An "Existential Crisis" To Close 2025

By Michael Every of Rabobank

The Fed delivered what was expected – a 25bps rate cut to 3.75% and a deep public split over whether it should cut further because the labor market is weakening or keep policy tight because inflation is too high. The Fed will also buy $40bn of T-Bills just after stopping QT, but this is not to be seen as QE, nor as having any impact on monetary policy - and QE was a neutral “asset swap”, not a balance sheet expansion that juiced asset prices. See here for the take of our US Strategist Philip Marey, who concludes that as Trump takes a firmer grip of the Fed ahead, rates are likely to fall more than some expect.

The ECB’s Lagarde spoke of “Europe's existential crisis” and didn’t think the level of ECB rates could do anything about it. She underlined estimates that internal trade barriers due to national regulations on top of the EU’s own amount to an effective tariff of 110% on services and 60% on goods traded between member states. “Everybody wants to sugarcoat, gold-plate and do just a bit more,” yet on reforms, “There will be pushback from multiple corners… from people who say: ‘We’re very happy in our corner of Europe, leave us alone.’” (As ‘Teresa Ribera is ‘not interested in competition,’ complains jilted Brussels bubble’ – but that didn’t stop the EU from just raiding China’s Temu over a foreign subsidy allegation.) Lagarde underlined the need for a transformative capital markets union and joint Eurobonds for defence funding, seeing this as opportunity.

The BoC left rates on hold at 2.25% and seems to think it’s done, yet admitted it‘s difficult to “assess the underlying momentum of the economy,” given US tariffs’ impact over time. See here for more from Molly Schwartz.

The RBA, hawkish on Tuesday, prompting market chatter of rate hikes in 2026, will look at the jobs numbers today (-21.3K vs +20K expected) and perhaps rethink. But what of asset prices as the AFR notes, ‘Why this mum bought her 11-year-old son a townhouse.’ Only one? Tsk!

Today, BoE Governor Bailey will testify to Parliament’s Covid Inquiry. Will we see questions about the Bank’s response, e.g., why didn’t it use macroprudential measures on mortgage lending at the same time as deep rate cuts and massive QE? There are key lessons to be learned for when the next, inevitable ‘nobody saw it coming’ crisis hits - will central banks have a clearer idea of what they are *for* by then?

Meanwhile, as so often reiterated here, the backdrop against which all central banks pretend to know what they’re doing is getting increasingly unpredictable.

In geoeconomics, Mexico imposed 50% tariffs on China and other Asian economies –exactly the Trump Plan we predicted: next, Canada(?) Against that backdrop, the USTR said he seeks a “constructive” reset on trade with China, which launched a satellite super factory to rival Starlink and added domestic AI chips to its official procurement list for the first time. However, Ford suppliers received China's new streamlined rare-earth licenses - but German automakers were notably excluded so far. Indonesia is resisting US trade demands on critical minerals and energy it sees risking its relations with China and Russia. On the other hand, India reportedly offered the US its ‘best-ever’ deal, as D.C. pushes farm access in trade negotiations, as the US Soybean association president meanwhile stated that Trump’s farm aid plan for them is “A band-aid on an open wound.” The UK’s PM also told Parliament that a return to the EU customs union would “unravel” new UK trade deals: yes, some things are zero sum. Trade can be one of them.

In geopolitics, US Representative Massie has introduced a bill to pull America out of NATO, which speaks to the times if not its likelihood of passage. It’s nonetheless noted that Trump’s recent verbal attacks on Europe will force it to speed up post-America defence plans, with belated recognition that the era of America’s “security guarantee” for Europe is over. It seems Europe will have to pay much more than it has budgeted for the military by 2035, and a lot sooner. That’s as a report suggested a parallel US National Security Strategy to split up the EU and establish a new global “C5” of the US, China, Russia, India, and Japan, leaving Europe out of the power loop.

Germany’s Chancellor Merz nonetheless underlined he still wants the US as partner, and if Trump "can't make sense of this institution or the structure of the EU," the US can still cooperate with member states, and “Germany is, of course, first and foremost one of them.” Divide et impera.

Regardless, the EU is pressing harder for the passage of its €210bn Ukraine loan scheme, which Lagarde says is now the “closest” to being legal so far - is that something compliance officers like hearing? She added the new version should reassure investors it “does not amount to confiscation” - but as this money is clearly not going to be given back to Russia, it’s unclear how. Indeed, Belgium is demanding an extra cash buffer as wergild against expected Russian retaliation against it and Euroclear. And that’s presuming retaliation stays in that dimension – the FT reports on fears of a wider Russian campaign of sabotage to infrastructure and businesses ahead, which potentially comes with its own cost in terms of lower growth and higher inflation.

Muddying the waters for the EU in terms of its desire to adhere to global institutions, the International Court of Justice granted Russia’s counterclaim in a genocide case vs Kyiv. The potential implication, according to some, is that any warfare can be genocide if civilians are involved. Elsewhere, the US threatened to sanction the International Criminal Court unless it promises not to prosecute President Trump.

In Latin America, the US seized an Iranian oil tanker off the coast of Venezuela after smuggling Nobel peace prize laureate Machado out of the country: she called for democracies to “fight for freedom,” which may not be metaphorical. In Brazil, a bill that could reduce ex-President Bolsonaro’s prison time has advanced in Congress. In Bolivia, leftist ex-president Arce was just arrested for corruption a month after leaving office. And China pledged foreign aid to the region with no “political conditions” – it seems the Western Hemisphere may be ideologically, if not physically, contested.

In the Indo-Pacific, China says it seeks a “fair and just maritime order” in the South China Sea, which it claims; the ongoing Japan-China spat is seen as having no off-ramp; a Telegraph report claims China’s hypersonic missiles would destroy the US Navy in a fight over Taiwan - as the US Navy Secretary called for a “wartime footing” in US weapons production; and Thailand-Cambodia border fighting rages on as Trump signals he might try to intervene.

In the Middle East, there are reports of a build-up of US military jets heading towards the Middle East, as others say Iran has started mass production of ballistic missiles again. Trump will also delay unveiling his Gaza Board of Peace members until 2026, and it’s reported that the US is weighing hitting the UN Palestinian refugee agency UNWRA with terrorism-related sanctions.

If you think that’s too much information to fit into a Global Daily, try writing it(!) Moreover, consider this is just one day, in one week, in one month, in what has been a non-stop year for wild news headlines. 2026 doesn’t look like it’s going to get any easier. Quite the opposite, in fact.

You might not see it all as an existential crisis, just a ‘volatile trading backdrop’, but trying to keep up with just that part for readers can certainly prompt one for those who try!

Tyler Durden Thu, 12/11/2025 - 10:25

TIME Person Of The Year Are The Architects Of AI

TIME magazine has picked the 'Architects of AI' as their person of the year for 2025, when the potential for AI "roared into view" with no turning back.

"For delivering the age of thinking machines, for wowing and worrying humanity, for transforming the present and transcending the possible, the Architects of AI are TIME’s 2025 Person of the Year," the magazine announced. 

2025 was the year when artificial intelligence’s full potential roared into view, and when it became clear that there will be no turning back.

For delivering the age of thinking machines, for wowing and worrying humanity, for transforming the present and transcending the… pic.twitter.com/mEIKRiZfLo

— TIME (@TIME) December 11, 2025

Whether you use it or not, AI has dominated headlines all year. On one hand, AI has proven useful in an increasing number of applications. On the other, it's potentially rotting our brains. What's hilarious is that less than 6 months ago, TIME published a piece titled "ChatGPT May Be Eroding Critical Thinking Skills, According to a New MIT Study." 

In it, MIT researchers found that "the usage of LLMs could actually harm learning, especially for younger users."

"What really motivated me to put it out now before waiting for a full peer review is that I am afraid in 6-8 months, there will be some policymaker who decides, ‘let’s do GPT kindergarten.’ I think that would be absolutely bad and detrimental," said the paper’s main author Nataliya Kosmyna. 

Then there's 'vibe coding' - where 'programmers' simply ask an AI to write code for them instead of programming it manually, and of course, you can't scroll Facebook now (why would you?) without running into mountains of 'AI slop' - which spans everything from fake scientific journals to brain-rotting videos seemingly designed to pull western society's average IQ into double-digits. 

McDonald's has unveiled its own AI-generated Christmas ad that somehow looks even worse than Coca-Cola's.

Terrible AI visuals? Check. Horrible messaging? Check. A like-to-dislike ratio that says it all? Oh, you better believe that's a check:https://t.co/XQHnVLoG5T pic.twitter.com/Vestu3uNJS

— 80 LEVEL (@80Level) December 8, 2025

In 2023, Elon Musk called AI one of humanity's "biggest threats," which is why he says he set off to create a "politically neutral" and "maximally truth-seeking" chatbot (Grok) with the aim of minimal bias. 

Maximally truth-seeking is absolutely essential to ensuring a good AI future for humanity https://t.co/6QnWy3v1AB

— Elon Musk (@elonmusk) July 25, 2025

"AI is more dangerous than, say, mismanaged aircraft design or production maintenance or bad car production, in the sense that it is, it has the potential — however small one may regard that probability, but it is non-trivial - it has the potential of civilization destruction," Musk told Tucker Carlson. "A regulatory agency needs to start with a group that initially seeks insight into AI, then solicits opinion from industry, and then has proposed rule-making." 

According to TIME, "It was hard to read or watch anything without being confronted with news about the rapid advancement of a technology and the people driving it. Those stories unleashed a million debates about how disruptive AI would be for our lives. No business leader could talk about the future without invoking the impact of this technological revolution. No parent or teacher could ignore how their teenager or student was using it." 

"Every industry needs it, every company uses it, and every nation needs to build it," Nvidia CEO Jensen Huang told the outlet. "This is the single most impactful technology of our time."

Indeed.

