Authored by Conor Gallagher via NakedCapitalism.com,

As the US goes down the trade war route with China, it’s looking for others to join the party. There are numerous reasons to believe the entire project will go down in flames like the effort to isolate Russia.

What of its Project Ukraine partner in crime, the EU? Is it game for another ride at the imperial rodeo? On April 16 the Wall Street Journal reported some of the more unsurprising recent news: that the U.S. plans to use global tariff negotiations to isolate China. The Irish Times on the same day had the scoop that any Washington-Brussels deal over tariffs will likely involve an agreement for the bloc to fully join the US in the economic war against China, which the EU is open to, although it has some qualms about other aspects of the Trump team’s proposed terms:

They suggest that the overall US strategy is to decouple from China, and that any country who wishes to have a trade deal with the US will also have to distance itself from Beijing…

At present neither US beef nor chicken can gain entry to the EU market because of strict EU rules – something which has repeatedly been complained of by the Trump administration. But senior Irish and EU sources dismissed any chance that the EU would change its standards on, for example, hormone-treated beef and chlorine-washed chicken.

The EU is also standing firm —for now— on Washington’s demands it abandon its efforts to regulate American tech behemoths operating in Europe. There are not, however, strong objections to the demands on China.

The EU was already heading down this path anyway with its recent “de-risking” campaign. In 2023, Italy abandoned its lackluster participation in Beijing’s Belt and Road Initiative. Germany faces an internal battle over its China policy, but incoming Chancellor Friedrich Merz is among those with a more hawkish tone. Still, it’s more likely that he and his coalition will continue the untenable balance of political hostility toward Beijing while maintaining the economic relationship. That arrangement favors some of Germany’s biggest companies, which continue to make significant amounts of money in China. Meanwhile, the US, European Atlanticists, and workers will push for a tougher policy. In the end, it could be decided by market developments in China. Should Germany’s Big Three auto companies continue on the path to irrelevance in the Chinese market and be overtaken by Chinese companies elsewhere, that would drive Berlin to embrace a more confrontational policy.

At the EU level, Ursula von der Leyen and many others are fully aboard the derisking train.

EU member states added new instruments to Ursula’s toolbox during her first five-year term, such as the Foreign Subsidies Regulation, International Procurement Instrument, an Anti-Coercion Instrument, the Corporate Sustainability Due Diligence Directive, the EU Critical Raw Materials Act, and the NZIA (Net-Zero Industry Act), which aims for the EU to process 40 percent of the strategic raw materials it uses by 2030. Taken together, they mean Ursula can do serious damage to trade with China if she convinces herself —or Washington does— it’s the best course of action.

The EU is making noise about cozying up to China as a counterweight to the Trump’s hardball negotiation tactics, but we’ve seen this before, and it’s best to wait and see. The EU bigwigs are not going to Beijing until late July, and both Washington and Brussels aim to iron out a deal before then ahead of the end of Trump’s 90-day tariffs pause. That reprieve was announced on April 9, which means a deadline of July 8.

Say the EU more fully commits to this path of “de-risking” from China. What will it mean for the bloc? And what knock on effect will it have on the US, which has increasingly been the recipient of transshipped Chinese goods through the EU?

In an August paper from the Peterson Institute for International Economics Mary E. Lovely and Jing Yan lay this out in detail. Aptly titled, “While the US and China decouple, the EU and China deepen trade dependencies,” the following chart tells a big chunk of the story:

What does this mean? Here’s the Conversable Economist to decipher:

In short, these patterns seem to suggest that imports not coming from China to the US economy are, in a substantial way, ending up in the EU economy instead. This pattern suggest that if the goal of US trade policy is to reduce China’s footprint in the global economy, it is unlikely to do so.

Well, unless Washington can get Brussels to once again shoot itself in the foot. What is the EU importing from China? Gone are the days when it mostly consisted of textiles, shoes, and furniture. They are now pharmaceutical ingredients, chemicals, critical raw materials, and machinery.

Disrupting that trade would be another death blow to European industry. As a recent report for the European Commission notes:

Member States with more industry-oriented economies typically exhibit higher exposure to Chinese imports. This is the case for Member States such as the Czech Republic’s (33% of total Czech extra-EU imports originate in China), Romania, Poland, Slovenia, Slovakia and Germany, underlining the important role of China as source of inputs for EU industry.

There would likely be product shortages as China is the main source of the EU’s “strategic product dependencies.” It is the primary source of 64 such products out of a total of 204 identified by the EU.

The report for the European Commission notes:

For some specific products, the EU’s import concentration on China is at very high levels of 90% and more (e.g. certain pharmaceuticals,chemicals, raw materials). Together, the wide scope in the nature and type of dependencies (“where to start?”) and deep levels of reliance on China in specific cases (“how to diversify?”) underline the complexity of de-risking import dependencies from China.

Indeed, the EU is completely reliant on China for magnesium, which is used in aerospace, automotive, electronics, and other industries for components like aircraft parts, car frames, mobile phone housings. Problem is that over 94% of the world’s magnesium export production now comes from Chinese producers. Russia makes up a big chunk of the rest. Oops.

And before Beijing threw in the towel on its zero-Covid policy, it was leading to shortages in the EU of medicines, ranging from children’s fever reducers to eye drops and antibiotics. About 80 percent of active pharmaceutical ingredients used in Europe and about 40 percent of finished medicines sold in Europe come from China or India. The EU joining the economic war against China could see a return to those days of shortages:

[China] is a major producer of older unbranded medicines that are routinely used in hospitals. Antibiotics, for example, have become increasingly outsourced to Asia, with China dominating. The country has cornered the market for the key ingredients that go into making penicillin. China also is a key exporter in other categories such as blood pressure drugs or painkillers.

Naturally, the EU plan to fix this involved “reviving investment and boosting access to affordable drugs,” as well as requiring companies to hold bigger stocks of medicines deemed essential, but did nothing to fix the underlying problem, and that pretty well sums up the story across various industries. The problem is that neoliberal motivations planted the seeds of China’s dominance today (and good for Beijing for handling those gifts responsibly).  Now Western officials say they want the jobs and industry back, and in a sense they do. China has moved too far up the value chain and is no longer under their thumb. But that does not mean industrial manufacturing that left will be making a return to Detroit and Dusseldorf, Toledo and Turin.

That’s because it is not possible to simultaneously embrace neoliberalism while pursuing an industrial policy, and that’s not the goal anyways. Instead, the very same forces that shipped Western industry East are exploiting anger over those lost jobs and living standards and directing it toward China for “stealing.” And all the big money thinks it can get supply chains up and running via “friend shoring” that excludes China and runs seamlessly from other polluted slave labor centers to their garden doors.

Why would the EU be up for another economic shootout at the US’ side?

Aside from the oft-cited reasons of its misleadership class, racial motivations, and power delusions, the US does remain the most important economic partner for the bloc — just not for essential items:

At an aggregate level, the US is still the EU’s main economic partner as of today (Figure 4).8 Only for imports of goods, China stands out as more important for the EU in relative terms than the US. In other dimensions (goods exports, services imports and exports as well as inward and outward FDI), the EU-US relation is significantly more intense. A similar picture exists from the perspective of the US, with the EU as a more important economic partner across all dimensions considered.

Prior to her humiliating 2023 trip to Beijing, von der Leyen elaborated on her “de-risking” strategy in a speech on EU-China relations at the Mercator Institute for China Studies and the European Policy Centre. Here’s a key excerpt:

The starting point for this is having a clear-eyed picture on what the risks are. That means recognising how China’s economic and security ambitions have shifted. But it also means taking a critical look at our own resilience and dependencies, in particular within our industrial and defence base. This can only be based on stress-testing our relationship to see where the greatest threats lie concerning our resilience, long-term prosperity and security. This will allow us to develop our economic de-risking strategy across four pillars. The first one is: making our own economy and industry more competitive and resilient.

About that stress-testing. It’s strange that the trans-Atlantic relationship is never put to the same test as with Moscow and Beijing.

A Risky Bluff

At first glance it would appear that like in the case of Project Ukraine the EU would be due to suffer much more than the US in a coordinated economic war against Beijing due to Europe’s heavier reliance on China.

That might not be the case however. That’s because while the US might simply be masking its reliance on Beijing. The Mercator Institute for China Studies:

EU dependencies have since 2016 further concentrated on China, while US have diversified away – likely in part a consequence of the Trump Administration’s hawkish approach to China after entering office in 2016 and the start of trade measures in 2018. The US has seen its trade dependencies on Vietnam and Mexico increase, but they, in turn, have become more dependent on imports from China. This raises the question in how an increase in indirect dependencies could undercut the benefits of any decrease in direct dependencies.

And if Washington hopes for its economic war to succeed, it needs —and is actively pursuing as the above-mentioned WSJ article shows— other countries to join it against Beijing.

