World's Billionaire Population Surges To New Record High: UBS

Authored by Andrew Moran via The Epoch Times (emphasis ours),

The ultra-rich grew even wealthier this year and the world has more billionaires than ever, according to Swiss bank UBS.

A megayacht, built by Dutch yacht builder Royal Van Lent for former Starbucks CEO Howard Schultz, is piloted past a bridge in Woubrugge, Netherlands, on May 28, 2025. Josh Walet/ANP/AFP via Getty Images

Global billionaire wealth hit a record $15.8 trillion in 2025, up by 13 percent from 2024, UBS said in its 11th Billionaire Ambitions Report, published on Dec. 4. This is the second-largest annual increase, after 2021, “lifted by existing tech billionaires’ appreciating wealth and the number of new billionaires across a range of sectors,” the report reads.

UBS’s analysis includes cash, securities, corporate ownership interests, property, and other material assets.

“In a highly uncertain time for geopolitics and economics, entrepreneurs are innovating at scale across a range of sectors and markets,” UBS Global Wealth Management executive Benjamin Cavalli said. “They’re creating wealth as they do so.”

Inheritance was also a factor in the growth of the billionaires’ ranks.

In the 12 months through April, 91 people became billionaires through inheritance, receiving almost $298 billion, and the trend is likely to continue as the great wealth transfer intensifies.

The bank calculated that at least $5.9 trillion will be inherited by billionaire children over the next 15 years, “either directly or indirectly through spouses who inherit it first and then pass it on.”

A majority of respondents, 82 percent, said they hope that their children develop the skills and values necessary to succeed on their own without “relying solely on inherited wealth.”

The number of billionaires rose by 8.8 percent in 2025, to 2,919 from 2,682 a year earlier.

The United States has the most billionaires worldwide, with 924 individuals owning approximately $6.9 trillion. This is followed by mainland China, where 470 billionaires own about $1.8 trillion. India (188 billionaires), Germany (156), and the UK (91) rounded out the top five.

UBS said this could change, as billionaires have become more mobile amid geopolitical concerns, tax policy changes, and living standards.

Debating the Wealth Tax

For years, U.S. and European governments have debated the idea of a wealth tax, or an annual levy on net worth, to be imposed once assets minus debts exceed a threshold.

In 2024, Sen. Elizabeth Warren (D-Mass.) and Rep. Pramila Jayapal (D-Wash.) introduced legislation—the Ultra-Millionaire Tax Act—to implement a wealth tax on individuals with more than $50 million.

“All my bill is asking is that when you make it big, bigger than $50 million dollars, then on that next dollar, you pitch in 2 cents, so everyone else can have a chance,” Warren said in March 2024.

The bill stalled in both chambers. Overseas, politicians and voters have been reluctant to back similar schemes.

Billionaire businessman Elon Musk speaks during a town hall meeting at the KI Convention Center in Green Bay, Wis., on March 30, 2025. Scott Olson/Getty Images

Nearly 80 percent of Swiss voters recently turned down a proposed 50 percent tax on inherited fortunes greater than 50 million Swiss francs ($62 million).

The French Parliament rejected a proposed 2 percent tax on wealth greater than 100 million euros ($116 million) in October. Although the UK has not adopted a formal wealth tax, it has announced plans to impose higher taxes on wealthier residents.

Economists have presented divergent opinions on the concept in general. Proponents say it can improve governments’ deteriorating fiscal health and address income inequality. Critics have said that it would disincentivize wealth creation.

In June 2024, a study by French economist Gabriel Zucman estimated that a Group of 20 motion to slap a minimum 2 percent tax on the ultra-wealthy could generate $250 billion in additional revenue.

Nobel Prize-winning economist Joseph Stiglitz, speaking at a 2020 virtual event, argued that the United States needs a wealth tax.

“Where we are today in the 21st century, a basic middle-class life is not accessible to very large portions of America,” Stiglitz said. “I think a wealth tax is a good idea because we have so much inequality in wealth ... [that] even a moderate rate like 3 percent on billionaires and 2 percent on those over $50 million ... [would raise] an enormous amount of revenue.”

Economist Ludwig von Mises wrote in “Human Action” that a wealth tax would be a detriment to capital accumulation and a hindrance to wealth creation, since it would disincentivize the building of wealth.

“Capital levies, inheritance and estate taxes, and income taxes are similarly self-defeating if carried to extremes,” Von Mises wrote. “The power to tax is, as Chief Justice [John] Marshall pertinently observed, the power to destroy.”

Years later, economist Milton Friedman also said a wealth levy would punish saving and investment because it would incentivize the affluent “to dissipate wealth.”

“Where do you get the factories?” Friedman said during a university lecture in the 1970s. “Where do you get the machines? Where do you get the capital investment? Where do you get the incentive to improve technology?”

According to Friedman, a wealth tax would be on top of all the other taxes wealthier households already pay.

The Tax Foundation concluded in 2024 that wealth taxes would produce unintended consequences, including job destruction, reduced capital and innovation, slower economic activity, and higher administrative costs. This would result in little revenue being generated, it said.

Tyler Durden Fri, 12/05/2025 - 14:40

Record-Long Gov't Shutdown Forces Southwest To Cut Guidance As Airline Warnings Pile Up

First, Delta Air Lines warned that the record 43-day government shutdown last month, which throttled air traffic at 40 major airports, would slash its fourth-quarter profit by about $200 million. Now Southwest Airlines is following suit, cutting its full-year profit guidance as the shutdown's ripple effects continue to weigh on major carriers.

Southwest revealed in a new SEC filing:

"As a result of lower revenue due to the government shutdown, and the impact of higher fuel prices, the Company now expects its full-year 2025 EBIT to be approximately $500 million, compared with its prior expectation of $600 million to $800 million. Following the temporary decline in demand related to the shutdown, bookings have returned to previous expectations."

The good news is that the shutdown's impact didn't spill over into December. Southwest noted in its filing that bookings have already bounced back:

Following the temporary decline in demand related to the shutdown, bookings have returned to previous expectations.

Southwest shares are down about 1.5% in premarket trading following the earnings outlook downgrade. Year-to-date (as of Thursday's close), shares are up 6.5%. The float is short 6.56%, or about 33.5 million shares.

Delta Air Lines and Alaska Air Group, which owns Alaska Airlines and Hawaiian Airlines, both disclosed Wednesday that the shutdown's disruption would dent earnings this quarter.

"When you've got the Transportation Secretary telling people, 'We don't have controllers,' questioning the safety at some level of travel, which has never before happened, people said, 'Whoa, I'm going to hold up on making decisions,'" Delta Chief Executive Ed Bastian said Wednesday at a conference.

Last month, the Federal Aviation Administration restricted flights at major US airports in response to the government shutdown, which sent some federal transportation workers home. More importantly, air-traffic controllers called out sick, causing widespread disruptions and prompting Transportation Secretary Sean Duffy to reduce flight volumes nationwide to prevent chaos across airports.

Tyler Durden Fri, 12/05/2025 - 14:20

Noem Says US Travel Ban To Expand To Over 30 Countries

Authored by Aldgra Fredly via The Epoch Times,

Homeland Security Secretary Kristi Noem said on Dec. 4 that the Trump administration is looking to increase the number of countries subject to the U.S. travel ban to more than 30.

The United States currently imposes full or partial suspensions of entry on nationals from 19 countries, including Afghanistan, Haiti, Iran, Cuba, Somalia, Libya, Laos, Burma (also known as Myanmar), and Sudan.