Tyler Durden Thu, 12/11/2025 - 10:05

What GAO Found Federal real property management has faced longstanding challenges. The General Services Administration (GSA) and its component office, the Public Buildings Service (Buildings Service), play a central role in addressing the high-risk issues identified by GAO of underused buildings, real property data reliability, and building condition. Underused buildings. Federal agencies, many of which are tenants in buildings managed by the Buildings Service, have long struggled to determine how much space they need to fulfill their missions. Retaining this underused space costs millions of dollars. While the issue remains on GAO’s High-Risk List, GSA and others have taken steps to address underused buildings in recent years. For example, in March 2025, GSA launched a program called Space Match to help agencies find available office space in underused federal space. According to GSA, potential benefits of the program include helping agencies find available space as employees return to in-person work; optimizing the use of underused space; and creating a collaborative work environment for agencies. Data reliability. Without reliable data, supporting real property management and decision making is difficult. GAO has identified problems with the reliability of federal real property data since GAO first designated management of federal real property as a High-Risk area in 2003. GSA has taken steps to improve the reliability of real property data, including contributing to new quality standards in August 2024. Building Condition. In the 2025 High-Risk Update, GAO added building condition as a new concern for federal real property due to large increases in the cost of addressing deferred maintenance in federal buildings. This backlog of maintenance and repair needs has more than doubled in estimated cost from fiscal years 2017 through 2024, going from $170 billion to $370 billion. In addition, GAO found in 2023 that the spaces of federal agencies, many of which are GSA tenants, are not well configured to meet modern office needs. If agencies continue to operate in poorly configured office buildings, they will continue to underuse space, spending unnecessary operating funds. GSA and Buildings Service tenant agencies are taking steps to improve building condition and configuration, but challenges remain. As instructed by the administration, the Buildings Service began a major reorganization in March 2025, which has included reducing staff levels by about 50 percent. Buildings Service officials told GAO in September 2025 that they planned to finalize this reorganization in October 2025. GAO has not confirmed with GSA how the recent lapse in appropriations affected its implementation timeline. GAO will issue a report in the coming months applying leading practices for agency reforms to the Buildings Service’s reorganization efforts. GAO’s past work has shown that agency reforms are more likely to be successful in refocusing and enhancing agency missions and achieving efficiency and effectiveness if they follow these leading practices. Why GAO Did This Study Federal real property management has been on GAO’s High-Risk List since 2003. GAO has previously reported that better management is needed to effectively dispose of underused buildings, collect reliable real property data, and improve the condition of federal buildings. The Buildings Service’s primary mission is to manage federal real property. In March 2025, the Buildings Service began taking reorganization actions. This statement discusses how the issues of underused buildings, data reliability, and the condition of federal buildings on the High-Risk List relate to GSA and the efforts GSA’s Buildings Service has taken to reorganize as of October 2025. This work is a part of a review for Congress on the organization and management of the Buildings Service. GAO’s description of the relationship of the high-risk issues to GSA is based on GAO’s prior work and reflects GAO’s most recent High-Risk Update, released on February 25, 2025. As of May 2025, GAO has eight open priority recommendations to GSA on real property High-Risk issues, including property disposal, data reliability, and the management of deferred maintenance and repair. See GAO-25-108060. To identify the steps the Buildings Service has taken to reorganize, GAO reviewed GSA documents and interviewed GSA officials. For more information, contact: Heather Krause at krauseH@gao.gov.

The Census Bureau released the Residential Vacancies and Homeownership report for Q3 2025 today.

The results of this survey were significantly distorted by the pandemic in 2020.
This report is frequently mentioned by analysts and the media to track household formation, the homeownership rate, and the homeowner and rental vacancy rates.  However, there are serious questions about the accuracy of this survey.

This survey might show the trend, but I wouldn't rely on the absolute numbers. Analysts probably shouldn't use the HVS to estimate the excess vacant supply or household formation, or rely on the homeownership rate, except as a guide to the trend.

National vacancy rates in the third quarter 2025 were 7.1 percent for rental housing and 1.2 percent for homeowner housing. The rental vacancy rate was not statistically different from the rate in the third quarter 2024 (6.9 percent) and not statistically different from the rate in the second quarter 2025 (7.0 percent).

The homeowner vacancy rate of 1.2 percent was higher than the rate in the third quarter 2024 (1.0 percent) and higher than the rate in the second quarter 2025 (1.1 percent).

The homeownership rate of 65.3 percent was not statistically different from the rate in the third quarter 2024 (65.6 percent) and not statistically different than the rate in the second quarter 2025 (65.0 percent).
emphasis added

Click on graph for larger image.

The Red dots are the decennial Census homeownership rates for April 1st, 1990, 2000, 2010, and 2020. 

The HVS homeownership rate was increased to 65.3% in Q3, from 65.0% in Q2.  
The results in Q2 and Q3 2020 were distorted by the pandemic and should be ignored.

The HVS homeowner vacancy increased to 1.2% in Q3 from 1.1% in Q2.

The homeowner vacancy rate declined sharply during the pandemic and includes homes that are vacant and for sale (so this mirrors the increasing levels of existing home inventory).
Once again - this probably shows the general trend, but I wouldn't rely on the absolute numbers.


The rental vacancy rate increased to 7.1% in Q3 from 7.0% in Q2.  This is up from the low of 5.6% in 2021 and 2022.

The quarterly HVS is the timeliest survey on households, but there are many questions about the accuracy of this survey.

Disney Invests $1 Billion In OpenAI, Strikes Landmark Deal To Bring Beloved Characters To Sora

Disney and OpenAI have resolved their prior video-generation rights dispute by entering into a three-year licensing and technology partnership that makes Disney the first major content partner for Sora, OpenAI's generative video platform.

"As part of this new, three-year licensing agreement, Sora will be able to generate short, user-prompted social videos that can be viewed and shared by fans, drawing from a set of more than 200 animated, masked and creature characters from Disney, Marvel, Pixar and Star Wars, including costumes, props, vehicles, and iconic environments," Disney wrote in a press release.

As part of the agreement, Disney will invest $1 billion in OpenAI and receive warrants for additional equity.

Disney will feature a curated selection of fan-generated Sora videos on Disney+, and both companies will collaborate to develop innovative AI products and enhance experiences across Disney's platforms.

In addition to enhancing the user experience with AI, Disney will adopt OpenAI tools for employees and use OpenAI APIs to build new internal and consumer-facing applications. So does that mean a restructuring of coders at the studio is just ahead?

"Technological innovation has continually shaped the evolution of entertainment, bringing with it new ways to create and share great stories with the world," Disney CEO Robert Iger wrote in a press release.

Iger continued, "The rapid advancement of artificial intelligence marks an important moment for our industry, and through this collaboration with OpenAI we will thoughtfully and responsibly extend the reach of our storytelling through generative AI, while respecting and protecting creators and their works."

He noted, "Bringing together Disney's iconic stories and characters with OpenAI's groundbreaking technology puts imagination and creativity directly into the hands of Disney fans in ways we've never seen before, giving them richer and more personal ways to connect with the Disney characters and stories they love."

So the OpenAI / $dis deal is a licensing deal where $dis invests $1bn?

I imagine they are going to collect more than $1bn in licensing fees

The game continues pic.twitter.com/a2zbKX6pu4

— Sterling Capital (@jay_21_) December 11, 2025

Disney shares are up 2% in early trading. Year-to-date, the stock is down 2% and has been trading sideways since its peak in early 2021.

The resolution follows Disney and other major studios raising serious concerns about the unlicensed use of their characters in early Sora-generated videos. Disney has found a solution. Will other studios follow?

Tyler Durden Thu, 12/11/2025 - 09:50

This is part 2 of a two-part series analyzing the impact of an amendment to the House Homeland appropriations bill on the H-2A and H-2B visa programs. Read part 1 here.

Key takeaways:

• The government funding bill for the Department of Homeland Security (DHS) may include a rider amendment that would establish a new methodology for setting the H-2B visa program’s annual numerical limit. This amendment (originally known as Amendment #1 but later dubbed the Bipartisan Visa En Bloc amendment) would result in a cap of at least 252,000 visas in fiscal year (FY) 2026.
• H-2B visa extensions and job changes are not counted against the annual cap, but after adding them to the updated cap of 252,000, the total number of H-2B workers employed in FY 2026 would be 282,000, which is almost 113,000 greater than the total number of workers in 2024 and 2025.
• The rider would move 12,000 H-2B workers employed at carnivals, traveling fairs, and circuses to the P visa, which lacks any numerical limit on the number of visas, further expanding the number of exploitable workers in H-2B industries.
• The rider would restrict the already limited ability of H-2A and H-2B workers to change employers, leaving them more exploitable and vulnerable to workplace violations.
• This amendment in Congress would mainly benefit employers by allowing them to gradually hire an exponentially higher number of workers they can control, while undercutting labor standards for all workers.

In part 1 of this two-part blog post series, I provided background and discussion on a rider amendment that the Homeland Security subcommittee of the House Appropriations Committee proposed and passed over the summer. Originally known as Amendment #1 but later dubbed the Bipartisan Visa En Bloc amendment, it would make major changes to the H-2A and H-2B visa programs through the appropriations process, while completely circumventing the committees that should have subject matter jurisdiction in the House and Senate. Part 1 focuses on the changes and impacts in the H-2A program; this post will briefly explain the components of the rider that would make changes to the H-2B visa program and the impact of those changes, as well as one change that would affect both programs.

The H-2B program has been expanded through appropriations riders every year since fiscal year 2016

Two of my previous reports provide a fuller explanation of the background on the size of the H-2B program and a history of the legislative riders in appropriations bills that have been used to expand the size of the H-2B program. A quick recap here is warranted. In fiscal year 2016, Congress authorized a “returning worker” exemption through appropriations legislation to fund the operation of the U.S. government. The legislation exempted H-2B workers from the annual H-2B cap of 66,000 that is set in law, for fiscal year 2016, if the workers hired were previously in H-2B status in any of the preceding three fiscal years. There was no cap on the number of returning H-2B workers under the exemption.

In each year since FY 2017, Congress has, through appropriations riders, given the executive branch the discretionary legal authority to roughly double the number of H-2B visas available. Rather than specify the level of increase for the H-2B program, appropriators have passed the buck instead to the executive branch—perhaps because they didn’t want the responsibility or criticism that may come from setting a specific number—by directing the U.S. Department of Homeland Security, in consultation with the U.S. Department of Labor (DOL), to determine how many additional H-2B visas are appropriate, if any. DHS has interpreted the rider language as allowing them to issue up to 64,716 “supplemental” visas in the corresponding fiscal year. In total, it has been 10 years (FY 2016–2025) since Congress first permitted increases to the size of the H-2B program through an appropriations rider. The Biden administration in 2023, 2024, and 2025 used the full authority granted to the executive branch in the legislative riders, raising the total H-2B annual limit to 130,716.