That’s when potential shortages could really start to bite (depending on China’s response). Here’s another chart from the Peterson Institute for International Economics:

And again from the Conversable Economist:

Indeed, given that imports often pass through the production process in several countries on their way to a final product, it’s plausible that some Chinese exports are going to Mexico and the EU, being incorporated into other products, and then ending up as US imports.

Let’s use the example of pharmaceuticals. US imports from the EU have exploded in recent years:

The US trade deficit with the EU in pharmaceuticals (NAICS definition, US data) is $120b — also 4x the deficit in autos …

And it clearly exploded around the time of the Tax Cuts and Jobs Act (the Trump-Ryan tax reform)

2/3 pic.twitter.com/nYEJ5rqPyL

— Brad Setser (@Brad_Setser) April 15, 2025

And we now have Trump threatening the EU with tariffs — including on pharmaceuticals — in order to get Brussels to engage in economic war against Beijing. If the EU acquiesces — or if it doesn’t and Trump follows through with his threats — Americans could end up paying even more exceptional prices for drugs. Here’s why:

Data from 2021 show that approximately 95 percent of vitamin B1 and its derivatives imported into the EU came from China. Over 96 percent of the heterocyclic compounds with an unfused pyrazole ring, APIs used in many antibiotics, are also imported by the EU from China. An even higher dependency can be found for chloramphenicol and its derivatives, reaching over 98 percent. Chloramphenicol is a key substance for a wide-spectrum antibiotic used for severe infections that cannot be treated with other antibiotics.

Moreover, even when the active ingredients or the final drugs are manufactured in Western countries or in India, production often depends on imports of raw materials from China. For example, India imports about 70 percent of APIs from China, including those necessary for the production of antibiotics, paracetamol and drugs for diabetes and cardiovascular diseases. In fact, compared to India, China is able to produce APIs 20-30 percent cheaper, depending on the product, thanks to the availability of cheap raw materials. In addition to the production of the APIs, China is also a key supplier of excipients, meaning substances that improve, for example, the absorption, taste or physical properties of the drug.

Roberta Pizzocaro, president of Olon, a Milan-based company that makes around 300 different pharmaceutical ingredients that go into finished drugs, tells Politico the following:

Many pharmaceutical ingredients are now only produced in Asia and some exclusively in China, said Pizzocaro. She said that her company could last “some time” on existing stocks, but it wouldn’t be long before shortages started to bite.

Perhaps it isn’t wise for nations to be so reliant on one country for so much of the pharmaceutical supply chain? The fact the EU does not have fallback options would seem to rule out launching a trade war, but to believe common sense will carry the day would require ignoring all the self destruction the leadership class repeatedly inflicts on its own citizens.

Northrop Grumman shares plunged in premarket trading—much like the U.S. MQ-9 drones downed by Iran-backed Houthis—after the aerospace and defense contractor posted dismal first-quarter results and slashed its 2025 earnings forecast.

Northrop posted a profit of $481 million, or $3.32 per share, for the first quarter, down from $944 million, or $6.32 per share, in the same quarter one year ago. The staggering 47% per share profit drop was primarily due to loss provisions tied to the first production batch of B-21 stealth bombers. 

Northrop explained more in an earnings release:

During the first quarter of 2025, we recognized a pre-tax loss of $477 million ($397 million after-tax or $2.74 per diluted share) across the five low-rate initial production (LRIP) options on the B-21 program at Aeronautics Systems. The loss largely relates to higher manufacturing costs primarily resulting from a process change made by the company to enable an accelerated production ramp, as well as increases in the projected cost and quantity of general procurement materials.

Sales for the quarter slid about 7% to $9.47 billion, missing the Bloomberg consensus projection of $9.93 billion. 

Here’s a snapshot of Northrop’s weaker-than-expected results across most divisions, with a significant miss on EPS, free cash flow, and aeronautics margins… 

EPS: $3.32 vs. $6.32 last year; missed estimate of $6.28

Revenue: $9.47B, down 6.6% y/y; missed estimate of $9.93B

Free Cash Flow: -$1.82B; well below estimate of -$599.3M

CapEx: $256M, down 5.2% y/y; missed estimate of $310.7M

Backlog: $92.8B

Segment Performance:

• Sales: $2.81B, down 5.2% y/y; missed $3.12B estimate

• Operating Loss: -$183M vs. $297M profit y/y; estimate was +$300.1M

Defense Systems:

• Sales: $1.81B, up 28% y/y; slightly missed $1.86B estimate

• Operating Income: $179M, +1.1% y/y; in line with $180.4M estimate

Mission Systems:

• Sales: $2.81B, up 5.6% y/y; beat $2.77B estimate

• Operating Income: $361M, down 4.5% y/y; missed $398M estimate

Space Systems:

• Sales: $2.57B, down 30% y/y; missed $2.71B estimate

• Operating Income: $283M, down 15% y/y; missed $293.5M estimate

Management also attributed the sales miss to a “previously disclosed wind-down of work on certain Space Systems programs,” adding, “These decreases were partially offset by higher sales at Mission Systems and Defense Systems.” 

For the full year, Northrop reduced its outlook for operating income from a previous forecast but kept revenue guidance: 

• Adjusted EPS forecast: Cut to $24.95–$25.35 from $27.85–$28.25; below Bloomberg consensus of $28.12

• Revenue forecast: Maintained at $42.00–$42.50 billion; in line with estimate of $42.32 billion

In premarket trading, Northrop shares plunged as much as 10%. If losses extend into the cash session, it would mark the stock’s worst day since the early days of the Covid. Should losses exceed -10.15%, it would be the steepest single-day drop since October 10, 2008, when shares fell 13.45%.

Goldman’s Noah Poponak, Anthony Valentini, and Connor Dessert provided clients with their first take on the earnings report:

Bottom Line: NOC 1Q25 results are below consensus. The company recorded a $(477)mn pre-tax loss in Aeronautics for the five LRIP options on the B-21 program. Total company segment EBIT excluding that charge is still below consensus. The company reiterated 2025 revenue guidance, and reiterated free cash, while reducing segment EBIT and EPS.

Details: 1Q25 fully adjusted EPS of $6.06 compares to FactSet consensus at $6.26 and our $6.53. Reported EPS is $3.32. Fully adjusted segment EBIT of $1.05bn is 3% below consensus. Revenue of $9.5bn is 5% below consensus with a slight beat in MS, but all other segments missed by MSD%+. The adjusted segment operating margin of 11.0% is 10bps below our estimate and 20bps below consensus. All segments beat on margin except Mission Systems, which missed by 160bps. NOC updated its 2025 guidance, including revenue of $42.0-$42.5bn (reiterated, vs. consensus at $42.3bn), segment operating income of $4.20-$4.35bn ($4.65-$4.80bn prior, vs. consensus at $4.82bn), EPS of $24.95-$25.35 ($27.85-$28.25 prior, vs. consensus at $28.11), and free cash flow of $2.85-$3.25bn (reiterated, vs. consensus at $3.10bn).

Our $527 12-month price target is based on a target relative (S&P 500) CY25E P/E of 1.1X. Key risks include (1) Geopolitics, (2) DoD spending priorities, (3) capital deployment, and (4) margins.

Despite the earnings miss and guidance cut, CEO Kathy Warden stated in a press release, “Global demand for our products remains strong, which is reflected in our record first quarter backlog, and we are making significant progress on our key programs.” 

*  *  *

Top products last week at ZeroHedge Store:

– ZeroHedge Waxed Canvas Hat

– ZeroHedge Shirt

– IQ Biologix Astaxanthin (extremely potent anti-inflammatory)

– ZeroHedge Multitool

– Anza SWAT Micarta Blued (made in the USA)

US equity futures are higher, attempting to pare back some of the sharp losses from Monday’s prior session and extending yesterday’s late day buying where the S&P found support at the 5,100 level; according to JPM, there is some optimism around a trade deal with either Japan or India and a deal is a likely milestone for stocks to finally bottom. As of 8:00am ET, S&P and Nasdaq futures are are up 0.8%, off session highs of 1.3%, with Mag 7 and Semis all higher with TSLA earnings after the close. This week 25% of the S&P reports with implied vols among the highest since peak-COVID. Chinese tech names are reportedly considering US listings despite “market ructions”, via Bloomberg citing sources; Walnut Coding, CloudSky, Zaihui & Zhonghe said to be considering IPOs in the US. The yield curve is twisting flatter and USD seeing a bid following 4 days of losses. The commodity space is mostly higher led by Energy but gold remains the top story as it set a new ATH rising above $3500 before easing back. The macro data focus is on regional Fed activity indicators (Philly non-mfg and Richmond Fed at 8:30am/10:00am ET), but the more impactful data is tomorrow’s Flash PMI prints. We also get a slew of Fed speakers (see below) alongside numerous heavyweight earnings including Tesla.

