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White House PressSec Slams Media Over Silence On Russia Collusion Hoax Bombshells

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White House PressSec Slams Media Over Silence On Russia Collusion Hoax Bombshells

Authored by Bryan Hyde via American Greatness,

White House Press Secretary Karoline Leavitt took members of the press corps to task over their refusal to cover newly released evidence that shows Hillary Clinton approved the Russian collusion hoax against Donald Trump.

Leavitt’s comments come on the heels of a newly declassified appendix to the Durham Report that exposes a reported Clinton campaign plan to falsely accuse President Trump of collusion with Russia.

Leavitt chided members of the press, telling them, “This is a story that every outlet in this room should be covering,” and that “This is further evidence that Hillary Clinton approved the Russia Hoax against President Trump. Her campaign financed it.”

Leavitt added that “the FBI and the CIA were both weaponized to accelerate this hoax against then-candidate and former president Trump.”

The Press Secretary told reporters that, “The president wants to see justice served and he trusts the Attorney General and the Department of Justice to implement that justice and hold these people accountable.”

The so-called “Durham annex” to John Durham’s Special Counsel report was released yesterday by Senate Judiciary Committee Chairman Chuck Grassley (R-IA) and brings previously classified information to light regarding the Clinton campaign’s plans to falsely tie Trump to Russia.

In a press release, Grassley said, “History will show that the Obama and Biden administration’s law enforcement and intelligence agencies were weaponized against President Trump. This political weaponization has caused critical damage to our institutions and is one of the biggest political scandals and cover-ups in American history. The new Trump administration has a tremendous responsibility to the American people to fix the damage done and do so with maximum speed and transparency.”

At a press conference just one week ago, Director of National Intelligence (DNI) Tulsi Gabbard said that the Obama administration promoted a “contrived narrative” that Russia interfered in the 2016 election.

Gabbard stated, “There is irrefutable evidence that details how President Obama and his national security team directed the creation of an intelligence community assessment that they knew was false. They knew it would promote this contrived narrative that Russia interfered in the 2016 election to help President Trump win, selling it to the American people as though it were true it wasn’t.”

Independent journalist Matt Taibbi has suggested that mainstream media has left itself few options because it cannot cover the most recent disclosures without making major admissions to its own part in the hoax.

 

Tyler Durden
Fri, 08/01/2025 – 15:00

Zelensky Calls For Western Allies To Seek ‘Regime Change’ In Russia

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Zelensky Calls For Western Allies To Seek ‘Regime Change’ In Russia

Ukrainian President Volodymyr Zelensky has publicly called for Western-supported regime change in Russia, arguing it is the only way to ensure long-term security against “Russian aggression.”

He further claimed that if there’s not change of government in Moscow, then all of Europe is under threat. The provocative words were issued during a virtual speech marking the 50th anniversary of the Helsinki Final Act, or Helsinki Accords.

“If the world doesn’t aim to change the regime in Russia, that means even after the war ends, Moscow will still try to destabilize neighboring countries,” Zelensky said, claiming that this will be the case even if Russia is compelled to end the war through a ceasefire.

Global Images Ukraine via Getty Images

He also urged the Western allies to seize and not just freeze Russian assets and use them to help defend against Russian forces, through more arms purchases and defense funding. 

This comes after one of the single deadliest Russian strikes on Kiev early Thursday morning, which demolished an apartment building, and left at least 28 dead and over 120 wounded.

In response, Russian Foreign Minister Sergey Lavrov once again reiterated that Russia has not threatened the EU and instead accused the bloc of drifting toward what he called a “fourth Reich”.

The Kremlin has consistently rejected Western assumptions that its war aims in Ukraine are ‘expansionist’ in nature, or that nearby NATO states will be invaded.

On the negotiations front, there’s been no momentum whatsoever, and even behind-the-scenes efforts of the White House to engage top Russian officials have proven fruitless. President Trump has been turning back toward strongly supporting Ukraine of late.

Russia has signaled willingness to negotiate and has participated in various talks; however it refuses to recognize Zelensky as a legitimate head of state, citing the expiration of his term using the excuse of martial law.

Any future or final peace agreement must be signed by what Russia deems a legitimate Ukrainian authority, at a moment Zelensky has called for direct talks with Putin.

But until Zelensky agrees to territorial concessions, or at the very least giving of claims of sovereignty over Crimea, for example, Putin will see little incentive in any direct dialogue at the negotiating table.

The same could be true of President Trump, who is threatening more sanctions if a peace deal isn’t made by August 8. Putin has in response pointed out that Russian ground forces are advancing all across the frontlines in Ukraine.

Tyler Durden
Fri, 08/01/2025 – 12:40

Debasement: What It Is And Isn’t…

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Debasement: What It Is And Isn’t…

Authored by Lance Roberts via RealInvestmentAdvice.com,

Over the past year, financial headlines continue to flood investors with doomsday predictions about the U.S. dollar.

Whether it’s social media influencers waving “dollar collapse” charts or YouTube personalities warning about debasement, the noise has become deafening. The narrative is seductive: inflation is out of control, the government is printing money, and the dollar is on its last legs. But while there are real risks to watch, most headlines sell fear, not fact.

One of the favorite charts used to make the “debasement” case is the classic graph showing that the U.S. dollar has lost 90% of its purchasing power since 1966.

It’s striking, and those selling gold, silver, or other doomsday assets often use it. But here’s the thing: that chart doesn’t show debasement. It only reflects inflation, a well-understood and largely expected outcome in a growing economy.

Prices rise over time because demand increases due to population growth, rising incomes, and growing consumption. This is especially true in a post-industrial, service-driven economy that incentivizes credit expansion and capital investment. As we often say, it’s not the dollar losing value; it’s the economy expanding.

Let’s discuss what “debasement” is and is not as it relates to the economy.

Understanding Inflation vs. Debasement

Let’s start by untangling two often-confused concepts: inflation and currency debasement. While both reduce the purchasing power of a dollar, they operate differently.

Inflation is the rise in prices due to supply and demand imbalances. Rising wages and consumer demand for products and services that grow faster than the available supply create higher prices (aka inflation). The chart below is from a previous article we wrote discussing why the economy surged following the pandemic-related economic shutdown.

“The following economic illustration is taught in every ‘Econ 101’ class. Unsurprisingly, inflation is the consequence if supply is restricted and demand increases via monetary interventions.”

Conversely, debasement implies a structural dilution of a currency’s value. This is vastly different than inflation. In a “debasement” scenario, governments take conscious actions to reduce the “structure” of the currency. In Rome, for example, the government reduced the amount of silver in minting coins to increase the number of coins produced to pay its creditors. However, debasement is not a reality in a fiat system like ours, where the linkage to gold or silver is nonexistent. In other words, when the government is “printing paper,” it is impossible to dilute the “structure.”

However, the term has become “co-opted” by the bears and fear mongers as a psychological representation of perception and confidence in the dollar. But that is what makes this discussion so interesting. While the “debasement experts” point to record stimulus, growing deficits, and expanding M2 over the last few years, confidence in the dollar remains intact—not just among U.S. consumers and investors but globally.

As shown, the U.S. dollar index remains strong. Most notably, the bigger picture reveals a more resilient and globally dominant currency than many alarmists will admit. The U.S. dollar is still at the center of 80% of global transactions, and nearly 60% of all global reserves. The “debasement” argument is at best premature, and at worst, deeply misleading.

But what about that dollar purchasing power chart above?

That chart is not about “debasement,” as shown; it is just a measure of inflation caused by a growing U.S. population and increasing economic demand over time.

What M2 Growth Tells Us

“No Lance, the dollar purchasing power is going down, because we are printing too much money.”

That would be a fair statement if the Government were increasing the money supply faster than the economic growth rate. In such a case, the surge in the money supply would cause inflation.

