President Donald Trump arrived at a newly constructed migrant detention center in the Florida Everglades, referred to by some as “Alligator Alcatraz.” 

JUST IN: President Trump has arrived at “Alligator Alcatraz.” pic.twitter.com/sLtToKlReY

— Resist the Mainstream (@ResisttheMS) July 1, 2025

Alligator Alcatraz is a detention, processing, and deportation center for illegal aliens. With 5,000 beds, it is designed to support the federal government’s efforts to deport illegals, particularly those with criminal records. 

The administration has signaled plans to more than double the number of detention beds, with an eventual goal of exceeding 100,000. Florida’s newest facility is being framed as critical infrastructure to help meet a daily target of 3,000 arrests by ICE agents nationwide.

“You may think Alligator Alcatraz is a bit much. You may think ICE raids at Home Depots are harsh. You make think sending gang bangers to a top security Salvadoran prison seems cruel. You may think mass deportations is a mean policy. But each leads to thousands and eventually millions of self deportations. When illegals know there are real consequences for breaking into America, many, perhaps a majority will conclude it’s no longer worth the risk and return home — and that’s exactly the point,” conservative media host Charlie Kirk wrote on X. 

Hi guys. I have just been handed official Alligator Alcatraz merch.

I repeat, this prison has merch.

Things are going insanely well. pic.twitter.com/9MdYLj7nG2

— Benny Johnson (@bennyjohnson) July 1, 2025

The president is currently touring the site.

🚨 LMAO! President Trump name drops Biden in Alligator Alcatraz: “Son of a…”

“Hey! BIDEN wanted me in here. Ok? He wanted me – it didn’t work out that way. But, he wanted me in here, that son of a…”

🤣🤣 pic.twitter.com/fRxdANBtkT

— Eric Daugherty (@EricLDaugh) July 1, 2025

🚨 President Trump at Alligator Alcatraz just sent a message to Gavin Newsom

“The first thing he should do is come here and LEARN something.

They don’t do this out there. They don’t know where to begin. And if they did, it’d cost 100 times more.

His state is a DISASTER!” pic.twitter.com/NARQsVeCLc

— Nick Sortor (@nicksortor) July 1, 2025

Last weekend, Democrats lined the street near Alligator Alcatraz, infuriated that the Trump administration was constructing a deportation facility in the middle of the Everglades to house some of the most dangerous criminal illegal aliens. Apparently, resolving national security threats and making the Homeland safer is a major problem for the unhinged liberals.

Watch Trump Live at Alligator Alcatraz

“We are working on cost-effective and innovative ways to deliver on the American people’s mandate for mass deportations,” the Department of Homeland Security recently stated, adding, “Alligator Alcatraz will expand facilities and bed space in just days, thanks to our partnership with Florida.” 

The auto sales slowdown that emerged in June is largely a hangover from the spring surge, when consumers rushed to dealerships nationwide to beat tariff hikes sparked by President Trump’s escalating trade war and new tariffs on trading partners. With affordability still worsening and economic uncertainty elevated, industry researcher J.D. Power now expects sales to remain subdued through the second half of the year. 

Bloomberg cited a new report from J.D. Power that showed consumers rushed to buy new vehicles before prices climbed, pushing Q2 sales up 2.5% year-over-year. But that momentum quickly fizzled with the annualized sales rate dropping to 15 million units in June — the slowest in 12 months — down from April’s 17.6 million pace.

“The party is over,” Jonathan Smoke, chief economist for researcher Cox Automotive, said in an interview, adding, “It’s slowing. It’s because of affordability getting worse and forcing what we think will be production declines to keep supply in balance.”

Smoke expects the annualized monthly rate of auto sales to hover around 15 million in the second half of the year, down from 16.3 million during the first six months. Last year, Americans purchased around 16 million cars and light trucks. In the analyst’s view, this indicates an apparent slowdown, primarily driven by worsening affordability.

Cox data shows the average cost of a new car is rising, up 1% in June from a year ago to $48,799 — a 28% increase compared to 2019 prices. 

“Given the impact of tariffs, prices are likely to start rising at a much faster rate,” Charlie Chesbrough, senior economist for Cox, recently noted. “Higher vehicle prices are coming to the new vehicle market.”

Meanwhile, the Manheim Used Vehicle Value Index is beginning to rise again, indicating that used cars are increasingly being chosen as substitutes for new vehicles amid ongoing concerns about affordability. It also points to a tightening supply in the used vehicle market.

There is some good news: Goldman’s Jan Hatzius wrote in a note to clients that he expects the Federal Reserve to begin cutting interest rates in September, with three 25-basis-point reductions anticipated by the end of the year.

As for this summer, affordability woes persist, and prices stay high—toxic combination for the automobile market.  

By Michael Every of Rabobank

Equity markets at new record highs continue to think 2025 is more of the same-old, same-old. Bond markets whispering about a series of Fed rate cuts do too. Yet the US dollar just had its worst H1 — down around 10% — in over five decades. 

Those in markets who know economic history recall this was when the gold-backed-dollar Bretton Woods system was about to collapse under the Triffin Paradox demand for offshore dollars earned via a swelling trade deficit, with a fiscal deficit led by hot war in Vietnam, Cold War in general, and demands for more social spending. The Yom Kippur War in 1973 and the Iranian Revolution in 1979 then helped western inflation became entrenched and its politics often went haywire. 

In June 1970, TIME magazine wrote ‘Money: Anger at Dollar Imperialists’, noting:

“The men who manage Europe’s money are increasingly annoyed with the US. They are upset by America’s old habit of spending, lending and investing more abroad than it takes in from foreign sources… The BIS annual report added that it is “hard to discern how the US authorities expect, by their own actions, to correct the balance of payments.” … Robert Triffin… [says] the US is unconcerned about its deficits because it has discovered that it can get away with a kind of “monetary imperialism.” The position of the dollar as the standard of value against which all other currencies are measured enables the US to escape the consequences that other countries suffer if they consistently overspend abroad. In any other country, a parade of deficits comparable to those the US has run would force devaluation of the currency. Devaluation of the dollar, the currency that more than any other has been considered as good as gold, would bring such chaos that it has been considered unthinkable.” 

No, history doesn’t repeat itself. Yes, it can rhyme.

On the fiscal front, are there are any serious global fiscal rules anymore even before we hit the next crisis? Italy will include a €13.5bn bridge to Sicily as NATO spending, suggesting the resolution to get broad defense from under 2% to 5% of GDP by 2035 will at least blow up deficits. UK PM Starmer is failing to win over party rebels opposed to welfare cuts. Trump just told Republicans to stop cutting spending and ‘go for growth’ to raise revenue “10 times”. Even Xinhua has reported the creation of a new “decision-making and deliberative coordination body” at the CCP’s Central Committee – does that lean towards more China stimulus? 

On the monetary front, Trump took his attacks on Fed Chair Powell to a new level in visually showing he’d like Fed Funds between 0.25% – 1.75% as Treasury Secretary Bessent said he can’t fund down the curve because of where yields sit, against whispers of zero-coupon bonds.

The ECB used its policy strategy review to underline that geopolitics, digitalisation, AI, demography, the environment, and changes in the international financial system all suggest inflation will be more volatile, with larger target deviations from its 2% CPI target in both directions. Yet while it’s prepared to take “appropriately forceful or persistent monetary policy action in response to large, sustained deviations of inflation from the target in either direction,” it flagged longer-term refi operations, QE, negative rates and forward guidance, all on the easing side – what’s the tightening equivalent? Lastly, there was market chatter that the RBA should drop its 2.5% CPI mid-point target: but only to cut, allowing housing to get even more expensive. 

In FX, all is in flux. Many countries that are not set up to see higher exchange rates are getting them anyway. There is deepening discussion of the strategic role that Bitcoin and dollar stablecoins will play within the new US and international financial architecture – and if a weaker dollar is now a US gameplan after markets rudely rejected what higher tariffs were supposed to achieve, which was a stronger greenback. There is equivalent talk of gold’s future in many circles, and in some of both Europe and China’s fresh attempt to internationalise their currencies… with almost zero realpolitik power in the former case, and a closed capital account and vast trade surplus in the latter. Anybody thinking this is markets business as usual frankly looks like they are wearing 1970’s flares.

In politics, not only are centrists failing and populists rising, but the latter are being outflanked. A farther right alternative to the UK Reform Party now leading opinion polls, the Advance UK Party, has just been launched by key ex-members. Openly socialist Democrat Zohran Mamdani could easily be the next Mayor of New York City. Elon Musk just posted: “If this insane spending bill passes, the America Party will be formed the next day. Our country needs an alternative to the Democrat-Republican uniparty so that the people actually have a VOICE.” A libertarian one that votes for austerity – really?

In geopolitics, we luckily just avoided another Middle East oil shock involving Israel and Iran. On that, one hopes for the best, and Israel is reported to be in advanced talks with Syria over officially ending hostilities running since 1948 and hopes remain for a ceasefire in Gaza, which President Trump reportedly wants to be permanent. He and PM Netanyahu will meet in the White House on Monday. However, we still have a hot war in Ukraine, with huge forces arrayed around Sumy, with clear risks of other global flash points.

One key difference from the 1970s is that protectionism is already back with a bang. The EU has reportedly accepted it’s going to get stuck with a 10% US universal tariff and now wants to find UK-style quota workarounds for 25% and 50% sectoral tariffs: following Canada’s humiliating climbdown on its digital services tax the day before, that’s another victory for the US brute force, which hasn’t changed since the 1970s. Japan was also called “spoiled” by Trump and criticised for not buying its rice – but it may buy US oil; and a trade deal with India is reported as close (again) – expect a flurry of activity over the next week, it seems. The US is already reshaping the global economy, despite markets saying TACO, and it will continue to do so.

For its part, the EU has promised greater market access for Ukrainian farm goods in return for aligning farm standards; as France and Germany combined to destroy an EU ethical supply chain law, says Politico.

Moreover, China warned it: “is pleased to see parties resolving their economic and trade differences with the US through equal consultation. At the same time, we urge all parties to stand on the side of fairness and justice, to be on the right side of history, and to firmly uphold international economic and trade rules and the multilateral trading system. China firmly opposes any party making a deal that sacrifices China’s interests in exchange for so-called tariff reductions. Should that occur, China will not accept it and will respond resolutely to safeguard its legitimate rights and interests.” In short, expect supply-chain friction ahead – and for years.

We also see more economic statecraft: Australia just moved to set up a domestic fuel reserve rather than exporting it all and then suffering local shortages.