The appropriations rider would create a new methodology to expand the H-2B cap by at least 100,000

The rider takes a different approach to allowing a higher number of H-2B visas to be issued in FY 2026. The language of the amendment states that for every employer who has had any H-2B positions certified in the past five fiscal years (2021–2025), the highest number that they had certified in those years will be the number of H-2B workers they may hire who will not count against the annual cap of 66,000. In other words, if an employer had 10 jobs certified in 2021, 15 in 2022, 20 in 2023, 100 in 2024, and 50 in 2025, they would be allowed to hire 100 H-2B workers in 2026 without them counting against the 66,000 cap.

To calculate how many workers could be hired in 2026 under this formula, a colleague and I matched employer records from DOL and identified the employers who had at least one approved H-2B job in each of the years between 2020 to 2024. (Full year data for 2025 were not available at the time of writing, so 2020–2024 are used as a proxy.) Altogether, 186,342 H-2B workers would have been exempted from the annual cap under this formula. This is almost certainly a low-end estimate because the number of H-2B jobs certified in 2020 was lower than normal because of the bureaucratic shutdowns and slowdowns caused by the start of the COVID-19 pandemic.

Table 1 shows an estimate for 2020–2024 that serves as a proxy for our estimate on the number of new H-2B workers who will be exempted from the cap in 2026 and also lists the number of new H-2B workers who will be permitted under the regular annual cap of 66,000. Altogether, the regular cap plus the supplemental cap for H-2B in 2026 would permit at least 252,342 new workers if the language in the rider becomes law. That’s an increase of almost 100%, relative to the total cap in 2023–2025, and a 282% increase, relative to the original H-2B cap of 66,000.

It’s also important to note that the annual caps and total number of workers will grow exponentially in the following years after 2026 if Congress reauthorizes the same language in the rider year after year, as they’ve done with past H-2B riders. This will occur because employers will have an incentive to apply to DOL for labor certification for as many H-2B jobs as possible because that will increase the size of their exemption from the cap for the following year.

Table 1 Total number of H-2B workers would reach 282,000 in 2026 if the rider becomes law

In a recent report, I showed that in 2024, when 64,716 supplemental H-2B visas were added to the statutory cap of 66,000, for a total cap of 130,716, there were a total of 169,177 H-2B workers. This was up from 75,122 total H-2B workers just a decade earlier. The nearly 170,000 total in 2024 included 139,541 H-2B workers with newly issued visas from the State Department, and 4,580 H-2B workers who had their employment extended with the same employer. An additional 25,056 were H-2B workers who changed employers. Workers who extend their H-2B status or change jobs are not counted against the annual cap. (In 2025 the cap was identical to the previous year; thus, final numbers for 2025 are likely to be very similar to 2024.)

To get a better sense of the total number of H-2B workers who would be employed in 2026 if the rider became law, I estimated that the same number of workers who extended their status or changed jobs in 2024 would also do so in 2026, and added that total to the 2026 total cap that would result from the rider. This is illustrated in Figure A, which shows the total number of H-2B workers from 2017 to 2024, and projections for 2025 and 2026. The annual cap plus the supplemental cap, together with H-2B extensions and job changes, will result in nearly 282,000 H-2B workers being employed in 2026—almost 113,000 more workers than were employed in 2024 and 2025.

Figure A The rider would move 12,000 H-2B jobs to the P visa, which is not administered by the Department of Labor

The other notable change in the rider when it comes to the H-2B program is that H-2B workers employed at carnivals, traveling fairs, and circuses would be moved to the P visa program. According to DOL, in FY 2024 there were 12,398 H-2B jobs certified in the “Amusement and Recreation Attendants” occupation, which is the relevant occupation that would be moved to the P visa. There would be no annual cap on the number of amusement and carnival workers who could be employed in the P visa program.

At present, the P visa is a little-known program intended for use by professional athletes and coaches, members of an internationally recognized entertainment group, or persons performing under a reciprocal exchange program or as part of a culturally unique program. At present, the P visa program has no wage rules or worker protections and is administered exclusively by DHS, which has no staff or expertise on worker rights. This is extremely troubling, given that H-2B workers employed at carnivals and traveling fairs work grueling hours and in terrible conditions, making them some of the most exploited H-2B workers—as advocacy groups have pointed out. These workers are often paid below the minimum wage and are not paid for overtime hours. Yet DOL would no longer have any formal oversight role to ensure they are protected.

The rider language says that employers hiring H-2B carnival workers through the P visa “shall be subject to the same program requirements” of the H-2B program, which are administered by DOL. It also directs DHS and DOL to each separately publish regulations to implement H-2B carnival workers being moved to the P visa program within 180 days and finalize them within one year.

The legislators who support this amendment have provided no explanation or rationale for why it makes sense to create an entirely new process and set of regulations to move one of the biggest H-2B occupations from DOL into DHS—an agency that will be given primary responsibility over the P visa and protecting carnival workers, but which has no mandate or expertise on labor standards and employment laws. The most obvious explanation is that this legislative maneuver is simply a new way to expand the H-2B cap even beyond 252,000, in a way that gives carnival employers an unlimited supply of workers who can be exploited and underpaid. It also seems absurd to put a low-paid traveling carnival worker into the same visa category—where there’s no labor oversight—as a professional baseball player coming from abroad to sign a multimillion-dollar contract with a major league team, or a world-famous singer, dancer, or painter.

House Homeland Security appropriations rider would defund the H-2 modernization rule, restricting the ability of H-2 workers to change jobs and leave abusive employment situations

One other notable section in the rider that impacts both the H-2A and H-2B programs would prohibit DHS from spending funds to implement a regulation that took effect in January 2024—often referred to as the H-2 modernization rule. The rule, among other things, requires additional scrutiny of applications from employers that have violated the law, makes it easier for H-2 workers to be eligible for green cards through existing pathways, and expands the ability of H-2A and H-2B workers to change employers (this is referred to as visa “portability”), making it easier to leave an abusive employment situation. The regulation is far from perfect. As EPI and other advocates have pointed out, the portability provisions require additional measures to make visa portability a more practical reality, rather than just a right that exists on paper and one that can be hijacked by employers seeking to circumvent the annual cap.

Nevertheless, these three provisions in the H-2 modernization rule can undoubtedly help some workers, reducing the indentured nature of the visa programs by tilting the balance of power ever so slightly in the direction of workers. And that’s likely the exact reason that the employers and legislators pushing for the rider included this provision to defund the rule.

The H-2B program needs reforms to improve labor protections and provide H-2B workers with a pathway to citizenship

The appropriations committees in the House and Senate should not continue using parliamentary tactics to make changes to the H-2B program that would likely not pass in Congress through regular order. Instead, Congress should work with the executive branch to reform the H-2B program in the following ways: 

• ensure U.S. workers are considered for open temporary and seasonal jobs 
• craft updated wage rules that protect U.S. wage standards for all workers in H-2B industries
• provide migrant workers with new protections and allow them to more easily change jobs
• provide migrant workers with a quick path to a green card and citizenship
• prohibit lawbreaking employers from hiring through the H-2B program

As EPI and other advocates have long said, these genuine reforms are the only way to ensure that the workers playing vital roles in the U.S. economy are not being exploited and underpaid and that their employers are not able to use visa programs as an employment law loophole that ultimately erodes job quality for all.

 

Australia's Social Media Ban For Under-16s Comes Into Effect

Authored by Victoria Friedman via The Epoch Times (emphasis ours),

A social media ban for those younger than 16 in Australia came into effect on Dec. 10, with Australian Prime Minister Anthony Albanese hailing the world’s first restriction of its kind as giving children back their childhoods.

Three 11-year-old boys use their phones while sitting outside a school in Sydney on Dec. 8, 2025. Rick RycroftAP Photo

As of Dec. 10, according to the Online Safety Amendment (Social Media Minimum Age) Act, social media platforms must stop under-16s in Australia from signing up for accounts and must begin phasing out existing accounts for underage children.

Facebook, Instagram, Kick, Reddit, Snapchat, Threads, TikTok, Twitch, X, and YouTube are now age-restricted platforms in Australia. These platforms are expected to take “reasonable steps” to prevent those younger than age 16 in the country from having or signing up for accounts, according to the Australian eSafety Commissioner website.

Companies failing in this regard face fines of up to AU$49.5 million (US$32.9 million).

The restrictions were brought in amid concerns over mental health, online harms, and screen addiction affecting Australian children.

“Enforcing a minimum account age of 16 will create normative change and give young people a reprieve from powerful and persuasive design features built to keep them hooked, often enabling harmful content and conduct online,” Australian eSafety Commissioner Julie Inman Grant said in a statement on Dec. 10.

She said that although no single measure is a “silver bullet,” the restrictions are part of a holistic approach that includes education and outreach.

The eSafety Commissioner website states that platforms must use measures for age verification that respect privacy laws and digital rights, suggesting that platforms use “age-related signals” to work out whether someone is underage, such as how long an account has been active, analysis of the user’s language level, and behavioral and interaction signals.

The website states that people who do have to prove their identity will not be forced to use a government ID, saying that the Social Media Minimum Age legislation “specifically prohibits platforms from compelling Australians to provide a government-issued ID or use an Australian Government accredited digital ID service to prove their age.” Platforms may offer it as an option but must also offer a reasonable alternative.

Global Issue

“This is the day when Australian families are taking back power from these big tech companies, and they’re asserting the right of kids to be kids and for parents to have greater peace of mind,” Albanese told ABC News Australia on Dec. 10.

When asked what advice he can give to parents and children concerned about the impact of the loss of social media profiles, the prime minister said families need to have that discussion and talk these issues through.

“We understand that this is going to be difficult,” Albanese said. “But it is so important that young people are given the opportunity to actually grow as young humans and to differentiate, as well, between what is real in human interactions and what they can often be exposed to online.”

Australian Prime Minister Anthony Albanese speaks to reporters during a news conference at Parliament House in Canberra, Australia, on Aug. 26, 2025. Lukas Coch/AAP Image via AP

The prime minister said that although his country is the first to have enacted such legislation, the impact of social media on children is a global problem. Other countries, including Malaysia and Denmark, as well as various states across the United States, are either bringing in similar controls or attempting to.