We did witness such an event, as the surge in M2 during the pandemic era was unprecedented. During 2020 and 2021, the Government added over $6 trillion to the money supply. But let’s not forget the context: the world was undergoing the most severe economic shock since the Great Depression. The U.S. government and Federal Reserve stepped in forcefully to stabilize the economic and financial system—and it worked. The consequence was, as would be expected, and as shown in the chart above, a shift in the “supply/demand” equation, creating higher prices. However, at the same time, that surge in demand that outstripped supply led to a massive surge in economic growth, sending unemployment to near record lows. That outcome would not have occurred without the increase in the money supply.

But therein lies the misunderstanding. It’s easy to point to M2 charts and scream “debasement. “ However, the money supply must grow as the economy grows. If it doesn’t, deflationary risks emerge. Therefore, the key is whether money creation exceeds economic growth in a sustained way. Since 1959, the money supply has grown in alignment with economic growth.

A better way to assess this is by comparing M2 to GDP. Historically, the two have tracked closely. Even during the COVID shock, M2 as a percentage of GDP remained below 100%, meaning money supply growth was broadly aligned with economic output. Today, that ratio is falling, not rising.

The reality is, as you would expect, that the growth rates of M2 and the economy are highly correlated.

If the dollar were truly being debased, you’d see a very different set of outcomes:

  • Capital fleeing U.S. assets (stocks, bonds, gold, cryptocurrencies)

  • A collapse in Treasury demand.

  • A breakdown in global trade settled in dollars.

Instead, we see the opposite. Treasury demand remains robust. The dollar is still used in 80% of global transactions and represents nearly 60% of international reserves. Central banks, sovereign wealth funds, and institutional investors continue to hold and accumulate U.S. assets.

So, while media pundits scream about a “loss of trust,” global capital continues to support the dollar.

The Dollar’s Death Is Greatly Exaggerated

Every few decades, someone proclaims the end of the dollar. In the 1980s, it was Japan. In the 2000s, it was the Euro. Today, it’s China or crypto. Yet none of these alternatives have been able to replicate what the dollar provides: deep capital markets, rule of law, and the economic and military reach of the United States.

The dollar remains the cleanest dirty shirt in the global laundry basket. That’s not to say it’s perfect, but perfection isn’t the benchmark. Trust, liquidity, and legal protections are. Furthermore, gold, often touted as the “real money” alternative, is traded and valued in dollars.

In reality, “debasement” isn’t the issue that investors should pay attention to. However, “inflation“ over time erodes the purchasing power of dollars. As such, investors must ensure their “savings” grow at the inflation rate over time. That means investing your savings in assets that grow faster than the inflation rate over the long term. We discussed this topic in “Conviction and How to Lose a Lot of Money.”

“As an example, let’s consider a high-end men’s suit. In 1900, the average price of a high-end men’s suit was around $35. Today, the average price of a high-end suit is around $2,000.

Looking at it another way, if you had stuffed $41.34 under your mattress in 1900, today you might be able to buy a couple of Polo shirts if you find a deal. But if you had bought two 1-ounce gold coins and stuffed those under your mattress in 1900, today you’d be able to buy a fancy suit and have about $1,600 left over.“ – Michael Maharrey

He is correct in his math. However, the same investment in the stock (price appreciation only since gold doesn’t pay a dividend) allowed an individual to buy 15 suits with money left over.

Yes, gold has been a good hedge against inflation over the long term. Investing in the stock market has been much better.

So why do dollar debasement stories get so much attention? Because fear sells. Human psychology is wired to respond more strongly to threats than to opportunities. This “negativity bias” helps explain why bearish content generates more clicks, listens, and views. It’s not that the content is wrong, but it’s often disproportionately amplified.

Unfortunately, many investors confuse loud narratives with likely outcomes.

For investors, the key takeaway is to separate noise from narrative. While inflation, fiscal deficits, and policy missteps are worth our concern, the U.S. dollar remains the backbone of the global financial system, not because it’s flawless, but because there is still no viable alternative.

Again, “debasement” isn’t the concern it is being made out to be.

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

Tyler Durden
Fri, 08/01/2025 – 12:20

Kamala Harris Serves Up More Word Salad While Admitting Trump Broke Her

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Kamala Harris Serves Up More Word Salad While Admitting Trump Broke Her

Authored by Steve Watson via Modernity.news,

Political Failure Kamala Harris keeps talking about ‘continuing to fight’ but at the same time is declaring that she’s not going to run for anything because “the system is broken.”

Harris appeared on Colbert’s moribund show, of course she did, and served up heaps of word salad while hawking a book she claims to have written.

She explained her decision not to run for governor of California by stating “I don’t want to go back into the system.”

Wow, that’s some real fighting talk there.

She’s hardly treading ground in preparation for a big come back is she?

Harris actually managed to defeat herself before any contest for anything has actually begun.

And hang on, why is the system broken again?

Is it because you lost? Is that the sole reason?

She (or whoever tells her what to say) also elected for an interesting turn of phrase with “on bended knee.”

She sounds absolutely smashed.

What else is in this book?

So to sum up…

As we highlighted yesterday, Kamala’s book announcement was met with about the same enthusiasm shown by vampires hearing about a garlic festival.

After verbalising that splurge of mins garble, Harris followed up with this bizarre cringe.

Good God.

Speaking of Trump, he commented on Harris ruling herself out of any political race in 2026, noting how unsurprised he is.

 “She can’t speak, she can’t talk, she can’t do an interview,” he remarked, adding “I thought she was a terrible candidate… She didn’t really get the nomination. That whole nomination was strange.”

Trump quipped that he might read Harris’ book for a laugh, but quickly adding “no,” and noting “She didn’t do any interviews or anything, which was strange, not even friendly interviews with friendly reporters like her, right there, really friendly reporter,” pointing to Rachel Scott of ABC News.

“She didn’t run a great campaign, but we beat Biden, and then we had to beat– nobody’s beaten two. I had to beat two,” Trump added.

No one wants the salad. We’re all unburdened by the salad that has been.

*  *  *

Your support is crucial in helping us defeat mass censorship. Please consider donating via Locals or check out our unique merch. Follow us on X @ModernityNews.

Tyler Durden
Fri, 08/01/2025 – 11:40

Doomberg: “US Foreign Policy Adventures Standing In Way Of Nuclear Renaissance”

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Doomberg: “US Foreign Policy Adventures Standing In Way Of Nuclear Renaissance”

U.S. foreign policy is obstructing nuclear energy progress: “U.S. foreign policy adventures and various conflicts with perceived enemies is standing in the way of the nuclear renaissance.” Those were the words of energy and financial analyst Doomberg (who writes pseudonymously on Substack) from last evening’s ZeroHedge Debate with Mark Nelson of Radiant Energy Group, hosted by Erik Townsend of Macro Voices.

In a rational world, the U.S. would “put out to bid building parts or all of a fleet of envisioned reactors,” accepting proposals from countries like “Russia, China, and South Korea, Canada, and Westinghouse,” and selecting “the best of what’s available in the world.” While Trump may try to change course, beltway interests are not always aligned with what is rational. 

Other nations have already shown what’s possible, Doomberg argued. “The United Arab Emirates bought Korean technology and just implemented it very well,” with a “national project management type campaign,” including “multi-generational training” and “a holistic approach.” The result: “four now and counting immortal nuclear reactors” producing “steady 95% capacity factor, carbon-free, clean, marginally cheap electricity for generations.”

Meanwhile, Russia’s Rosatom—despite geopolitical tensions—has become “a technical powerhouse” with “35 or 40 reactors, either under construction or contracted all around the world.” From Turkey to Egypt to Bangladesh and even China and India, Rosatom’s record demonstrates that “you don’t have to be an extremely wealthy country for nuclear to make sense. You just need to execute your nuclear projects in a way that is far better than what the U.S. has done.”

Doomberg argued that the United States must treat nuclear energy as a public good, not merely a market commodity: “Once you build a nuclear reactor, properly maintained it is effectively immortal.” 

Just as the interstate system delivers near-free access to transportation, a fully developed nuclear grid could provide durable, low-cost power. But such infrastructure doesn’t arise from market forces alone. “There comes a point where market forces fail and government needs to get involved and government needs to subsidize,” Doomberg said.