So, yes, the dollar just had its worst H1 since 1973. But what happened to it after that? Not in H2, but structurally. It transmogrified into an even more powerful fiat currency than it was on gold. Given the Achilles heels everyone is now displaying, can a reverse change in the dollar occur – especially when it alone has mighty military muscles (for now)?

Look beyond all of the above to note that the dollar question is perhaps not “To be or not to be?”, but “B-2 or not B-2?” 

Despite ‘hard’ data plummeting, catching down to ‘soft’ data’s early demise, expectations were for a modest rise in Manufacturing survey data this morning.

• S&P Global Manufacturing PMI rose from 52.0 to 52.9 in June (better than 52.0 exp) – the strongest in over 3 years

• ISM Manufacturing rose from 48.5 to 49.0 (better than 48.8 exp) – highest since Feb 2025

For once, both surveys agreed with each other…

Source: Bloomberg

However, tariffs remained a prevalent theme, notably affecting purchasing decisions and prices.

Latest data showed manufacturers raising their input buying activity to the greatest extent since April 2022, at times reflective of efforts to build up inventories given ongoing trade and price uncertainty.

Nonetheless, input costs still rose sharply, with inflation hitting its highest level for nearly three years.

A similar trend was seen for output charges, which rose to the greatest degree since September 2022.

In the ISM survey, both employment and new orders remain below 50 (in contraction) and weakened in June.

Source: Bloomberg

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence: “June saw a welcome return to growth for US manufacturing production after three months of decline…”

“…with higher workloads driven by rising orders from both domestic and export customers. Reviving demand has also encouraged factories to take on additional staff at a rate not seen since September 2022.

“However, at least some of this improvement has been driven by inventory building, as factories and their customers in retail and wholesale markets have sought to safeguard against tariff-related price rises and possible supply issues. It therefore seems likely that we will get pay-back in the form of slower growth as we head into the second half of the year.

However, inflation looms:

“These price pressures are already building, with factories reporting steep cost increases again in June, linked to tariffs, which they are passing through to customers. The big question of course is whether this merely results in a short-term change in the price level rather than a more worrying return of stubborn inflation.

“More encouragingly, business confidence has continued to improve from the low-point seen in April, with US manufacturers becoming more optimistic in the face of fewer trade and tariff worries compared to the heightened uncertainty seen in April, That said, many firms remain cautious as they await news of trade deals as the deadline for paused tariffs draws closer.”

Is ‘soft’ data about to recover?

Submitted by QTR’s Fringe Finance

“When someone shows you who they are, believe them the first time.”

– Maya Angelou

Zohran Mamdani’s run for mayor of New York City is a clear and present danger to the stability, economic health, and democratic foundation of both the city and the nation.

His platform is rooted in a radical socialist ideology that has, time and time again, led to failure, repression, and suffering wherever it has been tried.

And thanks to a clip surfacing on social media today, we see that Mamdani is not hiding this. In fact, he has been strikingly open about what he believes and what he plans to do. You can listen to his comments for yourself here.

Speaking in 2021 at the Young Democratic Socialists of America Organizing Conference, Mamdani said his goal is to “continue to elect more socialists” and to be “unapologetic about our socialism.”

He followed that with two key objectives: boycotting Israel and “seizing the means of production.”

The phrase “seizing the means of production” is not some vague slogan—it is the core tenet of Marxist revolutionary ideology. It means that private property, businesses, and industries are taken from their owners and turned over to collective or state control.

Historically, this has been done not through elections or peaceful reform, but through authoritarian rule, state violence, and mass suppression.

His current proposals—government-run grocery stores, free childcare and buses, a $30 minimum wage, rent freezes, and massively taxing the wealthy—fit the same pattern of central planning that has failed in every country that tried it.

🔥 JULY 4 SALE – 50% OFF FOR LIFE: Using this coupon entitles you to 50% off an annual subscription to Fringe Finance for life: Get 50% off forever

These are not practical policies aimed at long-term economic health; they are mechanisms for government control over every facet of economic life.

Even when he tries to soften his message in mainstream interviews, the truth comes through. When asked on Meet the Press if billionaires should exist, he said, “I don’t think that we should have billionaires.” That is not a tax plan. It is a declaration of ideological war on success, wealth creation, and the very people who drive New York City’s economy.

He told Jen Psaki on MSNBC that his platform should be expanded nationally: “Absolutely.” He’s not proposing a local experiment; he is advocating for a national movement rooted in the same ideas that brought misery and collapse to multiple countries throughout the 20th century.

Mamdani’s defenders claim he isn’t a true communist because he only wants a “pilot project” of government-run grocery stores. But pilot projects have always been the start of larger schemes in socialist regimes. It begins with a few businesses. Just like Covid began with 15 days to slow the spread. It ended in surfers being pulled off paddle boards in the middle of the ocean and being arrested for not wearing masks. People walking in parks in Australia being tackled, beaten and arrested…for breathing fresh air.

First a few businesses. Then…it becomes housing, transportation, wages, healthcare, education—until the state controls everything and individual freedom vanishes.

He told the socialist conference in 2021 that “the ramifications of victory here is the difference between life and death.” This isn’t campaign rhetoric. This is the language of ideological extremism. The suggestion that political victory equates to “life and death” echoes the revolutionary tone used by past regimes that justified extreme measures in the name of justice.

The warning signs are all here. Mamdani is not hiding who he is. He is not moderating his views. He is proudly championing an ideology that has failed wherever it has been implemented. Electing him would be handing the reins of the most economically vital and culturally significant city in the country to a man who openly praises the very ideas that led to economic collapse in Eastern Europe, starvation in Asia, dictatorship in Latin America, and the silencing of dissent in every corner of the globe where socialism has been imposed.

New York has always been a city of opportunity, dynamism, and freedom. Mamdani’s vision would undo all of that. This is not just a bad policy agenda—it is a crisis waiting to happen. As I wrote last week, Democrats must find a way to unseat him before November. If they do, I think they will easily win the 2028 national election.

Now read:

• FDA Exposed: Hundreds of Drugs Approved Without Proof They Work
• Critics Of Capitalism Misunderstand Economic Success
• Powell: No Pivot, No Party
• Hey Dems: Unseat Mamdani And You’ll Win The 2028 National
• Beware Of When The Smoke Clears
• 3 Misconceptions About US Debt: Lyn Alden

QTR’s Disclaimer: Please read my full legal disclaimer on my About page here. This post represents my opinions only. In addition, please understand I am an idiot and often get things wrong and lose money. I may own or transact in any names mentioned in this piece at any time without warning. Contributor posts and aggregated posts have been hand selected by me, have not been fact checked and are the opinions of their authors. They are either submitted to QTR by their author, reprinted under a Creative Commons license with my best effort to uphold what the license asks, or with the permission of the author.

This is not a recommendation to buy or sell any stocks or securities, just my opinions. I often lose money on positions I trade/invest in. I may add any name mentioned in this article and sell any name mentioned in this piece at any time, without further warning. None of this is a solicitation to buy or sell securities. I may or may not own names I write about and are watching. Sometimes I’m bullish without owning things, sometimes I’m bearish and do own things. Just assume my positions could be exactly the opposite of what you think they are just in case. If I’m long I could quickly be short and vice versa. I won’t update my positions. All positions can change immediately as soon as I publish this, with or without notice and at any point I can be long, short or neutral on any position. You are on your own. Do not make decisions based on my blog. I exist on the fringe. The publisher does not guarantee the accuracy or completeness of the information provided in this page. These are not the opinions of any of my employers, partners, or associates. I did my best to be honest about my disclosures but can’t guarantee I am right; I write these posts after a couple beers sometimes. I edit after my posts are published because I’m impatient and lazy, so if you see a typo, check back in a half hour. Also, I just straight up get shit wrong a lot. I mention it twice because it’s that important.

The debate is raging this week over increased government spending and the potential raising of the debt ceiling by $5 trillion, with many fiscal conservatives splitting with the GOP and the Trump Administration over what they feel is a betrayal of their campaign promises to reduce government waste. 

Trump argues that all the elements included in his “big beautiful bill” are necessary in order to revitalize the US economy and break from the interdependency of the current globalist model.  Can the dollar continue to absorb the pressure of ever increasing debt obligations?  Is there a way to cut the debt without cutting spending?

At least one aspect of Trump’s fiscal plan is showing success in this area despite the warnings of critics; the establishment media has been forced to admit that the administration’s tariff efforts are actually working.

The US has collected over $121 billion in revenues from tariffs on imported goods, and despite claims that tariffs are a “tax on the consumer”, prices on the shelf have not risen so far.  Opponents of the policy are struggling to explain the data.  Some still argue that disaster is right around the corner while others are acknowledging that there is a potential to pay off US debt over time if the import duties remain in place for the long term.

CNBC forced to recognize that Trump’s tariffs have brought in over $121 BILLION to the US without imposing a burden on the consumers.

It’s almost like the “experts” were wrong!pic.twitter.com/oaHfWcyFsr

— Libs of TikTok (@libsoftiktok) June 30, 2025

Misconceptions about tariffs lead the public to believe that they are a tax on foreign producers or governments, but tariffs are in fact taxes on companies sourcing products internationally from nations on the duties list.  The taxes place the responsibility of adaptation on corporations – If they buy more from US sources or countries not on the list, then their costs will remain low.  If they don’t, then they must shift the costs in other ways. 

Raising prices is the last thing any company not producing necessities wants to do.  Consumers can easily cut back on peripheral goods.  In other words, the assertion that tariffs are a hidden tax on the public is rooted in a lack of understanding on import duties and how they affect markets.  Consumers will buy from producers that keep prices down by adapting to the tariffs, and there are many ways to adapt.  It’s that simple.    

Democrats and some conservatives argued that prices would rise exponentially as international corporations immediately deferred costs on consumers in order to offset the added expenses on imported raw materials and manufactured goods.  They were wrong.  

The personal consumption expenditures price index, the Federal Reserve’s preferred inflation gauge, rose 2.3% in May, modestly above the central bank’s 2% annual target. The May Consumer Price Index rose at an annual rate of 2.4%, cooler than economists expected.

Some blame the “front loading” of imports (increased orders of goods before the tariffs went into effect).  However, front loading was estimated to act as a stop-gap for only two months (possibly three by some predictions).  Tariffs were initiated in February and though there have been fluctuations it’s been five months waiting for the tariff asteroid to explode American wallets and nothing has happened.