In premarket trading, Magnificent 7 stocks are rising (Tesla +0.7%, Alphabet +0.7%, Nvidia +0.92%, Amazon +0.99%, Apple +0.82%, Microsoft +0.7%, Meta +0.6%). Solar stocks gain after the US set new duties as high as 3,521% on solar imports from four Southeast Asian countries (First Solar +5.8%, Sunnova Energy +1.2%, SolarEdge Technologies +3%, Array Technologies +1.9%, Enphase Energy +2.3%). 3M (MMM) climbs 3% after the company stood by its full-year financial guidance while acknowledging new risks from the unfolding trade war. Here are some other notable premarket movers:

• Appian (APPN) rises 2% after hiring Srdjan Tanjga as CFO. Tanjga is leaving MongoDB to take the job.
• Calix (CALX) soars 14% after the computer services company reported quarterly results that beat expectations and provided an outlook that is above the analyst consensus estimate.
• CoreWeave (CRWV) rises 2% as Jefferies and Barclays initiate the software company at overweight, citing AI compute reliability and first mover advantage.
• Danaher (DHR) climbs 3% after the life-sciences firm reported quarterly profit that beat estimates.
• Halliburton (HAL) falls 4% after the energy and engineering services company reported adjusted earnings per share and revenue for the first quarter that fell year over year.
• Kimberly-Clark (KMB) slips 2% after the consumer-products company reported quarterly organic sales that disappointed and said the company faces about $300 million in incremental costs in 2025 due to tariffs.
• Northrop Grumman (NOC) falls 8% after the defense contractor cut its adjusted earnings per share guidance for the full year.
• StoneCo (STNE) rises 3% as Citi upgrades the the fintech to buy on its progress toward becoming a small bank from a payment firm.
• Synchrony Financial (SYF) rises 3% after the financial services firm reaffirmed its net revenue forecast for the full year.
• Verizon Communications Inc. (VZ) declines 3% after posting a larger-than-expected decline in mobile-phone subscribers in the first quarter, the result of heavy competition and less spending by government agencies.
• Zions Bancorp (ZION) falls 3.8% after first-quarter earnings missed the average analyst estimate. Analysts note that current economic uncertainty is weighing on the company’s outlook.

While S&P futures have managed a rebound contracts added 0.9%, the conversation on Wall Street still focuses on the implications of any White House effort to replace Powell. Concerns that Trump may be preparing to fire Powell have added to unease for traders already grappling with the turmoil unleashed by the president’s tariff onslaught. Trump’s policies and his broadsides against the Fed have forced a reappraisal of the dollar and Treasuries as havens in times of stress, although the collapse in the dollar has been as large as when the Fed launched QE, so if Powell will not ease, Trump will get his hit to the dollar using other means.

“With increasing rhetoric from the administration admonishing the Fed to cut rates and the markets entertaining intensifying discussions about the possibility of replacing the Fed chair, we don’t expect a rush back into the market from abroad,” John Velis, a strategist at Bank of New York Mellon, said of US bonds. “The haven status of such assets is increasingly in question.” 

Attention later Tuesday will shift to Tesla, which reports first-quarter earnings after the market close; its stock has dropped about 44% this year as the massive post-eleciton rally has fully unwound. Elon Musk’s role in the federal government has contributed to a global sales slump.

In Europe, the Stoxx 600 index dropped as traders returned from the Easter break. Novo Nordisk A/S slumped almost 10% on concern it faces tougher competition from Eli Lilly & Co.’s experimental weight loss pill. Here are the biggest movers Tuesday:

• Precious metals and mining stocks advance as concerns over the US economy and President Donald Trump’s criticism of the Federal Reserve sent gold to a record above $3,500 an ounce
• L’Oreal shares gain as much as 2.6% after the cosmetics maker’s like for like sales growth exceeded expectations. Analysts pointed to a strong performance in the beauty company’s Chinese market
• Pernod Ricard shares rise as much as 3% after being upgraded by Barclays, with analysts arguing risk is skewing to the upside, particularly in the company’s key Chinese growth market
• OVH Groupe shares rise as much as 11%, hitting their highest in over two years, after being upgraded by analysts at Stifel, who argue the cloud computing company is facing no clear headwinds
• Biotage gains as much as 58% after private equity firm KKRa made a take-private offer for Swedish life sciences group for 11.6 billion kronor ($1.2 billion), a 60% premium versus last week’s close
• Novo Nordisk shares fall as much as 9.8% in their first day of trading since Wednesday after the release of strong data from a rival obesity pill developed by US peer Eli Lilly
• Orsted falls as much as 9.6% after being downgraded to underperform at Bank of America. The broker cites a surge in US regulatory uncertainty facing the Danish wind energy firm’s offshore projects
• Equinor shares fall as much as 3.1% after RBC downgraded shares to underperform from sector perform, and the Norwegian energy group halted the construction of its US offshore wind farm Empire Wind
• DCC shares drop as much as 1.5%, giving up initial gains, after agreeing to sell its healthcare division to funds advised by Investindustrial Advisors at an enterprise value of £1.05 billion
• Aryzta drops as much as 4.9% on Tuesday, snapping a run of six straight daily gains that had last week driven the stock to its highest since Oct. 2018, after reporting first-quarter results

Earlier in the session, Asian stocks were steady as traders await outcomes of US tariff negotiations with key trading partners, while fresh concerns about the independence of the Federal Reserve also kept a lid on sentiment. The MSCI Asia Pacific Index swung in a narrow range. Taiwan’s benchmark fell more than 1% while Indonesia and Singapore led gainers. Key gauges in Hong Kong climbed, while Australia’s was little changed as trading resumed  following a four-day weekend. Asian stocks overall have held up well relative to big losses in New York, with market watchers increasingly discussing the waning dominance of the US exceptionalism trade. 

In currencies, the Bloomberg Dollar Spot Index is little changed. The yen is the best performing G-10 currency, rising 0.3% against the greenback although couldn’t sustain an earlier break past 140. “Market volatility though is driving some haven flow into the yen,” said Shoki Omori, chief desk strategist at Mizuho Securities Co. in Tokyo. “Reports the BOJ sees little need to change their stance on rate hikes are also aiding sentiment in the currency, while denting the dollar.” 

In rates, treasuries are mixed with underperformance seen in shorter-dated maturities, pushing US two-year yields up 3 bps to 3.79% while long-dated tenors have plied narrow ranges, flattening 2s10s curve by nearly 4bp, 5s30s by more than 2bp. German yields fall across the curve with two-year borrowing costs touching the lowest since 2022. The gilt curve steepens with 2s10s widening nearly 5bps. The Treasury auction cycle begins with $69 billion 2-year at 1pm New York time and includes $70 billion 5-year and $44 billion 7-year sales Wednesday and Thursday. WI 2-year yield near 3.78% is about 11bp richer than March auction, which stopped through by 0.3bp. 

In commodities, oil prices advanced, with WTI climbing 1.4% to $64 a barrel. Bitcoin rises 1.3% and above $88,000. Spot gold earlier hit $3,500 for the first time before paring gains to around $3,460. 

Looking at today’s calendar, we get the April Philadelphia Fed non-manufacturing activity (8:30am) and Richmond Fed manufacturing index (10am). Fed speaker slate includes Jefferson (9am), Harker (9:30am), Kashkari (1:40pm), Barkin (2:30pm) and Kugler (6pm)

Market Snapshot

• S&P 500 mini +1%
• Nasdaq 100 mini +1%
• Russell 2000 mini +1%
• Stoxx Europe 600 -0.3%
• DAX -0.2%
• CAC 40 -0.4%
• 10-year Treasury yield +1 basis point at 4.42%
• VIX -1.7 points at 32.17
• Bloomberg Dollar Index little changed at 1216.69
• euro -0.1% at $1.1498
• WTI crude +1.5% at $64.05/barrel
• Top Overnight News
• The Trump administration intends to press India to give online retailers such as Amazon and Walmart full access to its $125bn ecommerce market, as part of a trade deal being negotiated under the threat of increased tariffs. FT
• Talks between the US and Thailand over the Trump administration’s tariff plans were postponed after Washington asked the Southeast Asian nation to address “issues” related to trade, officials said. BBG
• WSJ’s Timiraos writes “Trump Is Laying the Groundwork to Blame Powell for Any Downturn” and is signalling he will blame the Fed for any economic weakness resulting from his trade war if it doesn’t cut rates soon.
• US Securities and Exchange Commission announced Paul Atkins was sworn in as chairman
• Senior House Republican, Frank Lucas, defends Powell and Fed independence amid Trump attacks. Axios
• Chinese trade held up in April despite Trump’s tariffs, data showed, as Trump spared many electronics and paused levies against most countries. BBG
• China’s curbs on shipments of critical metals to the US are already having a visible effect, with exports of the minerals plunging and shipments of several critical items halting entirely in March, customs data shows. SCMP
• A Japanese delegation will deliver a letter from PM Shigeru Ishiba to Xi Jinping this week, as Tokyo strives to avoid China-US crossfire. BBG
• When Japanese Finance Minister Katsunobu Kato meets his U.S. counterpart Scott Bessent in Washington this week, the yen is shaping up to be a major topic of discussion, though sources say Tokyo will push back against any request to boost its currency. RTRS
• The BOE’s Megan Greene said US tariffs may be more of an disinflationary risk to the UK than inflationary. BBG
• India’s Prime Minister Narendra Modi and U.S. Vice President JD Vance on Monday hailed the “significant” progress made in trade talks between the two sides during Vance’s visit to India. CNBC