Noem said more countries will be added, but did not name any.

“I won’t be specific on the number, but it’s over 30, and the president is continuing to evaluate countries,” she said in an interview on Fox News’ “The Ingraham Angle” that aired Dec. 4.

“Listen, if they don’t have a stable government there, if they don’t have a country that can sustain itself and tell us who those individuals are and help us vet them, why should we allow people from that country to come here to the United States?”

Noem blamed the Biden administration for the asylum backlog, which she said has exceeded a million cases.

She said credible applicants were unable to get through “because the Biden administration was just allowing people to come here and allowing them a free-for-all at the United States and our territories and our country, and then they weren’t vetting them and backlogging their cases.”

The U.S. Citizenship and Immigration Services (USCIS) last week halted all asylum decisions following the Nov. 26 shooting of two National Guard members in Washington, which authorities say was carried out by an Afghan national who entered the United States in September 2021 through a Biden-era resettlement program.

Noem on Dec. 2 called for a “full travel ban” on countries she says are flooding the United States with criminals and welfare dependents following a meeting with President Donald Trump.

“Our forefathers built this nation on blood, sweat, and the unyielding love of freedom—not for foreign invaders to slaughter our heroes, suck dry our hard-earned tax dollars, or snatch the benefits owed to AMERICANS. WE DON'T WANT THEM. NOT ONE,” she stated on X.

Trump has said that his administration would work to pause immigration from “third-world countries” to allow for the U.S. system’s full recovery.

Speaking to reporters on Nov. 30, the president said that his reference to third-world countries included “people from different countries that are not friendly to us,” and “countries that are out of control themselves,” pointing to Somalia as one example.

Trump also urged to suspend all federal benefits and subsidies to noncitizens, denaturalize immigrants who undermine domestic tranquility, and deport any foreigners deemed to be “a public charge, security risk, or non-compatible with Western civilization.”

Tyler Durden Fri, 12/05/2025 - 13:20

The advance release of Q3 GDP has been cancelled. Q3 GDP will be released on Dec 23rd.

From BofA:

Since our last weekly publication, 3Q GDP tracking increased from 2.8% q/q sarr to 3.0% The upward revision was largely due to the strong September durable goods report that led us to revise higher our equipment estimate. [December 5th estimate]
emphasis added

From Goldman:

We lowered our Q3 GDP tracking estimate by 0.3pp to +3.5% (quarter-over-quarter annualized) and our Q3 domestic final sales estimate by 0.2pp to +2.6%. [December 5th estimate]

And from the Atlanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2025 is 3.5 percent on December 5, down from 3.8 percent on December 4. After this morning’s personal income and outlays release from the US Bureau of Economic Analysis, the nowcast for third-quarter real personal consumption expenditures growth declined from 3.1 percent to 2.7 percent. [December 5th estimate]

In this letter, CBO discusses the effects of enacting section 1564 of S. 2296, as passed by the Senate.

In normal times, today would have been a jobs day. However, the Bureau of Labor Statistics (BLS) has been forced to delay the release until December 16 due to the lingering impacts of the Trump administration radically restricting BLS operations during the government shutdown. Further, BLS has announced that we will never have data from the monthly survey of households for October. This means that valuable information for that month—like the overall unemployment rate or the unemployment rate for various demographic groups—will never be known. During the last federal shutdown in 2018–2019, BLS did not suspend its activities and released its employment situation report as normal. In fact, this is the first time in 12 years that a jobs report was delayed and the first time a month of household data will be missed completely.

Federal statistical agencies (FSAs) like BLS and the Census Bureau provide the gold standard data that are crucial for understanding the labor market. The monthly jobs report provides policymakers, businesses, and the public with the most rigorous and timely labor market data they need to make high-stakes decisions. Unfortunately, without a timely release, the Federal Reserve will meet next week without the best data on the state of the labor market. This will materially harm their ability to make a data-informed decision on interest rate policy.

This is not the first time the Trump administration has sought to weaken FSAs. In August, Trump fired the BLS commissioner for accurately reporting data that the administration found politically inconvenient. Amid these historically unprecedented threats, we assembled a new Data Accountability Dashboard that tracks next-best data from other (non-federal) data sources—including ADP employment data, job cut announcements from the Challenger report, and consumer sentiment reports.

These are clearly inferior to the datasets that have historically been collected and analyzed by the nonpartisan, expert professionals who work at FSAs, but they still provide some insights into the direction the economy is moving. This data would also—over time—provide some potential signal if official FSA data were being manipulated or suppressed to hide an economic downturn. Updates to those next-best data this week suggest some weakening in the labor market. Whether this is supported by the FSA data coming back online in coming weeks is a key question people should be watching.

On Wednesday, ADP’s monthly National Employment Report showed a loss of 32,000 jobs in the private sector in November. Our dashboard uses a three-month moving average to remove some volatility and, in making this adjustment, tracks BLS private-sector employment a bit more closely. As shown in Figure A below, ADP employment has dipped below zero for the first time since the pandemic. BLS data available only through September show a similar slowdown. It is possible that Trump administration attacks on immigrant communities have sharply reduced labor supply and driven some of the radical slowdown in job growth. However, even with reduced immigration, the U.S. economy still needs non-zero job growth to keep the labor market from deteriorating. I’ll be looking closely at the official data for October and November released on December 16 to see if they reflect the trends shown here.

Figure A

On December 9, the BLS will release data for September and October from the Job Openings and Labor Turnover Survey (JOLTS). Currently, the latest JOLTS data are only available through August. Data from Indeed on job postings (Figure B) and data from Challenger on job cuts (Figure C) provide some insights into job openings and layoffs, given the current lack of gold standard data. Indeed data are provided on a daily basis but are aggregated into a monthly average, which we use here to compare with JOLTS job openings data. So far, the latest data suggest little change in job openings.

Job cut announcements, while volatile, appear to be slowly rising. The official layoffs rate released as part of the JOLTS data has not yet reflected this rise. But it is concerning given that the hires rate remains depressed, a rate similar to the immediate aftermath of the Great Recession. That makes the downside risk of higher layoffs all the greater if laid-off workers have less opportunity to find another job. Put simply, the only reason the unemployment rate has been able to stay relatively low in the last year even as hiring has been depressed is because layoffs have been extraordinarily low. If layoffs pick up while hiring remains weak, unemployment will quickly spike. This makes layoffs a key indicator to watch when the JOLTS data are released next week.

Figure B Figure C   Once the official FSA data are released and hopefully return to a normal schedule, our Data Accountability Dashboard will still be useful to make sure those gold standard data are not being compromised either because of staffing shortages or for political gain. The first and best line of defense against data manipulation escaping public notice will be whistleblowers from FSAs who are dedicated professionals and will not want it degraded. But if data are being manipulated and whistleblowers emerge, the dashboard can provide useful data accountability checks. For more next-best data, check out the entire dashboard for all nine metrics we are tracking as new data become available.

AT&T Scraps DEI Amid Broader Corporate Shift Toward Merit-Based Policies

Authored by Tom Ozimek via The Epoch Times (emphasis ours),

AT&T told federal regulators this week that it has eliminated all diversity, equity, and inclusion (DEI) policies and programs across its business, becoming the latest major corporation to unwind such initiatives amid a broader shift toward merit-based employment practices and heightened scrutiny from the Trump administration.