The challenge, he insists, is not technical but political: “The cost to build nuclear in the US, in Western Europe, is a political choice.”

Watch the full debate via the link below — and if you are considering investing in the coming nuclear energy renaissance, take a look at the holdings in VanEck’s NLR ETF as the folks over at VanEck were kind enough to sponsor this discussion. Their ETF has exposure to uranium miners as well as utility providers.

Tyler Durden
Fri, 08/01/2025 – 11:20

Is AI Turning Us Into Dummies?

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Is AI Turning Us Into Dummies?

Authored by Charles Hugh Smith via OfTwoMinds blog,

Given that AI is fundamentally incapable of performing the tasks required for authentic innovation, we’re de-learning how to innovate.

That AI is turning those who use it into dummies is not only self-evident, it’s irrefutable. ChatGPT May Be Eroding Critical Thinking Skills, According to a New MIT Study

“Of the three groups, ChatGPT users had the lowest brain engagement and ‘consistently underperformed at neural, linguistic, and behavioral levels.’ Over the course of several months, ChatGPT users got lazier with each subsequent essay, often resorting to copy-and-paste by the end of the study.

“The task was executed, and you could say that it was efficient and convenient,” Kosmyna says. “But as we show in the paper, you basically didn’t integrate any of it into your memory networks.”

AI breaks the connection between learning and completing an academic task. With AI, students can check the box–task completed, paper written and submitted–without learning anything.

And by learning we don’t mean remember a factoid, we mean learning how to learn and learning how to think. As Substack writer maalvika explains in her viral essay compression culture is making you stupid and uninteresting, digital technologies have compressed our attention spans via what I would term “rewarding distraction” so we can no longer read anything longer than a few sentences without wanting a summary, highlights video or sound-bite.

In other words, very few people will actually read the MIT paper: TL/DR. Here’s the precis: Your Brain on ChatGPT (mit.edu).

Here’s the full paper.

Your Brain on ChatGPT: Accumulation of Cognitive Debt when Using an AI Assistant for Essay Writing Task.

To understand the context–and indeed, the ultimate point of the research–we must start by understanding the structure of learning and thinking which is a complex set of processes. Cognitive Load Theory (CLT) is a framework that parses out some of these processes.

Cognitive Load Theory (CLT), developed by John Sweller, provides a framework for understanding the mental effort required during learning and problem-solving. It identifies three categories of cognitive load: intrinsic cognitive load (ICL), which is tied to the complexity of the material being learned and the learner’s prior knowledge; extraneous cognitive load (ECL), which refers to the mental effort imposed by presentation of information; and germane cognitive load (GCL), which is the mental effort dedicated to constructing and automating schemas that support learning.

Checking the box “task completed” teaches us nothing. Actual learning and thinking require doing all the cognitive work that AI claims to do for us: reading the source materials, following the links between these sources, finding wormholes between various universes of knowledge, and thinking through claims and assumptions as an independent critical thinker.

When AI slaps together a bunch of claims and assumptions as authoritative, we don’t gain a superficial knowledge–we learn nothing. AI summarizes but without any ability to weed out questionable claims and assumptions because it has no tacit knowledge of contexts.

So AI spews out material without any actual cognitive value and the student slaps this into a paper without learning any actual cognitive skills. This cognitive debt can never be “paid back,” for the cognitive deficit lasts a lifetime.

Even AI’s vaunted ability to summarize robs us of the need to develop core cognitive abilities. As this researcher explains, “drudgery” is how we learn and learn to think deeply as opposed to a superficial grasp of material to pass an exam.

In Defense of Drudgery: AI is making good on its promise to liberate people from drudgery. But sometimes, exorcising drudgery can stifle innovation.

“Unfortunately, this innovation stifles innovation. When humans do the drudgery of literature search, citation validation, and due research diligence — the things OpenAI claims for Deep Research — they serendipitously see things they weren’t looking for. They build on the ideas of others that they hadn’t considered before and are inspired to form altogether new ideas. They also learn cognitive skills including the ability to filter information efficiently and recognize discrepancies in meaning.

I have seen in my field of systems analysis where decades of researchers have cited information that was incorrect — and expanded it into its own self-perpetuating world view. Critical thinking leads the researcher to not accept the work that others took as foundational and to spot the error. Tools such as Deep Research are incapable of spotting the core truth and so will perpetuate misdirection in research. That’s the opposite of good innovation.”

In summary: given that AI is fundamentally incapable of performing the tasks required for authentic innovation, we’re de-learning how to innovate. What we’re “learning” is to substitute a superficially clever simulation of innovation for authentic innovation, and in doing so, we’re losing the core cognitive skills needed to innovate.

In following the easy, convenient path of AI’s simulations of innovation, we are indeed “carefully falling into the cliff.” But since this is all TL/DR, and there’s no summary, highlights video or sound-bite, we don’t even see it.

So here’s the TL/DR “dummies” summary of AI: AI is turning us into dummies.

*  *  *

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Tyler Durden
Fri, 08/01/2025 – 11:00

Trump Admin’s Secret Talks With Moscow ‘Fruitless’ As Putin Boasts Troops Advancing ‘Along Entire Frontline’

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Trump Admin’s Secret Talks With Moscow ‘Fruitless’ As Putin Boasts Troops Advancing ‘Along Entire Frontline’

In Thursday comments President Trump condemned what he called Russia’s “disgusting” strikes on the Ukrainian capital from the night prior, which left 28 dead according to the continually rising death toll, after emergency crews have been picking through rubble of a collapsed apartment building.

The Trump administration has also informed the UN Security Council that a deal needs to be reached by August 8, or else new tariffs and sanctions targeting Russia and its trading partners will be unleashed.

“Both Russia and Ukraine must negotiate a ceasefire and durable peace. It is time to make a deal. President Trump has made clear this must be done by August 8. The United States is prepared to implement additional measures to secure peace,” US diplomat John Kelley told the UN Security Council, according to Reuters.

US State Dept

Trump is still seeking to distance himself from the conflict, given he’s calling it “Biden’s war”.

There’s apparently been a big push behind the scenes, focused on secret talks, to make something happen with Russia on the peace front, as the NY Times writes:

Mr. Trump’s comments came after Secretary of State Marco Rubio acknowledged in an interview with Fox News Radio that the administration held secret talks with Russia this week — “not with Putin but with some of Putin’s top people” — and made no progress on a cease-fire. Mr. Trump said he was dispatching his special envoy, Steve Witkoff, to Russia again, but the last visit that Mr. Witkoff, a fellow real estate investor, paid to Mr. Putin proved fruitless.

Administration officials gave no reasons to believe the latest engagement with Russia would be any more useful. And Mr. Trump himself, usually a true believer in the power of economic sanctions to alter the decisions of foreign leaders, admitted for the second time this week that Mr. Putin appears to be immune.

But then Trump has also conceded that “I don’t know that sanctions bother him” – in reference to Putin and the fact that the Russian economy has been doing relatively well considering the Western-imposed isolation.

It was merely months ago that Trump’s top officials, such as Pete Hegseth, were in Europe declaring that Ukraine would never be in NATO and even suggesting that ultimately the war is not Moscow’s fault, breaking sharply with the Western defense establishment. There was also the Oval Office shouting match with Zelensky, where Vice President JD Vance called out the Ukrainian leader.

NY Times’ commentary continues by pointing out a complete 180 in Trump’s thinking on Ukraine, further pointing to the fresh Rubio interview:

That has been followed by a series of apparent reversals, with no public acknowledgment from Mr. Trump that he is changing strategy. He no longer relies on what he has framed as a deep past relationship with Mr. Putin in an effort to win him over. In fact, he has been quite open about his frustration that conversations about cease-fires are usually followed by Russian escalation, often in the pace of drone and missile attacks.

“I think what bothers the president the most is he has these great phone calls where everyone sort of claims yeah, we’d like to see this end, if we could find a way forward,” Mr. Rubio said in his Fox interview, “and then he turns on the news and another city has been bombed, including those far from the front lines.”