Tariffs/Trade

• US Commerce Department finalized dumping duties ranging from 6.1% to 271.28% on solar cells imported from Cambodia, Malaysia, Thailand and Vietnam.
• US Trade Representative’s statement confirmed that USTR Greer and India’s Ministry of Commerce and Industry have finalised terms of reference to lay down a roadmap for negotiations on reciprocal trade and stated that India’s constructive engagement so far has been welcomed.
• South Korea’s Acting President Han said he expects South Korea-US trade talks this week to pave the way towards a mutually beneficial solution.
• Reuters reports that “Japan sees little scope for grand deal on yen in talks with US” at this week’s Washington meeting of Finance Ministers. Sources report that Japan will push back against any request to boost its currency. Japan reportedly sees little scope for direct action i.e. FX intervention or an immediate BoJ hike, via Reuters citing sources. The meeting is likely to focus, from a Japanese perspective, on getting further insight into Washington’s intentions.

A more detailed look at global markets courtesy of Newquawk

APAC stocks traded mixed with most indices rangebound despite the sell-off on Wall St where stocks and the dollar were pressured after President Trump renewed his criticism against Fed Chair Powell. ASX 200 was little changed as strength in mining stocks and gold producers were offset by losses in tech, energy and healthcare, while price action was also hampered by the absence of any key data. Nikkei 225 struggled for direction and swung between gains and losses in relatively contained parameters amid a choppy currency and slightly higher Japanese yields. Hang Seng and Shanghai Comp conformed to the mixed picture with the Hong Kong benchmark marginally pressured on return from the Easter weekend, while the mainland was kept afloat amid earnings and positive EV-related updates.

Top Asian News

• Japanese Finance Minister Kato said finance authorities are to ask banks to help support financing at small companies affected by US tariffs, while he is arranging to hold a meeting with US Treasury Secretary Bessent and plans to discuss forex issues.
• Japan Keidanren Business Federation Chief Tokura says wants FX to stabilise as much as possible; rapid FX fluctuations are not desirable for the economy, in response to a question on USD/JPY moving below 140.00.

European bourses (STOXX 600 -0.6%) opened mostly and modestly lower and have traded sideways throughout the morning thus far. Sentiment in Europe today is fairly gloomy, playing catch-up to the hefty losses seen in the US on Monday (reminder: Europe was shut on account of Easter Monday). European sectors hold a negative bias, in-fitting with the risk tone. Real Estate takes the top spot, benefiting from the  relatively lower yield environment (in Europe). Insurance follows closely behind, with both Helvetia and Baloise jumping around 4% after the pair announced a merger of equals to form a leading European insurance group. Healthcare has been weighed on today by significant pressure in Novo Nordisk (-8%), hit as traders digest the latest obesity-pill updates from rival Eli Lilly.

Top European News

• BoE’s Greene says market pricing for BoE rate cuts has been moving around a lot but not all of it is to do with the UK. Aware of rise in inflation expectations, but risks are to both sides. US tariffs represent more of a disinflationary risk than an inflationary one for the UK. Wage growth remains “pretty high”, the labour force survey has been volatile and has its own collection issues.
• ECB Survey of Professional Forecasters; 2025 and 2026 inflation forecasts raised, growth lowered.
• German government lowers growth forecasts to 0.0% for 2025 and ~1% for 2026 (Including the US base tariff of ten percent as well as on steel, aluminium and cars), according to Handelsblatt’s Olk.

FX

• DXY is flat with the USD showing a differing performance vs. peers (stronger vs. EUR and CHF, weaker vs. JPY). Monday was a notable down day for the USD after another outburst from US President Trump, attempting to strong arm Fed Chair Powell into lowering rates and speculation over whether he will attempt to remove him before his term expires next year. Today’s calendar is lacking in US data but heavy in speakers with Fed’s Jefferson, Harker, Kashkari, Kugler & Barkin all due on deck.
• EUR/USD is a touch lower but holding above 1.15 after early USD buying knocked the pair from its overnight peak at 1.1547. This comes after the pair hit a multi-year high on Monday at 1.1574. On the trade front, there has been little in the way of updates since last week’s reporting that the EU expects tariffs to remain given a lack of progress in trade discussions. As it stands, despite today’s reprieve for the USD, the EUR still remains a liquid alternative to the USD should investors continue to shun US assets.
• JPY is top of the G10 leaderboard as the currency continues to benefit from its safe-haven appeal with USD/JPY briefly slipping below the 140 mark earlier in the session for the first time since September 2024. JPY is also underpinned by hopes over upcoming talks between the US and Japanese administrations. That being said, a Reuters sources piece noted that Japan will push back against any request to boost its currency. This prompted a slight pick up in USD/JPY after failing to sustain a move below 140. From a policy perspective in Japan, source reporting suggests that the BoJ is likely to keep its rate-hike signal intact at its meeting next week despite Trump tariff risks.
• GBP is flat vs. the USD with UK-specific newsflow on the light side. In an interview on Bloomberg TV, MPC member Greene remarked that the main issue from the trade war is whether the main impact will be on demand or the supply side; whether the main factors will be on demand or the supply side. Greene added that wage growth remains “pretty high”, however, the labour force survey has been volatile and has its own collection issues. BoE’s Breeden is due later in the day.
• Antipodeans are both now steady vs. the USD after initially kicking the session off on the front foot. Upside was trimmed alongside a pick up in the USD in quiet newsflow. Overnight, AUD/USD hit a fresh YTD peak at 0.6439 before returning back to within Monday’s 0.6369-0.6437 range.
• PBoC set USD/CNY mid-point at 7.2074 vs exp. 7.2925 (Prev. 7.2055).

Fixed Income

• USTs are still digesting the remarks from Trump on Fed Chair Powell and interest rates. Commentary which sparked marked steepening on Monday as short-end yields were weighed on by the prospect of cuts while the long-end picked up on the prospect of this sparking more inflation down the line. As it stands, the curve is unwinding that action a little and is slightly flatter today but still in close proximity to the steepest points seen on Monday i.e. 2s10s around 63bps vs Monday’s 55-66bps range. USTs are softer on the session, at the low-end of a 110-18 to 110-27+ band. A 2-year auction is due later, with focus also on a slew of Fed speakers.
• Modest two-way action in Bunds today, with catalysts light thus far. No reaction to the latest ECB SPF that featured an increase to the inflation and cut to the growth views of respondents; a point which may well be reflected in the IMF forecasts this afternoon. Holding at the top-end of a 131.46-83 band on return from the long weekend and while Bunds are outperforming USTs, it is only modest with the German benchmark essentially unchanged. Ahead, a 2027 Schatz auction with appearances from ECB’s Lagarde and Knot also scheduled.
• Gilts opened lower by just under 30 ticks before paring essentially all of the move to print a 92.40 high, just five ticks shy of Friday’s close. However, this proved short lived with the benchmark coming under gradual but notable pressure and entered the appearance from BoE’s Greene at a 92.02 base. Greene highlighted two-way risks to inflation being present though some modest pressure in Gilts, to a 91.96 trough, came as she highlighted wage growth remains “pretty high” and she is keeping an eye on the rise in inflation expectations.

Crude

• Crude futures extend on the rebound from the prior day’s trough despite the European rebound in the Dollar and overall quiet news flow thus far. Desks pin the recent losses in the complex to US tariff uncertainty, risk aversion from Trump pressuring the Fed Chair, and telegraphed progress regarding US-Iran nuclear talks. WTI resides in a USD 62.72-63.43/bbl range with its Brent counterpart in a USD 66.54-67.25/bbl parameter.
• Spot gold extended on its rally and printed a fresh record high at USD 3,500/oz at the time of writing, with gains in the yellow metal facilitated by the recent fall in the Dollar coupled with ongoing uncertainty on the US tariff policy and geopolitics. Add to that, the issue of US central bank independence after US President Trump upped the pressure on Fed Chair Powell to ease monetary policy. Spot gold currently resides in a USD 3,3412.34-3,500.20/oz range.
• Mostly firmer trade across base metals amid the recent fall in the Dollar and resilience in the red metal’s largest buyer. 3M LME copper resides in a USD 9,254.03-9,333.05/t.

Geopolitics

• Kremlin spokesman Peskov said Russian President Putin’s comments on Monday that it was possible to discuss the issue of not striking the civilian targets, including bilaterally, he had negotiations and discussions with the Ukrainian side in mind.
• Iranian Foreign Minister will visit China on April 23rd, according to the Chinese Foreign Ministry.