Will companies eventually shift the tariff burden on American consumers over the next year?  A better question would be can they shift the burden in a weaker retail market?  Would they take the risk of plunging sales?  Or will they do what they should have been doing all along:  Buy a larger percentage of their goods from US producers and bring manufacturing back home?      

At the current rate, tariffs could generate around $300 billion by the end of this year and $1.2 trillion over the next four years.  It’s not enough to offset increased debt spending, but it does offer an alternative to hiking taxes on the general public (which is what Democrats would do).  And if inflation concerns continue to prove over-hyped, then the tariff model could remain in place for many years to come.    

US equity futures – which closed at a fresh all time high after the best quarter since 2023 put them in extremely overbought territory – are weaker, dragged by Tech as TSLA is -5% pre-mkt on Musk vs Trump part 2. Pre-mkt, the balance of Mag7 is mixed with Staples outperforming. As of 8:00am, S&P futures are down 0.2% following two successive closes at all-time highs as sentiment remains linked to progress of trade negotiations and the fate of President Trump’s tax and spending bill, which the Senate has failed to pass. Nasdaq futures also drop 0.3% while European stocks also fell. Bond yields are lower as the curve flattens with USD continuing to decline, setting another 52-wk low. As discussed yesterday, the dollar had its worst H1 since 1973 while SPX has its best quarter since 23Q1. Commodities are weaker although gold is soaring. Today is the first piece of the labor market puzzle with JOLTS but we also receive ISM-MFG and vehicle sales. Powell speaks at 9.30am. The voting process on the tax/budget bill continues.

In premarket trading, Tesla falls 5% after President Donald Trump lashed out at Elon Musk, accusing the Tesla and SpaceX chief executive officer of benefiting excessively from government subsidies for electric vehicles.Other Mag7 stocks are mixe ( Apple +0.4%, Amazon +0.05%, Alphabet -0.03%, Meta -0.01%, Microsoft +0.07%, Nvidia -0.7%). Here are some other notable premarket movers:

• US-listed Macau casino operators are trading higher premarket Tuesday, after monthly gaming revenue for the world’s biggest gambling hub exceeded analyst expectations in June. Wynn Resorts (WYNN) +3.9%, Las Vegas Sands (LVS) +4%
• AeroVironment Inc. (AVAV) falls 5% after the defense company announced proposed underwritten public offerings of $750m worth of shares of its common stock and $600m aggregate principal amount of its convertible senior notes due 2030.
• Dyne Therapeutics (DYN) drops 11% after the company offered around 24.2 million shares, raising around $200 million. The offering was priced at $8.25 per share, representing a discount of around 13.3% vs. Monday’s closing price of $9.52.
• Greif (GEF) climbs 1.6% after agreeing to sell its containerboard business to Packaging Corporation of America (PKG) for $1.8b in cash.
• MSC Industrial (MSM) rises 3% after the distributor of metalworking products posted adjusted earnings per share for the third quarter that beat the average analyst estimate.
• Sweetgreen (SG) drops 3% as TD Cowen downgrades to hold, saying the salad restaurant chain’s key urban footprint “appears to be under extreme pressure.”
• Wolfspeed (WOLF) surges 73% after the chipmaker said it would file for bankruptcy to enact a creditor-backed plan to slash $4.6 billion in debt. The company filed for reorganization under Chapter 11 and expects to emerge out of bankruptcy by the end of the third quarter.

Until this morning, stock bulls had seized control of a market that was rattled by Trump’s trade overhaul, a war in the Middle East and persistent uncertainty over growth and inflation. Yet unpredictability persists, with US trade talks racing toward a July 9 deadline and Trump pushing to finalize a budget that’s projected to add more than $3 trillion to the US deficit over the next decade.

“We’ve had a strong quarter, but there’s still too much on the table,” said Haris Khurshid, chief investment officer at Karobaar Capital. “If the trade talks drag or the tax bill stalls, we’ll see how much conviction these bulls really have.”

Trade talks hit a snag after Japan said it would not sacrifice its agricultural sector as part of its tariff talks with the United States, after President Donald Trump complained that the key Asian ally was not buying American rice. That won’t help Japan’s auto sector which is already reeling amid widespread cost cuts to remain competitive in the US market. 

As discussed yesterday, Goldman’s flow gurus noted the S&P 500 will add to its rally this month before losing steam into August. “We are entering the strongest month for the S&P historically,” they said, noting that the first two weeks of the months are traditionally the best span of the year for stocks.

While economists are widely expecting Trump’s tariffs to drive inflation higher, subdued price growth so far has cast doubt on that view, emboldening the White House and increasing its pressure on Jerome Powell. Although the Fed has so far held off on cutting interest rates, two governors have recently publicly diverged from Powell, suggesting a reduction could be appropriate as early as July. Swaps imply at least two quarter-points of monetary easing by the end of the year, with an about 65% chance of a third cut by December.

“The bulk of the market sees July as a live meeting, that’s limiting the dollar,” Geoffrey Yu, a strategist at Bank of New York Mellon Corp., told Bloomberg TV. “Going back to the other asset classes, the fact that July is live and we may get two cuts at least this year, that is underpinning risk sentiment as well.”

Powell and other top central bankers are set to discuss monetary policy at the European Central Bank’s annual retreat later on Tuesday in Portugal. Also on investors’ radar is a slew of economic data, including a wave of PMI readings and the US job openings report ahead of Thursday’s nonfarm payrolls.

“On balance, we see the environment as constructive for risky assets,” noted Mohit Kumar, chief European strategist at Jefferies International. “But with positioning moving to the long side, we do not see a sharp rally but a slow grind higher in risky assets.”

Europe’s Stoxx 600 falls 0.3%, with media and auto shares among the biggest laggards. In individual stocks, Umicore shares rise after the firm boosted its Ebitda guidance. Here are the most notable European movers:

• Umicore gains as much as 12%, hitting the highest since late-July 2024, after the materials technology company lifted its adjusted Ebitda guidance for the full year to a range of €790m to €840m.
• Zealand Pharma shares rise as much as 5.1%, the most in six weeks, after BNP Paribas Exane analysts initiated coverage on the stock with an outperform recommendation, saying the “attractive” risk-reward at current levels is “difficult to ignore.”
• Jeronimo Martins shares surge as much as 5.7%, most since May 8, after Citi upgraded the retailer to buy, citing expectations of a rebound in the Polish food market.
• Elixirr shares rise as much as 6.5% after the business management consulting firm completed its move to the London Stock Exchange’s Main Market from AIM.
• Baloise and Helvetia gain after UBS lifted recommendations on both stocks to buy from neutral, citing a potential 20% uplift in cash generation from the proposed merger.
• Mpac Group plunges as much as 34%, after the packaging and support services company warned annual revenue will be significantly below expectations because tariff uncertainty is causing US customers to defer orders.
• InPost drops as much as 6.1% to lowest since April 17 as Advent International sold a 3.5% stake in company via accelerated book-building at a discount to Monday’s closing price.
• VusionGroup shares fall as much as 7.9% to €252.6 after the French consumer electronics firm’s offering of 650,000 shares by holder Walmart priced at a discount.
• UK homebuilders underperform after data showed house prices fell the most in more than two years in June, in a sign buyers are under pressure after an increase in transaction taxes in April.

Earlier in the session, Asian equities advanced, after halting a four-day rally Monday, as Taiwan saw a strong rebound and South Korean stocks climbed. The MSCI Asia Pacific Index rose 0.4%, putting the index on pace for its highest close since September 2021. Shares of TSMC, Hon Hai and Reliance Industries contributed the most the benchmark’s gains. Taiwanese stocks jumped on a tech rally and bounce in the local currency. Singapore’s Straits Times Index was on pace for a record high. Holding companies helped drive gains in Korea on optimism that legal revisions will be approved this week to help speed corporate reforms.

In FX, the Bloomberg Dollar Spot Index falls 0.4% to the lowest since March 2022 while perceived safe-haven assets outperform, as investors monitor progress on trade talks and wrangling in Washington over President Donald Trump’s tax bill. The yen is leading gains against the greenback in the G-10 sphere, rising 0.8% with the Swiss franc not far behind. The euro is on the verge of its longest winning streak against the greenback in more two decades. The common currency gained as much as 0.4% to $1.1829, and a higher close would extend its rally to a ninth straight day, the longest stretch since 2004.

In rates, treasuries extend Monday’s advance, with yields falling by 2bp to 4bp across tenors, led by euro-zone bonds after ECB’s Martins Kazaks said significant gains for the currency could warrant another rate cut. US yields are lowest since early May, the 10-year under 4.19% for the first time since May 1 but trailing steeper drops for UK and German counterparts. European bonds also advance, led by longer-dated maturities. UK and German 30-year yields fall 6-7 bps each. Gilts got a boost after Bank of England Governor Andrew Bailey said they are looking at the possibility of offloading fewer government bonds over the coming year. A long list of ECB speakers provided few surprises while euro-area inflation rose as expected and was also largely ignored. Among Tuesday’s events are a global monetary policy panel in Sintra that includes Fed Chair Jerome Powell.

In commodities, oil prices are steady with WTI near $65 a barrel; spot gold climbs $40 to around $3,344/oz.