The AT&T logo on a building in Los Angeles on Aug. 10, 2017. Mike Blake/Reuters

In a Dec. 1 letter filed with the Federal Communications Commission (FCC) as part of AT&T’s bid to acquire U.S. Cellular spectrum licenses for roughly $1 billion, the company said it is “ending DEI-related policies ... not just in name but in substance,” following recent executive orders, Supreme Court rulings, and guidance from the Equal Employment Opportunity Commission.

AT&T said it has adjusted its employment and business practices “to ensure that they comply with all applicable laws and related requirements,” AT&T wrote to FCC Chairman Brendan Carr, adding that its hiring, training, and promotion practices “are not and will not be based on or limited by race, gender, or other protected characteristics.”

The company said it removed all training related to DEI, scrubbed internal and external messaging referencing the concept, discontinued sponsorships it deemed unrelated to its business strategy, and stopped conducting employee surveys focused on protected characteristics. AT&T also said it no longer uses DEI considerations in selecting suppliers and “will not have any roles focused on DEI.”

“AT&T has always stood for merit-based opportunity, and we are pleased to reaffirm our commitment to equal employment opportunity and nondiscrimination today,” the company wrote. “Consistent with applicable law, our multi-pronged approach allows employees to thrive in an environment free from invidious discrimination.”

Carr, a Republican tapped by President Donald Trump in January to lead the FCC, praised the disclosure.

“AT&T has now memorialized its commitment to ending DEI-related policies in an FCC filing,” he wrote on X.

He added that the companywide rollback followed changes announced earlier this year after pressure from conservative activist Robby Starbuck, who urged AT&T to dismantle programs he argued were discriminatory.

FCC Commissioner Anna Gomez, a Democrat, criticized the move, saying in a social media post that AT&T’s reversal “isn’t a sudden transformation of values, but a strategic financial play to curry favor with this FCC/Administration.”

Gomez said that abandoning “fairness and inclusion for short-term gain will be a stain to their reputation long into the future.”

Part of a Broader Corporate Retreat

AT&T’s shift comes as major corporations reassess or eliminate DEI initiatives in response to new legal risks and regulatory scrutiny. Wireless carrier T-Mobile said in July it was ending its DEI programs while seeking approval for two major transactions, including a $4.4 billion deal to acquire most of U.S. Cellular’s wireless operations. Verizon agreed to end its DEI program in the context of its $20 billion acquisition bid for Frontier Communications earlier this year.

The trend also extends beyond the telecommunications sector. Ford, McDonald’s, John Deere, Walmart, Nissan, Toyota, Molson Coors, Citibank, and Meta are among the large employers that have recently rebranded, scaled back, or ended DEI programs, citing changing legal standards after the Supreme Court’s 2023 affirmative action ruling and sweeping executive actions by Trump directing federal agencies—and encouraging the private sector—to abandon race- and sex-based preferences.

Disney Softens DEI Language Amid FCC Probe

The rollback wave has reached Hollywood as well. The Walt Disney Co. removed virtually all DEI-related terminology from its 2025 annual report to the Securities and Exchange Commission—the first such omission in at least five years—even as the company faces an FCC investigation into whether its ABC and related networks violated federal equal employment opportunity rules.

Carr ordered the probe in March, citing Disney initiatives that sought to “amplify underrepresented voices” and inclusion standards requiring a high percentage of characters, writers, directors, and crew to come from “underrepresented” groups. He said the agency must ensure that such practices do not embed “identity quotas” in violation of the Communications Act.

Disney said it was reviewing the FCC’s letter and plans to cooperate.

Tyler Durden Fri, 12/05/2025 - 12:00

Why Netflix Buying Warner Bros Would Be A Disaster For America

As we detailed earlier, Netflix and Warner Bros Discovery announced today a $72 billion merger, in a deal intended to consolidate Hollywood into the hands of a streaming giant.

“Our mission has always been to entertain the world,” said Ted Sarandos, co-chief executive of Netflix.

He added that the combination of the two entertainment giants together “can give audiences more of what they love and help define the next century of storytelling.”

Here's a snapshot of the deal terms:

• Each WBD share converts into $23.25 in cash plus $4.50 in Netflix stock

• Boards of both companies unanimously approved the transaction

• Closing in 12–18 months, pending regulatory review and WBD shareholder approval

• Bankers for NFLX: Moelis, Skadden; additional financing by Wells Fargo, BNP, HSBC

• Bankers for WBD: Allen & Co., J.P. Morgan, Evercore; legal counsel Wachtell and Debevoise

Netflix outbid other offers, including those from Paramount-Skydance and Comcast, earlier this year.

The former WBD CEO summed things up succinctly:

If I was tasked with doing so, I could not think of a more effective way to reduce competition in Hollywood than selling WBD to Netflix

— Jason Kilar (@jasonkilar) December 4, 2025

And as Matt Stoller details below via TheBIGNewsletter.com, this deal could be a disaster for America.

Already, filmmakers are coming out anonymously saying that the streaming giant, if the deal goes through, would “Hold a Noose Around the Theatrical Marketplace.” Just the fact that creative powerful storytellers are afraid of opposing this deal publicly should tell us something. The deal looks illegal and is likely to face a merger challenge, which I’m going to go into. It may ultimately even prompt a monopolization case against Netflix.

First, let’s talk about why this deal is happening and why it’s problematic.

Warner Bros Discovery is one of five remaining major film studios and the third biggest streamer via HBO Max (after Netflix and Amazon Prime). It has a lot of great assets, including “franchises like DC’s superheroes, Harry Potter, Lord of the Rings, Game of Thrones, Looney Tunes and Scooby-Doo. It is also the distributor of Legendary’s Dune franchise and Godzilla and King Kong films.” Warner Brothers has been sold multiple times in the last 30 years under the same premise that consolidation is necessary, and every single time the merger has been a failure. Nevertheless, they are still at it.

For the last eight months, there’s been an auction of Warner Bro. Discovery. The CEO of the company, David Zaslav, is a reviled executive who has done a poor job for shareholders and filmmakers, but will nonetheless get paid $500 million if the deal closes. But Zaslav is just the help, the real power here is cable billionaire John Malone.

There were multiple bidders in the process. Comcast/NBC and Paramount were the others, they owned traditional studios. Netflix, however, is different. It doesn’t release its content into theaters, and most people think that the goal of Sarandos is to kill the entire movie theater business in favor of streaming.

One very obvious problem with this deal is that movie theaters right now are in a precarious position, and Netflix will likely push them over the edge. A theater needs a certain number of new releases to be profitable, and are very close to that line right now. Previous mergers have actually cut the number of theatrical releases. Take the last big merger, when Disney bought Fox in 2019, cutting the number of major studios from six to five. The number of theatrical releases collapsed. Here’s a chart and commentary from investment bank TD Cowen making the point.

Before Disney acquired 20th Century Fox in 2019, those two studios combined for an average of 24 wide release (1000+ theaters) films annually. Over the last three years, the merged studios have only released an average of 14 films annually – a 44% decline. In contrast, total output for the rest of the industry is roughly flat, with a small decline in output from the other major studios (Warner, Universal, Sony, Paramount, Lionsgate, and Amazon/MGM) offset by increased output from smaller studios (such as A24, Angel, Neon Rated, and Roadside Attractions).

Netflix is the number one streamer, and would be buying the number three streamer. It would also be buying a large and important content library, which would presumably then be unavailable for potential rival streaming services. A Netflix-Warner merger is a recipe for monopolization, and would be a pretty straightforward challenge for an antitrust lawyer under the Clayton Act. Judges are always a crapshoot, but the story here is clear, and recent analogies work against this deal.