US Event Calendar

• 10:00 am: Apr Richmond Fed Manufact. Index, est. -6.5, prior -4

Central Bankers

• 9:00 am: Fed’s Jefferson Speaks at Economic Mobility Summit
• 9:30 am: Fed’s Harker Speaks at Economic Mobility Summit
• 1:40 pm: Fed’s Kashkari Speaks in Moderated Discussion
• 2:30 pm: Fed’s Barkin Speaks in Fireside Chat
• 6:00 pm: Fed’s Kugler Speaks on Monetary Policy Transmission

DB’s Jim Reid concludes the overnight wrap

Welcome back to all those in Europe that enjoyed the long Easter weekend. While most European markets were closed on Monday, the main market theme has been renewed pressure across US assets, with the S&P 500 falling -2.36%, 30yr Treasury yields rising +10.4bps to 4.90% and the dollar falling to a new 3-year low, while gold extended its YTD gain to over +30%.

The broad sell-off was triggered by rising concerns over Fed independence as President Trump became increasingly critical of Fed Chair Powell. The White House rhetoric had initially escalated after Powell’s hawkish-leaning speech that exacerbated the market sell-off last Wednesday. But while markets digested President Trump’s initial post that “Powell’s termination cannot come fast enough” last Thursday relatively well, ongoing criticism saw renewed pressure on US assets on Monday. In a post yesterday President Trump suggested it was time for “preemptive cuts”, claiming that “there is virtually No Inflation” and that the economy risks slowing unless Powell, whom President Trump referred to as “Mr. Too Late”, lowers interest rates. This post followed the National Economic Council Director Kevin Hassett saying on Friday that the Trump team was studying whether he could remove Powell.

While potential risks to Fed independence had already generated headlines in recent weeks, yesterday’s market moves were the clearest sign yet of investor anxiety over the topic. Powell, whose term as Chair expires in May 2026, reiterated last week that the Fed’s independence “is a matter of law,” and that “we’re not removable except for cause.” Other Fed officials have also warned against curtailing the central bank’s independence, including Chicago Fed President Goolsbee yesterday. Note that while the Fed Chair has significant influence over the FOMC, monetary policy actions are taken by a majority vote so removing Powell could lead to increased pushback from other members against pressure on the Fed to deliver easier policy. And with the latest rise in yields being driven mostly by real rates rather than breakevens, the market reaction is arguably more about broader investor concerns that less credible US policy-making may erode the exorbitant privilege that has allowed the US to run high twin deficits than it is about the specific risk of political influence over the Fed’s rates policy.

Tariffs also stayed in the headlines, with President Trump commenting yesterday that “Tariffs are going well, everybody wants to negotiate”, but with there being little definitive progress. Some positive headlines came out of US Vice President Vance’s visit to India, with the White House touting “significant progress in the negotiations”. Over in Japan, Prime Minister Ishiba said “If Japan concedes everything, we won’t be able to secure our national interest” ahead of an expected second round of talks with the US. Mexico’s President Sheinbaum said there was no agreement yet with the US, with talks ongoing ahead of a May 3 deadline for tariffs on auto parts. And earlier on Monday, China’s Ministry of Commerce warned other countries in talks with the US against “reaching a deal at the expense of China’s interests”, with no signs so far of a substantial engagement between the US and China.

This backdrop saw the S&P 500 (-2.36%) post a broad-based decline on Monday with all 24 of its industry groups lower on the day and the equal-weighted version of the index down by -2.04%. Cyclical stocks underperformed, with the Mag-7 down -3.23% led by a -5.75% decline for Tesla ahead of its earnings release this evening. And a -2.55% decline for the NASDAQ saw it move back into bear market territory, with the index down -21% from its recent peak. The VIX volatility index rose +4.17pts to 33.82 and other risk assets also struggled, with US HY credit spreads +14bps wider at 412bps.
In a pattern of bonds being an increasingly poor hedge for equities, long-term Treasuries saw a renewed sell-off. 10yr yields moved +8.6bps higher to 4.41% and 30yr yields rose +10.4bps to 4.90%, their highest since January. This rise was driven by real yields, with the 10yr real yield up +9.4bps to 2.18%. By contrast, 2yr yields fell -3.5bps to 3.765% as the amount of Fed rate cuts priced by December rose +6.1bps to 93bps. These moves translated into a sharp steepening of the yield curve, with the 2s10s and 2s30s slopes reaching their steepest levels since January 2022, shortly before the Fed started its post-Covid hiking cycle.

In FX, the dollar index (-0.96%) yesterday closed at its lowest level in over three years. The dollar index is now down -5.69% since the start of April and on course for its weakest month since 2009. The dollar lost ground against all G10 currencies on Monday, with the euro rising to 1.1515, its highest level since November 2021, while the Swiss franc (+1.08%) was the strongest performing G10 currency. The flight to perceived safe havens also saw gold (+2.92%) post its 22nd all-time high since the start of the year, extending its YTD advance to +30.46%. Overnight, gold prices edged up another +0.81% higher to $3,452/oz.

In the energy space, the risk-off mood, concerns about the US-China trade war and constructive weekend headlines on indirect US-Iran talks put new downward pressure on oil prices. Brent crude fell -2.50% to $66.26/bbl, reversing about half of its +4.94% rise last week.

Asian equity markets are struggling to gain traction this morning after yesterday’s meltdown on Wall Street. In Japan, the Nikkei (-0.35%) is slightly lower after falling by -1.30% on Monday. In China, the Hang Seng (-0.03%) and the CSI (+0.03%) are little changed, while the Shanghai Composite (+0.31%) and Korea’s KOSPI (+0.15%) are seeing minor gains reversing initial losses. Outside of Asia, US equity futures are seeing a modest recovery, with those on the S&P 500 and the NASDAQ around +0.35% higher. 10yr Treasury yields (+0.5bps) are marginally higher following yesterday’s sell-off, with the dollar (-0.15%) again moving lower overnight. In Europe, STOXX 50 futures are trading -0.47% lower this morning after Monday’s holiday, which follows rebounds of +3.09% for the STOXX 50 and +4.03% for the STOXX 600 last week.

Over in Asia, our strategists published an insightful report yesterday laying out the case for a stronger RMB. They see the risk-reward weighted to a move lower in USD/CNH over the summer months, with the cost-benefit analysis for China’s policy not favouring a weaponization of the RMB.

Looking forward to the rest of this week, the data highlight will be the April flash PMIs on Wednesday, with the impact of US tariffs in focus. European manufacturing PMIs have been recovering in recent months but remain in contractionary territory, while in the US the index was only slightly above 50 (50.2) last month. Investors will also be watching the PMIs for evidence of supply disruptions and price pressures from tariffs, with US manufacturing PMI price indices having risen to 2-year highs in March.

Other notable economic indicators out this week include March durable goods orders and housing market data in the US. Our US economists see durable goods orders (Thursday) growth at +1.0% MoM (+1.0% in February), pointing to a strong start to the year for capex prior to the major tariff announcements. The Fed will also release its Beige Book on Wednesday. In Europe, other sentiment releases include the Ifo survey in Germany (Thursday) as well as consumer confidence indicators in the UK (Friday), Eurozone (Tuesday) and France (Thursday).

Elsewhere, global policy-makers are gathering in Washington for the IMF/World Bank spring meetings. As part of that, the IMF will be releasing its latest economic forecasts later today, and G20 finance ministers and central bank governors will also be meeting on Wednesday and Thursday. And there will be plenty of Fedspeak, including Jefferson, Harker, Kashkari, Barkin and Kugler today.

We will also be entering the peak of the earnings season. Two of the Mag-7 will be reporting with Tesla after market close today and Alphabet on Thursday, while other tech reports include Intel, IBM and ServiceNow. Results from consumer groups including P&G and PepsiCo may get extra attention given the recent softening in US consumer sentiment, while in Europe names to watch include SAP and Dassault Systemes. See the full weekly calendar below.

An Easter dinner out with family turned into a big embarrassment for Kristi Noem and the Secret Service, as a thief stole the Department of Homeland Security chief’s handbag and the big stack of cash and various other sensitive items it contained. At Monday’s Easter Egg Roll at the White House, Noem confirmed the theft but told NBC News, “I don’t think I can comment on it yet. It’s not resolved yet.”

The crime unfolded Sunday night as Noem was eating with her extended family at Darden Restaurants-owned Capital Burger on Seventh Street NW in Washington DC. When it was over, Noem was without her large “Gucci B” shoulder bag (some of which retail for $4,400), a $600 Louis Vitton Clemence Purse, and valuable contents that included roughly $3,000 in cash, her DHS badge, passport, driver’s license, credit cards, blank checks, medicine and apartment keys. “Her entire family was in town including her children and grandchildren,” DHS told the New York Times via email. “She was using the cash withdrawal to treat her family to dinner, activities and Easter gifts.”