Looking at today’s calendar, US economic data slate includes June final S&P Global US manufacturing PMI (9:45am), June ISM manufacturing, May construction spending and May JOLTS job openings (10am) and June Dallas Fed services activity (10:30am). Fed speakers are limited to Powell’s Sintra panel (9:30am), which also includes BOE Governor Andrew Bailey, ECB President Christine Lagarde, BOJ Governor Kazuo Ueda and Bank of Korea Governor Chang Yong Rhee

Market Snapshot

• S&P 500 mini -0.2%
• Nasdaq 100 mini -0.2%
• Russell 2000 mini -0.2%
• Stoxx Europe 600 -0.2%
• DAX -0.3%, CAC 40 -0.3%
• 10-year Treasury yield -3 basis points at 4.19%
• VIX +0.3 points at 17.06
• Bloomberg Dollar Index -0.3% at 1186.29
• euro +0.2% at $1.1816
• WTI crude little changed at $65.16/barrel

Top Overnight News

• Musk resumes his campaign against the reconciliation bill, vowing to start a third party and launch primary campaigns against Republicans who vote for it. Tesla shares (-4%) slid premarket after Donald Trump accused Elon Musk of benefiting excessively from EV subsidies, suggesting the Department of Government Efficiency should take a look at his companies. NYT, BBG
• Moderate Republicans and hard-line conservatives in the House are expressing increasing opposition to the Senate’s version of the “big, beautiful bill” just days before the lower chamber is set to consider the legislation, a daunting dynamic for GOP leaders as they race to meet their self-imposed Friday deadline. The Hill
• US Senate parliamentarian has ruled that Sen. Murkowski’s Alaska carve-out for SNAP is compliant with the Byrd Rule, but the Medicaid one is not compliant, via Punchbowl’s Desiderio.
• US Senate votes 99-1 to remove the AI state regulation moratorium from the Reconciliation Bill (i.e. Senate adopts Blackburn’s amendment).
• Punchbowl reports US Senate Majority leader Thune said, “We’re getting to the end here.”, adds It’s unclear if Thune has the votes necessary for passage, or if he’s prepared to plow ahead with a final vote anyway.
• Punchbowl reports the House Rules Committee is “slated to come at noon to begin to prepare the bill for floor consideration. The full House is expected back Wednesday.”
• Trump’s top trade officials are scaling back their ambitions for comprehensive reciprocal deals with foreign countries, seeking narrower agreements to avert the looking reimposition of US tariffs. People familiar wit the talks said US officials were seeking phased deals with most engaged countries as they race to find agreements by July 9 deadline. FT
• A private gauge of China’s manufacturing activity bounced back into expansionary territory in June, as a temporary trade truce between Beijing and Washington eased some pressures on Chinese factories. The Caixin manufacturing purchasing managers index rose to 50.4 in June from 48.3 in May. WSJ
• UK house prices fell the most in more than two years in June, Nationwide said, as an increase in transaction taxes piled pressure on buyers. It leaves prices just 2.1% above the level seen a year ago, a fall in real terms. WSJ
• Japan will not sacrifice the agricultural sector as part of its tariff talks with the United States, its top negotiator said on Tuesday, after President Donald Trump complained that the key Asian ally was not buying American rice. RTRS
• Eurozone inflation expectations cool, with 12-months falling to +2.8% (down 30bp) and 36-months easing to +2.4% (down 10bp). ECB’s Lane says the battle to bring Eurozone inflation back to the 2% target is complete. BBG
• UK house prices fell the most in more than two years in June, Nationwide said, as an increase in transaction taxes piled pressure on buyers. It leaves prices just 2.1% above the level seen a year ago, a fall in real terms.
• DOGE officials at the SEC have in recent weeks sought meetings with staff to explore loosening regulations on SPACs and reporting requirements for private investment advisers, Reuters reported. BBG

Trade/Tariffs

• US narrows trade focus to secure deals, while officials were seeking phased deals with the most engaged countries as they race to find agreements by July 9th, according to FT.
• Japan’s Chief Cabinet Secretary Hayashi said Japan won’t do anything to sacrifice the agricultural sector in US trade talks, while Farm Minister Koizumi said he won’t comment on US President Trump’s posts regarding Japan’s rice imports.
• EU is to accept Trump’s universal tariff but seeks key exemptions and it wants the US to commit to lower rates on key sectors such as pharmaceuticals, alcohol, semiconductors and commercial aircraft, while it is pushing for quotas and exemptions to effectively lower a 25% tariff on automobiles and car parts as well as a 50% tariff on steel and aluminium, according to Bloomberg.
• RTÉ News understands that EU ambassadors were informed that the ongoing Section 232 investigation into the pharmaceutical sector would continue and would lead to measures “one way or another”. It is understood the EU’s own drive for simplification of rules is being offered as a concession, as well as plans to increase purchases of LNG and AI technology.
• EU reportedly seeks immediate relief from tariffs in key sectors as part of any trade deal with the US; wants immediate relief as soon as an initial agreement is reached, rather than waiting weeks or month for a final accord, via Reuters sources. Many EU members said a deal without this is unacceptable.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks began the new quarter mostly higher, albeit with gains capped amid this week’s busy data calendar and with underperformance in Japan owing to recent currency strength. ASX 200 treaded water with the index just about kept afloat as strength in defensives offset the losses in the mining and materials sectors. Nikkei 225 underperformed as exporters suffered the ill effects of recent currency strength and with the predominantly better-than-expected BoJ Tankan survey increasing the scope for a more hawkish BoJ, while US President Trump also noted they will be sending Japan a letter regarding tariffs after not accepting US rice. Shanghai Comp edged mild gains after Chinese Caixin Manufacturing PMI topped forecasts with a surprise return to expansionary territory, although the upside was limited for Chinese markets amid the holiday closure in Hong Kong and the absence of Stock Connect flows.

Top Asian News

• BoJ official said some automakers mentioned the impact of US trade policy although others cited improvement in profits due to pass-through of costs, while the official added there were no clear voices from firms citing the impact of US trade policy on capex plans.
• BoJ’s Masu says he does not have any strong disagreement to the view that underlying inflation is still short of 2%. Want to scrutinise how prices move after recent commodity spikes moderate (with specific reference to rice). At some point, the BoJ must “unload its huge ETF holdings”. Must do so cautiously. When asked if he is a dove/hawk, responds “probably stand in the middle, have not strong view”.

European benchmarks began the day in the green, though futures were drifting into the open and this trajectory has increased since, Euro Stoxx 50 -0.5%. Specifics behind the move somewhat light, potentially a function of a modest pullback from recent gains and as markets look to the first very busy day of a front-loaded week. Sectors mixed, at the top of the pile we have Utilities, potentially boosted by the European heatwave and soaring demand for A/C.

Top European News

• Olaf Sleijpen takes over from Klaas Knot as head of Dutch central bank today, according to Bloomberg.
• ECB’s Nagel says we are in “calm waters” on inflation, but cannot be complacent, via Bloomberg TV. Policy is in neutral territory. Uncertainty warrants a meeting-by-meeting approach.
• ECB’s Wunsch says risks are more tilted to the downside, if a move on rates was needed it would be down, via CNBC; broad consensus is that the job is primarily done
• ECB’s Lane says it is going to be a lively few years, via CNBC; not very helpful to provide too much forward guidance. 10% tariffs are part of the baseline. EUR appreciating has a tightening effect. Has been some rebalancing by global investors to the EUR.
• ECB’s de Guindos says the level of uncertainty is huge, via Bloomberg TV; must keep all options open. EUR/USD at 1.17 is perfectly acceptable, even 1.20 could be overlooked, any more would be “complicated”. The possibility of undershooting the 2% inflation target is quite limited. Risks tilted to the downside. An additional cut would not help the economy to improve, more certainty is what is required. Speed of the FX move is more concerning than the actual level.
• ECB’s Escriva says the symmetric 2% inflation goal should continue to be the priority.
• ECB’s Kazaks says any rate adjustments will be nothing big; further moves would be about signalling and fine-turning. Further EUR gains could increase the case for another cut. 10% US Tariff, plus EUR appreciation is large enough to hurt exports; any further rate cut would be small
• BoE Governor Bailey says need to watch carefully for the consequences of declining inflation; labour market is softening. Path of interest rates will continue to be gradually downwards. Not convinced cyclical productivity will come back. Have seen a steepening of the long-term bond yield curve. Does not think there is anything unusual about the UK when it comes to the yield curve. There will be no sustained growth without stable and low inflation.
• SNB’s Zanetti says the central bank has the tools to deal with the current challenging situation; adds that negative rates are an option.
• Blonde Money reports there are 84 UK Labour MPs who are negative on the welfare reform, citing their latest analysis.

FX

• DXY began the new month/quarter/HY relatively stable under 97.00 following recent selling pressure. However, as the morning progressed the pressure has ramped up with the index down to a 96.37 low. Focus firmly on the Reconciliation Bill (Senate debate ongoing, into its 20th hour).
• Havens outperform as the tone continues to deteriorate throughout the morning, USD/JPY as low as 142.83 vs a 144.06 high and USD/CHF below 0.79 to a 0.7875 base.
• EUR/USD above the 1.18 mark. Climbing gradually throughout the morning, a lot of ECB speak on the EUR. Further upside somewhat endorsed by de Guindos saying that EUR/USD at 1.17 is perfectly acceptable, even 1.20 could be overlooked, while any more would be “complicated”.
• EUR unreactive to the morning’s inflation data, which was as-expected across the board. No move in ECB pricing, still near-enough implies one more cut in 2025.
• Antipodeans have a slight upward bias, despite the risk tone, buoyed by the overnight release of the Chinese Caixin Manufacturing PMI, which topped forecasts with a surprise return to expansionary territory.
• PBoC set USD/CNY mid-point at 7.1534 vs exp. 7.1509 (Prev. 7.1586)

Fixed Income

• Complex is bid, continuing Monday’s gains. Supported by the deteriorating risk tone and digesting/awaiting numerous central bank officials.
• USTs continue to bull-flatten this morning, extending the bias that was seen on Monday amid quarter-end, soft Chicago PMI data and Bessent dialling back expectations he will term out the debt.
• USTs are just off best in a 112-00 to 112-12 band, surpassing the 112-05 June high and now eyeing the 112-23 May peak.
• Bunds unreactive to Flash HICP for June, printed in-line with analyst forecasts for the three main figures and while the Services Y/Y ticked up to 2.3% (prev. 2.2%), it is worth reminding the print has trimmed significantly from the 4% level seen in April.
• Benchmark around 10 ticks off best in a 130.18 to 130.73 band. If the upside resumes, resistance eyed at 130.80 from last Thursday before a handful of levels earlier that week between 131.12 to 131.20.
• Gilts outperform, but only modestly so, no move to its own unrevised PMI or a strong Green auction (as is usually the case). Numerous remarks from Bailey, nothing that has moved the dial though yield commentary was interesting. Ahead, the government presents its Welfare Reform Bill to the Commons for a second read, should pass but not a guarantee given expected significant rebellion.

Commodities

• Crude benchmarks in the red, but only modestly so, action this morning has been choppy with the space caught between the deteriorating risk tone and the softer USD. WTI resides in a USD 64.67-65.32/bbl range while Brent sits in a USD 66.31-66.97/bbl range.
• Specifics light, but we have seen a handful of geopolitical developments: 1) Iranian Government says there is no date or decision on negotiations with Washington, 2) “No breakthrough in Gaza negotiations and a large-scale campaign aimed at increasing pressure on Hamas remains an option”, according to Sky News Arabia citing Israeli press.
• Precious metals firmer, bolstered by the discussed risk tone. XAU above the USD 3300/oz mark, surpassing its 50-DMA at USD 3320/oz but stalling before the 26th June peak at USD 3350/oz.
• Base metals firmer across the board, off best given the tone but proving much more resilient than other assets. Resilience that comes from the better-than-expected Chinese Caixin Manufacturing PMI data, a release which lifted 3M LME Copper to a three-month peak at USD 9.98k.
• HSBC increases avg. gold price at USD 3,175/oz by the end of this year; sees USD 3,125 in 2026 (prev. saw 2,915).
• Commerzbank sees year-end copper prices at USD 9,500/ton (prev. saw 9,400).