Yesterday, Biden antitrust chief Jonathan Kanter went on CNBC to discuss the situation, before the deal closed. He cast doubt on all the bidders, but pointed out that Netflx probably has the biggest legal risk among all the possible buyers. It would be a big streaming combination where prices to consumers are already going up, it would also mean that a big film and TV library currently being licensed by other streamers would be locked up by Netflix.

Kanter’s main point was that even attempting a deal is dangerous, since Warner Bros Discover would have to freeze its business for a year and half while it undergoes a review. If the merger fails, then its assets will have degraded in that time period. The risks of a deal are significant, and frankly, it is irresponsible of the Warner board to try to do this kind of sale.

Republican Senator Mike Lee also warned off Netflix, saying that the possible deal raises “serious competition questions - perhaps more so than any transaction I’ve seen in about a decade.”

If the deal is illegal, why would Netflix go ahead with it? Well, it’s probably bad legal advice. Sarandos hired antitrust lawyer Steve Sunshine of Skadden, and Sunshine is a bad lawyer. He is often over-optimistic in telling his clients to go ahead with deals.

Sunshine has advised on several high-profile mergers over the past decade that faced federal challenges. In multiple cases where he represented the acquiring company, the deals were blocked or later abandoned after intervention from the Department of Justice or the Federal Trade Commission. Those included Visa’s attempted purchase of Plaid, Adobe’s effort to buy Figma, and Sabre’s proposed acquisition of Farelogix.

It’s actually worse than it looks, because Sabre and Visa, as a result of their attempted mergers, eventually also drew monopolization charges. If Netflix wanted to set itself up for a monopolization case, an ill-fated attempt to buy Warner Bros Discovery would be a good way to get a bunch of internal documents over to enforcers.

One way to understand whether this deal is legal is to look at a very similar merger than happened a few years ago, since judges work through analogy. In 2022, Judge Florence Pan blocked the largest book publisher in America, Penguin, from buying its major rival, Simon & Schuster. At the time, the lawyers for the merger said the industry had to consolidate to compete with Amazon, technology required economies of scale, yada yada. The case against the merger was pretty simple; five book publishers combining into four meant fewer opportunities to publish interesting books and less money for writers.

The attempt to merge Warner Bros Discovery with a rival is a dynamic that is very similar to Penguin/Simon & Schuster. There were five major publishers trying to consolidate to crush the bargaining power of authors, in this case there are five major studios trying to consolidate to crush the bargaining power of writers, directors, and actors. There was a “tech” argument in the form of Amazon for books, for content that argument is in the form of streaming and YouTube. Additionally, we saw what happened when the number of major book publishers dropped from six to five in a previous merger, which was a decline in bidding intensity for books. We’ve seen the same thing after the Disney/Fox combination.

After Judge Pan blocked the Penguin/Simon & Schuster, private equity giant KKR bought Simon & Schuster. And while there was a lot of concern that KKR would be a problematic owner, I’m told that what happened was the opposite. The company invested more in new imprints and titles, and Simon & Schuster is now profitable and flourishing. Meanwhile, the CEO of Penguin was fired. We don’t hear a lot about this situation, because KKR keeps the financials private. But also, Wall Street dealmakers don’t like to tell a story about the virtues of a deal that didn’t happen, the value of competition. It’s always consolidation will happen, it’s inevitable. But it’s not.

We can also look at the flip side; when Microsoft bought Activision, and a judge did not block that deal, there were mass layoffs and prices went way up for gamers.

Something similar is likely here. All of the streamers have been raising their prices, led by Netflix. That trend will accelerate with consolidation.

And that brings me to the politics. This merger will overseen by the Justice Department, foreign enforcers, and a host of state attorneys general. It’ll be a long drawn out process. If Trump decides he doesn’t like the deal, then the Antitrust Division will challenge it. But even if he doesn’t, or settles a deal in ways that are problematic, other enforcers can oppose it.

The politics of antitrust in this environment are complex, but they initially line up against this acquisition deal. In the bidding process, Paramount tried to convince Warner’s board that their Netflix’s proposal was illegal. For instance, Paramount’s David Ellison hired former Trump Antitrust Division chief Makan Delrahim, and their pitch was that the Trump administration will let them do the merger, but won’t let anyone else. You can expect meaningful GOP opposition to this deal, unless Netflix chooses to curry favor with Trump with donations, promised changes to content, and so forth, or finds a way to get his Silicon Valley advisors to persuade him to accept it.

On the other side, there was strident opposition to the GOP-leaning Paramount getting control of Warner Bros Discovery because of fear that Trump would revamp CNN in a way that would make it more right-leaning. So with Netflix buying Warner Bros Discovery, there is some softening to this merger among certain Democrats. Here, for instance, is Biden official Neera Tanden.

And yet, it’s not like the Democrats as a whole are going to be favorable. Hollywood creatives dislike Netflix’s acquisition, and they are likely to determine how Democrats respond. More broadly, Democrats are coming to understand that consolidation is a problem. Yesterday, Jane Fonda put out a piece in The Ankler making that very point, noting “how this administration has used anticipated mergers as tools of political pressure and censorship.” She cited using antitrust hurdles to change news coverage, as well as the attempt to fire Jimmy Kimmel. And called up antitrust enforcers to protect free speech.

And we must demand that the Justice Department and state attorneys general evaluate every proposed entertainment merger for compliance with antitrust laws. These reviews cannot be treated as procedural formalities or political leverage; they are the last line of defense against media consolidation that threatens competition, creative freedom, and democratic discourse.

So those are the politics.

What’s odd about this situation is that the Warner board just doesn’t seem to consider running Warner Bros Discovery as a profitable company making good movies and TV shows, even though that’s a perfectly viable path. Hollywood worked for a hundred years with that model. And that’s what Simon & Schuster is doing now in book publishing.

So why this aggressive attempt to sell the corporation? A big reason is that Zazlav will be paid $500 million for closing the deal. But behind that payday is that the financiers who run Hollywood simply don’t believe the movie business can offer the kind of returns they see their monopolist peers in tech getting. And they lack any capacity for creativity or leadership.

That’s why antitrust laws exist, to prevent people like this from ruining important corporations. Ultimately, this story of consolidation in Hollywood has been longstanding, and it intersects with deregulation. The old Hollywood model was to make TV shows and movies, and to sell them through multiple channels; good content made good money. But starting 20 years ago, the price signals that used to communicate what consumers liked and didn’t like started breaking down, so making good content stopped translating into profits.

Why did they break down? Well, in 2019, I started tracing the collapse of the industry to the end of the regulations that prohibited vertical integration of TV and film. These were known as financial syndication rules in TV and the Paramount decrees in movies. In this framework, TV networks couldn’t make their own prime time shows, but had to buy them from others. Similarly movie theaters and studios had to be separated. These rules created an open market for content, and linked consumer preferences with quality content.

When these rules went away, Disney bought ABC/ESPN, then we had the Marvel universe dominating everything, then Peak TV as streamers tried to lock in market power. Today, dominant streaming giants and the end of open markets for content is destroying the industry. The lack of fair rules is why prices are going up, but also why quality is down, and why it’s harder for innovative content models to emerge.