A law enforcement source told the Post that a review of security camera footage captured a white man in an N-95 mask, dark pants, a “fur-type” collar and ball cap pulling off the crime. Around 7:55pm, he entered Capital Burger and headed up a few stairs to the area where Noem was dining. After sitting near her, he maneuvered his chair close to hers and surreptitiously used his foot to nudge her handbag toward him. A few minutes later, he picked it up, tucked it inside his jacket, walked out the door and down the street. Noem had just finished settling the tab when she felt something brush against her leg; at that moment, she thought it was a grandchild, sources told the New York Post. 

In addition to embarrassing the woman responsible for securing the homeland, the theft is the latest in a long-running series of failures of the Secret Service, which is itself a DHS agency. While her detail is considerably smaller than that of the president or vice president, Noem is least nominally under round-the-clock Secret Service “protection.” At least two agents in street clothes were sitting at the Capital Burger’s bar, somewhere between the front doors and Noem’s table, a witness told NBC News, adding that the eatery wasn’t particularly crowded when the incident occurred.  

Former Secret Service agent Don Mihalek said protective details are often asked to keep a lower profile at personal events versus official ones. “They tend to give those people a lot more room, especially in a social setting,” he told the Washington Post. “They’re not going to stand over her while she’s having Easter dinner with the family.” However true that may be, when you consider how close he was able to seat himself, Noem is clearly fortunate this guy was apparently just a thief and not an armed, violent leftist outraged over Noem’s role in turning the tide against illegal immigration.   

Happy Easter! Wishing Christians around the country joyful celebrations for the resurrection of our Lord and Savior.

He is risen! pic.twitter.com/EKsRlvTVhW

— Kristi Noem (@KristiNoem) April 20, 2025

The Secret Service is now investigating the theft — and presumably itself too. Given the nature of the victim, the agency isn’t assuming this was necessarily a garden-variety purse-grab: Investigators want to know if the thief knew the significance of his victim.

Speaking of her high profile, Noem has a reputation as the Trump cabinet’s foremost publicity-seeker, stringing together a dense portfolio of photo ops depicting her donning a wide variety of tight-fitting uniforms and outfits — so much so that she’s earned the nicknames “Cosplay Kristi” and “ICE Barbie.” However, making headlines by failing to secure her own overpriced handbag, $3,000 in cash and DHS access badge isn’t exactly the kind of buzz she’s looking for.  

Authored by Jeffrey Tucker via The Epoch Times,

At the airport, the staff now offers comfort dogs, gorgeous Golden Retrievers and German Shepherds available for petting and holding. The idea is to comfort scared kids, delight passersby, and generally lift up the space. Yes, that’s exactly what dogs do.

What a wonderful idea. However, not everyone is happy about our love of dogs.

We’ve all become sensitive about threats on the horizon, small hints in science journals or from establishment media that target what we love. There was a time when we could treat these as an opportunity for debate and discussion. Events of the last five years suggest that parlor games are over. With so much trust lost, we are newly aware that these threats can turn out to be real and thus merit more attention.

The issue now concerns pets and dogs in particular. Are they coming for them?

In August 2020, Anthony Fauci co-authored an article in Cell that broadly called for “radical changes that may take decades to achieve: rebuilding the infrastructures of human existence.” Among the specifics, the article obliquely targets pet ownership, urging that we must reduce “unsafe exposure to animals.”

I wondered about that line at the time. The whole theory of the article is that humans are everywhere surrounded by icky things that can infect us. We’ve neglected these threats for many thousands of years by traveling around, moving here and there, domesticating animals, and living too closely together. This must change, they opine, because bad pathogens are ever more leaping from the outside world into humans.

A girl plays and pets Dino, a golden retriever led by his trainer Vesna Kiskovska (R) at the Skopje International Airport, in Skopje, North Macedonia, on Jan. 29, 2025. Robert Atanasovski/AFP via Getty Images

The empirics of the cause bear discussion. There really is no evidence that humans are uniquely in danger in our times as versus from the beginning of time. But the desire on the part of the intellectual elite to immanentize the eschaton never entirely disappears. That’s why there is a legitimate worry that they are coming for our pets.

Mother Jones has reprinted a piece from the Guardian which is a riff on a new journal article published in Australia, pointedly called “Bad Dog?: The Environmental Effects of Owned Dogs.” If you understand how this works, you don’t even need to read it. Dogs are polluters and wasteful. Feeding them requires too much in the way of resources. They threaten birds. They emit harmful gases. They sully the environment and spread diseases.

To quote from the breathless article: Dogs “are implicated in direct killing and disturbance of multiple species, particularly shore birds, but also their mere presence, even when leashed, can disturb birds and mammals, causing them to leave areas where dogs are exercised. Furthermore, scent traces and urine and faeces left by dogs can continue to have this effect even when dogs are not present. Faeces and urine can transfer zoonoses to wildlife and, when accumulated, can pollute waterways and impact plant growth. Owned dogs that enter waterways contribute to toxic pollution through wash-off of chemical ectoparasite treatment applications. Finally, the sheer number of dogs contributes to global carbon emissions and land and fresh water use via the pet food industry. We argue that the environmental impact of owned dogs is far greater, more insidious, and more concerning than is generally recognised.”

The solution seems obvious: get rid of them!

You can see what is happening here. Some among the scientific elite have picked up on Fauci’s call and added new research to back a growing attack on dogs and probably every other pet, too. It’s really an extension of the germophobia that spread lockdown ideology, and the conviction that the fix for all that ails us is to live in constant fear and isolation from all other living things.

Comfort dog Pepper, a Terrier Mix, gives the paw to its trainer at the Berlin Brandenburg Airport BER in Schoenefeld, Germany, on Oct. 20, 2023. Tobias Schwarz/AFP via Getty Images

No, the threat of dog confiscation is not around the corner. But what these sorts of campaigns can do is feed regulatory restrictions. More registrations, more shots, more tracking, more chips under the skin, more fines, more rules, and so on. In the industrialized West, we already face tremendous restrictions on breeding, raising, and selling pets.

It’s doubtful that anyone is going to take your pet. The way this works is to make it more difficult for the next generation to come along. They put the squeeze on, introducing ever more controls and mandates, fines and fees, monitoring and investigations, until it is just not worth it anymore. The costs outweigh the benefits. That’s how the anti-pet forces play the long game.

When I was a kid, you could go into any pet store and see the puppies all begging for owners. It was like going to the zoo, and it was wonderful. This has entirely disappeared, based on a very effective but ultimately ridiculous panic about “puppy mills,” thus forcing would-be pet owners to adopt or pay exorbitant prices from privileged breeders, which can require traveling across the country to get your favorite pet. It is very likely that you have to pay the town for the privilege, and that your pet has a required vaccination schedule that is tracked and enforced by private groomers and public authorities.

Thus is there already evidence of certain freak-out in the public over pets in general. I can easily imagine conditions under which this would be intensified by a public campaign. All it takes is one rabies bite or more crossover infections of some newly named pathogen. The panic against animals, and domesticated animals in particular, is just waiting to be fired up under the right conditions.

The global amplification of what would otherwise be an obscure journal article in Australia illustrates the point. The campaign is already underway and not going away anytime soon.

Americans will not easily acquiesce to having their pets taken away, but we’ve already given in to government control of pets in ways that other countries would find intolerable. I like to spend time in Mexico City, which has only the loosest possible enforcement of any pet rules.

A traveller pets a therapy dog providing solace to stressed travellers before they board their flight at the Istanbul Airport, in Istanbul, on May 3, 2024. Yasin Akgul/AFP via Getty Images

It’s not uncommon to be in a church and see a dog walk by. You ask around, and people say that this dog generally just hangs around the neighborhood. It’s the same in restaurants and parks. Nice, sweet, happy animals roam freely and no one particularly cares. In the United States such a dog would be rounded up and slaughtered in minutes!

There are also no restrictions on breeding and selling pets. Nor should there be. This is a wonderful way for people to make money, allowing their own animals to do what comes naturally. To stop this practice is extremely cruel and damaging to many rural people who supplement their income producing valuable pet friends for others. The crackdown on this practice in the United States was entirely a class-based imposition of something that is wholly fine and traditional.

Today, there are many in the Amish and Mennonite communities who breed wonderful dogs and sell them online. You have to pick them up in person and mostly pay cash, but at least it is permitted. But even they report nonstop harassment from health authorities who would prefer they stop this practice entirely, thus denying alternative communities another income stream that makes their lives possible.

In other words, the attack on dogs is not new at all but actually dates back many decades. This is how control over our lives works these days: it creeps in gradually over time, and we hardly notice it until it is too late. It is the proverbial frog in water that is never so alarmed at the heating water to inspire a leap out.

I hardly need to make the case for pet ownership. They bring delight to lives. As for disease and so on, exposure to pathogens is how the immune system improves. On this score, Fauci and the other Covidians had it entirely wrong. The path to health is not extreme isolation but exposure and normal human interactions. It’s the same with pets. They are not to be feared but loved and treasured.

