, there are three sell ratings, 17 holds, and six buys on the stock. The average 12-month price target among Wall Street analysts is $28.32. 

Barclays analyst Gena Wang said her desk is stepping to the sidelines due to ongoing regulatory uncertainties, citing "numerous twists and turns" from both the FDA and Sarepta following the death of a third patient. She set a 12-month price target of $18, implying a 35% upside from the last close. 

The FDA first asked Sarepta to halt shipments of Elevidys on Friday, following news reports of a third patient death in a clinical trial. The pharma company initially refused, sparking backlash. 

Related:

Thanks for playing in the Wall Street casino. 

Tyler Durden Tue, 07/22/2025 - 06:55

Hello New York, The UK Shows That If You Tax The Rich, They Will Flee

Hello New York, The UK Shows That If You Tax The Rich, They Will Flee

Authored by Mike Shedlock via MishTalk.com,

The UK closed a tax loophole. Guess what. NYC can expect the same.

Extreme Wealthy Flee the UK

The Wall Street Journal reports The U.K. Closed a Tax Loophole for the Global Rich. Now They’re Fleeing.

The U.K. is trying to tax the superrich. It’s off to a bumpy start.

“I’m on my way out,” said Bassim Haidar, a Nigerian-born Lebanese businessman who moved here in 2010. “There comes a time when you don’t feel welcome anymore, and it’s time to just start packing and leaving.”

Haidar is one of the estimated 74,000 who used a centuries-old tax loophole, abolished in April, that catered to the global rich. The nondomiciled—or non-dom status, as it is known—allowed foreigners living in the U.K. to pay tax only on what they earned domestically. Profits made abroad were ignored unless brought into the U.K.

Beset by high public debt and crumbling infrastructure, the U.K. hoped eliminating non-doms would bring in about $45 billion by 2030. But instead of paying up, wealthy expats are rushing for the exits, sparking questions about whether the effort will raise any money at all.

The British experiment has laid bare the difficult politics of taxing the rich. Taxing high earners has become a rallying cry on the left as a solution to income inequality and fraying social-safety nets. Low-tax advocates say taxes on the wealthy are counterproductive, driving away job creators and big spenders.

One challenge of taxing the wealthy is that they are highly mobile, with houses around the world, private jets and an army of advisers who can sort out visas and bureaucratic paperwork quickly. Jurisdictions such as Dubai, Italy and Monaco have rolled out the red carpet, offering no taxation or structures similar to the U.K.’s old non-dom status.

Haidar is selling his U.K. properties and plans to leave this summer. He’ll split his time between Dubai and Greece.

Wealthy Britons have been trying to escape the U.K.’s high tax rates for decades. In the 1970s, the Rolling Stones moved to France to avoid taxes, while David Bowie went to Switzerland.

The lucrative non-dom loophole had the opposite effect, drawing rich foreigners to London. 

The U.K. always knew that some rich residents would leave because of the tax changes and built that into its forecasts. The U.K.’s independent budget watchdog, the Office for Budget Responsibility, estimated that among a large subset of non-doms, around 12% will move. But it warned this month that departures could be higher and said the U.K.’s “growing reliance on this small and mobile group of taxpayers therefore represents a fiscal risk.”

A report from the Centre for Economics and Business Research, commissioned by the Land of Opportunity campaign, forecast that a higher share of non-doms would leave and suggested the government could lose money if the migration rate tops 25%.

Campaign Platform of Democrat Zohran Mamdani

In New York City, here is the campaign platform of Democrat Zohran Mamdani

  • Freeze rent

  • Create affordable, union-built, rent-stabilized homes – constructing 200,000 new units over the next 10 years.

  • Create a network of city-owned grocery stores

  • Free bus transportation

  • Free childcare for every New Yorker aged 6 weeks to 5 years, ensuring high quality programming for all families.

  • Wages for childcare workers to be at parity with public school teachers. 

  • New York City will renovate 500 public schools with renewable energy infrastructure and HVAC upgrades, transform 500 asphalt schoolyards into vibrant green spaces, create 15,000 union jobs, and build resilience hubs in 50 schools that provide resources and safe spaces during emergencies.

  • The Mamdani administration will protect LGBTQIA+ New Yorkers by expanding and protecting gender-affirming care citywide, making NYC an LGBTQIA+ sanctuary city, and creating the Office of LGBTQIA+ Affairs. He’ll make NYC an LGBTQIA+ sanctuary city and protect reproductive rights. 

  • As Mayor, Zohran will reject Medicare Advantage, and reject higher copays for inservice workers. 

  • As Mayor, Zohran will champion a new local law bringing the NYC wage floor up to $30/hour by 2030.

How Will Zohran Pay for the Above?
  •  Zohran’s revenue plan will raise the corporate tax rate to match New Jersey’s 11.5%, bringing in $5 billion

  • He will tax the wealthiest 1% of New Yorkers—those earning above $1 million annually—a flat 2% tax (right now city income tax rates are essentially the same whether you make $50,000 or $50 million).

Prisons Are Obsolete Abolition of Private Property Gender Affirming Care Defund the Police

Mamdani now says he does not support defunding the police.

Wait a Second

He now does not want to “defund” the police. He just wants yo cut $1 billion out of a $6 billion budget.

A Pathetic List of Candidates

The New York Times addresses the question Who’s Running for Mayor of New York City?

  • Zohran Mamdani is a state assemblyman and democratic socialist who stunned the political establishment with his victory in the Democratic primary.

  • Curtis Sliwa, a Republican, lost the general election to Mr. Adams in 2021. He is running for the Republican nomination again.

  • Eric Adams ran for mayor in 2021 as a former police officer who vowed to bring down crime, and his message four years later is similar. But he faces many challenges. He was indicted on federal corruption charges that were later dismissed by the Trump administration; his administration has been plagued by investigations and high-profile resignations; his approval rating is at record lows.

  • Andrew Cuomo was elected to three terms as governor and resigned in 2021 after roughly a dozen women accused him of sexual harassment. He also faced criticism for his handling of nursing home deaths during the pandemic.

  • Jim Walden, a former federal prosecutor who has handled high-profile cases, is running as an independent.

What a pathetic lot.

Sliwa, a Republican, has no chance and he won’t back out. That’s likely irrelevant.

However, three candidates running as independents is relevant. If they all stay in, they will split the vote ending what little chance they did have.

It’s even worse than I thought looking at the Platform of Jim Walden

To tackle affordability, he’s pledged $1 billion a year in rent relief for the city’s most rent-burdened tenants, funded immediately by cutting ineffective programs and using the city’s budget surplus, and in the future, by instituting a 0.75% “micro-tax” on goods and services, which he said would raise an estimated $60 billion over four years. Walden said the tax is small enough that it won’t cause companies to alter their business decisions. He would need state approval for the tax.

He also wants to create a contract-based rent-stabilization program to incentive more affordable housing.

Pretty Much Over Mish Proposal

Given that anyone would be better than Zohran Mamdani, I suggest Andrew Cuomo, Eric Adams, and Jim Walden agree to pulling a single name out of the hat to run as the independent.

Otherwise, and perhaps anyway, a Marxist will be running New York City.

Tyler Durden Tue, 07/22/2025 - 06:30

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