The right way to fix this situation is, as Jon Voigt proposed, to restore the prohibitions against vertical integration, a streaming version of the financial syndication rules. But financiers like Sarandos, Malone and Zazlav hate that idea, and think the answer is consolidation. They figure that consumers will then have no choice but to pay more for streaming, regardless of quality. Netflix in particular seems to have a model of importing foreign content, which will ultimately end the American film industry entirely. That might get the return on capital they want, but probably not.

I still find this situation odd. There are many ways to make money, you can try to profit by making great movies, you can also try to profit by burning down studios and squeezing Americans with streaming price hikes. It’s bizarre that our financiers have convinced themselves the only way to do well is through arson. It’s especially weird they are doing it by trying to buy Warner, which Wall Street has sold many times to different companies. And it never works out.

The financiers who push the ‘consolidation is inevitable’ line are wrong. And it’s not just Simon & Schuster showing that. There are many examples of successful merger challenges leading to healthier market structures, such as ARM-Nvidia, Visa-Plaid, or Figma-Adobe. Nvidia is particularly interesting; instead of being tied up with consultants trying to merge a giant chip blueprint producer, it became the biggest company in the world.

Unfortunately, Warner Bros Discovery board members are trying to sell their company in an illegal deal. The ideal scenario now is a trial that puts the secrets of Hollywood executives and financiers on display, and crushes the financiers who think mergers are the only move in business. Then Hollywood can get back to the business of making good tv shows and movies.

Tyler Durden Fri, 12/05/2025 - 11:45

"No Longer Gold's Quiet Sidecar": Silver Surges To Record High As China Demand Exacerbates Squeeze

As we have detailed extensively recently (here, here, and here), silver's latest breakneck surge to record highs was in large part due to collapsing inventories of the precious metal in Chinese warehouses linked to the Shanghai Futures Exchange, which just hit the lowest level since 2015. 

The squeeze continues to accelerate and this morning the white metal topped $59 - a new record high...

...as rising rate-cut odds support the buying...

...and Chinese demand continues to build back inventories...

Strong inflows to exchange-traded funds added more impetus to a scorching rally, as Bloomberg reports, total additions to silver-backed ETFs in the four days through Thursday are already the highest for any full week since July, a strong signal of investor appetite despite signs silver’s gains may be overdone.

As Goldman notes, key catalysts for silver's recent rise include a depletion of Shanghai Futures Exchange inventories plus growing expectations for a dovish, Trump-backed Fed Chair.

“These flows can quickly amplify price moves and trigger short-term short squeezes,” said Dilin Wu, research strategist at Pepperstone Group Ltd.

Silver prices have roughly doubled this year, outpacing a 60% rise in gold. The rally accelerated in the last two months, in part thanks to a historic squeeze in London. While that crunch has eased in recent weeks as more metal was shipped to the world’s biggest silver trading hub, other markets are now seeing supply constraints. Chinese inventories are near their lowest in a decade.

“Silver’s outsized rally signals it’s no longer gold’s quiet sidecar,” said Hebe Chen, an analyst at Vantage Markets in Melbourne.

“The market is waking up to structural scarcity and fast-rising industrial demand, not just the haven story.”

Silver could rise to $62 an ounce in the coming three months “on the back of Fed cuts, robust investment demand, and physical deficit,” Citigroup Inc. analysts including Max Layton wrote in a note.

Additionally, in the latest note from UBS, Dominic Schnider and Wayne Gordon raised their silver price forecasts by USD 5–8/oz, projecting average prices of USD 60/oz in 2026, with upside excursions toward USD 65/oz possible but unlikely to persist. 

“From a macro perspective, silver should benefit from the same drivers expected to support gold – a softer US dollar, Fed rate cuts, and renewed appetite for safe-haven assets amid geopolitical concerns,” said Ewa Manthey, a commodity strategist at ING Bank.

It's not all easy riding from here though, as a "hawkish cut" could spur some profit-taking, and Goldman's Robert Quinn notes that the annual commodity index rebalance looms with potential outflows representing 7-8% of total open interest.

Tyler Durden Fri, 12/05/2025 - 11:40

Jobs Data From Alternative Sources May Drive Feds Next Move

Authored by Lance Roberts via Real Investment Advice,

With the federal government shutdown delaying critical economic reports, the official jobs data remains incomplete. Last week, the Bureau of Labor Statistics (BLS) released the September jobs report. However, the October report, originally expected earlier this month, remains in limbo, potentially permanently. The reason is due to the shutdown, as the BLS was unable to conduct the household survey. As such, the Fed will have to rely on alternative data for perspective on the strength or weakness of the labor market.

Therefore, in the absence of official jobs data, private-sector reports have become the best available gauge of labor market conditions. For example, the most recent ADP report showed only 42,000 private-sector jobs added in October. Crucially, it isn’t the “monthly number” that is crucial to consider, but the trend of the data. While there are undoubtedly many hopes for a resurgence of economic activity in 2026, the trend of employment data certainly doesn’t suggest that will be the case. At least not at the moment.

Another “real-time” source of jobs data is from Revelio Labs, which monitors job trends through company records and employee profiles. The most recent report from Revelio estimates a net decline of more than 9,000 jobs.

LinkUp, which tracks job listings, also reported a loss of 5,000 jobs in October.

While that data is certainly concerning on its own, according to the job posting site Indeed, the number of jobs being posted is also rolling over, with listings now back to 2021 levels, and year-over-year declines in postings in almost every sector they track.

While the BLS employment report is heavily flawed, it remains the standard by which the markets and the Fed act. However, the alternative shows that the slowdown in employment is widespread and not just a function of the Government shutdown. There is evidence of both job losses and a retraction of job openings across the entire economy. This includes logistics to healthcare, retail, and professional services. The hiring freezes are not isolated events, but reflect a structural shift in demand.

None of this indicates a labor collapse. But the shift in momentum is significant, and job creation is stalling with openings shrinking and layoffs rising. This slowdown often precedes broader economic weakness, suggesting that the Federal Reserve’s next monetary policy moves may be more focused on job creation than on concerns about inflation.

The Fed Must Weigh Jobs Data Against Inflation Risks

The Fed’s dual mandate, which is to achieve full employment and price stability, puts it in a difficult position right now. As noted above, there is clear evidence that economic weakness is increasing, with jobs data showing signs of weakening. On the other hand, inflation remains elevated, particularly in the services sector, with inflation expectations still above the Fed’s target.

For example, Fed Chair Jerome H. Powell recently said:

“In the near term, risks to inflation are tilted to the upside and risks to employment to the downside—a challenging situation…we remain committed to supporting maximum employment, bringing inflation sustainably to our 2 percent goal.”

At this juncture, the Fed must carefully assess the risks of its next policy moves. While softening jobs data suggests the employment objective is under threat, cutting rates and increasing monetary accommodation may spark a resurgence of inflation. However, if inflation remains high, the price-stability objective is under pressure; but higher inflation slows economic activity and employment. As President Mary C. Daly recently put it:

“At this point … the risks to the inflation side of our mandate and the risk to the employment side of our mandate are in better balance. And so, we have to be thoughtful about not loosening too early, but we have to be thoughtful about not holding too long.”

The Fed will likely place greater emphasis on alternative job data, wage trends, and inflation indicators in its next policy steps. Suppose these alternative signals continue to indicate a softening job market without wage inflation escalating. In that case, the Fed’s bias will likely tilt toward easing policy to prevent a sharper economic slowdown.

Looking back, the Fed has confronted similar scenarios when job growth weakened while inflation remained above target. In the minutes of a prior meeting, the Fed noted:

“A number of participants noted … although the labor market remained strong, … there was some risk that further cooling in labor market conditions could be associated with an increased pace of layoffs.”