Geopolitics

• US State Department approved the potential sale of munitions guidance kits and munitions support to Israel for an estimated USD 510mln, according to the Pentagon.
• G7 issued a joint statement on Iran and the Middle East reiterating support for a ceasefire between Israel and Iran.
• Iran’s Foreign Minister told CBS that he doesn’t think negotiations will resume so quickly, according to Al Jazeera.
• Large explosions were heard after the Israeli forces blew up residential buildings east of Gaza City, according to Al Jazeera.
• Visegrad 24 posted on social media platform X regarding a mass-casualty event in Tehran after a drone struck an IRGC meeting with several people killed and wounded.
• Rockets attack reportedly targeted an Iraqi military airbase in Kirkuk, according to security sources cited by Reuters.
• White House said President Trump will sign an EO to terminate Syria sanctions. It was separately reported that the US is reviewing Syria’s state sponsor of terror designation, while the action will end Syria’s isolation from the international financial system and set the stage for global commerce and investment from the region and the US, according to a senior Treasury official.#
• “No breakthrough in Gaza negotiations and a large-scale campaign aimed at increasing pressure on Hamas remains an option”, according to Sky News Arabia citing Israeli press.

US Event Calendar

• 9:45 am: Jun F S&P Global U.S. Manufacturing PMI, est. 52, prior 52
• 10:00 am: Jun ISM Manufacturing, est. 48.8, prior 48.5
• 10:00 am: Jun ISM Prices Paid, est. 69.5, prior 69.4
• 10:00 am: May Construction Spending MoM, est. -0.2%, prior -0.4%
• 10:00 am: May JOLTS Job Openings, est. 7300k, prior 7391k

DB’s Jim Reid concludes the overnight wrap

Welcome to the second half of 2025. If you were in the UK or large parts of central or southern Europe last night, and without air con, I suspect you’ll be feeling the same as me this morning. Exhausted, hot and bitten all over!! Never have I been looking forward to the small amount of rain on the forecast tomorrow as much.

As it’s the start of the month, Henry will shortly release our usual performance review covering the month and quarter just gone. If you’d have told me on April 8th, when the S&P 500 was already around -12% in the first week of the quarter, that it would ultimately end up +10.94% at the end of the three months in total return terms, I would have probably asked you if you needed to sit down and have a warm, cold or stiff drink to compose yourself. It’s easy to forget now that at the start of the quarter, the S&P 500 had its fifth largest two-day slump since WWII. Also noteworthy in Henry’s piece is that the dollar posted its worst H1 performance since 1973. So the impact of events around Liberation Day has still left a big mark even with the big equity bounce.

It was fitting that the quarter ended on a positive note with the S&P 500 (+0.52%) seeing a third consecutive advance and a fresh ATH. Several factors powered the rally forward, but the main ones were growing optimism around US trade deals, along with continuing anticipation that the Fed would be cutting rates by year-end. So that helped spur a notably cross-asset rally, with US HY spreads (-2bps) closing at their tightest since early March, at 290bps, whilst the 10yr Treasury yield also fell -4.9bps to 4.228%.

In terms of the latest on trade, there’s just over a week until the 90-day reciprocal tariff extension runs out on July 9. But the mood music has been increasingly supportive, which has reassured investors that several deals are set to be announced beforehand. For instance, markets reacted to the news late-Sunday night that Canada would be rescinding its Digital Services Tax to advance its trade discussions with the US, with the aim of reaching a deal by July 21. And separately, Treasury Secretary Bessent said on Bloomberg yesterday that “there’s going to be a flurry going into the final week as the pressure increases”. We saw the first indications of this yesterday as Bloomberg reported that the EU is willing to accept a trade deal with the US that keeps the 10% universal tariff in place, as long as there are certain carve outs in key sectors. Additionally they are looking for quotas or exemptions for the higher levies in areas such as autos (25%) as well as steel and aluminium (50%). Meanwhile on Japan, President Trump threatened on social media that he would impose new tariffs on Japan after suggesting that the country was unwilling to import US made rice. So things are heating up ahead of next week but Trump has talked about the possibility of extending the July 9 tariff deadline, saying on Fox News on Sunday, that “I don’t think I’ll need to”, but that “I could, no big deal.” So for now at least, the market consensus is that we’re not going to see a huge shock next week, and it’s worth noting that given the 10% baseline has now been in place since early April, the baseline is a relatively high tariff rate anyway. One of the questions in the survey asks your view about how the July 9th deadline will pass so please feel free to answer the survey in the link at the top.

Elsewhere, the focus is very much on the US Senate right now, as the Republicans are still trying to pass the tax bill by the July 4 holiday. The deadline is still possible to achieve, but it’s proving politically difficult given the tight margins the Republicans have, and given that the House and Senate both need to pass the same version of the bill. Currently the Republicans have a 53-47 majority in the Senate, along with the tie-breaking vote, so they can afford to lose 3 votes. But Senator Rand Paul has said he’s a no, whilst Senator Thom Tillis has denounced the Medicaid cuts in the bill, and he announced over the weekend that he’d be retiring, so doesn’t have to worry about a primary challenge. So there’s not much room for manoeuvre among the remaining holdouts. In addition, the House still need to pass the Senate version, and the original version only passed the House by 215-214, so this is a very delicate balance to keep that coalition together. That said, from a market perspective, there’s not too much concern about the July 4 deadline, since the debt ceiling increase in the bill isn’t an issue until later in the summer. So, if the timing did slide, it would have little impact from a market point of view, and Trump himself said on Friday that the July 4 deadline was “not the end-all”.

Otherwise, there was growing anticipation about Fed rate cuts this year, which helped to propel risk assets higher. This came as the White House once again called on Fed Chair Powell and the FOMC to lower rates over 250bps. Indeed, the amount of cuts priced in by the December meeting moved up +2.5bps on the day to 66.6bps, the most since early May. So that supported a rally in US Treasuries, with the 10yr yield coming down -4.9bps on the day to 4.228%, whilst the 2yr yield fell -2.9bps to 3.72%. And with nominal and real yields coming down, that helped to lift equities, particularly in the more cyclical sectors. In addition, there was a late rally in the US session as Apple (+2.0%) announced that the company was considering using a third-party AI to back a new version of its virtual assistant Siri. The late rally from Apple and other AI-focused names saw the NASDAQ gain +0.47% after being unchanged just over an hour before the New York close.

Over in Europe, the focus is turning to this morning’s flash CPI print for the Euro Area. But before that, we had the country readings from Germany and Italy yesterday, which surprised on the downside. So in Germany, the EU-harmonised reading unexpectedly fell to +2.0% (vs. +2.2% expected), whilst the Italian reading remained at +1.7% (vs. +1.8% expected). That countered the upside surprise from France last Friday, and helped front-end bond yields to remain steady, with the 2yr German yield down -0.2bps yesterday. However, the long-end struggled across most of the continent, with yields on 10yr bunds (+1.5bps), OATs (+1.9bps) and BTPs (+0.3bps) all rising. It was a similar story for equities too, with the STOXX 600 down -0.42%.

The highlight in Asia is a trickier session for Japan after the trade news above. The Nikkei (-0.86%) is fighting back from deeper losses early but is down from a near one-year peak. A decent Tankan survey has also helped to strengthen the Yen. Chinese markets are either side of the flatline with Hong Kong closed today for a public holiday. On a positive note, the KOSPI (+1.13%) is leading gains in the region, buoyed by a near +2.0% rise in index heavyweight Samsung Electronics. S&P 500 (-0.11%) and NASDAQ 100 (-0.09%) futures are both edging lower.

Turning back to China, the manufacturing sector has returned to growth in June after a brief contraction in May, although overseas demand continues to decline amid ongoing external uncertainties. The Caixin manufacturing PMI increased to 50.4 in June, surpassing expectations of 49.3 and showing a significant rise from the 48.3 recorded the previous month. This data follows a recent government PMI report indicating that Chinese manufacturing activity contracted for the third consecutive month in June.

Elsewhere, confidence among major Japanese manufacturers has improved over the three months leading to June, as companies continue to uphold their optimistic long-term investment plans, even in the face of trade uncertainty. The headline index reflecting the business confidence of large manufacturers stood at +13 in June, an increase from +12 in March, and exceeding market expectations of a +10 reading. Additional details reveal that the large manufacturing outlook for the second quarter was recorded at 12.0, consistent with the previous figure of 12.0, and stronger than the anticipated 9.0. All this supports our out of consensus rate hike view for July but trade will be a bigger swing factor.
To the day ahead now, and data releases from the US include the ISM manufacturing for June, and the JOLTS report for May. Elsewhere, we’ll get the Euro Area flash CPI print for June, German unemployment for June, and the final manufacturing PMIs for June. From central banks, we’ll hear from Fed Chair Powell, ECB President Lagarde, BoE Governor Bailey, BoJ Governor Ueda, ECB Vice President de Guindos, and the ECB’s Elderson and Schnabel.

Authored by Charles Hugh Smith via OfTwoMinds blog,

I have endeavored to explain how our economy has changed dramatically over the past 50 years beneath the surface. Nothing that’s going to happen in the future will make sense unless we understand this, so refill your beverage of choice and let’s go through what changed.

Wages gained ground 1945 – 1975, and lost ground 1975 – 2025. In the “glorious 30” (Trente Glorieuses) years of sustained global growth 1945 – 1975, wages’ share of the economy remained around 50% of the nation’s income. As the economy expanded, wages increased in step with the economy.

Since the mid-1970s, that trend has reversed. Wages have lost ground for the past 50 years. As the economy expanded, wages’s share declined, meaning the economy’s gains flowed to capital rather than wages. (Chart #1 below)

This wealth transfer was non-trivial: $150 trillion was siphoned from wages to owners of capital.

As the chart below shows, Federal debt as a percentage of GDP declined in the the decades of organic growth, meaning the economy expanded from increases in productivity, efficiencies and resource extraction, as opposed to the synthetic growth of using debt / financialization to boost consumption.