“So at some point,” Mr. Rubio told his interviewer, Brian Kilmeade of Fox News Radio, “he’s got to make a decision here about what — how much to continue to engage in an effort to do cease-fires if one of the two sides is not interested.”

As if demonstrating his lack of concern over Trump’s ultimatum, President Putin has on Friday declared that his troops are advancing along the “entirety of the frontlines”.

Putin does not look too worried on Friday…

According to a summary of his fresh remarks:

Russian president Vladimir Putin has said that Moscow’s goals in Ukraine remained unchanged and claimed that Russian troops are advancing “along entire frontline” in Ukraine.

In comments reported by Reuters, Putin also said that the new deadly Oreshnik missile system is now being mass produced, with first deliveries already made to the army. At the same time, he said he hoped peace talks between Russia and Ukraine would continue, but warned against inflated expectations as to what can be realistically achieved.

He also insisted that the issue of the war would need to be addressed “in the context of European security as a whole,” which in the past was linked to his expansive security demands relating to large parts of central and eastern Europe.

Trump’s position, based on his latest remarks, is that the war “should be stopped, It’s a disgrace.” And yet the US still appears unwilling to strongly pressure Zelensky to make territorial concessions and to declare Ukraine will never join NATO. Washington also still continues arming Kiev. These things remain red lines for Russia.

Tyler Durden
Fri, 08/01/2025 – 09:05

‘Too Little Too Late’ – Trump Rages Amid The Post-Payrolls Carnage…

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‘Too Little Too Late’ – Trump Rages Amid The Post-Payrolls Carnage…

Weaker than expected job gains combined with rising unemployment rates and massively negative revisions have sent rate-cut odds soaring with September now priced around 75%…

2025 cut expectations are now back above 50bps (and 2026 is fading modestly)…

This has helped smash Treasury yields lower with the short-end leading (down a stunning 18bps)…

And the dollar is puking…

Gold is mirroring the dollar weakness and soaring higher…

Stocks are lower post-payrolls but were notably weaker already on the heels of tariffs and AMZN disappointment…

So, circling back to the start, is this ‘bad news’ from the labor market, good news for Trump as it forces The Fed’s hand sooner rather than later?

Time for an emergency cut?

Tyler Durden
Fri, 08/01/2025 – 08:56

Jobs Shocker: July Payrolls Far Below Estimates, Follow Massive Revisions Lower

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Jobs Shocker: July Payrolls Far Below Estimates, Follow Massive Revisions Lower

Heading into today’s jobs report, sentiment had seen a surprising boost in recent days, with the whisper number rising from just about 110K back to 125K, or where it started the month of July.

Well, the optimism proved to be very, very wrong, because moments ago the BLS reported job numbers that were very ugly with July printing just 73K, far below the 104K estimate.

But that’s not the real punchline: what is, is that Trump not only took a page out of the Biden playbook, but ripped pretty much all of it out with May and June revised massively lower, to wit:

  • May was revised down by 125,000, from +144,000 to +19,000,
  • June was revised  down by 133,000, from +147,000 to +14,000.

With these revisions, employment in May and June combined is 258,000 lower than previously reported, which puts to shame any/all of the far smaller revisions that defined much of the Biden regime. 

Blackrock PM Jeff Rosenberg told Bloomberg TV that the big news today is the revisions, and the main takeaway is that it raises the odds of a rate cut in September.

The number of jobs came in below the 80-100k breakeven level estimated by Fedʼs Barkin, suggesting Trump may have literally instructed the BLS to print a number that basically forces Powell’s hand to cut.

The number was even uglier in the Household survey, which showed a drop of 260K workers in July, the 3rd biggest monthly drop of 2025.

And with that the gaping disconnect between the two series is back with a vengeance.

 

Going down the report, the unemployment rate rose from 4.1% to 4.2%, as expected, which may be the only silver lining in today’s report as the Fed is now more focused on the unemp rate (according to Powell) than the number of jobs actually added.

Of note here is that the unemployment rate for Black workers was highest since October 2021.

The labor force participation rate, at 62.2%, dropped slightly in July from 62.3%, and has declined by 0.5% point over the year. It was the lowest since November 2022. The employment-population ratio, at 59.6%, also changed little over the month but was down by 0.4% over the year.

Turning to wages, we find that hourly earnings actually rose from an upward revised 3.8% (was 3.7%) to 3.9%, above the 3.8% expected.

Average hourly earnings for all employees on private nonfarm payrolls rose by 12 cents, or 0.3 percent, to $36.44 in July. Over the past 12 months, average hourly earnings have  increased by 3.9 percent. In July, average hourly earnings of private-sector production and nonsupervisory employees rose by 8 cents, or 0.3 percent, to $31.34. 

The average workweek for all employees on private nonfarm payrolls edged up by 0.1 hour to 34.3 hours in July. In manufacturing, the average workweek held at 40.1 hours, and overtime edged  down to 2.8 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls edged up by 0.1 hour to 33.7 hours in July. 

Some more details from the report:

  • The number of people employed part time for economic reasons, at 4.7 million, changed little in July. These individuals would have preferred full-time employment but were working part time  because their hours had been reduced or they were unable to find full-time jobs. 
  • The number of people not in the labor force who currently want a job changed little in July at  6.2 million but was up by 568,000 over the year. These individuals were not counted as unemployed because they were not actively looking for work during the 4 weeks preceding the survey or were  unavailable to take a job. 
  • Among those not in the labor force who wanted a job, the number of people marginally attached to the labor force changed little at 1.7 million in July. These individuals wanted and were available for work and had looked for a job sometime in the prior 12 months but had not looked for work in the 4 weeks preceding the survey. The number of discouraged workers decreased by 212,000 in July to 425,000, largely offsetting an increase in the prior month. Discouraged workers are a subset of the marginally attached who believed that no jobs were available for them. 

Turning to the composition of the report, the BLS reports that employment continued to trend up in health care and in social assistance. Federal government continued to lose jobs. 

  • In July, health care added 55,000 jobs, above the average monthly gain of 42,000 over the prior 12 months. Over the month, job gains occurred in ambulatory health care services (+34,000) and  hospitals (+16,000).
  • Social assistance employment continued to trend up in July (+18,000), reflecting continued job growth in individual and family services (+21,000). 
  • Federal government employment continued to decline in July (-12,000) and is down by 84,000 since reaching a peak in January. 
  • Employment showed little change over the month in other major industries, including mining,  quarrying, and oil and gas extraction; construction; manufacturing; wholesale trade; retail  trade; transportation and warehousing; information; financial activities; professional and  business services; leisure and hospitality; and other services.

The numbers were so ugly, they effectively put a 25bps rate cut in Sept front and center… maybe even 50bps. Sure enough, bond yields from the two-year through seven-years are lower by at least 10 basis points as the market sniffs out a Fed being late to cut. 

“We would look for the Fed to begin lowering rates in September,” says Gregory Faranello, head of US rates trading and strategy for AmeriVet Securities.  “It’s somewhat amazing how you can have a sitting Fed Chair intimate the strength in labor one day and receive these numbers a few days later.”

Commenting on the numbers, Bloomberg’s chief Economist Anna Wong wrote:

“July’s nonfarm payrolls were surprisingly weak, but the biggest shock was the massive revision to past data, which reduced gains for the past two months from solid to nearly zero. Adjusted for potential overstatement from the BLS’ ‘birth-death’ model, underlying job gains in July were also about flat.

“The unemployment rate, which Fed Chair Powell said earlier this week is the ‘main number’ to watch, also edged up, even as the labor force shrank for a third straight month. The main takeaway from the jobs report is that labor demand appears to be falling faster than labor supply – the labor market is not ‘solid,’ as Powell characterized it earlier this year, and we expect him to revise his opinion accordingly. We see growing chances of an earlier rate cut than our December base case.”