The airport people have it right: dogs love people and people love dogs, almost like we are meant to be together.

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

Countries are investing heavily in artificial intelligence to position themselves for a future that could look significantly different from today.

Greater investment in AI typically translates into stronger innovation ecosystems, which can attract top talent and fuel groundbreaking research that drives long-term economic growth.

This visualization is part of Visual Capitalist’s AI Week, sponsored by Terzo, and uses data from the 2025 AI Index Report to reveal which countries are placing the biggest bets on AI.

Data & Discussion

The figures in this graphic represent total private AI investment by country, between 2013 to 2024 in billions of U.S. dollars. Countries that raised less than $1 billion were grouped into the “Rest of World” category.

From this data we can see that nearly half a trillion dollars has been raised for AI in the U.S. This amount is greater than the rest of the world combined ($471 billion vs. $289 billion).

AI Startup Activity

The 2025 AI Index Report also features data on the number of newly funded AI companies by country. Generally speaking, more capital raised results in more companies starting up.

Based on these numbers, the U.S. is the clear leader in terms of creating new AI companies. In 2024 alone, 1,073 AI companies in the country were funded.

AI Focus Areas

Since 2013, the world has raised over $750 billion for AI ventures, but what is all of this money going towards?

Breaking down private AI investment by focus area reveals the top sectors that attracted the most capital in 2024.

“AI infrastructure, research, and governance” attracted the most capital due to large investments by companies building AI applications, such as OpenAI, Anthropic, and xAI.

To get into all the AI Week content, visit our AI content hub, brought to you by Terzo.

If you enjoyed today’s post, check out Which AI Companies Have Acquired the Most Funding on Voronoi, the new app from Visual Capitalist.

Authored by Kyle Anzalone via AntiWar.com,

Nine plane loads of bunker-busting bombs were shipped from the US to Israel. The munitions are intended to prepare Israel for a potential war with Iran.

“Nine US transport planes carrying bunker-busting bombs and other defensive weapons landed at Nevatim Airbase near Tel Aviv, in central Israel,” the Israeli broadcasting authority KAN reported. The outlet noted that Washington also sent additional interceptors for the THAAD air defense system to Tel Aviv.

The munitions and interceptors would be key to Israel attacking Iran’s nuclear program then countering the predictable Iranian response.

KAN explained the massive weapons shipment  comes “in anticipation of a possible joint US-Israeli strike, should nuclear negotiations between Washington and Tehran fail.”

Under President Donald Trump, a US-supported Israeli strike on Iran has become increasingly likely. The administration is divided on whether to attempt to make a new nuclear pact with Tehran or forego diplomacy and attack Iran’s nuclear program.

Prime Minister Benjamin Netanyahu is also lobbying Trump to aid an Israeli strike on Iran. Tel Aviv would need significant support from Washington to carry out a major attack on Iran’s nuclear program.

The New York Times reported last Wednesday that Netanyahu had requested Trump’s assistance in a series of military operations aimed at Tehran. The Times said the American President had denied the Israeli leader’s request.

However, on Thursday, Trump explained that he had not ruled out attacking Iran, but added, “I’m not in a rush to do it.”

The US and Iran are currently engaged in indirect talks aimed at creating a new nuclear agreement. In 2015, Tehran agreed to additional limitations and inspections on its civilian nuclear program in exchange for sanctions relief.

In 2018, Trump withdrew from that agreement. While in office, President Joe Biden engaged in some talks with Tehran in an effort to restore the Obama-era nuclear deal. Israel was able to sabotage the diplomacy with a series of assassinations and other attacks inside Iran.

Trump has now reengaged with the Iranian government. While US and Iranian officials appear optimistic after two rounds of talks, Trump has pushed for negotiations to move faster.

Israel will also need assistance in repelling any Iranian retaliatory attack. The US currently has multiple THAAD and Patriot systems deployed to Israel.

Yemen’s Houthi rebels have claimed responsibility for attacks on two US aircraft carrier groups currently patrolling the Red Sea and areas off Yemen’s coast on Monday, and further announced fresh drone launches on the southern Israeli cities of Ashkelon and Eilat.

The Pentagon has not confirmed that US warships have come under attack. But the US side has tended to remain silent in the face of similar recent reports by the Houthis. However, Washington has in the recent past acknowledged Houthi efforts to target its warships with drones and missiles.

Houthi military spokesperson Yahya Sarea cited American support for Israel as it “oppresses the Palestinian people”. Describing the fresh attacks, he said: “The first targeted a vital Israeli enemy target in the occupied Ashkelon area using a Yaffa drone, while the second targeted an Israeli military target in the Umm al-Rashrash area in southern occupied Palestine using a Sammad-1 drone.”

He then announced two military operations against the US in “retaliation to the American aggression against our country and its massacres against our people.”

“Missile forces and drone units launched two cruise missiles and two drones at the USS Harry S. Truman aircraft carrier and its associated ships in the northern part of the Red Sea. The second operation, carried out by naval forces, missile troops and drone units, targeted the USS Carl Vinson and its associated ships in the Arabian Sea, using three cruise missiles and four drones,” Sarea told the Al Masirah TV channel.

Saria then claimed that “the goals of both military operations were successfully accomplished.” But there are as yet no signs the carriers were actually hit by any inbound fire. The Houthis actually made a similar claim of attacks on both US carriers on April 18.

Just about a week ago the USS Harry S. Truman was joined by the USS Carl Vinson in regional Mideast waters. Presumably this is a sign the Trump administration plans to ramp of its airstrikes on Yemen even further.

The Houthis have proven impossible to dislodge merely through airstrikes, which have been intense and ongoing since March 15. There have been recent reports that the United States is in talks with Saudi-supported Yemeni forces in exile (who have long fought the Houthi rebels) to cobble together a possible new land offensive to send against the Shia militant group which is allied to Iran.

USS Carl Vinson (CVN 70) living up to its motto: “Vis Per Mare,” which means “Strength from the Sea” in the U.S. Central Command area of responsibility… pic.twitter.com/4t964ihhbg

— U.S. Central Command (@CENTCOM) April 12, 2025

“Yemeni forces opposed to the Houthis are in talks with the US and Gulf Arab allies about a possible land offensive to oust the militant group from the Red Sea coast, according to people involved in the discussions,” Bloomberg wrote last week.

Even if the US commits itself to a ‘limited’ ground operation using proxies, there’s always the potential for serious escalation which leads to direct Pentagon boots on the ground. The whole Yemen campaign seems a ‘no win’ situation, and is ultimately to the greater benefit of Israel – and not necessarily Washington.

Authored by Drieu Godefridi via The Gatestone Institute,

The news came down like a thunderbolt. In a spectacular decision, the Morton County courthouse in Mandan, North Dakota, ordered the environmentalist organizations that comprise Greenpeace to pay $665 million in damages to Energy Transfer, the company behind the Dakota Access Pipeline. The figure appears a monumental slap in the face to Greenpeace, which was sued by Energy Transfer for “defamation, trespass, nuisance, civil conspiracy and other acts,” following demonstrations against the pipeline project in 2016 and 2017.

The North Dakota jury did not pull any punches. Greenpeace was declared liable; its methods illegal and its actions harmful. Greenpeace has already announced that it will appeal.

Beyond the legal wrangling, this ruling raises the question: what if this case marks the start of a major transatlantic rift between an America defending its energy interests and a Europe mired in its green romanticism?

Let us look at the facts. 

The Dakota Access Pipeline — a nearly 1,900-kilometer artery that carries crude oil from North Dakota’s Bakken shale formation to Patoka, Illinois — has been the focus of much passion. As early as 2016, Sioux and Cheyenne Indian tribes, supported by an armada of activists, celebrities and organizations including Greenpeace, denounced the project as threatening sacred tribal lands as well as water resources. Tens of thousands of signatures poured in on petitions, and protests at the construction sites paralyzed the work — all costing Energy Transfer some $300 million in delays and extra costs.

The anger often degenerated into outright violence and large-scale vandalism, much to the annoyance of local populations, who became fed up with these crusaders who had appeared from elsewhere. Faced with this chaos, President Donald J. Trump, freshly inaugurated in 2017, issued a presidential memorandum to speed up the project, while brushing aside what he called an “incredibly cumbersome and horrific authorization process.”

The pipeline became operational in May 2017. Energy Transfer nevertheless immediately decided to go on a legal offensive. According to Energy Transfer, Greenpeace had orchestrated the demonstrations, financed the disorder and spread lies about the pipeline.

The jury in Mandan, North Dakota, agreed on March 19, 2025, and ruled that Greenpeace International, Greenpeace USA and Greenpeace Fund Inc. must pay combined damages of $665 million to Energy Transfer, a sum that sounds like a declaration of war on environmentalist NGOs. The days of omnipotence and de facto impunity for environmentalist NGOs were over.