In a more recent context, Powell said at the March 2025 Monetary Policy Forum:

“If the labor market were to weaken unexpectedly or inflation were to fall more quickly than anticipated, we can ease policy accordingly.”

That statement highlighted conditionality—policy is not on a preset course but rather depends on the data. However, it is a balancing act between cutting too much and not enough. Unfortunately, the Fed has a long history of doing both at the wrong times.

The problem for the Fed, as noted above, is that two mandates of full employment and price stability work against one another. To achieve full employment, prices will rise as economic activity increases. To reduce inflation, economic activity must slow, which in turn leads to fewer jobs being created. This is why the Fed consistently gets itself trapped in providing increasing or reducing accommodation to solve one problem, but creates a problem with the other.

What the Fed Will Likely Do Next

The Federal Reserve is staring at a familiar dilemma with the jobs data cooling and inflation remaining above target. Furthermore, it appears, at least outside the stock market, that traditional policy tools are becoming less effective in their impact.

We expect that over the coming months, the Fed will likely continue easing monetary policy at a cautious pace while reassuring the markets that it is remaining “data-driven.” The reality is that they are cutting policy in the hopes of stimulating economic growth, which could spark an inflationary uptick. However, with the risks of a deflationary impact from the onset of AI, demographic trends, and rising non-productive debt levels, the Fed continues to “push on a string.” While the October rate cut was a clear sign that officials are willing to respond to weakening economic conditions, the bar for navigating the current environment without a policy misstep remains exceptionally high.

However, we expect that the most likely path forward includes:

• Cut rates in December, unless inflation readings rise meaningfully.
• A return of focus to the BLS Employment reports
• Consider a second 25 bps cut in early 2026 if wage growth continues to decelerate, quits remain low, and layoffs continue to rise.
• Avoid aggressive rate cuts unless recession risks rise sharply. As Fed Chair Powell emphasized, the Fed won’t act prematurely: “We have to be careful not to move too soon or too late.”
• Continue to balance downside risks with increased attention to credit conditions, consumer delinquencies, and business investment data.

The Fed will avoid rushing into a complete easing cycle unless both components of its mandate, employment and inflation, clearly support that move. Right now, the labor market is flashing yellow, but not red. Inflation is sticky, but no longer accelerating; therefore, we expect the Fed’s policy approach to reflect this.

How Investors Should Prepare

Investors should expect volatility. With conflicting economic signals, markets are vulnerable to sharp swings in response to Federal Reserve comments, inflation reports, and any new labor market indications. The path forward is not linear.

Here’s what to watch for and how to position:

• Watch yield curves: If short-term yields fall further while long-term yields stabilize, the bond market is pricing in slower growth with softer inflation. This benefits duration-sensitive assets.
• Favor high-quality fixed income: Slower job growth and lower inflation expectations improve the risk/reward profile of investment-grade credit and Treasuries.
• Avoid chasing speculative assets: If the Fed remains cautious, liquidity conditions will stay tight. High-beta equities, unprofitable tech companies, and cryptocurrencies remain vulnerable.
• Look for relative value in defensive sectors: Healthcare, consumer staples, and utilities offer protection if economic weakness deepens.
• Stay flexible on equity allocation: Earnings forecasts may still be too optimistic. Slower jobs data often precedes revenue and margin pressure. Valuations remain elevated in many areas.
• Watch small-business indicators: Job postings, wage plans, and hiring intentions in the NFIB and other surveys will be critical signals of broader labor market trends.

More broadly, investors should prepare for a period where monetary policy lacks a clear anchor. With a Fed that’s hesitant to act too aggressively, markets will likely overreact to soft guidance, regional inflation trends, and real-time labor indicators.

The economy is not falling off a cliff, but the momentum is clearly weakening, and the job market’s directional change is real. That weakness also suggests that inflation is no longer the problem. For the first time in nearly two years, the Fed’s focus is shifting, slowly, from restraining prices to protecting employment. Unfortunately, at least from a historical view, they have not managed such a shift without negative consequences.

While “this time could be different,” I wouldn’t make aggressive bets on that outcome.

Tyler Durden Fri, 12/05/2025 - 11:30

Iran Launches Live Fire Drills In Gulf, Flexing Reconstituted Missile Arsenal 

Iran's elite Revolutionary Guards (IRGC) Navy launched ballistic and cruise missiles at mock targets in the Persian Gulf on Friday as part of an announced two-day military drill designed to demonstrate its readiness against external threats, state media indicates, at a time the region is still on edge following the last June 12-day war involving Iran, Israel, and the United States.

Tehran is seeking to signal to its enemies that it has both regrouped and reconstituted its missiles and military assets after many hundreds of drones and ballistic missiles - including potentially hypersonic projectiles - were expended against Israel.

Iranian military file image

The new exercise includes 'live fire' drills, as the navy is launching volleys of ballistic and cruise missiles aimed at targets in the Oman Sea, state media reported on Friday. State media has identified that Qadr 110, Qadr 380 and Qadir cruise missiles, along with the 303 ballistic missile, have also been fired from inside Iran against sea targets off the coast.

Drone waves are also being deployed again mock enemy bases and targets, with part of the exercises focused on how to quickly respond to aerial threats against fast boats and coastal positions. One new aspect to the drills is that commanders are now touting AI-based operational capabilities.

Iran's military has been busy seeking to demonstrate its capabilities of late, as earlier this week Iran conducted an anti-terrorism exercise in East Azerbaijan province alongside members of the Shanghai Cooperation Organization. Press TV said the drills are a warning to adversaries that "any miscalculation would receive a decisive response."

According to some recent conclusions in the wake of the June war, the establishment think tank Soufan Center writes:

• Iran shows no signs of altering its core policies despite the damage done by Israel and the United States to Iran’s strategic architecture.
• A continuation of Iran’s existing policies is unlikely to bring the sanctions relief that moderate leaders such as elected President Masoud Pezeshkian deem vital to addressing economic deterioration.
• Iran is resisting Trump’s pressure to dismantle its uranium enrichment infrastructure while leaving the door open to renewed diplomacy with the U.S. and its European allies.
• Tehran is developing new methods and routes to resupply its Axis of Resistance partners, particularly Lebanese Hezbollah and the Houthis in Yemen.

On Friday Iranian lawmaker Fada-Hossein Maleki was quoted in international press reports as saying that the Trump administration had reached out, saying the US is open to new negotiations. He said whether to engage or not is the Supreme Leader's final decisions, while noting that "we tried every path, but in the end it led to war and the wall of distrust only grew higher."

Iranian state media put out footage of the new Gulf area drills Friday:

Iran’s Revolutionary Guards Navy fired ballistic and cruise missiles at simulated targets in the Gulf during a two-day exercise meant to counter foreign threats.

The drills included mass launches of Qadr-series cruise and ballistic missiles, along with drone strikes on mock… pic.twitter.com/fUWN5d1tHp

— Clash Report (@clashreport) December 5, 2025

Maleki warned that Iran remains ready for any possible escalation. "We are far more prepared than before," he said.  Maleki admitted that while Iran suffered significant losses in the opening hours of the June surprise attack from Israel, at least "the enemy knows our readiness now."