And here is B. Riley Wealth chief market strategist, Art Hogan,  

“Today’s jobs report is unambiguously soft and a reflection of the trade and tariff impact on economic growth. Both the actual report and the big negative revisions are more evidence that the trade policy will slow growth. What we know about our workforce population growth is that we need to create between 100 and 150,000 jobs a month to keep the unemployment rate unchanged. That is down from a range of 150 to 200,000 last year due to less immigration. The three-month average coming to today’s report was 150,000. The new three-month average of job creation is now 80,000. Not great news.”

All good points, but what really happened is that Trump finally figured out what we said last December, namely that if he wants the Fed to cut quick, he needs a labor market emergency. 

Well, he finally got it. 

Tyler Durden
Fri, 08/01/2025 – 08:40

Where’s Your TACO Now: Futures Slide, Global Markets Tumble After Trump Unleashes Harsh Tariffs

survivalnomics
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Where’s Your TACO Now: Futures Slide, Global Markets Tumble After Trump Unleashes Harsh Tariffs

Global markets and US equity futures extended a selloff as Trump’s sweeping import tariffs sparked renewed fears about the outlook for economic growth amid traders. The MSCI All Country World Index fell for a sixth day, the longest streak since September 2023. As of 8:00am ET, S&P futures on the S&P 500 retreated more than 1%, suggesting the index will extend a three-day run of declines. In premarket trading, Amazon.com slumped as much as 8%
and weighed on Big Tech after projecting weaker-than-expected operating income, prompting questions about its huge AI spending; Elsewhere AAPL (+1.7%) rallied on iPhone sales growth including while other Mag 7 names are mostly lower NVDA (-.25%), GOOG/L (-2.2%) and META (-1.3%) as Consumer Discretionary and Healthcare underperform. In rates, 30y TSYs added 3.2bps. Commodities are mixed, with precious metals higher and base metals lower. Today’s economic data slate includes July jobs report (8:30am), July final S&P Global US manufacturing PMI (9:45am), and July ISM manufacturing and July final University of Michigan sentiment (10am)

In premarket trading, Mag 7 stocks are mostly lower: Amazon.com slides 7% after projecting weaker-than-expected operating income and trailing the sales growth of its cloud rivals, leaving investors searching for signs that the company’s huge investments in artificial intelligence are paying off. Apple rises 1.8% after the company reported its fastest quarterly revenue growth in more than three years, easily topping Wall Street estimates, after demand picked up for the iPhone and products in China. Others are mostly in the red (Microsoft +0.5%, Meta -1%, Tesla -1.2%, Alphabet -1.8%, Nvidia -2%). 

  • Avantor (AVTR) slumps 10% after the maker of laboratory supplies reported adjusted earnings per share for the second quarter that missed the average analyst estimate.
  • CCC Intelligent Solutions (CCCS) climbs 15% after the software company reported revenue for the second quarter that exceeded the average analyst estimate.
  • Coinbase (COIN) falls 11% after the largest US crypto exchange reported revenue for the second quarter that missed the average analyst estimate following a drop in digital-asset market volatility.
  • Eli Lilly & Co. (LLY) ticks up as much as 2.5% after the Washington Post reported that the US government plans to experiment with covering weight-loss drugs for federal health programs.
  • First Solar (FSLR) advances 2% after the renewable energy firm boosted its net sales forecast for the full year.
  • Fluor (FLR) tumbles 17% after the engineering and contracting firm cut its adjusted earnings per share guidance for the full year.
  • Kimberly-Clark Corp. (KMB) rises 3% after raising its full-year guidance after reporting the strongest volume growth in five years.
  • Lumen Technologies (LUMN) falls 5% after the telecommunications firm posted 2Q revenue came in just shy of estimates.
  • Moderna (MRNA) falls 5% after the struggling biotech company narrowed its revenue forecast for the full year.
  • Reddit (RDDT) rises 16% after the social-networking company forecast revenue for the third quarter that beat the average analyst estimate.

Late on Thursday, Trump announced a slew of new levies, including a 10% global minimum and 15% or higher duties for countries with trade surpluses with America, as he forged ahead with his turbulent effort to reshape international commerce. Questions about the impact on growth and inflation are starting to overshadow the AI-driven optimism that has buoyed megacap technology stocks.

“Next week marks a significant turning point for global trade with the introduction of Trump’s tariffs, creating uncertainty about how these new and historical barriers will affect markets in practice,” said Kim Heuacker, an associate consultant at Camarco. “Current high valuations, particularly among US stocks, are becoming increasingly difficult to justify.”

Trump’s baseline rates for many trading partners remain unchanged at 10% from the duties he imposed in April, easing the worst fears of investors after the president had previously said they could double. Yet, his move to raise tariffs on some Canadian goods to 35% threatens to inject fresh tensions into an already strained relationship.

Taken together, the average new tariff rate rises to 15.2% from 13.3% — up significantly from 2.3% in 2024, according to Bloomberg Economics. The biggest losers appear to be China and Switzerland, Bloomberg economist Maeva Cousin says.

Now that tariff news is in the bag, all eyes turn to today’s jobs report: the US economy is expected to have created 104,000 jobs in July, down from 147,000 a month earlier. The “whisper” is for 120,000. According to JPMorgan, either would be good enough to take the S&P 500 higher (see our full preview here). Today’s closely-watched jobs report may give fresh hope to doves looking to make the case for the Fed to cut interest rates. There are fewer company updates to distract from payrolls, but a slew of new tariffs is dampening the mood. 

“Given all the uncertainties, it makes a lot of sense for traders, for dealers to take some money off the table going into nonfarm payrolls today,” said Gareth Nicholson, CIO of Nomura International Wealth Management.

The Euro Stoxx 600 falls 1.2% to around a one-month low, tracking declines in Asia with pharmaceutical stocks including Novo Nordisk A/S, GSK Plc and AstraZeneca Plc leading declines after Trump demanded drug companies lower US prices. Travel, industrial and technology shares are also leading declines.  The tariffs are “really bad for Europe,” said Ludovic Subran, chief investment officer at Allianz SE. “The cost for companies will be huge, as the US is the biggest market by far.” These are the biggest movers Friday:

  • Campari gains as much as 8.8%, the most since April, after the Italian spirits maker reported 1H results. Adjusted Ebitda and sales for the period beat consensus estimates and the company left its full-year guidance unchanged
  • Melrose Industries gains as much as 7.9%, the most in almost four months, after the aerospace company reported earnings ahead of expectations in the first half, which analysts at RBC say helps de-risk its full-year guidance
  • Erste shares rise as much as 3.1% to a fresh all-time high after the bank raised its forecast for return on tangible equity and net interest income. Analysts at Morgan Stanley note strong capital position
  • UMG shares fall as much as 8.9% after the music label reported Ebitda margin that expanded more slowly than expected during 2Q, with its merchandising unit being hit by higher tariffs and freight costs
  • European pharmaceutical stocks drop after US President Donald Trump demanded drug companies lower US prices, and Novo Nordisk loses its spot among Europe’s 10 most valuable companies after nearly a weeklong slump
  • Daimler Truck falls as much as 5.5% in early trade after the truckmaker lowered its outlook, citing the impact on sales from ongoing tariffs in North America. Order weakness in North America stood out, Citi says
  • Saint-Gobain shares fall as much as 5%, the most in almost four months, after results from the French construction materials producer showed a slowing volume trend into the second-quarter
  • J. Martins falls as much as 4.6% in early trading as 2Q earnings beat driven by rebound of like-for-like sales in Poland and better cost control is clouded by erosion of Portuguese retailer’s gross margin
  • Engie falls as much as 8.3%, before trimming losses, after the French energy group said most earnings metrics fell year on year, with Jefferies seeing a 24% miss on Ebit ex-nuclear. Shares are down 3.1% as of 10.29am in Paris
  • Cancom shares drop as much as 21%, the most since 2008, after the IT services provider cut its outlook for the full year, citing challenges in its core German market
  • Mutares shares fall as much as 22% after the German Financial Supervisory Authority (BaFin) says in statement that there are concrete indications the investment firm has violated accounting regulations

Earlier in the session, Asian stocks were set to record their biggest weekly decline since April as Washington’s tariffs damped the outlook for the export-dependent region. The MSCI Asia Pacific Index dropped as much as 1% on Friday, with South Korean equities leading declines after authorities unveiled plans to raise taxes on corporations and investors. Tech shares weighed on the regional gauge as Tokyo Electron dropped the most in nearly a year following a move by the chip tool maker to lower its full-year earnings outlook. The retreat in the Asian index marks a reversal of the back-to-back weekly gains that helped propel it to the highest level since March 2021. Investors are watching the parameters and impact of trade deals, as well as factors such as central bank policy direction to plot their next move. 