“New technology can do wonderful things, but we need to make sure that humans are in control of our own destiny, and that is what this is about, particularly focused on our youngest Australians,” Albanese said.

US, Australian Parents Back Bans

A recent survey found that most parents in Australia and the United States are in favor of social media bans for those younger than 16.

The Family Online Safety Institute found that 65 percent of Australian parents and 58 percent of U.S. parents supported such measures. Support among children aged 10 to 17 was much lower; 38 percent of young Australians and 36 percent of young Americans were in favor.

In its report, published on Dec. 9, the institute found that 52 percent of U.S. parents and 42 percent of Australian parents are confident that social media bans will protect children’s mental health. Lower percentages of American (43 percent) and Australian (33 percent) youth hold the same view.

However, both age groups shared the same beliefs about whether such bans would reduce young people’s overall screen use.

“Many children, 64 percent in the U.S. and 59 percent in Australia, say that with a social media ban in place, they would spend more time on other digital platforms, including video games or text messaging,” the report states.

“This could indicate that total screen time could remain the same, just with a shift to different digital platforms.”

Tyler Durden Thu, 12/11/2025 - 09:35

The Census Bureau and the Bureau of Economic Analysis reported:

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced today that the goods and services deficit was $52.8 billion in September, down $6.4 billion from $59.3 billion in August, revised.

September exports were $289.3 billion, $8.4 billion more than August exports. September imports were $342.1 billion, $1.9 billion more than August imports.
emphasis added

Click on graph for larger image.

Exports and imports increased in September. 

Exports were up 6% year-over-year; imports were down 4% year-over-year.
Imports increased sharply earlier this year as importers rushed to beat tariffs.  

The second graph shows the U.S. trade deficit, with and without petroleum.

The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

Note that net, exports of petroleum products are positive and have been increasing.

The trade deficit with China decreased to $15.0 billion from $31.8 billion a year ago.

Futures Rebound From Worst Levels As Oracle Plunges 11% On Cash Burn Fears

US equity futures are lower, as lousy earnings and an ugly capex forecast by Oracle reversed the market euphoria following the "more dovish than expected" Fed rate cut. As of 8:00am ET, S&P futures are down 0.2% but well off session lows, having tumbled as much as 1% earlier; Nasdaq 100 is down 0.4%, reversing earlier losses of 1.5%. In premarket trading, Mag 7 stocks underperform: NVDA -1.7%, META -1.0%, TSLA -1.0%. ORCL plunged 11.2% in premarket trading after cloud sales missed estimates with free cash flow concerns rising again amid a surge in capex at the worst possible time. Bond yields are mostly unchanged; the USD is lower. Commodities are mixed: oil is down -1.4%; base metals and Ags are lower. Bitcoin slipped nearly 2% as it approached $90,000. Today's US economic calendar includes weekly jobless claims, September trade balance (8:30am) and September final wholesale inventories (10am)

In premarket trading, Nvidia leads Mag 7 names lower after Oracle’s report dampened risk appetite in the AI sector (Apple +0.4%, Alphabet -0.2%, Amazon -0.6%, Microsoft -0.5%, Tesla -0.6%, Meta -0.6%, Nvidia -1.4%)

• Ciena (CIEN) soars 11% after the maker of equipment used by telecom companies posted reported adjusted earnings per share for the fourth quarter that beat the average analyst estimate.
• Diamond Hill Investment Group Inc. (DHIL) shares are halted after Genstar Capital-backed First Eagle Investments agreed to buy the boutique asset-management firm for $473 million in cash.
• Eli Lilly & Co. (LLY) gains 2% after a next-generation obesity shot helped patients lose almost a quarter of their body weight in 68 weeks.
• Gemini Space Station Inc. (GEMI) rises 15% after its application for a derivatives exchange was approved by the Commodity Futures Trading Commission, in a move that will allow the company to join the fast-growing field of prediction markets.
• Oracle (ORCL) falls 11% after the company forecast 3Q cloud sales growth below analyst estimates, raising concerns that supply constraints are preventing the cloud-infrastructure provider from converting its large backlog to actual revenues.
• Oxford Industries (OXM) sinks 21% after the owner of the Tommy Bahama apparel brand cut its adjusted earnings per share forecast for the full year, missing the average analyst estimate. The fourth-quarter net sales outlook also missed consensus.
• Planet Labs (PL) gains 17% after the satellite-imaging firm raised its sales and margin outlook, boosted by new and expanded contracts. Recent wins included an expansion to a contract with NATO and a deal with National Geospatial-Intelligence Agency.

Caution toward the AI space returned with a vengeance, with Nvidia Corp. down 1.4% to lead Magnificent Seven losses as Oracle, once viewed as a bellwether of the AI investment boom, sank more than 12% in premarket trading after cloud sales missed estimates and the company lifted its 2026 capital spending outlook by $15 billion to $50 billion.

Oracle’s results pushed worries about tech valuations and whether heavy spending on AI infrastructure will pay off back into focus, reviving concerns that fueled weeks of volatility in November. While the sector has powered the S&P 500’s stunning rally this year, spending fears have prompted some investors to rotate into other areas as the US economic outlook remains robust.

"Markets have grown far more wary of AI-related spending, which is a sharp contrast with mid-2025 when anything hinting at higher capex sparked excitement,” said Susana Cruz, a strategist at Panmure Liberum. “Oracle has been the weakest link in all this, largely because it’s funding a big chunk of its investment with debt.” 

In an attempt to reboot excitement in the sector, Microsoft’s CEO said the company will unveil a new model on Friday that is “going to take agents to the next level.” 

Oracle’s earnings landed after the S&P 500 closed just shy of a record on Wednesday, lifted by a Federal Reserve interest-rate cut and Chair Jerome Powell’s sanguine economic outlook. Investors had taken comfort in Fed policymakers leaving the door open to more easing next year, even though the quarter-point cut drew three dissents. Traders stuck to bets on two cuts in 2026, even as the Fed’s new projections signaled only one such move.

“The Fed’s ‘hawkish-but-bullish’ cut last night reinforces this: stronger 2026 growth, faster disinflation,” said Florian Ielpo, head of macro at Lombard Odier Investment Managers. “Cuts are continuing, but they’re no longer automatic — and that’s usually a constructive backdrop for equities.”

“The effect of Oracle has been greater than the Fed. This already tells us everything as we’ve been witnessing a strong concentration and one theme — AI — leading the market,” said Alberto Tocchio, a portfolio manager at Kairos Partners. “This doesn’t mean that AI is gone or it’s a bubble, but we need to focus on a wider scale.”

In other assets, the IEA trimmed estimates for a global oil supply surplus this year and next for the first time in several months as demand strengthens and output growth slows. And tariffs are back in focus, with Mexican lawmakers giving final approval for new duties on Asian imports.

Technology stocks dragged Asian bourses lower overnight and looked set to do the same in Europe but the Stoxx 600 is now green. Construction, retail and industrial shares are leading gains. The construction and materials sector outperforms, while utilities lag. Software stocks including SAP SE and Sage Group Plc drop after US tech giant Oracle Corp. reported disappointing cloud sales and a jump in AI-related spending. Here are some of the biggest European movers on Thursday:

• Schneider Electric shares climb as much as 4.4%, the most since July, after the electrical power products manufacturer announced a share buyback program as it targets growing profitability over the next five years.
• Nilfisk shares surge as much as 35%, the most on record, after the cleaning products manufacturer received a takeover offer from Freudenberg Group.
• BNP Paribas Bank Polska shares rise as much as 3.5% to a record high, after the Polish unit of BNP targeted acceleration of loan growth and net income in its 2026-2030 strategy.
• Carl Zeiss Meditec shares gain as much as 8.6%, the most since April, after the German medical technology firm reported earnings which included a beat on quarterly revenues.
• Nordex  shares rise as much as 3.9%, on course to close at their highest level since 2007, after Kepler Cheuvreux upgraded its recommendation on the wind-turbine maker to buy from hold.
• RS Group shares rise as much as much as 5.5%, touching their highest levels since February, after JPMorgan upgraded the stock to overweight from neutral, as it sees a better year for European business services in 2026.
• Entain shares slip as much as 4.1% after the gambling firm announced that Chief Financial Officer Rob Wood will step down after 13 years.
• Naturgy shares drop as much as 6.9%, to the lowest level since April, after BlackRock’s infrastructure arm sold a stake in the Spanish company at a 5.4% discount to Wednesday’s closing price.
• SAP shares drop as much as 4.3% to their lowest level since October 2024, after US peer Oracle reported disappointing cloud sales.
• Ceres Power shares sink as much as 15% after Grizzly Research discloses that it’s short the clean-energy technology stock.
• Delivery Hero shares falls as much as 6.6%, putting the firm among Thursday’s worst performers in the Stoxx 600 index, after Citi downgraded it to sell amid increasing competition in the Middle East and North Africa region.

Earlier,  Asian equities erased early advances and fell, dragged by a slide in technology shares as disappointing earnings from Oracle Corp. offset optimism over the Federal Reserve’s rate cut. The MSCI Asia Pacific Index fell as much as 0.7%, after rising 0.6% in morning trading Thursday. A gauge of the region’s technology shares dropped 1.7%. SK Hynix declined after Korea Exchange issued an alert on the stock and prohibited margin trading after big gains. Equity benchmarks in Taiwan dropped more than 1%, while those in Japan and South Korea also retreated. 

In FX, the Bloomberg Dollar Spot Index is steady. The Aussie dollar is the weakest of the G-10 currencies, falling 0.3% against the greenback after soft jobs data. The Swiss franc is the best performer, rising 0.4% after the SNB left interest rates on hold.

In rates, treasuries are little changed, with US 10-year yields near flat at 4.14% broadly holding Wednesday’s curve-steepening rally that followed the FOMC rate decision. OIS contracts price in around 50% odds of another 25bp rate cut in March. Trading of short-term rate products remains in focus as the Fed’s plan, also announced Wednesday, to buy $40 billion of Treasury bills per month. Yields are 1bp-2bp richer on the day with belly outperforming, steepening 5s30s spread by around 1bp. 10-year yields is near 4.135% after peaking near 4.21% Wednesday, highest since Sept. 4. The week’s Treasury auction cycle concludes with $22 billion 30-year bond reopening at 1pm New York time, following good demand for 3- and 10-year note sales Monday and Tuesday. WI 30-year yield near 4.78% is ~9bp cheaper than last month’s auction, which tailed by 1bp.