Tyler Durden Fri, 12/05/2025 - 11:20

 

 

Fascinating conversation updating the book, The Big Short:

“Of all the characters in The Big Short, fund manager Michael Burry (depicted by Christian Bale in the movie version) seemed the least likely to grant Michael Lewis a follow-up interview. Burry was one of the first to see the subprime housing market crisis coming, and he actually helped Wall Street banks develop the credit-default swap, the instrument that allowed short sellers to make their bets against the market. Lately, Burry has been in the news again because his fund has taken short positions against tech giants Nvidia and Palantir. Now he finally sits down with Lewis as part of this series.”

 

 

The post Michael Burry Speaks to Michael Lewis appeared first on The Big Picture.

Here is a graph of the year-over-year change in shelter from the CPI report and housing from the PCE report this morning, both through September 2025.

CPI Shelter was up 3.6% year-over-year in September, down slightly from 3.6% in August, and down from the cycle peak of 8.2% in March 2023.
Housing (PCE) was up 3.7% YoY in September, down from 3.9% in August and down from the cycle peak of 8.3% in April 2023.

Since asking rents are mostly flat year-over-year, these measures will slowly continue to decline over the next year as rents for existing tenants continue to increase.
The second graph shows PCE prices, Core PCE prices and Core ex-housing over the last 3 months (annualized):

Key measures are above the Fed's target on a 3-month basis. 

3-month annualized change:
PCE Price Index: 2.8%
Core PCE Prices: 2.7%
Core minus Housing: 2.6%

Supreme Court Allows Texas To Use A Congressional Map Favorable To Republicans In 2026

Via Headline USA,

A divided Supreme Court on Thursday came to the rescue of Texas Republicans, allowing next year’s elections to be held under the state’s congressional redistricting plan favorable to the GOP and pushed by President Donald Trump. 

With conservative justices in the majority, the court acted on an emergency request from Texas for quick action because qualifying in the new districts already has begun, with primary elections in March.

The Supreme Court’s order puts the 2-1 ruling blocking the map on hold at least until after the high court issues a final decision in the case.

Justice Samuel Alito had previously temporarily blocked the order while the full court considered the Texas appeal.

The justices cast doubt on the lower-court finding that race played a role in the new map, saying in an unsigned statement that Texas lawmakers had “avowedly partisan goals.”

In dissent, Justice Elena Kagan wrote for the three liberal justices that her colleagues should not have intervened at this point. Doing so, she wrote, “ensures that many Texas citizens, for no good reason, will be placed in electoral districts because of their race. And that result, as this Court has pronounced year in and year out, is a violation of the Constitution.”

The Texas congressional map enacted last summer was engineered to give Republicans five additional House seats.

The effort to preserve a slim Republican majority in the House in next year’s elections touched off a nationwide redistricting battle.

Texas was the first state to meet Trump’s demands in what has become an expanding national battle over redistricting.

Republicans drew the state’s new map to give the GOP five additional seats, and Missouri and North Carolina followed with new maps adding an additional Republican seat each. To counter those moves, California voters approved a ballot initiative to give Democrats an additional five seats there.

The redrawn maps are facing court challenges in California and Missouri.

A three-judge panel allowed the new North Carolina map to be used in the 2026 elections.

The Trump administration is suing to block the new California maps, but it called for the Supreme Court to keep the redrawn Texas districts in place.

The justices are separately considering a case from Louisiana that could further limit race-based districts under Section 2 of the Voting Rights Act. It’s unclear how the current round of redistricting would be affected by the outcome in the Louisiana case.

Texas Attorney General Ken Paxton said the Supreme Court’s order “defended Texas’s fundamental right to draw a map that ensures we are represented by Republicans.” He called the redistricting law “the Big Beautiful Map.”

“Texas is paving the way as we take our country back, district by district, state by state,” Paxton said in a statement.

“This map reflects the political climate of our state and is a massive win for Texas and every conservative who is tired of watching the left try to upend the political system with bogus lawsuits.”

Texas Gov. Greg Abbott issued a statement saying: “We won! Texas is officially — and legally — more red.”

U.S. Attorney General Pam Bondi hailed Thursday’s Supreme Court stay, posting on X, “Federal courts have no right to interfere with a State’s decision to redraw legislative maps for partisan reasons.” 

Tyler Durden Fri, 12/05/2025 - 10:45

According To Democrats, Current Economic Conditions Have Never (Ever) Been Worse

Consumer confidence data from the University of Michigan showed an impressive (and surprising) rebound in preliminary December data with the headline print rising from near record lows at 51.0 to 53.3 (well above the 52.0 exp)...

Source: Bloomberg

This month’s increase was concentrated primarily among younger consumers. Overall, while views of current conditions were little changed, expectations improved, led by a 13% rise in expected personal finances, with improvements visible across age, income, education, and political affiliation.

Labor market expectations improved - 63% of consumers expect unemployment to rise in the year ahead, still much higher than the 40% seen a year ago, according to Surveys of Consumers Director Joanne Hsu.

After UMich respondents proclaimed their fear of losing their jobs last month was as high as during the peak of COVID and the GFC, this month saw those fears collapse...

Source: Bloomberg

Most notably, reality is finally starting to hit for the Democrats who were fearmongered into believing inflation would explode under Trump.

Year-ahead inflation expectations decreased from 4.5% last month to 4.1% this month, the lowest reading since January 2025. This marks four consecutive months of declines. Additionally, long-run inflation expectations softened from 3.4% last month to 3.2% in December, matching the January 2025 reading

Source: Bloomberg

Independents saw long-term inflation expectations plunge...

Source: UMich

But it was the Democrats that really came to their senses...

Source: Bloomberg

Simply put, UMich's Hsu is forced to admit that consumers have noted that the soaring inflation they feared in April and May 2025 at the height of tariff developments has not come to fruition at this time.

Hsu couldn't help but play down the improvements with her concluding remarks: 

"Consumers see modest improvements from November on a few dimensions, but the overall tenor of views is broadly somber, as consumers continue to cite the burden of high prices."

Finally, according to UMich Democratic respondents, current conditions sentiment has never been worse...ever... and the gap between Republican and Democrat confidence has never been wider...

But, no bias, right?

Tyler Durden Fri, 12/05/2025 - 10:30

Peace In Our Time? Don't Count On It

By Benjamin Picton, Senior Market Strategist at Rabobank

US equities closed mixed on Thursday, despite solid leads from European markets where all of the major indices closed higher. Bond yields were mostly higher with US 10s pushing up 3.5bps to 4.09% and the 2-year yield lifting by almost 4bps to 3.52%. There was notable price action in the Aussie market where 2-year yields rose by 7.5bps to 3.98% after the Wall Street Journal reported that a number of local banks are considering updating their forecasts to project an RBA rate hike as early as February. 

The rate hike chatter down under has been egged-on by a run of higher-than-expected inflation, strong household consumption figures and a lift in activity in Australia’s invincible housing market since the RBA began cutting interest rates back in February. A weaker-than-expected Q3 GDP result that showed growth of 0.4% in the quarter – compared to estimates of 0.7% - wasn’t enough to derail the push higher in yields as commentators pointed out that domestic final demand was strong and that the growth miss was largely attributable to a drawdown in inventories by mining companies. 

We’re a little more circumspect on the prospect for hikes early next year in Aussie. The latest GDP figures confirmed that year-on-year productivity growth (as measured by GDP per hour worked) rose from 0.2% in Q2 to 0.8% in Q3, which raises the prospect that productivity growth might exceed the RBA’s 0.9% year-end forecast and thereby imply a higher potential growth rate for the economy. Similarly, the household savings ratio was upgraded substantially to levels that now exceed those observed in pre-Covid times and substantially exceed the RBA’s projections issued last month. That suggests that the intertemporal rate of substitution was more skewed towards saving (rather than spending) than the RBA thought, and implies that monetary policy may have been more restrictive than thought. That’s as growth gross national expenditure remains in-line with the RBA forecasts, the labour market continues to soften, Aussie equities underperform global peers and growth in rents continues to moderate.