In FX, the Bloomberg Dollar Spot Index rises 0.2%, trading at the highest in two months after Trump fired his latest salvo at the Federal Reserve, saying in a social-media post the institution’s board should “assume control” if Chair Jerome Powell doesn’t lower interest rates. Traders are also bracing for key US jobs data later Friday. The Swiss franc is among the weakest G-10 currencies, falling 0.5% against the greenback after Switzerland was hit with a 39% levy by Trump. The yen outperforms, rising 0.2% after some modest jawboning from the Japanese Finance Minister.

In rates, treasuries are mixed, with outperformance at the short-end pushing 2-year yields down 2 bps. Gilts lead a selloff in European government bonds, with UK 10-year yields rising 5 bps.

In commodities, WTI crude futures fall 0.7% to $68.80 a barrel. Gold rises $5. Bitcoin falls 1%. Bitcoin is on the backfoot, and trades back below the USD 115k mark – downside which is in-fitting with the broader risk tone.

Looking at today’s US economic data calendar we get the July jobs report (8:30am), July final S&P Global US manufacturing PMI (9:45am), and July ISM manufacturing and July final University of Michigan sentiment (10am). Fed speaker slate includes Hammack (9:10am) and Bostic (10:30am)

Market Snapshot

  • S&P 500 mini -1%
  • Nasdaq 100 mini -1.1%
  • Russell 2000 mini -1.5%
  • Stoxx Europe 600 -1.3%
  • DAX -1.8%
  • CAC 40 -1.9%
  • 10-year Treasury yield +1 basis point at 4.38%
  • VIX +2 points at 18.69
  • Bloomberg Dollar Index +0.2% at 1224.03
  • euro -0.1% at $1.1402
  • WTI crude -0.6% at $68.86/barrel

Top Overnight News

  • Donald Trump set a 10% global minimum tariff, with rates of 15% and higher for countries with significant trade surpluses with the US. BBG
  • Trump says he remains open to trade deals, and negotiations are set to continue despite the new tariff rates going into effect. NBC News
  • Donald Trump will impose a 39% tariff on imports from Switzerland, one of the steepest levies globally which threaten to leave the country’s key exports reeling: BBG
  • Trump again criticized Powell in which he called him ‘Too late’ and said he is a terrible Fed Chair.
  • US held secret talks w/Moscow this week but failed to make progress on a ceasefire, and there isn’t much hope for Witkoff’s upcoming trip to Russia to change the situation. NYT
  • Asia’s factory activity deteriorated in July as soft global demand and lingering uncertainty over U.S. tariffs weighed on business morale, private sector surveys showed on Friday, clouding the outlook for the region’s fragile recovery. Reuters
  • China’s Caixin manufacturing PMI returned to contractionary territory in July, as softening new business growth led factories to scale back production, falling to 49.5 from 50.4 in Jun (the Street was modeling 50.2). WSJ
  • Eurozone inflation: the headline Jul CPI ran a bit hot at +2% (flat vs. June and above the Street’s +1.9% forecast) while core was inline (and flat vs. June) at +2.3%, supporting the case for officials who say there’s no rush to keep lowering rates. BBG
  • The US CDC told physician groups, public health professionals and infectious disease experts that they will no longer be invited to help review vaccine data and develop recommendations. BBG
  • Big Tech’s runaway results this week showed sings that AI is beginning to boost earnings, easing investor concerns about the sector’s historic spending binge on the technology. Alphabet, Meta, and Microsoft were the clear winners, adding more than $350bn in stock market value after reporting double-digit increases in revenue and net income. MSFT became the 2nd company to reach $4tn mkt cap. FT

Earnings

  • Amazon.com Inc (AMZN) Q2 2025 (USD) EPS 1.68 (exp. 1.33), Rev. 167.7bln (exp. 161.91bln), AWS net sales 30.9bln (exp. 30.77bln): Co. shares -8% pre-market
  • Apple Inc (AAPL) Q3 2025 (USD): EPS 1.57 (exp. 1.43), Rev. 94.04bln (exp. 89.29bln), iPhone rev. 44.58bln (exp. 44.52bln), Services rev. 27.42bln (exp. 26.80bln), Mac rev. 8.05bln (exp. 7.26bln), iPad rev. 6.58bln (exp. 7.24bln), Wearables, Home & Accessories net sales 7.40bln (exp. 7.82bln), Americas rev. 41.20bln (vs. 37.68bln y/y), Greater China rev. 15.37bln (exp. 15.12bln): Co. shares +2% pre-market

Trade/Tariffs

  • US President Trump announced tariffs on countries ranging from 10%-41% including a tariff rate of 10% for Brazil, 30% for South Africa, 20% for Taiwan and 25% for India, while the order stated “These modifications shall be effective with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time 7 days after the date of this order”.
  • White House said President Trump signed an executive order modifying reciprocal tariff rates for certain countries, with the tariff on Canada increased from 25% to 35% effective August 1st, while it added that Trump determined it is necessary and appropriate to modify the reciprocal tariff rates for certain countries. Furthermore, it stated that countries listed in Annex I of the executive order will be subject to the tariff specified therein and countries not listed in Annex I will be subject to a 10% tariff, while goods transhipped to evade the 35% tariff on Canada will be subject instead to a transshipment tariff of 40%.
  • US official said that if the US has a surplus with a country, the tariff rate is 10% and small deficit nations have a 15% tariff, while they are still working out technicalities of rules of origin terms for transshipment and will implement rules of origin details in the coming weeks. The official said the US has more trade deals to come and the challenge with India includes geopolitical differences over BRICS and Russia, as well as noted that differences with India cannot be resolved overnight and there is no final decision on China.
  • US President Trump said on Thursday that they just made a couple of other trade deals a little while ago and later commented that Canada’s stance on a Palestinian state is not a deal-breaker. Trump also commented he may speak with Canadian PM Carney on Thursday night and he is open to further talks with Canada and open to more deals.
  • US Commerce Secretary Lutnick said the China trade extension is up to US President Trump, while he stated if Canadian PM Carney complies, “maybe” Trump will reduce tariffs on Canada, but added that the 35% Trump sent in the letter is surely on the cards.
  • White House Trade Adviser Navarro said the US is moving forward on progress with India, Canada and China, according to Fox News.
  • Mexico’s Economy Minister Ebrard said the 90-day deal with the US was achieved without a concession from Mexico and they are moving closer to the renewal of their trade deal with the US. Ebrard separately commented that the tariff debate with the US includes concerns about intellectual property and the rules of origin panel, while he added that they have to address those issues from the perspective of revising the USMCA.
  • Malaysian Trade Minister says “Pharma and Semiconductors are exempted from US tariffs”.
  • Swiss Economy Ministry understands that the 39% tariff rate does not apply to pharmaceuticals.
  • PBoC Deputy Governor met with US business delegation on July 29th, according to a statement, two sides had in-depth talks on US-Sino relations; China’s macroeconomic policies and the opening up of financial industry.
  • India is engaged with US for further trade talks; US delegation to visit Delhi on August 24th, according to Reuters sources; India expects USD 40bln exports to impacted by the high US tariffs

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded mostly subdued following the weak handover from US peers and as participants digested the latest Trump tariff adjustments ahead of the deadline and with the key US Non-Farm Payrolls report on the horizon. ASX 200 was pressured with underperformance in tech, healthcare and financials leading the declines in most sectors as sentiment is dampened amid trade uncertainty. Nikkei 225 slumped at the open but was well off today’s worst levels with a rebound facilitated by recent currency weakness. Hang Seng and Shanghai Comp were lacklustre mood following the latest S&P Global China General Manufacturing PMI (formerly sponsored by Caixin) which missed forecasts and surprisingly returned to contractionary territory. US equity futures lacked demand after declining on Thursday and with little impact seen following the mixed fortunes in the likes of Apple and Amazon post-earnings.