Financialization took off in the 1980s as unlimited credit for financiers enabled a synthetic boom of corporate takeovers and mergers. Financialization expanded into every nook and cranny of the economy in the 1990s and 2000s, so that assets such as the family home became commoditized assets that could be sold as securities to global capital.

As the Federal-debt-GDP charts illustrates, Federal debt rose faster than GDP as financialization hollowed out the US economy. The acceleration of globalization from 2001 advanced this hollowing out.

The destabilizing nature of financialization manifested in 2008 as the Global Financial Crisis, when heavily financialized subprime mortgage securities catalyzed a global meltdown.

the 2008-09 crisis and response was a critical juncture in American history , as the organic economy became subservient to the synthetic economy of debt, bubbles and “the wealth effect,” the toxic harvest of hyper-financialization and hyper-globalization.

Federal debt, which has risen from 40% of GDP in the early 1980s to 60% in 2007, exploded higher to 120% as the synthetic “growth” of using debt to inflate asset bubbles that generated “the wealth effect” became the engine of consumption.

As a result of policy decisions made in 2008-2010, our economy became dependent not on wages but on “the wealth effect” for consumption: as asset valuations bubble higher, the owners of the assets feel wealthier, and are incentivized to borrow and spend more of their phantom wealth.

The top 10% of US households now account for 49.7% of all US consumer spending: The U.S. Economy Depends More Than Ever on Rich People: The highest-earning 10% of Americans have increased their spending far beyond inflation. Everyone else hasn’t. (WSJ.com)

The problem is that unlike wages, which are broadly distributed, asset ownership is concentrated in the top 10% of households, so “the wealth effect” dramatically boosted wealth and income inequality. So all the synthetic “growth” since 2009 has flowed to the top tier of households as wages’ share of the nation’s income continued losing ground.

This sets up a can’t win scenario: if the Everything Bubble that drives “the wealth effect” continues inflating, wealth inequality will crack our society wide open. If the bubble pops, consumption implodes, jobs will be lost and the Great Recession that was pushed forward in 2009 will kick in with a vengeance.

Beneath the superficial surface of rising GDP, the policies of inflating debt-bubbles to drive “the wealth effect” have hollowed out not just the economy but society. Courtesy of @econimica (X/Twitter), these charts show the pernicious consequences of relying on debt for consumption and channeling gains to the owners of assets.

The net effect was to load younger generations with debt while funneling the majority of Federal spending to the older generations who also happen to own most of the assets. Since younger workers couldn’t buy assets when they were cheap, few have gained from “the wealth effect.”

By effectively impoverishing the nation’s younger generations, we’ve chosen a demographic doom-loop as marriage and birth rates have collapsed from 2007. Guess what happens when you make starting a family and buying a house unaffordable to younger generations? They no longer start families and have children.

As the Boomer generation retires, the legacy of retirement programs designed in the 1930s (Social Security) and the 1960s (Medicare) is fiscal bankruptcy as these programs are driving the expansion of federal spending and borrowing.

It’s called a Doom Loop, with no exit, for all speculative asst bubbles pop. Once “the wealth effect” reverses, assets get sold off to raise cash and since only the wealthy can afford to buy them, there’s no buyers left, so valuations crash.

It didn’t have to be this way, but our leadership chose poorly, and the consequences will fall on us. Let’s go through the charts supporting this grim reality.

Wages share of the national income has declined for 50 years.

As a percentage of GDP, Federal debt has tripled from 40% of GDP to 120% of GDP as synthetic “growth” replaced organic growth:

Thanks to the policy decision to reply on “the wealth effect” for consumption, wealth inequality has soared: the net worth of the top 10% (34 million Americans) is 2X the net worth of the bottom 90% (306 million Americans) and 27X the net worth of the bottom 50%–170 million Americans.

Most of the future expansion of Federal spending and debt is in programs for the older generations and rising interest payments on the expanding debt to pay for these programs.

Here are Econimica’s explanatory comments on his three charts reprinted below:

“Federal Reserve policies have far-reaching consequences, well beyond interest rates and economics / finance. Given the Fed is a non-democratically elected entity making policy that is ultimately deciding the winners and losers or our modern-day society…perhaps it’s time for a rethink of the power that has been handed to them?

Consider since 2007 (when ZIRP & QE were implemented):

—US births (blue columns) have declined by -0.7 million/yr (-16%…or 12 million fewer births than Census projected since ’07 w/ the delta only continuing to grow)
—US female childbearing population (red line) +4.2 million (+11%)
—US 65+yr/old pop (white line) increased +27 million (+72%)

Think of who the economic / financial policies implemented since ’07 favor (elderly/institutions holding the bulk of assets) and who they punish (young adults w/ little to no assets to shield them). Young adults have made the logical choice to have fewer or avoid children altogether. Unless something dramatic changes, suggest births/families will continue moving significantly lower and the future of the US working class is likewise deteriorating.

2007 was also the interest rate driven explosion in student loan debt and consumer debt (vehicles, credit cards, etc.) to allow a flat consumer population to continue consuming more.”

Note how debt serviced by younger generations exploded higher from 2008 while the population and workforce made only marginal gains.

GDP minus federal debt was positive until 2008-09, and has since crashed into deeply negative territory. It’s called eating our seed corn, spending money borrowed from future productivity and generations to fund unsustainable consumption today. Spoiler alert: this ends badly.

Regardless of assurances that this bubble will never pop, all bubbles pop, and they do so with remarkable symmetry, returning to their starting point.

Either way, we lose: if the Federal Reserve manages to keep the Everything Bubble inflated, we decimate the nation’s younger generations, fatally destabilizing our society. If the bubble finally pops, all the phantom wealth that’s been propping up consumption goes to Money Heaven, gone for good.

We will collectively bear the burdens of catastrophically short-sighted / self-serving policies of 2009-2025 for decades to come. Beneath the easily gamed statistical veneer, our economy and society have been hollowed out to the benefit of the few at the expense of the many.

These are real-world problems, not monetary problems. Unfortunately, playing around with “money” doesn’t make all this go away: stablecoins, Universal Basic Income (UBI) and Modern Monetary Theory (MMT) are all disconnected from the real world: what ultimately matters is resources extracted, productivity and efficiency, and how the gains and losses of these real world factors are distributed.

“Money” in all its manifestations is simply the unit/medium used to instantiate the distribution.

*  *  *

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

A team of UBS analysts led by Zuzanna Pusz pointed to new June data from the KOF Swiss Economic Institute showing deteriorating sentiment across Swiss watchmakers, further validating their cautious stance on the global luxury market.

June readings from the KOF Swiss Economic Institute (monthly survey of Swiss watch producers) show that expectations of production plans over the next three months decelerated m/m to -7.3 (restated May -5.5). Additionally, sentiment on expected orders over the next three months also decreased to -14.8 (May -10.7), the second lowest point in 2025ytd. -Pusz

The survey revealed declines in both production expectations and order outlooks, suggesting that a meaningful recovery in the global global luxury market might not occur until 2027.

The Jun readings show a sequentially more negative picture regarding sentiment in the industry vs. May, supporting our cautious view about the potential recovery in the global luxury market in 2025, as we believe it may take until 2027 for the sector’s momentum to meaningfully re-accelerate.-Pusz

With secondary market prices for timepieces having already fallen sharply in recent years, as per Bloomberg Sundial data below, perhaps conditions may soon be ripe for contrarian investors to begin bottom-fishing Rolexes. 

Used Rolex prices are unlikely to rebound meaningfully until the Federal Reserve initiates an interest rate-cutting cycle (and price rebound could occur in the form of a lag).

According to Morgan Stanley’s Michael Wilson, that easing cycle could begin as early as next year, with the potential for at least seven rate cuts.

If realized, this shift in monetary policy could provide a supportive backdrop for risk assets—including stocks and also luxury watches—heading into the second half of 2025.

Still, UBS’s Zuzanna Pusz emphasized that both the watch segment and the broader luxury market remain on shaky ground, reiterating that any “momentum to meaningfully re-accelerate” is unlikely before 2027.

Authored by Daniel Batten via BitcoinMagazine.com,

The Global Pattern

In recent years the IMF has:

• Successfully pressured El Salvador to (de facto) drop Bitcoin as legal tender, and rollback other Bitcoin policies

• Successfully pressured CAR’s 2023 Bitcoin repeal through regional banking bodies

• Been responsible for the lack of follow through from Bitcoin campaign rhetoric to action from Milei in Argentina.

• Cited “serious concerns” with Pakistan’s Bitcoin plans

• Consistently framed crypto as a “risk” in loan negotiations

Here’s a summary

As we can see, the only nations that were able to resist IMF pressure were El Salvador, prior to gaining an IMF loan, and Bhutan which does not have an IMF loan. 

Each country with an IMF loan who has adopted, or attempted to adopt Bitcoin at a nation-state level has been successfully thwarted, or largely thwarted by the IMF. 

How is it that the IMF has been so successful in preventing global nation state adoption, with the exception of Bhutan, and why do they aggressively move to prevent it?

In this detailed report we do a deep-dive into each of the three nations where the IMF has successfully pushed back against Bitcoin adoption, and the signs that it is likely to be successful achieving the same result with Pakistan. 

In the last section of this report, we look at the IMFs five reasons to fear Bitcoin, and how Bitcoin is still thriving from a grassroots level despite top-down Bitcoin abandonment, or partial abandonment, by various nation states.

1. Central African Republic: When Colonial Money Met Digital Hope

The Central African Republic (CAR) uses the CFA franc. The CFA isn’t just currency—it’s a geopolitical chain, backed by France and governed by the Bank of Central African States (BEAC). Of its 14 member nations, the 6 Central African nations (including CAR) must still deposit 50% of foreign reserves in Paris.

This control over reserves fosters economic dependency, while establishing export markets for French goods at favorable terms. In 1994 for example, the CFA was devalued by half, a policy that was influenced by Western pressure, particularly from the IMF. This caused the cost of imports to leap, leading to exporters (mainly EU based) being able to procure resources from CFA nations at half the cost. Locally the impact was devastating, leading to wage freezes, layoffs, and widespread social unrest across CFA countries.

When the Central African Republic (CAR) announced in 2022 it was adopting Bitcoin as legal tender, BEAC and its regulatory arm COBAC immediately voided the law, citing violations of the CEMAC Treaty; The treaty which established the economic and monetary community of Central Africa. This wasn’t bureaucracy—it was a warning shot from the monetary guardians of la Françafrique.