In commodities, oil retreated toward the lowest since October, tracking wider losses in risk assets. WTI crude futures fall 1.3% to around $57.70 a barrel. Spot gold drops $15. Silver extended an all-time high past $62 an ounce. Bitcoin is down over 2% near $90,000.

Looking ahead, today's US economic calendar includes weekly jobless claims, September trade balance (8:30am) and September final wholesale inventories (10am)

Market Snapshot

• S&P 500 mini -0.5%
• Nasdaq 100 mini -0.7%
• Russell 2000 mini little changed
• Stoxx Europe 600 +0.1%
• DAX little changed
• CAC 40 +0.4%
• 10-year Treasury yield -1 basis point at 4.14%
• VIX +0.3 points at 16.1
• Bloomberg Dollar Index little changed at 1209.7
• euro little changed at $1.1704
• WTI crude -1.6% at $57.54/barrel

Top Overnight News

• Trump said any deal for Warner Bros. Discovery must include the sale of CNN, a potential wrinkle for Netflix’s bid. As the takeover fight plays out, the political divide grows. BBG
• NEC Director Hassett said the Fed has plenty of room to cut rates and probably will need to do some more, while he added that data could support a 50bps cut and they could definitely get to 50, or even more. Hassett also said a 25bps cut would be a small step in the right direction and that President Trump will make the Fed Chair choice in a week or two.
• US House of Representatives voted 312-112 to pass the USD 901bln defence spending bill
• China now has the biggest power grid the world has ever seen. Between 2010 and 2024, its power production increased by more than the rest of the world combined. Last year, China generated more than twice as much electricity as the U.S. Some Chinese data centers are now paying less than half what American ones pay for electricity. WSJ
• China put rate cuts in play after pledging to adopt supportive monetary and fiscal policy to bolster the economy. It will “flexibly” use interest rate and RRR cuts. Policymakers also plan to step up efforts to stabilize the housing market. BBG
• The BoJ sees limited need for emergency intervention to restrain rising bond yields, a move that runs counter to its effort to roll back stimulus. RTRS
• The SNB kept its interest rate at zero, in line with expectations, judging that a weakened inflation outlook doesn’t yet justify a return to negative borrowing costs. BBG
• Mexico approved tariffs of up to 50% on Chinese and other Asian imports, broadly aligning itself with US efforts targeting Beijing. China urged Mexico to “correct” its unilateral and protectionist practices. BBG
• Mexico’s tariff hike will affect $1 billion worth of shipments from major Indian car exporters, including Volkswagen and Hyundai. BBG
• Rents for Manhattan apartments surged to a record high in November. New leases were signed at a median of $4,750 in the month, up 13% from a year earlier and 3.3% from October. RTRS
• The United States can use other measures to recreate the roughly $200 billion in revenues it is collecting under tariffs based on a 1977 law if the Supreme Court strikes down use of that law, U.S. Trade Representative Jamieson Greer said on Wednesday. RTRS

Trade/Tariffs

• UK pledges an additional GBP 1.5bln for NHS medicines as part of Trump tariff deal, according to FT.
• Britain is to reform the system to speed up investigations into unfair trade practices and is to sharpen trade defences by giving the trade secretary power to direct investigations, according to draft government guidance.
• Mexico approves wide-ranging tariffs of up to 50% on China, according to Bloomberg. China's Commerce Ministry later commented regarding Mexico's tariffs that it will closely monitor the implementation and will further evaluate the impact, while it added that the measures harm the interests of relevant trade partners, including China.
• India's CEA chief economic advisor said most trade issues with the US have been sorted out and will be surprised if there is no deal with the US by March.
• Mexico's tariffs to hurt Indian-made car exports of Volkswagen (VOW3 GY), Hyundai (5380 KS), Nissan (7201 JT) and Maruti Suzuki (7269 JT), according to Reuters Sources. It was earlier reported by Bloomberg that Mexico approved wide-ranging tariffs of up to 50% on China.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were ultimately subdued after failing to sustain the early positive momentum from the dovishly perceived FOMC where the Fed lowered rates by 25bps to between 3.50-3.75%, as expected, but with a less hawkish tilt than what Wall Street had anticipated, although much of the gains were eventually wiped out as a slump in Oracle post-earnings stoked tech and AI-related concerns. ASX 200 eked mild gains but with upside limited by the latest jobs data, which showed a surprise contraction in jobs that was solely due to a drop in full-time work. Nikkei 225 reversed its opening gains and more amid pressure from a firmer currency and as AI-exposed stocks were hit, including SoftBank. Hang Seng and Shanghai Comp gradually retreated with the mainland not helped by another liquidity drain by the PBoC, while trade-related uncertainty lingered, with China said to have held urgent discussions with major domestic tech firms on Wednesday about whether to permit purchases of NVIDIA’s H200 processors.

Top Asian News

• HKMA cut its base rate by 25bps to 4.00%, as expected, and in lockstep with the Fed.
• China's Commerce Ministry said China has taken measures to grant exemptions on Nexperia chips for compliant exports intended for civilian use.
• China's Foreign Ministry on tensions with Japan said Japanese PM Takaichi's attitude makes it impossible to engage in dialogue.
• China's Commerce Ministry said non-state import quota for fuel oil in 2026 set at 20mln metric tons.
• China holds annual central economic work conference on Dec 10-11th, according to Xinhua; said China is to make use of RRR rate cut flexibly. Will continue to expand domestic demand. Will build strong domestic market. Will consolidate, stabilise economy. Will implement appropriately loose monetary policy. Will implement more proactive fiscal policy. Will maintain yuan exchange rate basically stable. Will step up counter-cyclical and cross-cyclical adjustment. Will optimise fiscal expenditure structure. Will emphasise resolving local fiscal difficulties. Will flexibly use policy tools including RRR, rate cuts. Will actively resolve local govt debt risks, prohibit new hidden debt. Will stabilise property market with city-specific measures. Encourages buying existing homes for social housing.
• Japan's Lower House passes supplementary budget bill for FY2025 to fund new economic policy package under PM Takaichi, according to Jiji.

European bourses (STOXX 600 +0.2%) opened broadly lower, but managed to clamber off worst levels as the morning progressed, albeit marginally so. European sectors also held a negative bias as the open, but now display a mixed picture. Construction leads followed by Autos whilst Tech is weighed down by pressure seen in Oracle (-11% pre-market) after its earnings.

Top European News

• ECB's Makhlouf said he is confident that medium-term inflation will be at 2%.
• SNB maintains its Policy Rate at 0.00% as expected; SNB reiterates it remains willing to be active in the foreign exchange market as necessary. Inflation in recent months has been slightly lower than expected. In the medium term, however, inflationary pressure is virtually unchanged compared to the last monetary policy assessment. Sight deposits held at the SNB will be remunerated at the SNB policy rate up to a certain threshold. Although US tariffs and trade policy uncertainty weighed on the global economy, economic developments in many countries had thus far remained more resilient than had been assumed.
• SNB Chairman Schlegel said the Bank will continue to observe the situation and adjust monetary policy where necessary to keep price stability Banks' sight deposits held at the SNB will be remunerated at the SNB policy rate up to a certain threshold. The low level of interest rates in Switzerland is having an effect via the exchange rate. Mid-term inflation pressure is practically unchanged since the previous quarter. Ready to intervene in the FX market if necessary. Policy continues to be expansionary, and supports inflation and the economy. Cannot say lower CPI outlook makes NIRP more likely.
• ECB proposes expanding the existing small banks regime to include more banks for supervision purposes. Recommends merging bank capital stack into 2 elements; a releasable and a non-releasable buffer. The non-binding pillar 2 guidance would be kept separate, on top of the releasable buffer. ECB design or role of additional tier 1 instruments could be adjusted to enhance loss absorption capacity.
• BoE's Bailey said BoE should not have interest rate risk on its balance sheet, the question is how fast to remove it.

FX

• DXY attempted a recovery from the post-FOMC slump, which saw the index fall to a 98.592 low yesterday before extending lower to 98.537; though the index is now flat. A floor was found during APAC trade as risk began to wane. To recap, the Fed cut rates by 25bps to 3.5-3.75%, as expected, but in a dovish 9-3 vote split - Goolsbee and Schmid voted to leave rates unchanged, while Miran wanted a larger 50bps reduction. In terms of the session ahead stateside, weekly initial jobless claims (for the week of 6th December) are seen rising to 220k from 191k (last week's low reading was largely due to seasonal adjustment factors); continuing claims (for the week of 29th November) are seen ticking up to 1.947mln from 1.939mln. Wholesale sales and inventory revisions are also due today.
• High beta FX (CAD, GBP, NZD, AUD) are all softer, with state-side sentiment also lower following the Fed and Oracle earnings. AUD is the laggard following the Aussie jobs report overnight, which showed a surprise contraction in jobs that was solely due to a drop in full-time work. Little move was seen on China's Economic Work conference readout, which noted that China is to make use of RRR rate cut flexibly. EUR/USD is uneventful around the 1.1700 mark in a narrow 1.1683-1.1707 parameter.
• CHF was unmoved by the SNB rate decision, which was overall as expected with no fireworks (some expected a return to NIRP). SNB kept rates at 0.00% and reiterated its language on FX, that it “remains willing to be active in the foreign exchange market as necessary”. In terms of inflation projections, 2025 was unchanged, whilst 2026 and 2027 were revised a touch lower. The CHF, however, saw mild strength during the press conference, in which he said he cannot say whether a lower CPI outlook makes NIRP more likely. USD/CHF dipped as low as 0.7979 (vs high 0.8001).
• RBI likely selling USD to help INR avert a sharp fall, according to traders cited by Reuters