If all of that isn’t reason enough to be skeptical of a February rate hike, the trade-weighted AUD already exceeds RBA forecasts even as the US Fed looks poised to cut rates next week, the JPY remains in a weakening trend and the PBOC begins fixing the CNY weaker than estimates. A February rate hike course reversal from one of the most notoriously staid central banks while all of that is going on? The 2-year yield might say yes, but don’t count on it.

While Australia navel-gazes over local issues, the economic picture elsewhere seems to be deteriorating. As noted yesterday, the US ADP employment survey for November was a miss, recording a loss of 32,000 jobs. Similarly, the Challenger job cuts figures released overnight show that in the year to November this year has seen more job losses than any non-recession year except 2002. The UK construction PMI printed at an abysmal 39.4 to follow Canada’s dreadful services PMI of 44.3 and a decent drop in US capacity utilization reported the day before that makes today’s PCE inflation release all the more interesting.

One bright spot seems to be US weekly jobless claims, where the number of new claimants fell to just 191,000 and the four-week average fell by approximately 10,000 to 215,000 – the lowest level since January. So, more job cuts but less claimants. Can we chalk that dynamic up to the activities of ICE? Axios today reports that daily arrests are surging, and the Wall Street Journal reports that the Trump administration is preparing to further tighten controls over the work rights of legal immigrants. Fewer jobless claims despite fewer jobs does seem to suggest a shrinking labor pool.

In geopolitical news the FT reports that French President Macron has warned of a risk of the “disintegration of the international order” following a meeting with Xi Jinping. Such revelations will not be news to regular readers of this missive – we have been warning of this since 2016 at least, but European politicians have been a little slow to catch on. President Xi, who has repeatedly criticized the international order as a US-led order that is too Western-centric and marginalizes the global South, encouraged Macron to “hold high the banner of multilateralism” as the two sides made all the right noises on mutual investment.

The kind of multilateralism that Xi has in mind is an important point to consider. Is Xi talking about an idealistic evolution of the United Nations where more power is given to the developing world but disputes are resolved via dialogue? Or is he talking about ending US hegemony to carve the world up into spheres of influence for regional great powers to preside over? Xi’s reluctance to get involved in brokering a peace deal in Ukraine and recent naval deployments in the wake of a diplomatic spat with Japan will make many nervous that it is the latter.

A spheres of influence paradigm is certainly favorable in the eyes of Vladimir Putin. He has reportedly rejected the latest peace overtures from US special envoy Witkoff and told India Today that Ukrainian troops will either leave the Donbas region or Russia will “liberate these territories by force”. Kremlin officials have reportedly told journalists that a peace deal remains a long way off. The Wall Street Journal editorial today says “maybe it is time to conclude that Mr. Putin doesn’t want peace” while arguing that Putin has no incentive to negotiate in good faith while he feels that he is winning.

So, peace in our time? Don’t count on it.

Tyler Durden Fri, 12/05/2025 - 10:20

Fed's Favorite Inflation Indicator Continues To Show No Signs Of Runaway Tariff Costs

First things first, this is September data... so horribly lagged/stale... but, it's all we have, so let's dive in.

The Fed's favorite inflation indicator - Core PCE - rose 0.2% MoM (as expected), which leave it up 2.8% YoY (as expected), slightly lower than August +2.9%...

Source: Bloomberg

On an annual basis, the headline PCE rose 2.8%, up modestly from 2.7% YoY in August (as expected). That is the highest since April 2024, but again remains in the range of the last two years...

...showing no signs at all of the runaway tariff-driven costs that so many establishment economists proclaimed was imminent.

Services costs (not tariff-related directly) attributed the most to the rising costs while Goods prices were barely positive...

The closely-watched SuperCore PCE slipped to +3.25% YoY...

... as Financial Services and Food Service/Accommodations stalled out.

Also trending lower overall, ruining the 'Trump will kill us all with tariffs' narrative.

Meanwhile, amid rising prices, income growth outpaced spending growth for a change...

This left the savings rate at 4.7%, unchanged from August and at lowest since Dec 2024...

One place where there continues to be tangible improvement is the divergence between private and government sector wage growth in September: 

• Private worker wages up 5.8% in Sept, up from 5.2% and highest since March 2024
• Govt worker wages up 4.2% in Sept, unch vs August and lowest since August 2021

TL/DR: while this data is admittedly stale, it shows no signs of 1) tariff-driven inflation or 2) a suffering consumer.

Tyler Durden Fri, 12/05/2025 - 10:15

Personal income increased $94.5 billion (0.4 percent at a monthly rate) in September, according to estimates released today by the U.S. Bureau of Economic Analysis. Disposable personal income (DPI)?personal income less personal current taxes?increased $75.9 billion (0.3 percent) and personal consumption expenditures (PCE) increased $65.1 billion (0.3 percent). Personal outlays?the sum of PCE, personal interest payments, and personal current transfer payments?increased $70.7 billion in September. Personal saving was $1.09 trillion in September and the personal saving rate?personal saving as a percentage of disposable personal income?was 4.7 percent. Full Text

From the BEA: Personal Income and Outlays, September 2025

Personal income increased $94.5 billion (0.4 percent at a monthly rate) in September, according to estimates released today by the U.S. Bureau of Economic Analysis. Disposable personal income (DPI)—personal income less personal current taxes—increased $75.9 billion (0.3 percent) and personal consumption expenditures (PCE) increased $65.1 billion (0.3 percent).

Personal outlays—the sum of PCE, personal interest payments, and personal current transfer payments—increased $70.7 billion in September. Personal saving was $1.09 trillion in September and the personal saving rate—personal saving as a percentage of disposable personal income—was 4.7 percent.
...
From the preceding month, the PCE price index for September increased 0.3 percent. Excluding food and energy, the PCE price index increased 0.2 percent.

From the same month one year ago, the PCE price index for September increased 2.8 percent. Excluding food and energy, the PCE price index increased 2.8 percent from one year ago.
emphasis added

The September PCE price index increased 2.8 percent year-over-year (YoY), up from 2.7 percent YoY in August.
The PCE price index, excluding food and energy, increased 2.8 percent YoY, down from 2.9 percent in August.

The following graph shows real Personal Consumption Expenditures (PCE) through August 2025 (2017 dollars). Note that the y-axis doesn't start at zero to better show the change.

Click on graph for larger image.

The dashed red lines are the quarterly levels for real PCE.

Personal income was at expectations and spending was below expectations.
Inflation was slightly lower than expected.

From Manheim Consulting today: Manheim Used Vehicle Value Index: November 2025 Trends

The Manheim Used Vehicle Value Index (MUVVI) rose to 205.4, reflecting a 1.3% increase in November’s wholesale used-vehicle prices (adjusted for mix, mileage, and seasonality) compared to October. The index is mostly unchanged compared to November 2024. The long-term average monthly move for November is a decrease of 0.6%.
emphasis added

Click on graph for larger image.

This index from Manheim Consulting is based on all completed sales transactions at Manheim’s U.S. auctions.

The Manheim index suggests used car prices increased in November (seasonally adjusted) and were mostly unchanged YoY.