Why it mattered: To this day, CAR’s economy relies heavily on IMF bailouts. With $1.7Billion in external debt (61% of GDP), defying BEAC meant risking financial isolation.

The IMF’s Silent Campaign

The IMF moved fast. Within two weeks (May 4, 2022), it publicly condemned CAR’s “risky experiment,” citing legal contradictions with CEMAC’s crypto ban. The move raised “major legal, transparency, and economic policy challenges,” the IMF said, that were similar to the concerns the IMF raised about El Salvador’s Bitcoin adoption: risks to financial stability, consumer protection, and fiscal liabilities. (For context, none of those risks materialized in El Salvador).

But their real weapon was leverage. As CAR’s largest creditor, the IMF tied its new Extended Credit Facility (ECF)—a $191M lifeline—to policy compliance.

The Timeline That Tells All

This table traces the IMF’s shadow campaign:

Key to scuttling CAR’s Bitcoin ambitions was ensuring that the Sango project — a blockchain-hub initiative from the CAR government to sell “e-residency” and citizenship for $60K in Bitcoin — did not proceed.

The Sango Project – coincidence or collusion?

In July 2022, CAR launched the Sango Project. It aimed to raise $2.5B (100% of GDP).

It failed catastrophically. By January 2023, only $2M (0.2% of target) was raised. While IMF reports cite “Technical obstacles with 10% internet penetration” as the reason for the failure, our analysis shows a different picture. Two factors scuttled the project.

1. Investor flight
2. A CAR Supreme Court ruling formally blocked the Sango project

However, on closer examination, both of these factors hint at IMF involvement.

Let’s take a closer look at the evidence.

Investor Flight

The IMF’s role in this investor flight is circumstantial but compelling. On May 4, 2022, the IMF expressed concerns about CAR’s bitcoin adoption, stating it raised major legal, transparency, and economic policy challenges. This statement, made before the Sango Project launch, highlighted risks to financial stability and regional economic integration, potentially deterring investors. Further, in July 2022, during a staff visit for the Staff-Monitored Program (SMP) review, the IMF noted “economic downturns due to rising food and fuel prices”, which could have compounded investor caution. Reports also mention that the IMF and COBAC warned of inherent risks in CAR’s crypto move, adding to the skepticism.

The timing of these IMF statements aligns with the observed investor flight, suggesting that their cautionary stance may have influenced perceptions. While circumstantial, the sequence of events suggests IMF influence as a respected financial institution in the investor community likely played a role in investor flight.

Supreme Court Ruling

On the surface, the Supreme Court ruling looks like an independent event, until we dig beneath the surface and find big question-marks over the independence of CAR’s judiciary, a country that itself ranks 149/180 on its Corruption Perception Index (extremely low).

As mentioned, one week after CAR announced its Bitcoin strategy, the IMF reported “concerns”, including risks to financial stability, transparency, anti-money laundering efforts, and challenges in managing macroeconomic policies due to the volatility. (Bloomberg, 4 May, 2022)

On 29 Aug 2022, 117 days later, the Supreme Court of CAR ruled that the Sango project was illegal. For context, the Supreme Court which forms part of CAR’s judiciary is described by international transparency bodies such as Gan Integrity as one of the most corrupt institutions in the country, with evidence pointing to inefficiency, political interference, and likely influence from bribes or political pressure.

The Sango project’s collapse became the IMF’s Exhibit A: “Proof Bitcoin can’t work in fragile economies.” But the reality was, the IMF’s consistent expression of “concerns” created the environment where the project was structurally undermined in advance, so that this conclusion became possible.

5,200 miles away, in the small nation of Bhutan we see the stark contrast of the successful Bitcoin rollout that was possible without IMF’s “involvement”.

The Unspoken Conclusion: Bitcoin’s Resilience Beyond Borders

CAR’s reversal wasn’t about Bitcoin’s viability. It was about raw power. The IMF weaponized regional banking unions (CEMAC), starved CAR of capital, and leveraged a $191M loan to extinguish the threat of financial sovereignty. When the Sango Project struggled—the trap snapped shut.

Yet this defeat reveals Bitcoin’s enduring power. Notice what the IMF didn’t destroy:

• Nigeria’s Bitcoin remittances still bypass dollar corridors, saving millions in fees.

• Kenya’s BTC-powered trade flourishes without IMF approval.

• El Salvador keeps stacking BTC despite 221 mentions of Bitcoin in loan conditions

The pattern is clear: Where grassroots adoption takes root—Bitcoin survives. But for countries announcing top-down Bitcoin manifestos who have large IMF loans, all 4 have met with crushing levels of resistance: El Salvador, CAR, Argentina and now Pakistan.

CAR’s outstanding $115.1 million IMF loan balance made it vulnerable to heavy IMF pressure. In nations without IMF loans such as Bhutan, Bitcoin slips through the IMF’s grip. Every peer-to-peer payment, every Lightning transaction, erodes the old system’s foundations.

The IMF won the CAR round. But the global fight for financial sovereignty is just beginning.

2. Argentina’s $45 Billion Bitcoin Adoption Roadblock

If CAR was thwarted in its Bitcoin plans, Argentina never made it to the start line. Precampaign rhetoric from President Milei suggested big things were in store for Bitcoin. Yet nothing materialized. Was this just a politician’s rhetoric fizzling out post-election, or was something else at play? This section pulls back the lid on what really happened to Argentina’s aborted Bitcoin aspirations.

Understanding how Bitcoin adoption is going, is like assessing whether a rocket is going to reach escape velocity: we must look at both the thrust and drag factors.

I’m an optimist: I believe Bitcoin will win: it is so clearly a better solution to the broken money legacy system we currently have. But I’m also a realist: I think most people underestimate the strength of entrenched forces which oppose Bitcoin.

When I was running my tech company, we encountered the same thing. Our technology was 10x better, faster and more cost effective than the legacy system we eventually replaced. But they didn’t relinquish their incumbent monopoly easily!

What happened in Argentina?

When libertarian Javier Milei was elected Argentina’s president in November 2023, many Bitcoin advocates cheered. Here was a leader who called central bankers “scammers,” vowed to abolish Argentina’s central bank (BCRA), and praised Bitcoin as “the natural reaction against Central Bank scammers.” The case became a litmus test for whether Bitcoin could gain mainstream acceptance through government adoption rather than grassroots growth.

Source: Coinsprout. 14 Aug 2023

Yet eighteen months into his presidency, Milei’s Bitcoin vision remains unfulfilled. The reason? A $45 billion leash held by the International Monetary Fund.

The IMF’s Bitcoin Veto in Argentina

The constraints had already been put in place by the time of Milei’s election. On 3 March, 2022, Argentina’s previous government signed a $45 billion IMF bailout agreement. In the weeks following, details emerged that the agreement had contained an unusual clause: a requirement to “discourage cryptocurrency use.” This wasn’t a suggestion—it was a loan condition documented in the IMF’s Letter of Intent, citing concerns about “financial disintermediation.”

The immediate effect:

• Argentina’s central bank banned financial institutions from crypto transactions (BCRA Communication A 7506, May 2022)

• The policy remains enforced under Milei, despite his pro-Bitcoin rhetoric

Milei’s Pivot

After taking office, Milei:

✔ Slashed inflation from 25% monthly to under 5% (May 2024)
✔ Lifted currency controls (April 2025)
✔ Secured a new $20 billion IMF deal (April 2025)

But his manifesto’s flagship proposals—Bitcoin adoption and abolition of BCRA (Argentina’s Central Bank) — are conspicuously absent. The math explains why: Argentina owes the IMF more than any other nation, giving the Fund unparalleled leverage.

Yet there’s irony in Argentina’s case: while the IMF blocks official Bitcoin adoption, Argentinians are embracing Bitcoin anyway. Cryptocurrency ownership grew by 116.5% between 2023-2024 in South America.

Across the region, Argentina has the highest ownership rates, at 18.9%, a figure almost 3 times the global average, and which has surged as citizens hedge against high annual inflation of 47.3% (April 2025) — a quiet rebellion the IMF can’t control.

.

What Comes Next?

All eyes are on the October 2025 mid-term elections. If Milei gains legislative support, he may test the IMF’s red lines. But for now, the lesson is clear: when nations borrow from the IMF, their monetary sovereignty comes with strings attached.

Key Takeaways

• The IMF’s 2022 loan explicitly tied Argentina’s bailout to anti-crypto policies

• Milei has prioritized economic stabilization over Bitcoin advocacy, to maintain IMF support

• Parallels exist in El Salvador, CAR and now Pakistan revealing a consistent IMF playbook

• Argentinians are circumventing restrictions through grassroots Bitcoin adoption

3. El Salvador: A partial IMF-victory

When El Salvador made Bitcoin legal tender in 2021, it wasn’t just adopting a cryptocurrency—it was declaring financial independence. President Nayib Bukele framed it as a rebellion against dollar dominance and a lifeline for the unbanked. Three years later, that rebellion hit a $1.4 billion roadblock: the IMF.

The Price of the Bailout

To secure its 2024 loan, El Salvador agreed to dismantle key pillars of its Bitcoin policy. The conditions reveal a systematic unwinding:

1. Voluntary Acceptance Only
   Businesses are no longer required to accept Bitcoin (2021 mandate repealed). source

2. Public Sector Ban
   Government entities prohibited from Bitcoin transactions or debt issuance. This includes bans on tokenized instruments tied to Bitcoin. source

3. Bitcoin Accumulation Freeze
   All government purchases halted (6,000+ BTC reserve now frozen)
   Full audit of holdings (Chivo wallet, Bitcoin Office) by March 2025. source

4. Trust Fund Liquidation
   Fidebitcoin (conversion fund) to be dissolved with audited transparency. source

5. Chivo Wallet Phaseout
   The $30 incentive program winds down after surveys showed most users traded BTC for USD. source

6. Tax Payment Rollback
   USD becomes the sole option for taxes, eliminating Bitcoin’s utility as sovereign payment. source

Bukele’s Calculated Retreat

El Salvador’s compliance makes fiscal sense:

• The loan stabilizes debt (84% of GDP) as bond payments loom
• Dollarization remains intact (USD still primary currency)

Yet the backtrack is striking given Bukele’s 2021 rhetoric. The Chivo wallet’s low uptake  likely made concessions easier.

What’s Left of the Experiment?

The IMF hasn’t killed Bitcoin in El Salvador—just official adoption. Grassroots use persists:

• Bitcoin Beach (local circular economy) still operates, in fact thrives
• Tourism draws increasing numbers of Bitcoin enthusiasts

But without state support, Bitcoin’s role potentially shrinks to a niche tool rather than a monetary revolution, at least in the short term.