Fixed Income

• USTs continue to build on the post-FOMC upside; in brief, the FOMC cut rates by 25bps to 3.50-3.75%, as expected, while the vote split was a bit more dovish than expected. For US paper specifically, the Fed also said it will start technical buying of Treasury bills to manage market liquidity, in which the initial round will total around USD 40bln in Treasury bills per month to help manage market liquidity levels. Currently trading in a 112-11 to 112-18+ range, and another leg higher would see a retest of the high from 8th December at 112-19. From a yield perspective, the FOMC sparked a bull steepening, which has continued into today. Now attention turns to a number of US data points, incl. Jobless Claims, Wholesale Sales and then a 30-year auction, which follows on from a strong 3yr and mostly positive 10yr.
• Bunds follow USTs, and are now flat to trade in a current 127.36 to 127.77 range. Newsflow is incredibly light this morning, with price action essentially a paring of some of the upside seen following the FOMC. Elsewhere, UBS analysts recommend a long 10yr Bund trade, target 2.75% yield; said term premia priced by markets are too high – for reference, current 10yr yield is at 2.85%.
• Elsewhere, Gilts remain bid, as UK paper plays catch-up to peers – price action muted and within a narrow 91.22 to 91.38 range.
• Italy sells EUR 5bln vs exp. EUR 4.0-5.0bln 2.35% 2029, 3.00% 2029, 2.70% 2030 BTP

Commodities

• Crude benchmarks have sold off throughout the APAC session and into the European session as risk tone sours across equity markets despite an FOMC cut that was perceived dovish. After opening at USD 58.92/bbl and USD 62.43/bbl respectively, WTI and Brent trended c. USD 1.30/bbl lower to session lows of USD 57.57/bbl and USD 61.20/bbl as equities sold off. The selloff completely reversed Wednesday's gains following the seizure of an oil tanker off the coast of Venezuela.
• Spot XAU peaked to USD 4248/oz early in the APAC session as the metal continued its gains following the dovish FOMC announcement. As the APAC session continued, however, XAU reversed lower as the dollar began to strengthen and equities sold off. In past sessions, XAU has been moving in-tandem with equities despite its safe haven characteristics, perhaps explaining the selloff in the APAC session.
• 3M LME Copper gapped higher and drove higher to a peak of USD 11.72k/t, USD 30/t shy of ATHs, before falling back lower as global risk tone soured. The red metal stabilised at USD 11.58k/t and has since remained in a tight USD 60/t band.
• Russia's Energy Ministry expects oil refining and gas and coal production to remain at 2024 levels in 2025, via RIA.

Geopolitics: Middle East

• US officials discussed hitting the UN Palestinian refugee agency with terrorism-related sanctions, according to sources cited by Reuters.
• US State Department condemned the Houthis' ongoing unlawful detention of current and former local staff of US missions to Yemen.

Geopolitics: Ukraine

• Ukrainian navy drones in the Black Sea struck the "Dashan" vessel that is part of Russia's shadow fleet, while the attack led to the tanker being disabled.
• The EU is looking to reach an agreement by Friday to lengthen the freeze on Russian assets using emergency powers, according to Bloomberg citing people familiar.
• Russia's Lavrov said Russia wants a package of documents on a long term sustainable peace for Ukraine. Should be security guarantees for all sides.
• Ukrainian drones struck Lukoil's oil extraction platform in the Caspian sea, according to SBU source cited by Reuters; oil and gas production halted.
• Russia’s Lavrov said European peacekeepers in Ukraine "will Be A Target ", via Interfax.

Geopolitics: Other

• US seized an oil tanker off the coast of Venezuela, while President Trump said the vessel was seized for a very good reason, and Attorney General Bondi said the oil tanker was used to transport sanctioned oil from Venezuela and Iran. Furthermore, Guyana's government said the oil tanker seized by the US was falsely flying a Guyana flag and that it will take action against the unauthorised use of the Guyanese flag.
• Russia's Kremlin said President Putin plans to meet Turkey's President Erdogan during his visit to Turkmenistan.
• Russia's Kremlin said Russia remains open to investment. It was reported by the WSJ that US companies could invest in strategic sectors from rare-earth extraction to drilling for oil in the Arctic and help restore Russian energy flows to Western Europe and rest of the world.

US Event Calendar

• 8:30 am: Dec 6 Initial Jobless Claims, est. 220k, prior 191k
• 8:30 am: Nov 29 Continuing Claims, est. 1938k, prior 1939k
• 8:30 am: Sep Trade Balance, est. -63.1b, prior -59.6b
• 10:00 am: Sep F Wholesale Inventories MoM, est. 0.1%

DB's Jim Ried concludes the overnight wrap

Last night saw the market rally resume after the Fed cut rates by 25bps, which included enough dovish hints to pare back the hawkish repricing over recent days. So the S&P 500 (+0.67%) closed less than 0.1% beneath its record high, whilst 2yr Treasury yields (-7.7bps) saw their best day in two months. However, that momentum behind risk assets has been lost overnight, as disappointing results from Oracle after the US close pushed their shares down -11.52% in after-hours trading. And in turn, S&P 500 futures are down -0.90% this morning, with those on the NASDAQ 100 down -1.20%. So even as investors were reassured by the Fed’s latest rate cut, familiar concerns about AI are still very much top of mind right now. 

In terms of the Fed decision, the FOMC delivered a third consecutive cut that took the target range for the fed funds rate down to 3.50-3.75%. This was a 9-3 decision, with Governor Miran again advocating for a larger 50bp cut, whereas regional Fed presidents Goolsbee and Schmid favoured no change. The cut was accompanied by implicit signals that the Fed could remain on hold in early 2026. For instance, the dot plot showed the median participant only expecting one more rate cut in 2026, while new wording on “the extent and timing” of further rate adjustments signaled a possible pause ahead. Powell also emphasised that the FOMC was “well positioned to wait and see how the economy evolves” as recent easing had brought the policy stance “within a broad range of estimates of neutral”.

However, this cautious guidance was accompanied by several dovish-leaning elements. Notably, the updated economic projections struck a sanguine tone, with real GDP revised higher across the 2025-27 period, whilst 2026 headline and core PCE inflation were revised -0.1pp and -0.2pp lower to 2.4% and 2.5% respectively. The statement also dialed up the tone on the recent uptick in unemployment while Powell sounded a bit more sanguine on upside inflation risks, saying that “inflation has come in a touch lower” recently and that “most of the inflation overshoot is from tariffs”. Our US economists’ base case remains that Powell has now delivered the last rate cut of his tenure as chair, but continued labor market weakness could swing the FOMC to cut again in the next few months (see their full reaction note here).
Away from rates policy, the Fed also announced they’ll begin reserve-management purchases of Treasury bills. Those will start at $40bn a month from next week and are expected to “remain elevated for a few months” before slowing significantly after the April tax payment window. This will mark the first sustained increase in the size of the Fed balance sheet since the Fed ended QE in spring 2022. And it was a slight surprise this was announced at yesterday’s meeting, even if a shift towards more active liquidity management had been expected by early 2026.

After the decision, markets saw the FOMC’s signal as favourable to expectations of a 2026 rate cut. So even though a rate cut is only priced at 20% by the next meeting in late-January, futures currently signal a 52% chance of a cut by March as we go to press this morning. Moreover, there was a dovish shift in the futures curve, with the rate priced by the December meeting down -6.6bps on the day, meaning that 55bps of cuts were priced for next year by the close. In turn, that meant 2yr Treasury yields fell by 5 to 6bps intraday after the FOMC to register their biggest daily decline in two months (-7.7bps to 3.54%), and 10yr yields fell by -4.1bps on the day to 4.15%. That trend has continued overnight as well, with the 10yr yield down another -2.1bps to 4.13%. And this also weighed on the dollar index, which fell -0.44% yesterday to a six-week low.

Although the Fed’s decision helped to support equities, with the S&P 500 (+0.67%) closing just -0.06% below its all-time high, it’s been a very different story overnight following Oracle’s earnings. They reported after the US close, but their revenues fell short of analysts’ estimates, with their share price down -11.52% in after-hours trading. So that’s pushed US equity futures lower this morning, with those on the S&P 500 down -0.90%, whilst those on the NASDAQ 100 have fallen -1.20%.

That more negative trend has continued in Asia overnight, where there’ve been losses across the major indices. So the Nikkei (-0.97%), the Shanghai Comp (-0.75%), the CSI 300 (-0.52%), the Hang Seng (-0.22%) and the KOSPI (-0.20%) are all lower this morning. And those losses have been particularly sharp for tech stocks, with the Hang Seng Tech index down -1.12%. Bond yields have also moved lower, which partly reflects the Fed and the wider risk-off tone this morning, but we also saw Japan’s 20yr auction have its strongest demand since 2020. Moreover, the latest employment data from Australia showed an unexpected contraction of -21.3k in November (vs. +20.0k expected), which has raised doubts about the likelihood of a near-term rate hike by the RBA. Indeed, yields on 10yr Australian government bonds are down -8.9bps this morning, and the Australian dollar is the worst-performing G10 currency, down -0.59% against the US dollar.

Before the Fed and Oracle’s earnings, investors had priced in a growing chance of an ECB rate hike for 2026, which is now seen as a 40% chance. That gave the European bond selloff a fresh dose of momentum, which was particularly clear at the front end of the curve. For instance, the 2yr German yield (+2.2bps) rose to 2.17%, its highest level since the fiscal stimulus announcements were made in March. And that was echoed across the continent, with yields on 2yr French (+2.4bps) and Italian (+1.6bps) debt also at their highest in months. However, the long-end was more subdued, with yields on 10yr bunds (+0.1bps), OATs (+1.2bps) and BTPs (+0.3bps) seeing smaller increases that still left them beneath their closing level on Monday. In the meantime, equities saw a relatively stronger performance, with the STOXX 600 (+0.07%) inching up after three consecutive declines.

On the theme of central banks, yesterday also brought the Bank of Canada’s decision, who held their policy rate at 2.25% as expected. This followed rate cuts at the previous two meetings, but this time their statement said that if the economy and inflation evolved in line with their October projections, then they felt rates were “at about the right level”. In turn, Canadian government bond yields fell back, with the 2yr yield down -6.0bps on the day, whilst the 10yr fell -4.4bps.

Finally, there wasn’t too much data yesterday, although we did get the Employment Cost Index (ECI) from the US for Q3. That came in a bit softer than expected at +0.8% (vs. +0.9% expected), and it was also the slowest pace since Q3 last year. So that helped to ease fears about inflationary pressures, particularly with the year-on-year pace now down to +3.5%, the slowest since Q2 2021.

To the day ahead now, and data releases include the US weekly initial jobless claims, along with the trade balance for September. Otherwise from central banks, we’ll hear from BoE Governor Bailey.