Top Asian News

  • China’s MOFCOM announced tax credit policies related to direct investment by foreigners.

European bourses (STOXX 600 -1.3%) opened entirely in the red, and has continued to trundle lower as the August 1st tariff deadline passed. US President Trump announced new rates on 92 countries, which brought the average US tariff rate to 15.2% (prev. 13.3%, prev. 2.3% pre-Trump). European sectors are entirely in the red, in-fitting with the risk tone. Media is found right at the bottom of the sectoral list, pressured by post-earning losses in UMG (-6.3%); the Co. lowered its earnings forecast and highlighted rising content costs. Tech is also on the backfoot, as the sector cools from recent upside and as the risk-tone weighs. 

Top European News

  • Healthcare completes the bottom three, with US President Trump to blame; he sent letters to 17 pharma companies (in both US and Europe), asking them to lower drug prices before the end of September. The likes of Novo Nordisk (-4%) and GSK (-1.7%) both move lower, but are off worst levels.

FX

  • DXY began steady with the USD showing a mixed performance vs. peers. Markets are currently digesting the fallout from the latest executive orders from US President Trump, which has seen the imposition of tariffs on countries ranging from 10%-41%. This includes a tariff rate of 10% for Brazil, 30% for South Africa, 20% for Taiwan and 25% for India. Canada’s tariff increased from 25% to 35%, while Mexico received a 90-day extension of the current tariff rates. Accordingly, the average US tariff rate has risen to 15.2% (prev. 13.3%; 2.3% pre-Trump). It’s also worth noting that the July payrolls release looms large with consensus looking for the rate of job growth to slow to 110k from 147k and the unemployment rate to rise to 4.2% from 4.1%. A soft outturn could reignite expectations of a September cut. Elsewhere, ISM manufacturing data is also due on deck and we expect to hear statements from Waller and Bowman on the justification of their dissent. As the morning progressed, the DXY gained a firm footing on a 100 handle with a current session high at 100.25.
  • EUR steady vs. the USD with a firmer-than-expected outturn for Eurozone inflation unable to provide much traction for the shared currency. HICP Y/Y for July remained at the 2% target (Exp. 1.9%), whilst both core metrics came in 10bps over consensus, and services declined to 3.1% from 3.3%. For now, today’s NFP print is likely to provide the greatest source of traction for EUR/USD. Again, as the morning has progressed, the mentioned USD pickup has weighed with EUR/USD now just sub-1.14.
  • JPY is marginally firmer vs. the USD in what has been a bruising week for the Yen vs. the dollar. Part of this has been a USD story and part has been stemming from the fallout from the latest Japan deal, political uncertainty and a reticence yesterday for the BoJ to attempt to bolster rate hike bets. The Yen depreciation has not gone unnoticed in Tokyo with the Japanese Finance Minister Kato stating that he is “alarmed over FX moves”. On the trade front, the Nikkei reports that Japan is eyeing a 15% rate for the US chip tariff, which would be on par with the EU. After hitting a multi-month high at 150.91 overnight, USD/JPY has pulled back but remains above the 150 mark and its 200DMA at 149.56.
  • GBP remains on the backfoot vs. the USD with Cable extending its losing streak to a 7th session in a row. It remains the case that macro drivers for the UK remain on the light side, however, next week will see the latest BoE policy announcement and MPR, which is 82% priced for a 25bps reduction. Cable has slipped onto 1.31 handle for the first time since 13th May with a session low at 1.3142.
  • NZD is underperforming its antipodean peer in the wake of the latest Trump tariff announcements, which has seen the rate for New Zealand increase to 15% from 10% and Australia hold steady at 10%.
  • PBoC set USD/CNY mid-point at 7.1496 vs exp. 7.2033 (Prev. 7.1494).

Fixed Income

  • USTs are slightly softer on the final day of a very busy week. For today, the highlights are July’s NFP report, ISM Manufacturing and expected explanations of dissent from Fed’s Bowman and Waller. Thus far, USTs have been holding around the low end of a 110-28+ to 111-00+ band. The bearish bias this morning appears to be tariff-induced (i.e. higher inflation, firmer yields). For NFP, the headline is seen at 110k (prev. 147k), Unemployment Rate at 4.2% (prev. 4.1%); post-Fed, Chair Powell said the unemployment rate is the figure to watch.
  • Bunds are in the red, to a slightly larger degree than USTs but faring better than Gilts (see below). Pressure this morning is likely a function of the latest tariff measures from Trump, measures which have seen tariff increases for several key economies and as such biased yields across the curve with a clear steepening bias in the early morning; though, this does come after a period of flattening for the curve. No significant reaction to any of the morning’s PMI data (the EZ-wide figure was unrevised). The day’s main EZ event was July’s Flash HICP, printed hotter than expected for the three main Y/Y metrics with all measures remaining at the prior rate – again no real move.
  • Gilts are on the back foot. No fixed income pertinent newsflow specifically for the UK. Pressure is likely a function of the global inflation implications of the latest tariff measures, as discussed. Currently, Gilts are lagging peers. However, this seems to be more a function of the bouts of relative outperformance seen over the last few days rather than a UK specific. Currently, at a 91.49 low and, despite the extensive 91.16-92.28 WTD range, set to end the week with near enough unchanged.

Commodities

  • Crude is on the backfoot following Thursday’s macro-induced losses as markets awaited Trump’s revised tariffs. In terms of the highlights from the announcement, the average US tariff rate has now risen to 15.2% (prev. 13.3%; 2.3% pre-Trump). China was not mentioned; EU/UK/Japan had their rates as agreed; Switzerland, New Zealand, and Canada’s tariffs were increased, while Mexico pays a lower tariff for 90 days. WTI resides in a 68.70-69.55/bbl range while Brent sits in a USD 71.18-72.00/bbl range.
  • Precious metals are mostly softer despite a relatively stable dollar (DXY oscillates around 100) and despite of the broad downbeat risk tone. Focus today on NFP, ISM Manufacturing and Fed speak. Spot gold resides in a USD 3,281.74-3,300.54/oz range at the time of writing, within Thursday’s USD 3,276.28-3,314.98/oz parameter.
  • 3M LME Copper is relatively stable following Thursday’s slide, which saw the CME-LME arb collapse as the US copper tariff was not as bad as feared, as the 50% tariff applied to copper pipes and wiring, whilst omitting copper input materials such as ores, concentrates and cathodes. 3M LME copper prices reside in a USD 9,597.85-9,696.30/t range.
  • Codelco said a worker died and nine were injured with five missing at the Andesita mine at El Teniente in Chile after a seismic event.

Geopolitics

  • US President Trump said Iran has been acting very badly and their nuclear capability was decimated but added that Iran can start again.
  • US President Trump said it is disgusting what Russia is doing and they are going to put sanctions on Russia.
  • China cyber association accused the US of a cyberattack on the defence sector to steal secrets, according to Bloomberg.
  • Ukrainian Presidential Office head says Ukrainian partners confirm “positive signals” from the White House on Russia sanctions.

d

 

US Event Calendar

  • US economic data slate includes July jobs report (8:30am), July final S&P Global US manufacturing PMI (9:45am), and July ISM manufacturing and July final University of Michigan sentiment (10am)
  • Fed speaker slate includes Hammack (9:10am) and Bostic (10:30am)

DB’s Jim Reid concludes the overnight wrap

Welcome to August, which begins with the deadline now having been passed for tariff deals to be concluded with the United States. Much of the rhetoric and the negotiation are now behind us and we’ll now see how the rubber hits the road. The US tariff rate has risen to about 15% from a little over 2% at the start of the year. That’s their highest level since the 1930s but that has not prevented US equities from being near their all-time highs and other markets being much stronger this year.