The Road Ahead

Two scenarios emerge:

1. Slow Fade: Bitcoin becomes a tourist curiosity as IMF conditions take full effect
2. Shadow Revival: Private sector keeps it alive despite government retreat

One thing’s clear: when the IMF writes the checks, it also writes the rules.

Key Takeaways

• IMF loan forced El Salvador to reverse 6 key Bitcoin policies
• Precedent set for other nations seeking IMF support
• Grassroots Bitcoin use may outlast government involvement

El Salvador made a lot of Bitcoin concessions. While arguably this doesn’t hurt El Salvador much, it sends a strong message to other LATAM nations such as Ecuador and Guatemala who were watching El Salvador and thinking of copying their playbook (until they checked the size of the IMF loan they had). So on net balance it was a partial IMF win, a partial El Salvador win. 

4. Bhutan: the IMF-free success story

We are now 2 years into Bhutan’s Bitcoin experiment. 

That means we now have some good data on how it has affected the economy. 

The IMF warned that nations embracing Bitcoin would destabilize their economy, be less effective at attracting foreign direct investment, and endanger their decarbonizing and environmental initiatives. It specifically voiced concerns over Bhutan’s “lack of transparency” with crypto-adoption.

What does the data say?

1. The bitcoin reserves have directly addressed pressing fiscal needs. “In June 2023, Bhutan allocated $72 million from its holdings to finance a 50% salary increase for civil servants”

2. Bhutan was able to “use Bitcoin reserves to avert a crisis as foreign currency reserves dwindled to $689 million”

3. Prime Minister Tshering Tobgay in an interview said that bitcoin also “supports free healthcare and environmental projects”

4. Tobgay also said their Bitcoin reserves helped in “stabilizing [the nation’s] $3.5 billion economy”

5. Independent analysts have now said that “this model could attract foreign investment, particularly for nations with untapped renewable resources”

Considering how the IMF analysis was not just wrong, but roughly 180° off target, it begs the question, were the IMF’s predictions ever based on data? 

5. Five reasons the IMF may fear Bitcoin

“Get all your friends, libertarians, democrats, republicans, get everyone to buy Bitcoin – and then it becomes democratized.” encouraged John Perkins ~ Bitcoin 2025

What if the IMF’s greatest fear isn’t inflation… but Bitcoin, and can Bitcoin Break the IMF/World Bank Debt Grip?

During my recent conversation with John Perkins (Confessions of an Economic Hit Man), something clicked. Alex Gladstein previously and brutally exposed how IMF “structural adjustments” did not eliminate poverty, but in fact enriched creditor nations. Perkins layered this with his own first-hand accounts. 

Perkins laid bare to me how the Global South is trapped in a cycle of debt—one designed to keep wealth flowing West. But here’s the twist: Bitcoin is already dismantling the playbook in five key ways.

1. Reducing Remittance Costs to Loosen the Debt Noose

Chris Collins’ Sculpture symbolically captures the debt noose

Remittances—money sent home by migrant workers—often make up a significant part of developing nations’ GDP. Traditional intermediaries such as Western Union charge fees as high as 5–10%. This acts as a hidden tax that drains foreign reserves. For countries like El Salvador or Nigeria, every remittance dollar that doesn’t flow into the country is a dollar their central bank must store to stabilize their currencies. Often this store of US dollars is provided by the IMF.

Bitcoin Changes the Game

With Lightning, fees drop to almost zero, and transactions settle in seconds. In 2021, El Salvador’s president Bukele optimistically predicted that bitcoin could save $400 Million in remittance payments. The reality has been there’s little evidence remittance payments using bitcoin have reached anywhere near that threshold. However the potential is clear: more remittances in bitcoin leads to higher dollar reserves, which leads to less need for IMF loans.

Little wonder the IMF mentioned Bitcoin 221 times in their 2025 loan conditions for El Salvador. They’d like to remain a relevant lender.

Bitcoin isn’t just cheaper for remittances—it bypasses the dollar system entirely. In Nigeria, where the naira struggles, families now hold BTC as a harder asset than local currency. No need for central banks to burn through dollar reserves. No desperate IMF bailouts.

The numbers speak for themselves:

• Pakistan loses $1.8 billion yearly on remittance fees—Bitcoin could save most of that
• El Salvador already saves $4M+ annually with just 1.1% Bitcoin remittance adoption

Adoption isn’t universal yet—only 12% of Salvadorans use Bitcoin regularly, while over 5% of Nigeria’s remittances flow through crypto. But the trend is clear: every Bitcoin transfer weakens the debt dependency cycle.

The IMF sees the threat. The question is: how fast will this silent revolution spread?”

Remittances totaled almost $21 billion in 2024, representing over 4% of Nigeria’s GDP

2. Evading Sanctions and Trade Barriers

Oil-rich Iran, Venezuela and Russia have had restricted USD access due to US sanctions in 1979, 2017 and 2022 respectively, resulting in the export of vastly fewer barrels per day of oil in each case.

Whether we agree with the ideologies of these nations or not, Bitcoin breaks this cycle. Iran already evades sanctions by using Bitcoin as a way to effectively “export oil”, whereas Venezuela has used Bitcoin to pay for imports, evading sanctions.

Iran is also able to bypass sanctions by monetizing its energy exports through mining. This avoids the IMF’s “reform-for-cash” ultimatums while keeping economies running.

The petrodollar’s grip weakens as Russia and Iran pioneer Bitcoin oil deals.

Another nation that has used Bitcoin to avoid the economic hardship caused by sanctions is Afghanistan, where humanitarian aid flows through using Bitcoin. NGOs like Code to Inspire bypassed Taliban banking freezes, and Digital Citizen Fund have used Bitcoin to deliver aid post-Taliban takeover, preventing families from starving.

Afghanistan’s “Code to Inspire” NGO uses Bitcoin donations, which cannot be intercepted by the Taliban, to train women to write software.

Though Bitcoin’s share of sanctioned trade is small—under 2% for Iran and Venezuela’s oil exports—the trend is growing.

Sanctions are a critical tool for geopolitical leverage, often supported by the IMF and World Bank through their alignment with major economies like the U.S. Sanctioned nations using Bitcoin reduces IMF control over financial flows while simultaneously threatening U.S. dollar dominance.

3. Using Bitcoin as a Nation State Inflation Shield

When nations like Argentina face hyperinflation, they borrow USD from the IMF to bolster currency reserves and stabilize their currency, only to face austerity or the enforced sale of strategic assets at a low price when repayments falter. Bitcoin offers a way out by acting as a global, non-inflatable currency that operates independently of government oversight, and which appreciates in value.

El Salvador’s experiment shows how Bitcoin can reduce dollar dependency. By holding BTC, nations can hedge against currency collapse without IMF loans. If Argentina had allocated just 1% of its reserves to Bitcoin in 2018, it could’ve offset the peso’s 90%+ devaluation that year, sidestepping an IMF bailout. Bitcoin’s neutrality also means no single entity can impose conditions, unlike IMF loans that demand privatization or unpopular reforms.

Bitcoin doesn’t have debt-leverage or a long history of the IMF to draw on when encouraging adoption. However, due to the Lindy Effect (see chart below), each passing year Bitcoin becomes a more viable alternative.

Lindy Effect: The longer something has been successful, the more likely it is to continue being successful. Bitcoin’s longevity strengthens its potential to disrupt

4. Bitcoin Mining: Turning Energy into Debt-Free Wealth

Many developing nations are energy-rich but debt-poor, trapped by IMF loans for infrastructure like dams or power plants. These loans demand cheap energy exports or resource concessions when defaults hit. Bitcoin mining flips this script by turning stranded energy—like flared gas or overflow hydro—into liquid wealth without middlemen or transport costs.

Paraguay’s earning $50 million yearly from hydro-powered mining, covering 5% of its trade deficit. Ethiopia made $55 million in 10 months. Bhutan’s the standout: with 1.1 billion in Bitcoin (36% of its $3.02 billion GDP), its hydro-powered mining could produce $1.25 billion annually by mid-2025, servicing its $403 million World Bank and $527 million ADB debts without austerity or privatization. Unlike IMF loans, mined Bitcoin appreciates in value and can be used as collateral for non-IMF borrowing. This model—monetizing energy without surrendering assets—scares the IMF, as it cuts their leverage over the energy sector.

Bhutan’s Prime Minister, Tshering Tobgay, calls Bitcoin a “strategic choice to prevent brain drain”

5. Grassroots Bitcoin Economies: Power from the Ground Up

Bitcoin is not just for nations—it’s for communities. In places like El Salvador’s Bitcoin Beach or South Africa’s Bitcoin Ekasi, locals already use BTC for daily transactions, savings, and community projects like schools or clinics. These circular economies, often sparked by philanthropy, aim for self-sufficiency. In Argentina, where inflation often tops 100%, 21% of people used crypto by 2021 to protect wealth. If scaled up, these models could reduce reliance on national debt-funded programs, which is of course the last thing the IMF want.

Hermann Vivier, founder of Bitcoin Ekasi, says his community was inspired by El Salvador’s Bitcoin Beach to replicate their Bitcoin circular economy in S.Africa

Conclusion 

By fostering local resilience, Bitcoin undermines the IMF’s “crisis leverage”. Thriving communities don’t need bailouts, so the IMF can’t demand privatization in exchange for loans. In Africa, projects like Gridless Energy’s – which has already brought 28,000 rural Africans out of energy poverty using renewable microgrids tied to Bitcoin mining – cut the need for IMF-backed mega-projects. If thousands of towns adopt this, dollar shortages would matter less, and trade could bypass USD systems. 

While the IMF occasionally engages in spreading misinformation about Bitcoin energy consumption and environmental impact as a way to obstruct adoption, its preferred and much more powerful tool is simply to use the financial leverage it has over IMF-indebted nations to “strongly encourage” compliance with its Bitcoinless vision of the future. 

The IMF fought Bitcoin adoption in El Salvador, CAR, and Argentina. Now they are fighting Pakistan’s intention to mine Bitcoin as a Nation State. Scaling these grassroots efforts is likely to force the IMF’s hand to crack down more and more transparently.

Above: Children from South Africa’s poorest villages learn to surf via the Bitcoin Ekasi township project

Grassroots Bitcoin economies empower communities to thrive without IMF bailouts. And people-power is needed to find new innovative ways to overcome the IMF’s counterpunch.