Tyler Durden Thu, 12/11/2025 - 08:39

Continuing Jobless Claims Plummet To 8 Month Lows

After plunging near 60 year lows in the prior week (at 192k), initial jobless claims rebounded (as many expected) to 236k last week - back into the 'normal' range and nothing at all to worry about from a labor market perspective...

Source: Bloomberg

Sure enough it was California in large part that was responsible for the chaos...

Source: Bloomberg

But while initial claims rebounded back to 'normal', continuing jobless claims plummeted

Source: Bloomberg

We assume whatever screw-up that seasonal adjustments caused in initial claims the week before have rippled through to the continuing claims data this week, but still - taken at face value, it's great news!

However, there could be an even more silver lining as we noted last week, before Trump sent out his ICE troops, California's Continuing Claims were running ~400K per week. Beginning in the summer, however, these claims steadily dropped... and perhaps this week's crash in continuing claims is the chopping block coming down on illegals claiming benefits in California?

Tyler Durden Thu, 12/11/2025 - 08:38

The post Europe Needs an Ally Against Russia and Trump: China appeared first on CEPR.

The U.S. goods and services trade deficit decreased in September 2025 according to the U.S. Bureau of Economic Analysis and the U.S. Census Bureau. The deficit decreased from $59.3 billion in August (revised) to $52.8 billion in September, as exports increased more than imports. The goods deficit decreased $7.1 billion in September to $79.0 billion. The services surplus decreased $0.6 billion in September to $26.2 billion. Full Text

The DOL reported:

In the week ending December 6, the advance figure for seasonally adjusted initial claims was 236,000, an increase of 44,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 191,000 to 192,000. The 4-week moving average was 216,750, an increase of 2,000 from the previous week's unrevised average of 214,750.
emphasis added

The following graph shows the 4-week moving average of weekly claims since 1971.

Click on graph for larger image.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims increased to 216,750.

The Orbital Data Center Space Race Has Officially Begun

We've highlighted a new theme: data centers in low Earth orbit, or at least the race to get these AI chips into space.

Week after week, the news flow shows a new space race taking shape, as Elon Musk, Jeff Bezos, and Sam Altman appear to be the major players in the scramble to get chips into orbit - almost certainly joined by other billionaires quietly working behind the scenes.

The latest news on the AI chips-in-space theme comes from a Bloomberg report that Musk's SpaceX is planning to raise $30 billion at a $1.5 trillion valuation, with some of the proceeds expected to be used for space-based data centers.

We must note that Musk has the only capable space program that could rapidly deploy space-based data centers at scale; neither China nor Russia, nor even Bezos' Blue Origin, currently has this capability.

Meanwhile, ChatGPT founder Sam Altman attempted to buy rocket startup Stoke Space this past summer, with the intent of joining the space race to launch AI chips into orbit.

A new Wall Street Journal report on Wednesday afternoon added more color about the Musk-Bezos space-based data center race:

Bezos' Blue Origin has had a team working for more than a year on technology needed for orbital AI data centers, a person familiar with the matter said. Musk's SpaceX plans to use an upgraded version of its Starlink satellites to host AI computing payloads, pitching the technology as part of a share sale that could value the company at $800 billion, according to people involved in the discussions.

The push to move data centers into low Earth orbit is all about sidestepping Earth's power constraints and soaking up precious resources, harnessing essentially limitless solar energy, and leveraging space's near-zero thermal environment to keep advanced AI chips cool.

"Taking resource-intensive infrastructure off Earth has been an idea for years, but it has required launch and satellite costs to come down. We are nearing that point," Will Marshall, CEO of satellite operator and builder Planet Labs, told WSJ.

Making spaceflight affordable has been SpaceX's focus with its reusable rockets, and once Starship becomes commercialized, costs should drop even further.

Let's remind readers that SpaceX is effectively America's rocket program - and it leads the world by light-years.

This makes Musk and xAI uniquely positioned to scale data centers quickly.

SpaceX also leads in terms of spacecraft upmass...

WSJ noted that Google and Planet Labs plan to conduct a 2027 space test using satellites equipped with Google AI chips. Early tests aim to demonstrate feasibility, while full-scale systems will require thousands of satellites to match a single large terrestrial data center.

Latest from Musk about data centers in space. 

The lowest cost place for data centers is space when 300 GW of computer data center you can power and cool in space when you have continuous solar and no batteries needed. @elonmusk pic.twitter.com/J5EMJt8rRw

— Marc Benioff (@Benioff) November 19, 2025

And Bezos. 

Jeff Bezos plans to build a data center in space within the next 10+ years.

Unlimited solar energy available 24/7, space is an ideal location for data centers.$AMZN AWS is set to make major moves out there. pic.twitter.com/KJCEO973eQ

— Bourbon Capital (@BourbonCap) October 3, 2025

Why stop with data centers in low Earth orbit? How about on the moon? We're sure Starlink's in-space mesh network can help with that... So crypto mining on the moon as well? All things space are about to kick off with SpaceX's IPO slated for next year. 

Tyler Durden Thu, 12/11/2025 - 08:25

Lilly's Next-Gen Obesity Shot Shows Best-In-Class Weight Loss In Study

Shares of Eli Lilly are higher in premarket trading after the company unveiled blowout topline results for its next-generation obesity drug retatrutide, which delivered more than 23% weight loss over 68 weeks - the strongest performance yet for a late-stage obesity trial.

Adult patients in the Phase 3 TRIUMPH-4 trial testing retatrutide, a first-in-class GIP, GLP-1, and glucagon triple hormone receptor agonist, entered the study with obesity or overweight and knee osteoarthritis. Most participants had a BMI of 35 or higher.

Result highlights for both high-dose regimens (9 mg and 12 mg):

• Met all primary and key secondary endpoints

• Produced massive weight loss: up to 28.7% on average (71.2 lbs) at 68 weeks

• Delivered major pain improvement: up to 4.5 points (75.8%) reduction on the WOMAC pain score

• Improved physical function, in addition to weight and pain outcomes

"We are encouraged by the results of TRIUMPH-4, which highlight the powerful effect of retatrutide, a first-in-class triple agonist, on body weight, pain and physical function. With seven additional Phase 3 readouts expected in 2026, we believe retatrutide could become an important option for patients with significant weight loss needs and certain complications, including knee osteoarthritis," Kenneth Custer, Ph.D., executive vice president and president, Lilly Cardiometabolic Health, wrote in a statement.

Some patients lost so much weight they chose to exit the trial early, particularly those with a BMI below 35. The highest dose saw an 18% dropout rate due to side effects, including nausea, diarrhea, constipation, and occasional mild dysesthesia.

"Not all patients may need this potentially very high level of efficacy, and we believe retatrutide will likely be best suited for patients with a very high BMI, or with obesity-related complications that require a high degree of weight loss," Lilly's Chief Scientific Officer Daniel Skovronsky told investors in October.

The results come as the race for next-generation obesity drugs intensifies: Shares of rival Novo Nordisk plummeted the most on record after an experimental GLP-1 fell short of Wall Street expectations last year. The drug CagriSema helped patients lose an average of 20.4% of their weight, far short of Novo's promise.

Stock Chart: Lilly vs. Novo

Is Goldman still putting their clients in Novo?

Tyler Durden Thu, 12/11/2025 - 08:05

What GAO Found The Department of Defense (DOD) identified test and evaluation modernization as a crucial part of its effort to get capabilities to warfighters faster. DOD organizations, including the Office of the Secretary of Defense and the military departments, have undertaken modernization planning efforts with varying areas of focus and levels of detail. Nonetheless, these plans share themes, including the use of digital engineering tools and highly skilled workforces. GAO’s analysis of DOD-wide test and evaluation policies found they were not fully consistent with selected leading practices for product development as applied to test and evaluation: involve testers early, conduct iterative testing, use digital twins and threads, and obtain user feedback iteratively. These policies contained some tenets of the leading practices, particularly for the software acquisition and urgent capability acquisition pathways. However, these leading practices were largely not reflected in the policies for programs in the major capability acquisition and middle tier of acquisition pathways, which account for the majority of DOD spending on weapon systems acquisition. Key DOD-wide Weapon Systems Testing Policies Fall Short of Selected Leading Practices Further, GAO found that DOD’s digital engineering policy and the test and evaluation section of DOD’s systems engineering policy do not describe specific processes to ensure application of leading practices to testing. GAO also found that military department-level test and evaluation policies generally did not reflect the leading practices beyond the level found in DOD-wide policies. GAO similarly found that these leading practices were not reflected in key program documents, like acquisition strategies and test strategies, for selected weapon systems acquisition programs it reviewed. DOD has a unique opportunity to not only retool its existing test and evaluation enterprise, but to redefine the role that enterprise can play in enabling faster delivery of relevant capabilities to warfighters. Fully incorporating leading practices into policies relevant to weapon system test and evaluation could help pivot the test enterprise’s current reactive role to a proactive one, informing and aiding defense acquisition efforts. Why GAO Did This Study DOD has yet to realize its goal to rapidly develop weapon systems to get capabilities to the warfighter when needed. DOD acquisition programs have identified challenges discovered during test and evaluation as contributing to delays in development. A House committee report includes a provision for GAO to assess how DOD is modernizing weapon system test and evaluation. GAO’s report (1) describes DOD’s plans to modernize test and evaluation to deliver capabilities faster to the warfighter, and (2) assesses the extent to which DOD-wide and military department policies for test and evaluation reflect selected GAO leading practices for product development. To do this work, GAO assessed DOD test and evaluation modernization plans and policies and weapon system acquisition documentation. GAO visited three military department test organizations to observe tools in practice. GAO also interviewed DOD and military department officials from test organizations and other entities.

Dark-Fleet Tanker At Epicenter Of Iran's Shadow Oil Trade Seized By U.S. Commandos

Welcome to Monroe Doctrine 2.0 - a revival of gunboat diplomacy - where U.S. forces just carried out an exceptionally rare move: seizing a massive dark-fleet tanker off Venezuela, long known as a key tanker for Iran's shadow oil trade.

Maritime tracker MarineTraffic shows that the vessel commandeered by a U.S. special operations team, which rappelled onto the tanker's deck from a Black Hawk helicopter on Wednesday (watch here), is the VLCC Skipper, carrying a million barrels of crude.