With just a few hours to go before the August 1 deadline, last night President Trump signed an executive order outlining a new set of tariffs, including a 10% global minimum and duties of 15% or higher for countries with trade surpluses with the US. Some of the higher rates that had not previously been confirmed included 39% on Switzerland and 20% on Taiwan. The tariffs are due to take effect after August 7 which, while being a delay for technical implementation, could leave open the possibility of more countries agreeing deals in the next week. Trump also announced that tariffs on Canadian goods would rise from 25% to 35% immediately (though goods compliant with the United States-Mexico-Canada Agreement would remain exempt which reduces the impact). So, Canada is being singled out to a degree.
Earlier in the day, following a meeting with Mexican President Claudia Sheinbaum, President Trump announced a 90-day extension in trade negotiations between the US and Mexico. During this period, Mexico will continue to pay a 25% tariff on non-USMCA compliant goods and cars as well as 50% on steel and aluminium. In exchange, Mexico has agreed to immediately eliminate its non-tariff trade barriers.

Meanwhile, the US Court of Appeals began hearing arguments yesterday regarding Trump’s use of tariffs, with a ruling expected “within weeks,” according to Bloomberg. The first hearing yesterday saw some sharp questions from judges on the administration’s use of International Emergency Economic Powers Act to set broad tariffs. Ahead of the hearing, Trump posted on Truth Social, warning that if the US cannot defend itself using “tariffs against tariffs,” the country would be “dead, with no chance of survival or success.”

Equity markets have seen contrasting themes over the last 24 hours as a resurgence of US “tech-ceptionalism” was offset by a broader loss of momentum.” The Mag-7 gained +1.39% to a new record high, buoyed by impressive earnings from Microsoft (+3.95%) and Meta (+11.25%), whose valuations continued to climb. Microsoft posted its largest daily gain since early May and briefly surpassed a $4 trillion market capitalisation, placing it just behind Nvidia as the world’s second-largest company.

However, the broader equity mood turned more cautious as the US session went on, with the S&P 500 retreating from its early peak of +1.01% just after the open to close -0.37% lower. And the small-cap Russell 2000 fell by -0.93%, moving back into the red YTD. While month-end effects may have played a role in this softening, there were also specific headwinds. Healthcare stocks (-2.79%) were the laggards in the S&P after Trump sent letters to 17 of the largest pharma companies, demanding they charge the US the same as other countries for new medicines and giving the companies 60 days to voluntarily comply. The Philadelphia Semiconductor index slid -3.10% after underwhelming results from Qualcomm (-7.73%) and ARM Holdings (-13.44%).

After the US close, we saw mixed results from Apple and Amazon. Apple’s shares gained around 2% after-hours following a strong revenue beat ($94bn vs $89.3bn est.) amid the strongest sales growth in more than three years which CEO Tim Cook ascribed to an acceleration across many markets including China. On the other hand, Amazon lost ground as it projected weaker-than-expected Q3 operating profits ($15.5-$20.5bn vs 19.4bs est.) and saw weaker cloud growth than rivals. Against this background, US futures are indicating a negative start with those on the S&P 500 (-0.15%) and NASDAQ 100 (-0.20%) edging lower.

On the data front, June’s US core PCE—the Fed’s preferred inflation gauge—rose by +0.3% month-on-month, in line with expectations. However, the year-on-year rate came in a tenth above forecast, which was hinted at by revisions in Wednesday’s GDP report. This will not go unnoticed by the Fed, especially as it exceeds the level targeted by Governor Waller, one of the two dissenters arguing for a cut at the FOMC this week. Initial jobless claims leaned hawkish, coming in at 218k versus 224k, while continuing claims were -7k below forecast at 1946k. The Employment Cost Index (ECI) for Q2 also surprised to the upside at +0.9%, a tenth above expectations. These figures are likely to draw more attention from the Fed than the personal spending data, which came in a tenth below expectations at +0.3% for June. The generally solid data saw pricing of Fed cuts by year-end decline by another -3.4bps to only 33bps. 2yr Treasury yields rose +1.5bps, while 10yr yields (+0.4bps) were steady.

Staying with data, today brings the latest US payrolls number. Our US economists expect headline payrolls to slow to +75k in July (from +147K in June) amid payback from a likely seasonal June spike in education employment, and private payrolls to gain +100k (previously +74K in June), with the unemployment rate edging up to 4.2%. You can sign up for their post-employment call to discuss the data and the impact on the Fed outlook here.

While the data supported Chair Powell’s cautious stance, Trump launched one of his most pointed attacks yet on the Fed Chair, accusing him of “costing our country trillions of dollars” and being “too political to have the job.” Treasury Secretary Scott Bessent made some more softly critical remarks on CNBC, suggesting it would be “highly unusual” for Powell to remain on the Fed Board after his term ends next May. He added that the White House would begin interviewing candidates for the Fed, with a nomination announcement expected “by year-end.”

In the euro area, 10-year yields fell by 1-2bps across the board, while 2-year yields edged up slightly. Inflation data from France, Italy, and Germany was mixed. Italy’s CPI surprised slightly to the upside at +1.7% year-on-year (vs. +1.6% expected), driven by a rise in food inflation (3.9% vs. 3.3%). Germany’s July CPI, however, came in slightly below expectations at +1.8% (vs. +1.9%). Following the country releases, our European economists see this morning’s euro area headline inflation release tracking for a low +2.0% reading (consensus +1.9%) with core HICP set to hold steady at +2.3%.

European equities were more subdued ahead of the US tariff hike. The STOXX 600 fell by -0.75%, with wine and spirits companies particularly affected due to the anticipated 15% tariff on those products. A European Commission spokesperson confirmed that the EU is still negotiating for an exemption on alcoholic beverages. The CAC 40 dropped -1.14%, the DAX -0.81%, while the FTSE 100 outperformed slightly, down just -0.05%, supported by strong earnings from Rolls Royce (+8.50%).

Asian equity markets, along with US futures, are experiencing a decline this morning following the imposition of new tariffs by the US on numerous trading partners. The KOSPI (-3.23%) stands out as the largest underperformer, trading sharply lower in response to the new Finance Ministry’s proposal to increase capital gains tax (more details below). Meanwhile, Chinese stocks are relatively stable, with the Hang Seng (-0.18%), the CSI (-0.16%), and the Shanghai Composite (-0.12%) all registering minor losses after experiencing significant declines in the previous session. Additionally, the Nikkei (-0.38%) and the S&P/ASX 200 (-0.75%) are also declining in unison with their regional counterparts.

Returning to South Korea, the new government has announced an increase in the corporate tax rate from 24% to 25%, with all corporate tax brackets rising by one percentage point. Furthermore, the stock transaction tax will be raised from 0.15% to 2%. The threshold for capital gains tax on stock holdings will be reduced to 1 billion won from the current 5 billion won. These measures are intended to recover public revenue lost during two years of slowing growth and tax reductions implemented by the previous administration. As you can imagine the proposals are not proving popular amongst market participants.

Early morning data revealed that China’s manufacturing sector unexpectedly contracted in July, as a decline in export orders and weak domestic demand took their toll. The S&P Global China Manufacturing PMI dropped to 49.5 in July (compared to +50.2 expected), down from 50.4 in June. In other news, Japan’s jobless rate remained unchanged in June at 2.5%, while the jobs-to-applicants ratio fell to 1.22 (versus +1.25 expected) from 1.24 in May.

Looking ahead, today’s US data releases include the July jobs report, the ISM index, total vehicle sales, and June construction spending. We’ll also see Italy’s July manufacturing PMI, the Eurozone’s July PMI, and Canada’s July manufacturing PMI. On the earnings front, reports are expected from Exxon Mobil, Chevron, Moderna, Nintendo, and AXA.

Tyler Durden
Fri, 08/01/2025 – 08:21

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