Greenpeace USA is now crying that it will be forced into bankruptcy. Really? With its network of donors — small, large and mega-large — the NGO should be able to bounce back. The signal is clear: in the United States, no one any longer jokes with those who hinder the economy and trample on the rights of others under the guise of idealism.

Meanwhile, Europe is getting restless. Greenpeace International has invoked the European anti-SLAPP directive — an EU initiative to protect individuals, especially journalists and activists, from abusive lawsuits (Strategic Lawsuits Against Public Participation) aimed at silencing criticism or public participation, by providing safeguards like early dismissal of unfounded claims and financial protections. The anti-SLAPP directive, adopted in April 2024 by a European Union always ready to support and finance the most extremist NGOs, concretely aims to immunize these organizations against legal proceedings. Greenpeace International filed a lawsuit against Energy Transfer under the anti-SLAPP directive in the Netherlands, in February 2025.

Greenpeace related the incident to broader environmental concerns, according to its statement:

“Based in the Netherlands, Greenpeace International is citing Dutch law on torts and abuse of rights, as well as Chapter V of the EU Directive, adopted in 2024, which protects organisations based in the EU against SLAPPs outside the EU, and entitles them to compensation. The Directive, along with existing Dutch law, paves the way for GPI to pursue remedies against three entities in ET’s corporate group… for the damage it has suffered and continues to suffer as a result of the SLAPP suits and related actions in the US. Greenpeace International sent Energy Transfer a Notice of Liability in July 2024, summoning it to withdraw its lawsuit in North Dakota and pay damages, or face legal action. Energy Transfer refused to do so.”

Greenpeace would apparently like organizations such as itself to directly or indirectly cause hundreds of millions of dollars worth of damage, while preventing any court from intervening.

The applicability of the EU anti-SLAPP directive to the judgment in question is doubtful, because:

1. The anti-SLAPP directive in question has not yet entered into force in the Netherlands.

2. It is first and foremost Greenpeace USA that has been found liable (for $400 million) for acts committed in the USA, while the EU’s anti-SLAPP directive is solely related to cross-border disputes. According to Article 1 of the anti-SLAPP directive, it pertains to clearly baseless claims or exploitative legal actions in civil cases that have cross-border elements, targeting individuals or entities — known as SLAPP targets — due to their involvement in public participation. The requirement of ‘cross-border implications’ means that SLAPPs related solely to domestic cases are not covered by the directive.

3. Greenpeace was found liable for activities that led to violence, not for having expressed its opinion. Incitement to violence is not an opinion, and the EU anti-SLAPP directive does not cover acts of violence. Its primary focus is on protecting individuals and entities engaged in public participation from manifestly unfounded claims or abusive court proceedings in civil or commercial matters with cross-border implications.

If judges in the Netherlands nevertheless find in favor of Greenpeace International, anything is possible: such a ruling would be another slap(p) in the face to the United States. Would the Trump administration let stand a new European encroachment on US sovereignty? It looks as if the EU, through this directive, once again is trying to dictate the law on American soil. Transatlantic tensions, already fuelled by trade disputes, issues of free speech, NATO funding and the war in Ukraine, would mount further.

Beyond this legal duel, there is a clash of civilizations at play. On one side, Trump’s America, driven by the mantra “drill, baby, drill” and a newfound pride in fossil fuels. Shale oil and gas, abundant and cheap, have made America the world’s leading producer of hydrocarbons. The US is seeing energy independence boosted by massive exports of liquefied natural gas.

On the other side, a Europe stubbornly pursuing its Green Deal, a project as costly as it is illusory, sacrificing its competitiveness on the altar of environmentalist dogma. While in Europe, factories are closing, they are reopening in the United States. The contrast between pragmatism and ideology is striking.

What can we learn from all this? America has chosen its side: energy sovereignty, prosperity, an end to impunity for NGOs that engage in illegal activities. Greenpeace may appeal and its activists may cry “gagging prosecution,” but the tide clearly seems to be turning.

Authored by James Gorrie via The Epoch Times,

Is a new boom in deceptive trading practices taking shape in many parts of the world? As the U.S.–China trade war intensifies, it certainly looks that way.

China’s Gray Trade Strategy Blunts Impact of US Tariffs

With U.S. tariffs reaching 145 percent on Chinese imports—at least at the time of this writing—Beijing’s new strategy seems to include the use of so-called gray trade to bypass American trade barriers. Gray trade involves rerouting goods through low-tariff countries, such as Vietnam, Mexico, or Malaysia, to conceal their Chinese origin and thereby reduce U.S. import duties.

This sneaky tactic has surged as a response to President Donald Trump’s aggressive tariff policies, making China’s goods less competitive in the U.S. market due to their added cost.

Gray Trade Loophole Strategy

The simple idea behind gray trade is to exploit loopholes in U.S. Rules of Origin, the trading guidance for determining a product’s country of origin for tariff purposes. Chinese goods, for example, will remain unassembled or may be about 90 percent manufactured before being shipped to an intermediary country. There, they undergo final production, assembly, processing, repackaging, or relabeling to qualify as originating from that country, rather than from China.

For example, Chinese electronic parts may be sent to Vietnam, assembled into a product, and then labeled, “Made in Vietnam.” This enables China to benefit from the 10 percent tariff on Vietnamese imports under Trump’s 2025 reciprocal tariff regime, instead of the 145 percent tariffs on Chinese goods.

It’s a perfectly sensible response by Beijing, and there’s no doubt that Chinese firms are rerouting goods through Vietnam, Mexico, and Turkey to exploit lower tariffs on goods sourced from those countries. A related tactic occurring in Mexico involves dividing goods into packages that are below the $800 tariff-free threshold for non-Chinese origins, a tactic called the “Tijuana two-step.”

China Has to Resort to Gray Trade

But gray trade isn’t new or even unfamiliar to the second Trump administration. During Trump’s first term, Chinese solar manufacturers bypassed 30 percent tariffs by partnering with their neighbors in Southeast Asia. In 2025, tracing the movement and provenance of vast numbers of products is complex at best and nearly impossible at worst, making it a challenge to disrupt gray trade.

It’s no mystery why Beijing is engaging in gray trade. With its exports to the United States accounting for 10 percent of its trade and supporting between 10 million and 20 million jobs, some experts say the world’s largest manufacturer faces an estimated 80 percent decline in its exports over the next two years, if the gray trade were to cease.

As domestic economic conditions decline due to the anticipated extensive trade tensions, China’s 2025 GDP projections have fallen from 5 percent to as low as 4 percent, potentially resulting in a 20 percent drop in GDP growth in just one year. With joblessness among its young people (ages 16 to 24) already approaching 17 percent, the Chinese Communist Party (CCP) faces a growing resentment among its people. The Party would like to avoid an uprising by its younger generation.

The gray trade has provided a much-needed cushion against the blow of the Trump administration’s high tariffs. For instance, according to official data, China’s exports surged by 12.4 percent in March, with exports to ASEAN increasing by 11.6 percent and exports to Vietnam climbing by nearly 19 percent.

Impact on Low-Tariff Countries

But it’s not just China that gains from gray trade. Its low-tariff country partners also gain economically from gray trade but face risks, too. Gray trading partners, such as Vietnam, Malaysia, and Mexico, profit from trade and processing fees, with some estimates on the social media platform X reaching as high as 10 percent. It’s worth noting that between 2017 and 2022, Vietnam replaced almost half of China’s lost market share in U.S. imports.

However, gray trading partner countries risk the consequences of U.S. pushback, resulting in a delicate balancing act for these countries caught between gray trade with China and managing important trading relationships with the United States.

Economic and Geopolitical Implications

Economically, gray trade preserves China’s U.S. market access for the moment, but it raises costs as intermediaries take their cut, with logistics costs also increasing. For U.S. consumers, it may delay steep price hikes, but won’t eliminate them.

Geopolitically, Beijing’s retaliatory 125 percent tariffs on U.S. goods, plus adding barriers to U.S. beef and LNG imports, raise tensions even higher. CCP leader Xi Jinping’s recent visits to Vietnam, Malaysia, and Cambodia could have secured their gray trade hubs going forward.

A Rough Road Ahead?

But the impact of gray trade is perhaps deeper and wider than many may expect. On the one hand, it’s a reasonable response on China’s part to U.S. tariffs. But on the other hand, there are greater risks. The United States could expand tariffs or use the International Emergency Economic Powers Act (IEEPA) to close loopholes.

That, too, may be a rational response by the United States, or it could make things worse.

“The global trade system for the past ninety years is collapsing, leaving it difficult for people to forecast the economic impact and tell where the bottom for a market is,” Vincent Chan, a China strategist at Aletheia Capital Ltd., told Bloomberg.

As new phases of U.S. trade policy and responses unfold, the biggest risk may be uncontrolled escalation in both tariff retaliation and other forms of retaliation. In short, the impact of the gray trade may be deeper and wider than many expect, and it could even lead to a global trade war, with its own far-reaching implications.

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