Here's more from MarineTraffic:

U.S. forces seize tanker linked to covert Venezuelan crude shipment

U.S. forces have seized an oil #tanker believed to be the VLCC Skipper, after satellite imagery showed she secretly loading 1.1 million barrels of sanctioned Merey crude at Venezuela's José Terminal. The vessel had been transmitting falsified AIS positions during the operation, a tactic increasingly used by "dark fleet" tankers tied to Venezuelan and Iranian trades.

MarineTraffic data shows the vessel has been sanctioned by OFAC since November 2022 and repeatedly linked to high-risk activity. Her cargo history includes multiple liftings from Venezuela and Iran, while operational risk signals show a two-month AIS gap in Iranian waters. The vessel has also conducted high-risk and dark STS transfers in the Red Sea, Iranian and Syrian zones, alongside multiple AIS spoofing events. Here's the playback of the vessel's latest movements.

US forces seize tanker linked to covert Venezuelan crude shipment

US forces have seized an oil #tanker believed to be the VLCC Skipper, after satellite imagery showed she secretly loading 1.1 million barrels of sanctioned Merey crude at Venezuela’s José Terminal. The vessel had… pic.twitter.com/MJji0O20qT

— MarineTraffic (@MarineTraffic) December 10, 2025

Anas Alhajji of Energy Outlook Advisors asked several key questions after the U.S. seized the tanker:

• Who is the target?

• What is the impact on global oil markets?

• Shipping?

• Tanker rates?

⭕️Who Is the Target? What is the impact on global oil markets? Shipping? Tanker rates?

⭕️U.S. Forces Seize Guyana-Flagged VLCC “Skipper” Carrying Venezuelan Crude Bound for Cuba!

Link: https://t.co/CMcYGcx3d1 pic.twitter.com/uR5dUyWvvu

— Anas Alhajji (@anasalhajji) December 11, 2025

Intelligence firm Kpler noted:

The seizure underscores Washington's escalating efforts to crack down on dark-fleet activity tied to Iranian and Venezuelan crude trades.

The incident comes amid heightened U.S. military presence in the region, and as Venezuela's crude exports dropped to 700 kbd in November. The Skipper has been repeatedly linked to sanction evasion tactics, including spoofing and mislabeled Iranian cargoes routed through Asia, raising alarms about ongoing maritime deception.

Satellite imagery from November 14 shows the seized VLCC Skipper loading crude at Venezuela's José Oil Terminal. Credit: European Union Copernicus Sentinel.

Tanker with Venezuela oil seized by U.S.

U.S. forces have seized an #oil tanker believed to be the VLCC Skipper, following satellite evidence that it covertly loaded 1.1 million barrels of sanctioned Merey crude from Venezuela’s Jose Terminal. Despite transmitting falsified AIS… pic.twitter.com/7tjRUFBM3S

— Kpler (@Kpler) December 10, 2025

In markets, Brent crude round-tripped any fears of market disruptions as this seizure off Venezuela's shore is isolated.

CBS cited a statement from the Venezuelan government that read, "It strongly denounces and repudiates what constitutes a shameless robbery and an act of international piracy."

Tyler Durden Thu, 12/11/2025 - 07:45

What GAO Found As of July 2025, the Department of Commerce has provided incentive awards to 19 companies for 40 projects to construct, expand, or modernize semiconductor facilities. Thirteen of the 19 companies received funding for workforce development activities associated with the projects. In total, Commerce awarded the 19 companies with $30.9 billion in direct funding and two of them with $5.5 billion in loans through the incentive awards. Commerce awarded projects that collectively aim to address gaps and vulnerabilities at various stages of the supply chain, from materials production to packaging. Nearly 40 percent of projects are intended to produce leading-edge logic chips, which process data for emerging technologies such as artificial intelligence. Commerce estimates that these projects will bring the U.S. share of global leading-edge logic chip manufacturing from 0 percent in 2022 to 20 percent by 2030. Each project includes unique milestones, which span from November 2024 through October 2033. Commerce officials stated that companies have submitted milestone completion reports for 24 of 161 milestones, as of July 2025. One project, a new leading-edge logic chip manufacturing facility in Arizona, was certified as complete in June 2025. Semiconductor Projects’ Anticipated Completion Dates, as of July 2025 Note: For more details, see figure 6 in GAO-26-107882. Officials weighed six criteria to select projects, giving the greatest consideration to projects’ potential impact on economic and national security objectives. For projects selected for an award, officials found that economic and national security benefits outweighed any downsides or risks. Commerce set award funding amounts to incentivize project completion and distribute funds across a portfolio of projects throughout the supply chain. To ensure that funding amounts would not result in profits that significantly exceed company projections, Commerce negotiated upside sharing agreements for 27 of the 40 projects. Under these agreements, companies share profits with the federal government if their profits exceed a specific threshold. Why GAO Did This Study Semiconductors, also called chips, are small electronic devices that are critical to nearly all industries. A global semiconductor shortage occurring from 2020 through 2023 exposed long-term risks in the supply chain. For example, manufacturing facilities are concentrated in a few regions globally. The William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (as amended, the FY21 NDAA) authorized Commerce to provide financial assistance to entities undertaking semiconductor facility or equipment projects. The CHIPS Act of 2022 appropriated $39 billion for these purposes. In response, Commerce issued the first award in September 2024 after establishing a new office, soliciting input from stakeholders, developing a strategy for the program, and reviewing applications. The FY21 NDAA also includes a provision for GAO to issue a series of reports on the semiconductor incentives program. This report, the first in the series, examines (1) key characteristics and anticipated timelines of selected projects and (2) how Commerce selected projects and set funding amounts. This report covers awards made by Commerce from September 2024 through July 2025. GAO analyzed Commerce documents, including notices of funding opportunity, evaluation and selection documents, and awards. In addition, GAO reviewed relevant requirements in the FY21 NDAA and compared Commerce’s efforts to those requirements. GAO also interviewed Commerce officials. For more information, contact Candice N. Wright at WrightC@gao.gov.

Why This Matters Federal agencies must vet individuals who will need security clearances to access classified information. In 2018, we put this process on our High-Risk List partly due to delays and IT systems issues. The Office of the Director of National Intelligence (ODNI) oversees the efficiency and effectiveness of the process. ODNI has stated that consistent data are vital to meeting these responsibilities. GAO Key Takeaways In 2019, ODNI began requiring over 100 agencies that vet cleared personnel to submit data on timeliness, the number of investigations completed, and other key aspects of the personnel security clearance process. But more than 60 percent of the data we reviewed were not reliable across eight reporting requirements and seven agencies. ODNI officials look closely at data measuring the time for agencies to complete the process. Of the timeliness data we analyzed, 86 percent were inaccurate—a third by 20 percent or more. Most of these inaccuracies were due to a calculation method inconsistent with ODNI guidance. This affected the timeliness measurement of 95 percent of the clearances completed across the government. Agency officials stated they revised their method to align with ODNI’s guidance for data collected starting in fiscal year (FY) 2025. However, much of the data reported to Congress and the public from 2020–2024 has underestimated the time to complete the clearance process. ODNI reviews data it collects from agencies, but not in a way that aligns with data reliability principles. It also has not issued adequate guidance to agencies for assessing their data. Addressing these gaps will ensure ODNI and Congress have more reliable data to enable better oversight. Personnel Security Clearance Data for Seven Selected Agencies, Third Quarter of Fiscal Year 2024 How GAO Did This Study We analyzed FY 2024 data from ODNI and Departments of Defense, Energy, and the Treasury General Services Administration National Capital Planning Commission National Geospatial-Intelligence Agency U.S. Agency for International Development We also compared ODNI’s oversight to key practices and interviewed officials.

What GAO Found Based on a requirement in the Strengthening VA Cybersecurity Act of 2022, the Department of Veterans Affairs (VA) contracted with MITRE to perform a cybersecurity assessment. The subsequent assessment addressed the requirements in the act and aligned with federal guidance. For example, MITRE appropriately (1) selected for review five key systems that, if compromised, could severely impair VA’s ability to execute its mission, and (2) evaluated the effectiveness of VA’s information security program. VA submitted a plan to remediate the findings identified by the assessment that generally addressed the requirements in the act. Specifically, the remediation plan included a cost estimate and implementation timelines to address the system and security program findings. The remediation plan also included planned improvements to VA’s security program. While the remediation plan did not include improvements to system-specific security controls, VA provided details on those plans in other documents. VA has reported progress in remediating findings across the five systems and its security program. Specifically, the department reported remediating 215 of 442 system-specific findings by October 2024 and remediating 379 findings by July 2025 (see figure). Also, the department reported that it had completed 20 of 55 actions to address the 11 information security program findings. VA generally documented remediation efforts for the system and program findings in accordance with federal requirements. However, it did not always update its remediation plans. For example, for one system, VA did not update the remediation date for a high-risk vulnerability that was 15 months past due. Similarly, the department did not update estimated remediation dates for at least two program findings. Further, although plans were in place, remediation efforts were not timely. Specifically, as of July 2025, VA had not remediated two high-risk vulnerabilities—those with the most severe consequences—over a 17 to 21-month period, although its policy is to remediate them within 60 days. VA’s Inspector General has previously made recommendations to VA to (1) ensure the department tracks and updates planned remediation documents and (2) improve the process for resolving vulnerabilities that cannot be addressed within policy timeframes by ensuring implementation of mitigating controls. As of July 2025, VA had not yet implemented these recommendations. Doing so would help ensure that needed actions are taken to protect systems. Why GAO Did This Study VA depends on critical IT systems to manage benefits and provide health care to veterans and their families. VA’s highly networked and technologically diverse systems create unique cybersecurity complexities. Protecting these systems from cyber threats is imperative. The Strengthening VA Cybersecurity Act of 2022 includes a provision for GAO to evaluate an independent cybersecurity assessment and VA’s remediation plan in response to the assessment. This report examines the extent to which (1) the independent cybersecurity assessment addressed the act and federal guidance, (2) VA’s remediation plan adhered to the act, (3) the department reported remediating the assessment’s findings, and (4) VA’s efforts to remediate selected findings adhered to federal requirements. To address these objectives, GAO compared MITRE’s assessment of selected systems and the overall information security program, as well as VA’s remediation plan, against requirements in the act. GAO also summarized VA’s reported remediation progress for the assessment findings. In addition, GAO compared VA’s efforts to remediate findings against federal requirements. Further, GAO interviewed relevant MITRE and VA officials. For more information, contact Jennifer Franks at franksj@gao.gov.